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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MACROMEDIA, 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)
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(1) Title of each class 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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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LOGO
600 Townsend Street
San Francisco, California 94103
July 11, 1997
To Our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Macromedia, Inc. to be held at 600 Townsend Street, San Francisco,
California, on Friday, August 15, 1997, at 9:00 a.m. P.D.T.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Stockholders and Proxy
Statement.
It is important that you use this opportunity to take part in the affairs
of your Company by voting on the business to come before this meeting. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
LOGO
John C. Parsons, Jr.
Vice President of Finance and
Operations,
Chief Financial Officer and Secretary
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MACROMEDIA, INC.
600 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94103
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Macromedia, Inc. (the
"Company") will be held at 600 Townsend Street, San Francisco, California, on
Friday, August 15, 1997, at 9:00 a.m. P.D.T. for the following purposes:
1. To elect directors of the Company, each to serve until the next Annual
Meeting of Stockholders and until his successor has been elected and
qualified or until his earlier resignation or removal. The Company's
Board of Directors intends to present the following nominees for
election as directors:
Robert K. Burgess C. Richard Kramlich
John C. Colligan Donald L. Lucas
L. John Doerr James R. Von Ehr, II
John (Ian) Giffen William B. Welty
2. To consider and vote upon a proposal to amend the Company's 1993
Employee Stock Purchase Plan to increase the number of shares reserved
for issuance thereunder by 400,000 shares, from 400,000 shares to
800,000 shares.
3. To consider and vote upon a proposal to amend the Company's 1992 Equity
Incentive Plan to increase the number of shares reserved for issuance
thereunder by 1,000,000 shares, from 10,800,000 shares to 11,800,000
shares.
4. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
for the Company for the current fiscal year.
5. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Only stockholders of record at the close of business on July 7, 1997 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
LOGO
John C. Parsons, Jr.
Vice President of Finance and
Operations,
Chief Financial Officer and Secretary
San Francisco, California
July 11, 1997
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
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MACROMEDIA, INC.
600 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94103
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PROXY STATEMENT
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JULY 11, 1997
The accompanying proxy is solicited on behalf of the Board of Directors of
Macromedia, Inc., a Delaware
corporation (the "Company" or "Macromedia"), for use at the Annual Meeting of
Stockholders of the Company to be held at 600 Townsend Street, San Francisco,
California, on Friday, August 15, 1997 at 9:00 a.m. P.D.T. (the "Meeting"). Only
holders of record of the Company's Common Stock at the close of business on July
7, 1997 will be entitled to vote at the Meeting. At the close of business on
July 7, 1997 (the "Record Date"), the Company had 37,987,840 shares of Common
Stock outstanding and entitled to vote. A majority of the shares outstanding on
the Record Date will constitute a quorum for the transaction of business. This
Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on or about July 11, 1997. An annual report for the fiscal year
ended March 31, 1997 is enclosed with the Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above record date. Shares of Common Stock may not be voted
cumulatively.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Proposal Nos. 2, 3 and 4 require
for approval the affirmative vote of the majority of shares of Common Stock
present in person or represented by proxy at the Meeting and entitled to vote on
such proposals. All votes will be tabulated by the inspector of election
appointed for the Meeting who will separately tabulate, for each proposal,
affirmative and negative votes, abstentions and broker non-votes. Abstentions
will be counted towards a quorum and have the same effect as negative votes with
regard to Proposal Nos. 2, 3 and 4. Broker non-votes will also be counted
towards a quorum but will not be counted for any purpose in determining whether
a proposal has been approved.
The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, telegraph or in person. Following the original mailing of the
proxies and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders of the Company's Common Stock
forward copies of the proxy and other soliciting materials to persons for whom
they hold shares of Common Stock and request authority for the exercise of
proxies. In such cases, the Company, upon the request of the record holders,
will reimburse such holders for their reasonable expenses.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is signed
by the person who signed the earlier proxy and is presented at the Meeting or by
attendance at the Meeting and voting in person. Please note, however, that if a
stockholder's shares are held of record by a broker, bank or other nominee and
that stockholder wishes to vote at the Meeting, the stockholder must bring to
the Meeting a letter from the broker, bank or other nominee confirming that
stockholder's beneficial ownership of the shares.
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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Meeting, stockholders will elect directors to hold office until the
next Annual Meeting of Stockholders and until their respective successors have
been elected and qualified or until such directors' earlier resignation or
removal. The size of the Company's Board of Directors (the "Board") is currently
set at eight members. Accordingly, eight nominees will be elected at the Meeting
to be the eight directors of the Company. Shares represented by the accompanying
proxy will be voted for the election of the eight nominees recommended by the
Board unless the proxy is marked in such a manner as to withhold authority so to
vote. In the election of directors, each stockholder is entitled to one vote for
each share of Common Stock held. Shares of Common Stock may not be voted
cumulatively. If any nominee for any reason is unable to serve or for good cause
will not serve, the proxies may be voted for such substitute nominee as the
proxy holder may determine. The Company is not aware of any nominee who will be
unable to or for good cause will not serve as a director.
DIRECTORS/NOMINEES
The names of the nominees, and certain information about them as of July 7,
1997, are set forth below:
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
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Robert K. Burgess 39 President of the Company 1996
John C. Colligan(3) 42 Chairman of the Board of 1992
Directors
L. John Doerr(1)(3) 46 General Partner of Kleiner 1992
Perkins Caufield and Byers
John (Ian) Giffen 39 Vice President of Helix
Investments (Canada) Inc., a
venture capital company
C. Richard Kramlich(2) 62 General Partner of New 1992
Enterprise Associates
Donald L. Lucas(2) 67 Venture Capitalist 1992
James R. Von Ehr, II 47 President, Zyvex Management 1995
Corporation
William B. Welty(3) 55 President and Chief Executive 1992
Officer of agincourt partners,
llc, an investment management
firm
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(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
Each of the director nominees listed above, with the exception of Mr. Burgess
and Mr. Giffen, was elected to be a director at the Company's Annual Meeting of
Stockholders held on July 25, 1996. Mr. Burgess was appointed to be a director
as of November 1, 1996 by the Board of Directors at its meeting on October 16,
1996. Mr. Giffen is not currently a director of the Company.
Mr. Burgess has been President and a director of the Company since November
1996. Prior to joining the Company, Mr. Burgess was Senior Vice President of
Silicon Graphics, Inc., responsible for the Silicon Interactive Strategic
Business Unit. Prior to this position, he was President of Alias/Wavefront, a
wholly-owned independent software subsidiary of Silicon Graphics, created from
the 1995 merger of Alias Research, Inc., and Wavefront Technologies, Inc. From
1992 to 1995, he was President, Chief Executive Officer, Chief Operating Officer
and a director of Alias Research. Prior to joining Alias Research, Mr. Burgess
held a number of senior management positions at Silicon Graphics, including Vice
President of Marketing, Applications and Business Development (1991), Vice
President of Applications (1990) and President of Silicon Graphics Canada, Inc.,
(1984-90). A Canadian, Mr. Burgess earned a Bachelors degree in Commerce from
McMaster University.
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Mr. Colligan has been Chairman of the Company since February 1996 and a
director since March 1992. He was Chief Executive Officer from January 1993 to
November 1996, President from December 1992 to November 1996 and Chief Operating
Officer of the Company from March 1992 to December 1992. Mr. Colligan was
President, Chief Executive Officer and a director of Authorware from December
1988 until its merger into the Company in March 1992. Prior to joining
Authorware, Mr. Colligan was employed by Apple in a variety of positions from
May 1983 until December 1988, most recently as Director of Marketing and Sales
for Higher Education. Mr. Colligan holds a Bachelor of Science degree in
international economics from Georgetown University and a Master of Business
Administration from Stanford University. Mr. Colligan is also a director of S3
Corporation and c/net, inc.
Mr. Doerr has been a director of the Company since March 1992. Mr. Doerr
served as a director of MacroMind and its successor, Macromind/Paracomp, from
March 1990 until its merger into the Company in March 1992. Mr. Doerr has been a
general partner of Kleiner Perkins Caufield & Byers, a venture capital firm,
since August 1980. Prior to joining Kleiner Perkins Caufield & Byers, Mr. Doerr
worked with Intel Corporation for five years in sales and marketing management.
Mr. Doerr holds Bachelor of Science and Master of Science degrees in electrical
engineering and computer science from Rice University and a Master in Business
Administration from Harvard University. Mr. Doerr is also a director of Intuit,
Inc., The Lightspan Partnership, Millennium, Netscape Communications, Onsale,
Inc., Platinum Software Corporation, Precept Software, Shiva Corporation and Sun
Microsystems, Inc.
Mr. Giffen is a Vice President of Helix Investments (Canada) Inc., a
venture capital company. Mr. Giffen has also held senior finance positions with
various technology-related companies, including serving as Vice President,
Finance and Chief Financial Officer of Algorithmics Incorporated, a developer of
risk management software, from February 1996 through September 1996, and Vice
President, Finance and Chief Financial Officer of Alias Research Inc., a
developer of advanced graphics software, from January 1992 until January 1996.
Mr. Giffen holds a degree in Business Administration from the University of
Strathclyde (Scotland) and is a member of the Institute of Canadian Chartered
Accountants and the Institute of the Chartered Accountants of Scotland. Mr.
Giffen is also a director of Open Text Corporation and a number of other private
companies.
Mr. Kramlich has been a director of the Company since March 1992. Mr.
Kramlich served as a director of Paracomp and its successor, Macromind/Paracomp
from May 1989 until the formation of the Company in March 1992. Since June 1978,
Mr. Kramlich has been employed by New Enterprise Associates, a venture capital
firm, and has been a founder, organizer, manager and general partner of various
venture capital partnerships. Mr. Kramlich holds a Bachelor of Science degree in
history from Northwestern University and a Master in Business Administration
degree from Harvard University. Mr. Kramlich is also a director of Ascend
Communications, Inc., Chalone Inc., Lumisys Inc., Silicon Graphics, Inc. and
SyQuest Technology, Inc.
Mr. Lucas has been a director of the Company since March 1992. Mr. Lucas
served as a director of Authorware from July 1988 until the formation of the
Company in March 1992. Since 1967, Mr. Lucas has been actively engaged in
venture capital activities as a private individual. Mr. Lucas holds a Bachelor
of Arts degree in economics and a Master of Business Administration from
Stanford University. Mr. Lucas is also a director of Amati Communications
Corporation (formerly ICOT Corporation), Cadence Design Systems, Inc., Coulter
Pharmaceutical, Inc., Oracle Systems Corporation, Racotek, Inc., Transcend
Services, Inc. (formerly Tri-Care, Inc.) and Tricord Systems, Inc.
Mr. Von Ehr has been a director of the Company since January 1995. Mr. Von
Ehr is currently the president of Zyvex Management Corporation, a startup
research and development company working on molecular nanotechnology. From
January 1995 to July 1997, Mr. Von Ehr was a Vice President of the Company. Mr.
Von Ehr was Chairman of the Board, President and Chief Executive Officer of
Altsys, from December 1984, when he co-founded Altsys, until January 1995. Prior
to founding Altsys, Mr. Von Ehr was employed by Texas Instruments, Incorporated
from 1973, where he was Senior Member, Technical Staff and Manager of Integrated
Circuit Layout Graphics. Mr. Von Ehr received a Bachelor of Science degree in
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computer science from Michigan State University and a Master of Science degree
in computer science from the University of Texas at Dallas.
Mr. Welty has been a director of the Company since April 1993. Mr. Welty
served as a director of MacroMind and its successor, Macromind/Paracomp, from
April 1991 to March 1992. Since April 1997, Mr. Welty has been President and
Chief Executive Officer of agincourt partners, llc, an investment management
firm. From August 1988 to April 1997, Mr. Welty was a general partner of Volpe,
Welty & Company, an investment banking firm. Mr. Welty holds Bachelor of Science
degrees in industrial engineering and business administration from Iowa State
University. Mr. Welty is also a director of Action Technologies, Inc., Connect,
Inc. and Electric Communities.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met six (6) times, including telephone conference meetings,
during fiscal 1997 and acted by unanimous written consent six (6) times. No
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board (held during the period for which he was a director) and
the total number of meetings held by all committees of the Board on which he
served (during the period that he served).
Standing committees of the Board include an Audit Committee, a Compensation
Committee and a Nominating Committee.
Messrs. Kramlich and Lucas are the current members of the Audit Committee,
which met five (5) times during fiscal 1997. The Audit Committee meets with the
Company's independent accountants to review the adequacy of the Company's
internal control systems and financial reporting procedures; reviews the general
scope of the Company's annual audit and the fees charged by the independent
accountants; reviews and monitors the performance of non-audit services by the
Company's auditors, reviews the fairness of any proposed transaction between the
Company and any officer, director or other affiliate of the Company, and after
such review, makes recommendations to the full Board; and performs such further
functions as may be required by any stock exchange or over-the-counter market
upon which the Company's Common Stock may be listed.
Mr. Doerr and John C. Laing were the members of the Compensation Committee
in fiscal 1997 which met two (2) times and acted by unanimous written consent
eighteen (18) times during fiscal 1997. The Compensation Committee recommends
compensation for officers and employees of the Company, grants options and stock
awards under the Company's employee benefit plans and reviews and recommends
adoption of and amendments to stock option and employee benefit plans.
Messrs. Colligan, Doerr and Welty are the current members of the Nominating
Committee which did not meet during fiscal 1997. The Nominating Committee was
created by the Board at its meeting on January 21, 1997 for the purpose of
identifying and recommending candidates for the Company's Board.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS
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PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO THE
1993 EMPLOYEE STOCK PURCHASE PLAN
Stockholders are being asked to approve an amendment to the adoption of the
Company's 1993 Employee Stock Purchase Plan (the "Stock Purchase Plan") to
increase the number of shares of Common Stock reserved for issuance thereunder
from 400,000 shares to 800,000 shares (an increase of 400,000 shares). The Board
approved the proposed amendment described above on June 27, 1997.
Management believes that this amendment is in the best interests of the
Company because of the need to provide such benefits to attract and retain
quality employees and remain competitive in the software industry.
Below is a summary of the principal provisions of the Stock Purchase Plan,
assuming approval of the above amendment, which summary is qualified in its
entirety by reference to the full text of the Stock Purchase Plan.
1993 EMPLOYEE STOCK PURCHASE PLAN
STOCK PURCHASE PLAN HISTORY
The Board adopted the Stock Purchase Plan on October 15, 1993, and
thereafter it was approved by stockholders to offer eligible employees of the
Company ("Participating Employees") with a convenient means to acquire equity in
the Company through payroll deductions and to provide an incentive for continued
employment. The Stock Purchase Plan was amended by the Board on May 24, 1994 to
change the dates of the periods during which payroll deductions may accumulate
and to make certain other changes to facilitate administration of the Stock
Purchase Plan. The Board again amended the Stock Purchase Plan on January 31,
1996 to change the starting and ending dates of the periods during which payroll
deductions may accumulate by one day to facilitate administration of the Stock
Purchase Plan. These amendments did not require stockholder approval. Prior to
the Meeting, the Company's management will ask the Board to adopt certain
technical amendments to the Stock Purchase Plan to reflect changes the
Securities and Exchange Commission adopted on May 31, 1996 to Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("New Rule
16b-3"). This summary reflects the Company's compliance with New Rule 16b-3.
NUMBER OF SHARES SUBJECT TO STOCK PURCHASE PLAN
An aggregate of 800,000 shares (assuming approval of the proposed
amendment) of the Company's Common Stock have been reserved by the Board for
issuance under the Stock Purchase Plan.
ADMINISTRATION
The Stock Purchase Plan is administered by the Compensation Committee of
the Board (the "Committee"), the members of which are appointed by the Board. In
fiscal 1997, the Committee consisted of L. John Doerr and John C. Laing, each of
whom is a "non-employee director" as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an
"outside director" as defined pursuant to Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The interpretation or construction by the
Committee of any provisions of the Stock Purchase Plan or of any option granted
under it will be final and binding on all Participating Employees. The members
of the Committee do not receive any compensation for administering the Stock
Purchase Plan. The Company bears all expenses in connection with administration
of the Stock Purchase Plan.
ELIGIBILITY
All employees of the Company, or any subsidiary, are eligible to
participate in the Stock Purchase Plan except the following:
(a) employees who are not employed by the Company or any subsidiary on the
15th day of the month before the beginning of an Offering Period (as
defined below);
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(b) employees who are customarily employed for fewer than 20 hours per
week;
(c) employees who are customarily employed for fewer than 5 months in a
calendar year; or
(d) employees who own or hold options to purchase stock or who, as a result
of participation in the Stock Purchase Plan, would own stock or hold
options to purchase stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company.
As of July 7, 1997, approximately 385 persons were eligible to participate
in the Stock Purchase Plan and 280,063 shares had been issued pursuant to the
Stock Purchase Plan. As of that date, 119,937 shares were available for future
issuance under the Stock Purchase Plan, not including the proposed amendment to
the Stock Purchase Plan to increase the shares available for issuance
thereunder. As of July 3, 1997, the last trading day prior to the Record Date,
the closing price of the Company's Common Stock on the Nasdaq National Market
was $8.50 per share. Over the term of the Stock Purchase Plan, each of the
following "Named Executive Officers," as that term is defined under Item
402(a)(3) of Regulation S-K promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), has purchased shares of the Company's Common
Stock, as follows Mr. Meyrowitz (2,599 shares), Current Executive Officers as a
group have purchased 2,599 shares, and all employees as a group, other than
executive officers, have purchased 277,464 shares.
Participating Employees participate in the Stock Purchase Plan through
payroll deductions. A Participating Employee sets the rate of such payroll
deductions, which may not be less than 2% nor more than 10% of the Participating
Employee's W-2 compensation, including, but not limited to, base salary, wages,
commissions, overtime, benefit premiums, bonuses and draws unreduced by the
amount by which the Participating Employee's salary is reduced pursuant to
Sections 125 or 401(k) of the Code, not to exceed $25,000 per year or such lower
limit as set by the Committee.
OFFERING PERIOD
Each offering of Common Stock under the Stock Purchase Plan is for a period
of six months (the "Offering Period"). Offering Periods commence on February 16
and August 16 of each year and end on August 15 and February 15, respectively,
of each year. The first day of each Offering Period is the "Offering Date" for
such Offering Period.
Participating Employees may elect to participate in any Offering Period by
enrolling as provided under the terms of the Stock Purchase Plan. Once enrolled,
a Participating Employee will automatically participate in each succeeding
Offering Period unless the Participating Employee withdraws from the Offering
Period or the Stock Purchase Plan is terminated. After the rate of payroll
deductions for an Offering Period has been set by a Participating Employee, that
rate continues to be effective for the remainder of the Offering Period (and for
all subsequent Offering Periods in which the Participating Employee is
automatically enrolled) unless otherwise changed by the Participating Employee.
The Participating Employee may increase or lower the rate of payroll deductions
for any subsequent Offering Period, but may only lower the rate of payroll
deductions for an ongoing Offering Period. Not more than one change may be made
during a single Offering Period.
PURCHASE PRICE
The purchase price of shares that may be acquired in any Offering Period
under the Stock Purchase Plan will be 85% of the lesser of (a) the fair market
value of the shares on the Offering Date or (b) the fair market value of the
shares on the last day of the Offering Period. The fair market value of a share
of the Company's Common Stock is deemed to be the average of the high and low
prices of the Company Stock on the applicable date as quoted on the Nasdaq
National Market and reported in the Wall Street Journal.
PURCHASE OF STOCK UNDER THE EMPLOYEE STOCK PURCHASE PLAN
The number of whole shares a Participating Employee will be able to
purchase in any Offering Period will be determined by dividing the total amount
withheld from the Participating Employee during the Offering
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Period pursuant to the Stock Purchase Plan by the purchase price for each share
determined as described above. The purchase will take place automatically on the
last day of the Offering Period.
WITHDRAWAL
A Participating Employee may withdraw from an Offering Period. Upon
withdrawal, all accumulated payroll deductions will be returned to the withdrawn
Participating Employee, without interest. No further payroll deductions for the
purchase of shares will be made for succeeding Offering Periods unless and until
the Participating Employee enrolls in the new Offering Period in the same manner
as for initial participation in the Stock Purchase Plan.
AMENDMENT OF THE STOCK PURCHASE PLAN
The Board may at any time amend, terminate or extend the term of the Stock
Purchase Plan, except that any such termination cannot affect the terms of
shares previously granted under the Stock Purchase Plan, nor may any amendment
make any change in the terms of shares previously granted which would adversely
affect the right of any participant, nor may any amendment be made without
shareholder approval if such amendment would: (a) increase the number of shares
that may be issued under the Stock Purchase Plan; or (b) change the designation
of the employees (or class of employees) eligible for participation in the Stock
Purchase Plan.
TERM OF THE STOCK PURCHASE PLAN
The Stock Purchase Plan will continue until the earlier to occur of: (i)
termination of the Stock Purchase Plan by the Board; (ii) the issuance of all
the shares of Common Stock reserved for issuance under the Stock Purchase Plan;
or (iii) October 2003, ten years after the date the Stock Purchase Plan was
adopted by the Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT
OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPATING
EMPLOYEES UNDER THE STOCK PURCHASE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPATING EMPLOYEE WILL
DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPATING EMPLOYEE IS
ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE STOCK PURCHASE PLAN.
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code. It is not subject
to any provisions of the Employees Retirement Income Security Act of 1974.
Tax Treatment of the Participating Employee. Participating employees will
not recognize income for federal income tax purposes either upon enrollment in
the Stock Purchase Plan or upon the purchase of shares. All tax consequences are
deferred until a Participating Employee sells the shares, disposes of shares by
gift or dies.
If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable Offering Period, or if
the Participating Employee dies while owning the shares, the Participating
Employee realizes ordinary income on a sale (or a disposition by way of gift or
upon death) to the extent of the lesser of (i) 15% of the fair market value of
the shares at the beginning of the Offering Period or (ii) the actual gain (the
amount by which the market value of the shares on the date of sale, gift or
death exceeds the purchase price). All additional gain upon the sale of shares
is treated as long-term capital gain. If the shares are sold and the sale price
is less than the purchase price, there is no ordinary income and the
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Participating Employee has a long-term capital loss for the difference between
the sale price and the purchase price.
If the shares are sold or are otherwise disposed of including by way of
gift (but not death, bequest or inheritance) (in any case a "disqualifying
disposition") within either the one-year or the two-year holding periods
described above, the Participating Employee realizes ordinary income at the time
of sale or other disposition taxable to the extent that the fair market value of
the shares at the date of purchase is greater than the purchase price. This
excess will constitute ordinary income (not currently subject to withholding) in
the year of the sale or other disposition even if no gain is realized on the
sale or if a gratuitous transfer is made. The difference, if any, between the
proceeds of sale and the fair market value of the shares at the date of purchase
is a capital gain or loss. Capital gains continue to be offset by capital losses
and up to $3,000 of capital losses may be used annually against ordinary income.
Tax Treatment of the Company. The Company will be entitled to a deduction
in connection with the disposition of shares acquired under the Stock Purchase
Plan only to the extent that the Participating Employee recognizes ordinary
income on a disqualifying disposition of the shares and the Company timely
reports such income to the Internal Revenue Service. The Company will treat any
transfer of record ownership of shares as a disposition, unless it is notified
to the contrary. In order to enable the Company to learn of disqualifying
dispositions and ascertain the amount of the deductions to which it is entitled,
Participating Employees will be required to notify the Company in writing of the
date and terms of any disposition of shares purchased under the Stock Purchase
Plan.
THE BOARD RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 1993 EMPLOYEE STOCK PURCHASE PLAN
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PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO THE
1992 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's 1992
Equity Incentive Plan (the "Equity Incentive Plan" or the "1992 Plan") to
increase the number of shares of Common Stock reserved for issuance thereunder
from 10,800,000 shares to 11,800,000 shares (an increase of 1,000,000 shares).
The Board of Directors of the Company (the "Board") approved the proposed
amendment described above on June 27, 1997 to be effective upon stockholder
approval.
Management believes that this amendment is in the best interests of the
Company because of the need to provide options to attract and retain quality
employees and remain competitive in the industry.
Below is a summary of the principal provisions of the 1992 Plan, assuming
approval of the above amendment, which summary is qualified in its entirety by
reference to the full text of the Equity Incentive Plan.
1992 EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN HISTORY. The Board adopted and stockholders approved
the Equity Incentive Plan on September 23, 1992 to offer eligible persons an
opportunity to participate in the Company's future performance through awards of
stock options, restricted stock and stock bonuses. The 1992 Plan has since been
amended to increase the number of shares available for issuance thereunder. The
following describes each of the amendments made to the Equity Incentive Plan
since its initial adoption and approval. On October 15, 1993, the Board approved
an amendment to the 1992 Plan to place a limitation on the maximum number of
shares available for issuance to certain executive officers at any time under
the Plan, to make certain other amendments in the administration of the 1992
Plan and to increase the number of shares in the reserve available for issuance
under the 1992 Plan by 600,000 to 3,600,000 shares. Stockholders approved these
amendments on November 17, 1993. On May 24, 1994, the Board approved an
amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,000,000 shares to 4,600,000 shares. Stockholders
approved the amendment on July 26, 1994. On October 25, 1994, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,400,000 shares to 6,000,000 shares. Stockholders
approved the amendment on January 19, 1995. On May 24, 1995, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,200,000 shares to 7,200,000 shares. Stockholders
approved the amendment on June 19, 1995. On April 29, 1996, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,800,000 to 9,000,000. Stockholders approved the
amendment on May 31, 1996. On January 21, 1997, the Board approved an amendment
to the 1992 Plan to increase the number of shares reserved for issuance
thereunder by 1,800,000 shares to 10,800,000 shares. Stockholders approved the
amendment on March 3, 1997. On February 10, 1997, the Board adopted certain
technical amendments to the 1992 Plan to reflect the New Rule 16b-3.
SHARES SUBJECT TO THE EQUITY INCENTIVE PLAN. An aggregate of 11,800,000
shares (assuming approval of the proposed amendment) of the Company's Common
Stock have been reserved by the Board for issuance under the 1992 Plan. If any
option granted pursuant to the 1992 Plan expires or terminates for any reason
without being exercised in full, or any award terminates without being issued,
the unexercised shares released from such option and award will again become
available for issuance under the Plan. In addition, any shares issuable upon
exercise of options granted pursuant to the Authorware 1988 Stock Option Plan,
the MacroMind, Inc. 1989 Incentive Stock Option Plan and 1989 Non-Statutory
Stock Option Plan and the Paracomp, Inc. 1989 Stock Option Plan that expire or
become unexercisable for any reason without having been exercised in full also
will become available for distribution under the Equity Incentive Plan.
ADMINISTRATION. The Equity Incentive Plan is administered by the
Compensation Committee (the "Committee") the members of which are appointed by
the Board. In fiscal 1997, the Committee consisted of L. John Doerr and John C.
Laing both of whom are "non-employee directors" as that term is defined under
the Exchange Act, and "outside directors" as that term is defined pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
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Subject to the terms of the Equity Incentive Plan, the Committee determines
the persons who are to receive awards, the number of shares subject to each such
award and the terms and conditions of such awards. The Committee also has the
authority to construe and interpret any of the provisions of the Equity
Incentive Plan or any awards granted thereunder.
ELIGIBILITY. Employees, officers, directors, independent contractors,
consultants, and advisors of the Company (and of any subsidiaries and
affiliates) whom the Board deems to have potential to contribute to the future
success of the Company (the "Participants") will be eligible to receive stock
options, restricted stock or stock bonuses under the Equity Incentive Plan. No
"Named Executive Officer" as that term as defined under Item 402(a)(3) of
Regulation S-K promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act is eligible to receive more than
1,800,000 shares of Common Stock at any time during the 1992 Plan. As of July 7,
1997, approximately 443 persons were eligible to receive awards under the 1992
Plan, and 8,056,947 shares were subject to outstanding options. Over the term of
the 1992 Plan, the following Named Executive Officers (as defined below) have
been granted options to purchase shares of Common Stock under the 1992 Plan as
follows: John C. Colligan, 764,912 shares; Susan Gordon Bird, 274,000 shares;
Norman K. Meyrowitz, 320,020 shares; and Richard B. Wood, 275,244 shares.
Current executive officers as a group have been granted options to purchase
1,484,932 shares, and all employees as a group, other than executive officers,
have been granted options to purchase 16,147,107 shares.
STOCK OPTIONS. The Equity Incentive Plan permits the granting of options
that are intended to qualify either as Incentive Stock Options ("ISOs") or
Nonqualified Stock Options ("NQSOs").
ISOs may be granted only to employees. The option exercise price for each
ISO must be no less than 100% of the fair market value (as defined in the 1992
Plan) of a share at the time such option is granted. The option exercise price
for each NQSO must be no less than 85% of the fair market value of a share at
the time of grant. In the case of a 10% stockholder the exercise price for an
ISO or NQSO must be no less than 110% of the fair market value. Options are
exercisable within the times and upon the events determined by the Committee as
set forth in the optionee's option agreement.
The Equity Incentive Plan provides for the payment of the exercise price of
options by any of the following means, subject to the provisions of the
optionee's option agreement: (1) in cash (by check); (2) by surrender of shares
of the Company's Common Stock owned by the Participant for at least six months
and having a fair market value on the date of surrender equal to the aggregate
exercise price of the option; (3) where permitted by applicable law and approved
by the Committee, in its sole discretion, by tender of a full recourse
promissory note; (4) by cancellation of indebtedness of the Company to the
Participant; (5) by waiver of compensation due to or accrued by the Participant
for services rendered; (6) by tender of property; (7) by a "same-day sale"
commitment from the Participant and a NASD broker; (8) by a "margin" commitment
from the Participant and a NASD broker; or (9) by any combination of the
foregoing, when approved by the Committee in its sole discretion.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted
stock awards to purchase stock either in addition to, or in tandem with, other
awards under the Equity Incentive Plan, under such terms, conditions and
restrictions as the Committee may determine. The purchase price for such awards
must be no less than 85% of the fair market value of a share on the date of the
award (and 100% of the fair market value in the case of a 10% stockholder), and
can be paid for with the types of consideration described under Stock Options
above with the exception of a same-day sale or margin commitment which are
available only for options.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards
either in addition to, or in tandem with, other awards under the Equity
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all the assets of the Company or any other similar corporate
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Equity Incentive Plan
or provide substantially similar consideration,
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shares or other property subject to repurchase restrictions no less favorable to
the Participants under the Equity Incentive Plan. In the event that the
successor corporation does not assume or substitute the awards, the awards,
including outstanding options, shall expire on such transaction at the time and
upon the conditions as the Committee determines.
AMENDMENT OF THE EQUITY INCENTIVE PLAN. The Board may at any time terminate
or amend the Equity Incentive Plan, including amending any form of award
agreement or instrument to be executed pursuant to the Equity Incentive Plan.
TERM OF THE EQUITY INCENTIVE PLAN. The Equity Incentive Plan will terminate
on September 22, 2002, ten years from the date the Equity Incentive Plan was
adopted by the Board.
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT
OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE
EQUITY INCENTIVE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE
AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER
INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN AND IS ENCOURAGED TO SEEK
THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF
PARTICIPATION IN THE PLAN.
Incentive Stock Options. A Participant will recognize no income upon grant
of an ISO and incur no tax on its exercise (unless the Participant is subject to
the alternative minimum tax ("AMT")). If the Participant holds the stock
acquired upon exercise of an ISO (the "ISO Shares") for more than one year after
the date the option was exercised and for more than two years after the date the
option was granted, the Participant generally will realize long-term capital
gain or loss (rather than ordinary income or loss) upon disposition of the ISO
Shares. This gain or loss will be equal to the difference between the amount
realized upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of either
required holding period described above (a "disqualifying disposition"), the
gain realized upon such disposition, up to the difference between the fair
market value of the ISO Shares on the date of exercise (or, if less, the amount
realized on a sale of such shares) and the option exercise price, will be
treated as ordinary income. Any additional gain will be long-term or short-term
capital gain, depending upon the amount of time the ISO Shares were held by the
Participant.
Alternative Minimum Tax. The difference between the fair market value of
the ISO Shares on the date of exercise and the exercise price is an adjustment
to income for purposes of the AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in excess
of $175,000). Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price) and reducing this
amount by the applicable exemption amount ($45,000 in case of a joint return,
subject to reduction under certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
Nonqualified Stock Options. A Participant will not recognize any taxable
income at the time a NQSO is granted. However, upon exercise of a NQSO the
Participant will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the Participant's exercise price. The included amount will be treated as
ordinary income by the Participant and may be subject to withholding by the
Company (either by payment in cash or withholding out of the
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Participant's salary). Upon resale of the shares by the Participant, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss.
Restricted Stock and Stock Bonus Awards. Restricted stock and stock bonus
awards will generally be subject to tax at the time of receipt, unless there are
restrictions that enable the Participant to defer tax. At the time that tax is
incurred, the tax treatment will be similar to that discussed above for NQSOs.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget
Reconciliation Act of 1993 provides that the maximum rate applicable to ordinary
income is 39.6%. Long term capital gain will be taxed at a maximum tax rate of
28%. For this purpose, in order to receive long-term capital gain treatment, the
stock must be held for more than one year. Capital gains will continue to be
offset by capital losses and up to $3,000 of capital losses may be offset
annually against ordinary income.
Tax Treatment of the Company. The Company generally will be entitled to a
deduction in connection with the exercise of a NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent that
the Participant recognizes ordinary income and the Company properly reports the
income received by the Participant in connection with the award. The Company
will be entitled to a deduction in connection with the disposition of ISO Shares
only to the extent that the Participant recognizes ordinary income on a
disqualifying disposition of the ISO Shares and the Company properly reports the
income received by the Participant in connection with the award.
ERISA
The Equity Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1992 EQUITY INCENTIVE PLAN
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PROPOSAL NO. 4 -- RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Company has selected KPMG Peat Marwick LLP as its independent auditors
to perform the audit of the Company's financial statements for fiscal 1998, and
the stockholders are being asked to ratify such selection. Representatives of
KPMG Peat Marwick LLP will be present at the Meeting, will have the opportunity
to make a statement at the Meeting if they desire to do so and will be available
to respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF KPMG PEAT MARWICK LLP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 7, 1997,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director/nominee, (iii) each of the
Named Executive Officers of the Company (as defined below) and (iv) all
directors and executive officers as a group.
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
------------------------------------------ ----------------------- ----------------
James R. Von Ehr, II (2).................. 3,420,532 9.00%
The Capital Group Companies, Inc. (3)..... 2,445,200 6.44
Kevin F. Crowder (4)...................... 1,961,302 5.16
John C. Colligan (5)...................... 517,644 1.36
Robert K. Burgess(6)...................... 270,833 *
L. John Doerr (7)......................... 128,582 *
C. Richard Kramlich (8)................... 84,084 *
Susan Gordon Bird (9)..................... 48,500 *
Richard B. Wood (10)...................... 77,816 *
John C. Laing (11)........................ 41,129 *
Donald L. Lucas (12)...................... 34,109 *
William B. Welty (13)..................... 20,521 *
Norman K. Meyrowitz (14).................. 105,252 *
John (Ian) Giffen......................... 0 0
All directors and executive officers as a
group (12 persons)(15).................. 6,587,577 17.34
- ---------------
* Less than 1%
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.
Unless otherwise indicated below, the address for each person and entity
named in the table is: c/o Macromedia, Inc., 600 Townsend Street, San
Francisco, California 94103.
(2) Includes 523,274 shares held of record by Mr. Von Ehr's spouse to which Mr.
Von Ehr disclaims beneficial ownership.
(3) In its Schedule 13G/A under the Exchange Act filed on February 12, 1997
(the "Schedule 13G/A"), The Capital Group Companies, Inc. reported sole
dispositive power as to 2,445,200 shares of the Company's Common Stock (the
"Capital Group Shares"), sole voting power as to 973,500 of the Capital
Group Shares and no shared dispositive or voting power as to any shares of
the Company's Common Stock. The Capital Group Companies, Inc. disclaimed
beneficial ownership as to the Capital Group Shares pursuant to Rule 13d-4
under the Exchange Act. In Item 4 of its Schedule 13G/A, The Capital Group
Companies, Inc. states that it is the parent holding company of a group of
investment
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management companies that hold investment power and, in some cases, voting power
over the securities reported in the Schedule 13G/A and that it does not hold
investment or voting power itself. As reported, the investment management
companies provide investment advisory and management services for their
respective clients which include registered investment companies and
institutional accounts.
(4) Represents shares held jointly by Mr. Crowder and his spouse.
(5) Includes 480,644 shares subject to options held by Mr. Colligan that are
exercisable within 60 days of July 7, 1997.
(6) Includes 270,833 shares subject to an option held by Mr. Burgess that is
exercisable within 60 days of July 7, 1997.
(7) Includes 61,876 shares subject to options held by Mr. Doerr that are
exercisable within 60 days of July 7, 1997.
(8) Includes 61,876 shares subject to options held by Mr. Kramlich that are
exercisable within 60 days of July 7, 1997.
(9) Includes no options. Ms. Bird resigned from her position at the Company
effective February 28, 1997.
(10) Includes 77,816 shares subject to options held by Mr. Wood that are
exercisable within 60 days of July 7, 1997. Mr. Wood resigned from his
position at the Company effective February 28, 1997 and continued to
provide consulting services to the Company through May 31, 1997.
(11) Represents shares subject to options held by Mr. Laing that are exercisable
within 60 days of July 7, 1997.
(12) Represents 6,297 shares held of record by the Donald L. Lucas & Lygia S.
Lucas Trust and 27,812 shares subject to options held by Mr. Lucas that are
exercisable within 60 days of July 7, 1997.
(13) Represents shares subject to options held by Mr. Welty that are exercisable
within 60 days of July 7, 1997.
(14) Includes 102,653 shares subject to options held by Mr. Meyrowitz that are
exercisable within 60 days of July 7, 1997.
(15) Includes 1,067,344 shares subject to options that are exercisable within 60
days of July 7, 1997. Does not include the shares held by Ms. Bird and Mr.
Wood. For a description of Ms. Bird's and Mr. Wood's beneficial ownership,
see the chart and footnotes (9) and (10), respectively.
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EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to or earned or
paid for services rendered in all capacities to the Company and its subsidiaries
during each of fiscal 1995, 1996 and 1997 by (i) each person serving as the
Company's chief executive officer or acting in a similar capacity during fiscal
1997, (ii) the Company's other most highly compensated executive officer who was
serving as an executive officer at the end of fiscal 1997 and (iii) two
additional individuals who would have been among the five most highly
compensated executive officers of the Company at the end of fiscal 1997, but for
the fact that they left the Company before March 31, 1997 (together, the "Named
Executive Officers"). No other executive officer of the Company employed by the
Company as of March 31, 1997 earned an aggregate salary and bonus in excess of
$100,000. This information includes the dollar values of base salaries and bonus
awards, the number of shares subject to stock options granted and certain other
compensation, whether paid or deferred.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------ ALL OTHER
ANNUAL COMPENSATION SECURITIES COMPENSATION
-------------------- OTHER ANNUAL UNDERLYING ------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) ($)(1)
- ---------------------------- ---- -------- -------- --------------- ------------ ------------
Robert K. Burgess(2)........ 1997 $125,110 $ 83,333 $ 100,000(3) 1,000,000 --
President
John C. Colligan(4)......... 1997 250,084 -- -- 50,000 1,000
Chairman of the Board 1996 191,664 174,375 -- 50,000 1,000
1995 174,084 103,730 -- 60,000 750
Norman K. Meyrowitz......... 1997 175,151 -- -- 115,000 1,000
Executive Vice President 1996 142,933 84,885 -- 75,200 1,000
1995 126,300 25,742 -- 69,820 750
Susan Gordon Bird(5)........ 1997 167,388(6) -- -- 30,000 --
Former Vice President of 1996 244,534(7) 92,813 -- 10,000 --
Worldwide Sales 1995 235,973(8) 31,109 -- 44,000 --
Richard B. Wood(9).......... 1997 162,205 -- 40,065(10) 27,500 1,000
Former Vice President of 1996 143,333 97,500 -- -- 1,000
Operations, Chief 1995 122,949 61,574 -- 110,244 750
Financial Officer and
Secretary
- ---------------
(1) Represents the Company's 401(k) plan contributions.
(2) Mr. Burgess joined the Company in November 1996 as President.
(3) Represents relocation expenses.
(4) Mr. Colligan resigned from his position as President and Chief Executive
Officer of the Company in November 1996 and remains as Chairman of the
Board of Directors.
(5) Ms. Bird resigned from her position at the Company in February 1997.
(6) Includes $39,153 of commissions.
(7) Includes $134,534 of commissions.
(8) Includes $126,775 of commissions.
(9) Mr. Wood resigned from his position at the Company in February 1997 and
continued to provide consulting services to the Company through May 31,
1997.
(10) Represents severance pay.
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The following table sets forth further information regarding individual
grants of stock options during fiscal 1997 to each of the Named Executive
Officers. In accordance with the rules of the Securities and Exchange Commission
(the "SEC"), the table sets forth the hypothetical gains or "option spreads"
that would exist for the options at the end of their respective ten-year terms
based on assumed annualized rates of compound stock price appreciation of 5% and
10% from the dates the options were granted to the end of the respective option
terms. Actual gains, if any, on option exercises are dependent on the future
performance of the Company's Common Stock and overall market conditions. There
can be no assurance that the potential realizable values shown in this table
will be achieved.
OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES AT ASSUMED ANNUAL RATES
UNDERLYING PERCENT OF TOTAL OF STOCK PRICE APPRECIATION
OPTIONS OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
GRANTED TO EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME (#)(1) FISCAL 1997 ($/SH)(1) DATE 5%($) 10%($)
- ------------------------- ---------- ---------------- --------- ---------- ----------- ------------
Robert K. Burgess........ 1,000,000 18.9% $15.000 07/12/06 $ 9,433,419 $ 23,906,137
John C. Colligan......... 50,000 0.9 14.875 07/12/06 467,750 1,185,350
Norman K. Meyrowitz...... 15,000 0.3 14.875 07/12/06 140,325 355,605
100,000 1.9 16.375 10/30/06 1,029,815 2,609,753
Susan Gordon Bird........ 10,000 0.2 14.875 07/12/06 93,550 237,070
20,000 0.4 16.375 10/30/06 205,963 521,940
Richard B. Wood.......... 7,500 0.1 14.875 07/12/06 70,163 177,803
20,000 0.4 16.375 10/30/06 205,963 521,940
- ---------------
(1) Stock options are generally awarded with an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant. Options
granted to new employees, such as Robert K. Burgess, John C. Parsons, Jr.
and James N. White, become exercisable, so long as the employee continues to
provide services to the Company, as to 25% of the shares at the end of the
first year and as to 2.0833% per month thereafter. Options granted to
existing employees become exercisable with respect to 2.0833% of the shares
for each full month that the optionee renders services to the Company.
Options expire ten years from the date of grant or at the time of the
optionee's termination of employment.
(2) The 5% and 10% assumed rates of annual compound stock price appreciation are
prescribed by rules of the SEC and do not represent the Company's estimate
or projection of future Common Stock prices.
The following table sets forth certain information concerning the exercise
of stock options during fiscal 1997 by each of the Named Executive Officers and
the number and value at March 31, 1997 of unexercised options held by said
individuals.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND
MARCH 31, 1997 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END(2)($)
ACQUIRED ON REALIZED ------------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
Robert K. Burgess...... -- -- -- 1,000,000 -- --
John C. Colligan....... 95,392 $ 2,657,389 431,173 143,739 $ 2,548,338 $ 231,066
Norman K. Meyrowitz.... 7,000 279,125 96,951 188,069 191,601 99,275
Susan Gordon Bird...... 25,000 571,373 70,923 -- 391,613 --
Richard B. Wood........ 21,000 655,450 58,591 71,997 124,054 99,199
- ---------------
(1) "Value Realized" represents the fair market value of the shares underlying
the option on the date of exercise less the aggregate exercise price.
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(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized, and are based on the
positive spread between the respective exercise prices of outstanding stock
options and the closing price of the Company's Common Stock on March 31,
1997 ($9.0625 per share).
COMPENSATION OF DIRECTORS
Each non-employee director is reimbursed for actual business expenses
incurred in attending each Board meeting. In any calendar year, there are
approximately four meetings of the Board held per year. In addition, under the
Directors Plan, each non-employee director receives an initial stock option to
purchase 20,000 shares of Common Stock as a result of his or her appointment and
is automatically granted an option to purchase 7,500 shares upon completion of
each full year of service on the Board of Directors. Each current non-employee
director was originally granted a nonqualified option to purchase 20,000 shares
of Common Stock under the 1992 Equity Incentive Plan. In general, such options
become exercisable with respect to 12.5% of the shares six months after the
director begins service as a director and at the rate of 2.0833% of the shares
each month thereafter. Each of the non-employee directors also received an
option to purchase 10,000 shares of Common Stock under the Directors Plan in
1994, an option to purchase 15,000 shares of Common Stock in 1995 and an option
to purchase 7,500 shares of Common Stock in each of 1996 and 1997. Such options
become exercisable with respect to 2.0833% of the shares each month. Mr. Giffen,
a director nominee, provides business consulting services to the Company, for
which he is compensated at a rate of $1,500.00 per day.
EMPLOYMENT AGREEMENTS
JOHN C. COLLIGAN EMPLOYMENT AGREEMENT
The Company has an employment agreement with Mr. Colligan, which terminates
upon Mr. Colligan's death and is terminable by either the Company or Mr.
Colligan at any time upon written notice. The agreement was originally entered
into on December 9, 1988 between Mr. Colligan and Authorware. Upon termination
of Mr. Colligan's employment, except for certain reasons, the Company is
obligated to pay Mr. Colligan severance pay equal to his then base salary for
six months at regular payment date intervals. In addition, during the next
succeeding six months, the Company is obligated to pay Mr. Colligan severance
pay equal to his then base salary or, if Mr. Colligan is then employed in a new
position at a lesser base salary, the difference between such salary and his
base salary at the Company. In connection with such agreement, Mr. Colligan was
granted options to purchase an aggregate of 395,088 shares of the Company's
Common Stock at an exercise price of $0.48.
ROBERT K. BURGESS EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Mr. Burgess in August
1996. Under the employment agreement, Mr. Burgess' annual base salary is
$300,000. Mr. Burgess is guaranteed a $200,000 bonus for his first year of
employment. Thereafter, Mr. Burgess may earn an annual target bonus of $200,000,
if he meets 100% of the objectives established each year by the Board and up to
a maximum annual bonus of $480,000, if he exceeds 100% of certain specified
objectives. In accordance with his employment agreement, Mr. Burgess was granted
a non-plan stock option grant for 1,000,000 shares of the Company's Common Stock
which vests, so long as Mr. Burgess continues to provide services to the
Company, as to 25% of the shares at the end of twelve months of employment and
monthly thereafter for the next three years.
The Company made a recourse loan to Mr. Burgess for $2,000,000 at an
interest rate of 6% per year to refinance his residence. The principal and
accrued interest on the loan, which is secured by his residence, is payable in
full three years from the date of the loan, or if earlier, his termination of
employment or the sale of such residence. The agreement also permitted Mr.
Burgess to elect to receive either $100,000 or payment of certain expenses
related to his relocation to the Bay Area. Mr. Burgess elected to receive
$100,000, which was paid in fiscal 1997. If Mr. Burgess voluntarily terminates
employment within one year, other than pursuant to
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22
a constructive termination, he will be obligated to repay this amount reduced
prorata for the number of months he remained employed with the Company.
Upon termination for other than cause or constructive termination, Mr.
Burgess will continue to receive his salary and bonus at the target plan for a
period of twelve months. In addition, Mr. Burgess will be entitled to continue
vesting in his options for the greater of (i) twenty-four months, reduced by the
number of months from the grant date to his date of termination or (ii) twelve
months. In the event Mr. Burgess is constructively terminated as president or
voluntarily terminates within 180 days following a change in control, he will
continue to receive his salary and bonus for twelve months, and Mr. Burgess'
options will immediately become exercisable and vest as if he had remained
employed for an additional twenty-four months, and will remain exercisable for
twenty-four months following the later of his termination of employment as
President or the date of his option acceleration.
JOHN C. PARSONS, JR. EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with John C. Parsons, Jr.,
the Company's Vice President, Finance and Operations, Chief Financial Officer
and Secretary, on February 17, 1997. Mr. Parson's annual base salary is
$200,000, and he is eligible to earn an annual target bonus of $100,000 if he
meets 100% of the objectives established each year by the Board. In addition,
Mr. Parsons was granted an option for 200,000 shares of the Company's Common
Stock under the Company's 1992 Equity Incentive Plan which vests, so long as Mr.
Parsons continues to provide services to the Company, as to 25% of the shares at
the end of twelve months of employment and monthly thereafter for the next three
years.
Upon termination for other than cause or constructive termination, Mr.
Parsons will continue to receive his salary and bonus at the target plan for a
period of three months. In the event Mr. Parsons is constructively terminated as
Chief Financial Officer or voluntarily terminates within 180 days following a
change in control of the Company, he will continue to receive salary and bonus
for twelve months, and Mr. Parson's options will immediately become exercisable
and vest as if he had remained employed by the Company, and will remain
exercisable for 180 days following the later of his termination of employment as
Chief Financial Officer or the date of his option acceleration.
JAMES N. WHITE EMPLOYMENT AGREEMENT
The Company entered into an Employment Agreement with James N. White who is
a Vice President of the Company and General Manager of the Interactive Learning
Division on January 1, 1997. Mr. White's employment agreement provides an annual
base salary of $170,000 per year and an annual target bonus of up to $85,000 per
year if Mr. White meets 100% of the objectives established each year by the
Board and up to a maximum annual bonus of $204,000 per year, if he exceeds 100%
of certain specified objectives. Pursuant to his employment agreement, Mr. White
was granted a signing bonus of $100,000, net of taxes. In addition, Mr. White
was granted an option for 150,000 shares of the Company's Common Stock under the
Company's 1992 Equity Incentive Plan which vests, so long as Mr. White continues
to provide services to the Company, as to 25% of the shares at the end of twelve
months of employment and monthly thereafter for the next three years.
The Company made a recourse loan to Mr. White for $410,000 at an annually
compounded interest rate of 6.0% per year to refinance his residence. The
principal and accrued interest on the loan, which is secured by his residence,
is payable in full on the earliest of (a) five years from the date of the loan;
(b) sixty days after Mr. White's employment is terminated with the Company for
any reason; or (c) immediately upon the sale of Mr. White's house.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board (the "Committee") makes all
decisions involving the compensation of executive officers of the Company. In
1997, the Committee consisted of the following non-employee directors: L. John
Doerr and John C. Laing.
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REPORT OF THE COMPENSATION COMMITTEE
This Report of the Compensation Committee is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such acts.
TO THE BOARD OF DIRECTORS
Final decisions regarding executive compensation and stock option grants to
executives are made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed of two independent non-employee
Directors, neither of whom have any interlocking relationships as defined by the
SEC. Although Mr. Colligan and, after his joining the Company, Mr. Burgess,
attended the meetings of the Committee, they do not participate in deliberations
that relate to their own compensation.
GENERAL COMPENSATION POLICY
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. The
Committee typically reviews base salary levels and target bonuses for the
President and other executive officers and employees of the Company at or about
the beginning of each fiscal year. The Committee administers the Company's
incentive and equity plans, including the 1992 Equity Incentive Plan (the "1992
Plan"), the Executive Incentive Plan (the "Incentive Plan") and the 1993
Employee Stock Purchase Plan.
The Committee's philosophy in compensating executive officers, including
the President, is to relate compensation to corporate performance. Consistent
with this philosophy, the incentive component of the compensation of the
executive officers of the Company is contingent on corporate profits and sales
performance. Long-term equity incentives for executive officers are effected
through the granting of stock options under the 1992 Plan. Stock options
generally have value for the executive only if the price of the Company's stock
increases above the fair market value on the grant date and the executive
remains in the Company's employ for the period required for the shares to vest.
The base salaries, incentive compensation and stock option grants of the
executive officers are determined in part by the Committee informally reviewing
data on prevailing compensation practices in technology companies with whom the
Company competes for executive talent and by their evaluating such information
in connection with the Company's corporate goals. To this end, the Committee
attempted to compare the compensation of the Company's executive officers with
the compensation practices of comparable companies to determine base salary,
target bonuses and target total cash compensation. In addition to their base
salaries, the Company's executive officers, including the President, are each
eligible to receive a quarterly cash bonus under the Incentive Plan and are
entitled to participate in the 1992 Plan.
In preparing the performance graph for this Proxy Statement, the Company
used the Hambrecht & Quist Stock Index as its published line of business index.
The compensation practices of most of the companies in the Hambrecht & Quist
Stock Index were not reviewed by the Company when the Committee reviewed the
compensation information described above because such companies were determined
not to be competitive with the Company for executive talent.
FISCAL 1997 EXECUTIVE COMPENSATION
Base Compensation. The Committee reviewed the recommendations and
performance and market data outlined above and established a base salary level
for each executive officer, including the President.
Incentive Compensation. Under the Incentive Plan, cash bonuses are awarded
only if the Company meets predetermined objectives set by the Board at the
beginning of the year. For fiscal 1997, the objectives used by the Company as
the basis for incentive compensation for the President and the other executives
were based 75% on profits and 25% on sales performance. The target amount of
bonus and the actual amount of bonus are determined by the Committee, in its
discretion.
Stock Options. In fiscal 1997 stock options were granted to certain
executive officers as incentives for them to become employees or to aid in the
retention of executive officers and to align their interests with those
19
24
of the stockholders. Stock options typically have been granted to executive
officers when the executive first joins the Company, in connection with a
significant change in responsibilities and, occasionally, to achieve equity
within a peer group. The Committee may, however, grant additional stock options
to executives for other reasons. The number of shares subject to each stock
option granted is within the discretion of the Committee and is based on
anticipated future contribution and ability to impact corporate and/or business
unit results, past performance or consistency within the executive's peer group.
In fiscal 1996, the Committee considered these factors, as well as the number of
options held by such executive officers as of the date of grant that remained
unvested. In the discretion of the Committee, executive officers may also be
granted stock options under the 1992 Plan to provide greater incentives to
continue their employment with the Company and to strive to increase the value
of the Company's Common Stock. The stock options generally become exercisable
over a four-year period and are granted at a price that is equal to the fair
market value of the Company's Common Stock on the date of grant.
In order to respond to the substantial increase in competitive attempts to
recruit employees essential to the Company's success, the Company elected to
reprice stock options in fiscal 1996 and 1997. Competition for skilled engineers
and other key employees in the software industry is intense and the use of
significant stock options for retention and motivation of such personnel is
pervasive in the high technology industries. The Company believes that stock
options are a critical component of the compensation offered by the Company to
promote long-term retention of key employees, motivate high levels of
performance and recognize employee contributions to the success of the Company.
In light of a substantial decline in the market price of the Company's Common
Stock, the Company believed that the large numbers of outstanding stock options
with an exercise price in excess of the actual market price were no longer an
effective tool to encourage employee retention or to motivate high levels of
performance. As a result, on July 25, 1996 and May 6, 1997, the Company approved
option repricing programs. The 1996 repricing did not apply to executive
officers and restarted vesting for all repriced options. The 1997 repricing
reset vesting by one year for all repriced options granted before July 1996
which were not repriced in 1996 and generally required a one-year blackout on
exercisability.
Company Performance and President Compensation. Rob Burgess entered into an
employment agreement providing for a base salary of $300,000 per year and a
target bonus of $200,000 per year based on attainment of 100% of the Macromedia
Executive Bonus Plan objectives with a total bonus potential of $480,000 per
year based on attainment of specified hurdles in excess of 100% of the Executive
Bonus Plan objectives. In addition, Mr. Burgess received 1,000,000 shares of
Macromedia common stock vesting over four years. For a full description of the
Executive Bonus Plan see the discussion of "Employment Agreements" on page 16.
Compliance with Section 162(m) of the Internal Revenue Code of 1986. In
July 1996, the Company granted an option to Mr. Burgess in connection with his
entering into an employment agreement. This option did not meet the requirements
of Section 162(m) of the Internal Revenue Code of 1986. The Company intends to
comply with the requirements of Section 162(m) of the Internal Revenue Code of
1986 for 1998. The 1992 Plan is already in compliance with Section 162(m) by
limiting stock awards to named executive officers. The Company does not expect
cash compensation for 1997 to be in excess of $1,000,000 or consequently
affected by the requirements of Section 162(m).
COMPENSATION COMMITTEE
L. John Doerr
John C. Laing
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COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such acts.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company from the date of the Company's initial public
offering (December 13, 1993) to March 31, 1997 with the cumulative total return
on The Nasdaq (US only) Stock Market and the Hambrecht & Quist Technology Index
(assuming the investment of $100 in the Company's Common Stock and in each of
the indexes on the date of the Company's initial public offering, and
reinvestment of all dividends). Unless otherwise specified, all dates refer to
the last day of each month presented.
Nasdaq Stock
Measurement Period H&Q Technology Market - U.S.
(Fiscal Year Covered) Macromedia Index Index
12/13/93 100 100 100
Dec-1993 139.58 107.24 102.25
Jan-1994 168.75 113.86 105.35
Feb-1994 162.50 117.62 104.37
Mar-1994 125.00 111.19 97.95
Apr-1994 98.96 108.33 96.68
May-1994 102.08 108.65 96.91
Jun-1994 72.92 101.72 93.37
Jul-1994 69.79 105.52 95.28
Aug-1994 108.33 116.38 101.36
Sep-1994 129.17 116.00 101.10
Oct-1994 175.00 126.63 103.09
Nov-1994 168.75 125.54 99.67
Dec-1994 212.50 128.82 99.95
Jan-1995 204.17 126.94 100.51
Feb-1995 244.79 137.94 105.82
Mar-1995 281.25 144.26 108.96
Apr-1995 279.17 155.06 112.39
May-1995 289.58 160.62 115.29
Jun-1995 360.42 179.95 124.63
Jul-1995 397.92 196.38 133.79
Aug-1995 414.58 198.63 136.50
Sep-1995 476.04 203.37 139.64
Oct-1995 616.67 206.23 138.84
Nov-1995 775.00 203.70 142.10
Dec-1995 870.83 192.62 141.34
Jan-1996 666.67 195.47 142.03
Feb-1996 667.72 205.26 147.45
Mar-1996 712.50 196.33 147.94
Apr-1996 628.13 223.47 160.21
May-1996 710.42 226.83 167.57
Jun-1996 364.58 210.31 160.01
Jul-1996 268.75 188.69 145.76
Aug-1996 377.08 200.12 153.93
Sep-1996 345.83 223.25 165.70
Oct-1996 277.08 220.06 163.87
Nov-1996 302.08 246.01 174.00
Dec-1996 300.00 239.40 173.82
Jan-1997 185.42 265.04 186.14
Feb-1997 163.54 243.39 175.88
Mar-1997 151.04 228.19 164.43
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26
CERTAIN TRANSACTIONS
From April 1, 1996 to the present, there have been no (and there are no
currently proposed) transactions in which the amount involved exceeded $60,000
to which the Company or any of its subsidiaries was (or is to be) a party and in
which any executive officer, director, 5% beneficial owner of the Company's
Common Stock or member of the immediate family of any of the foregoing persons
had (or will have) a direct or indirect material interest, except as set forth
below and under "Executive Compensation" and "Employment Agreements."
When the Company acquired Altsys Corporation ("Altsys") in January 1995,
the Company assumed a lease from Altsys entered into with Renner Plaza
Properties, Inc. ("RPP") with respect to its use of the office space occupied by
it located in Richardson, Texas. RPP is wholly owned by Mr. Von Ehr, a director
of the Company, and his wife, Gayla J. Von Ehr. The Company is currently paying
approximately $17,500 per month in rental fees to RPP.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders must be received by the Company at its principal
executive offices no later than March 12, 1998 in order to be included in the
Company's proxy statement and form of proxy relating to that meeting.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of the Company's Common Stock to
file initial reports of ownership and reports of changes in ownership with the
SEC and the Nasdaq National Market. Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements were met, except
that a Form 5 with respect to the automatic annual option grant for non-employee
directors will be filed late for each of the following directors: L. John Doerr,
C. Richard Kramlich and William B. Welty.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE PAID
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
22
27
MACROMEDIA, INC.
1992 EQUITY INCENTIVE PLAN
As Adopted September 23, 1992
and amended through June 27, 1997
1. PURPOSE. The purpose of the Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
24.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and
18, the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be 11,800,000 Shares. Any Shares issuable upon
exercise of options granted pursuant to the Authorware 1988 Stock Option Plan,
the Macromind, Inc. 1989 Incentive Stock Option Plan and 1989 Nonstatutory Stock
Option Plan, and the Paracomp, Inc. 1989 Stock Option Plan (the "Prior Plans")
that expire or become unexercisable for any reason without having been exercised
in full, shall no longer be available for distribution under the Prior Plans,
but shall be available for distribution under this Plan. Subject to Sections 2.2
and 18, Shares shall again be available for grant and issuance in connection
with future Awards under the Plan that: (a) are subject to issuance upon
exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option, (b) are subject to an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price, or (c) are subject to an Award that otherwise terminates without
Shares being issued.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee; and provided, further, that the
Exercise Price of any Option may not be decreased to below the par value of the
Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisers of the Company or any Parent, Subsidiary or Affiliate of the
Company; provided such consultants, contractors and advisers render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. No
28
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 2
"Named Executive Officer" (as that term is defined in Item 402(a)(3) of
Regulation S-K promulgated under the Exchange Act) shall be eligible to receive
more than 1,800,000 Shares at any time during the term of this Plan pursuant to
the grant of Awards hereunder. A person may be granted more than one Award under
the Plan.
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered by
the Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the Board,
the Committee shall have full power to implement and carry out the Plan. The
Committee shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement and any
other agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating to
the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to
Awards;
(f) determine whether Awards will be granted singly, in combination,
in tandem, in replacement of, or as alternatives to, other
Awards under the Plan or any other incentive or compensation
plan of the Company or any Parent, Subsidiary or Affiliate of
the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under the
Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under the Plan to Participants who are not Insiders
of the Company.
29
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 3
4.3 Compliance With Code Section 162(m). If two or more
members of the Board are Outside Directors, the Committee shall be comprised of
at least two members of the Board, all of whom are Outside Directors.
5. OPTIONS. The Committee may grant Options to eligible persons and
shall determine whether such Options shall be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under the Plan
shall be evidenced by an Award Agreement which shall expressly identify the
Option as an ISO or NQSO ("Stock Option Agreement"), and be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and be
subject to the terms and conditions of the Plan.
5.2 Date of Grant. The date of grant of an Option shall be
the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of the Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 Exercise Period. Options shall be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement; provided, however, that no Option shall be exercisable after
the expiration of one hundred twenty (120) months from the date the Option is
granted, and provided further that no Option granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary of the
Company ("Ten Percent Stockholder") shall be exercisable after the expiration of
five (5) years from the date the Option is granted. The Committee also may
provide for the exercise of Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number or percentage as the
Committee determines.
5.4 Exercise Price. The Exercise Price shall be determined
by the Committee when the Option is granted and may be not less than 85% of the
Fair Market Value of the Shares on the date of grant; provided that (i) the
Exercise Price of an ISO shall be not less than 100% of the Fair Market Value of
the Shares on the date of grant and (ii) the Exercise Price of any Option
granted to a Ten Percent Stockholder shall not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of the Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to information,
if any, as may
30
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 4
be required or desirable by the Company to comply with applicable securities
laws, together with payment in full of the Exercise Price for the number of
Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then Participant may exercise such Participant's
Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than ninety (90)
days after the Termination Date (or such shorter time period as
may be specified in the Stock Option Agreement), but in any
event, no later than the expiration date of the Options.
(b) If the Participant is terminated because of death or Disability
(or the participant dies within three months of such
termination), then Participant's Options may be exercised only
to the extent that such Options would have been exercisable by
Participant on the Termination Date and must be exercised by
Participant (or Participant's legal representative or authorized
assignee) no later than twelve (12) months after the Termination
Date (or such shorter time period as may be specified in the
Stock Option Agreement), but in any event no later than the
expiration date of the Options.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
the Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year shall be ISOs and the Options for the amount
in excess of $100,000 that become exercisable in that calendar year shall be
NQSOs. In the event that the Code or the regulations promulgated thereunder are
amended after the Effective Date of the Plan to provide for a different limit on
the Fair Market Value of Shares permitted to be subject to ISOs, such different
limit shall be automatically incorporated herein and shall apply to any Options
granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
31
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 5
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of the Plan for Options
granted on the date the action is taken to reduce the Exercise Price; provided,
further, that the Exercise Price shall not be reduced below the par value of the
Shares, if any.
5.10 No Disqualification. Notwithstanding any other provision
in the Plan, no term of the Plan relating to ISOs shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee shall determine to whom an offer will be made, the number of
Shares the person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares shall be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to the Plan shall be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that shall be in such form
(which need not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. The offer of Restricted Stock shall be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer shall terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award shall be determined by the Committee and
shall be at least 85% of the Fair Market Value of the Shares when the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price shall be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
the Plan.
6.3 Restrictions. Restricted Stock Awards shall be subject
to such restrictions as the Committee may impose. The Committee may provide for
the lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or part, based on length of service, performance or such
other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already
32
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 6
rendered to the Company, or any Parent, Subsidiary or Affiliate of the Company
pursuant to an Award Agreement (the "Stock Bonus Agreement") that shall be in
such form (which need not be the same for each Participant) as the Committee
shall from time to time approve, and shall comply with and be subject to the
terms and conditions of the Plan. A Stock Bonus may be awarded upon satisfaction
of such performance goals as are set out in advance in Participant's individual
Award Agreement (the "Performance Stock Bonus Agreement") that shall be in such
form (which need not be the same for each Participant) as the Committee shall
from time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent, Subsidiary or Affiliate and/or individual performance factors
or upon such other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee shall determine
the number of Shares to be awarded to the Participant and whether such Shares
shall be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee shall determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"Performance Period") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of Shares
that may be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may
be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
shall determine.
7.4 Termination During Performance Period. If a Participant
is Terminated during a Performance Period for any reason, then such Participant
shall be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee
shall determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to the
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
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Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 7
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of Shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a
34
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 8
promissory note, such note has been fully paid with respect to
such Shares); or (2) were obtained by Participant in the public
market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483
and 1274 of the Code; provided, however, that Participants who
are not employees of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
provided, further, that the portion of the Purchase Price equal
to the par value of the Shares, if any, must be paid in cash;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from Participant
and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer")
whereby Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased
to pay for the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares
to forward the Exercise Price directly to the Company;
or
(2) through a "margin" commitment from Participant and an
NASD Dealer whereby Participant irrevocably elects to
exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or
(g) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
pay for Shares purchased under the Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued
in satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements
35
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 9
prior to the delivery of any certificate or certificates for such Shares.
Whenever, under the Plan, payments in satisfaction of Awards are to be made in
cash, such payment shall be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"). All elections by a Participant to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Committee and
shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made the election shall be irrevocable as to the particular
Shares as to which the election is made; and
(c) all elections shall be subject to the consent or disapproval of
the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant shall have any of
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant shall be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company shall be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
shall have no right to retain such dividends or distributions with respect to
Shares that are repurchased at the Participant's original Purchase Price
pursuant to Section 12.
10.2 Financial Statements. The Company shall provide
financial statements to each Participant prior to such Participant's purchase of
Shares under the Plan, and to each Participant annually during the period such
Participant has Options outstanding; provided, however, the Company shall not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under the Plan, and any interest
therein, shall not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the
36
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 10
lifetime of the Participant an Award shall be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement (a)
a right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under the Plan, for cash or cancellation of purchase money indebtedness,
at: (A) with respect to Shares that are "Vested" (as defined in the Award
Agreement), the higher of: (l) Participant's original Purchase Price, or (2) the
Fair Market Value of such Shares on Participant's Termination Date, provided,
such right of repurchase terminates when the Company's securities become
publicly traded; or (B) with respect to Shares that are not "Vested" (as defined
in the Award Agreement), at the Participant's original Purchase Price, provided,
that the right to repurchase at the original Purchase Price lapses at the rate
of at least 20% per year over 5 years from the date the Shares were purchased,
and if the right to repurchase is assignable, the assignee must pay the Company,
upon assignment of the right to repurchase, cash equal to the excess of the Fair
Market Value of the Shares over the original Purchase Price.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant
who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under the Plan shall be required to pledge and
deposit with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; provided, however, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such obligation
and, in any event, the Company shall have full recourse against the Participant
under the promissory note notwithstanding any pledge of the Participant's Shares
or other collateral. In connection with any pledge of the Shares, Participant
shall be required to execute and deliver a written pledge agreement in such form
as the Committee shall from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a prorata basis as the
promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash,
37
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 11
Shares (including Restricted Stock) or other consideration, based on such terms
and conditions as the Committee and the Participant shall agree.
38
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 12
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall
not be effective unless such Award is in compliance with all applicable federal
and state securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system upon which
the Shares may then be listed, as they are in effect on the date of grant of the
Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in the Plan, the Company shall have no obligation to issue or
deliver certificates for Shares under the Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) completion of any registration or other qualification
of such shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
shall have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or other relationship with, the Company
or any Parent, Subsidiary or Affiliate of the Company or limit in any way the
right of the Company or any Parent, Subsidiary or Affiliate of the Company to
terminate Participant's employment or other relationship at any time, with or
without cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company and the Awards granted under the Plan are assumed or replaced by the
successor corporation, which assumption shall be binding on all Participants),
(b) a dissolution or liquidation of the Company, (c) the sale of substantially
all of the assets of the Company, or (d) any other transaction which qualifies
as a "corporate transaction" under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company), any or all outstanding Awards may be assumed
or replaced by the successor corporation, which assumption or replacement shall
be binding on all Participants. In the alternative, the successor corporation
may substitute equivalent Awards or provide substantially similar consideration
to Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject repurchase restrictions
no less favorable to the Participant.
18.2 Expiration of Options. In the event such successor
corporation, if any, refuses to assume or substitute the Options, as provided
above, pursuant to a transaction described in Subsection 18.1(a) above, such
Options shall expire on such transaction at such time and on such conditions as
the Board shall determine. In the event such successor corporation, if any,
refuses to assume or substitute the Options as provided above, pursuant to a
transaction described in Subsections 18.1(b), (c) or (d) above, or there is no
successor corporation, and if the
39
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 13
Company ceases to exist as a separate corporate entity, then, notwithstanding
any contrary terms in the Award Agreement, the Options shall expire on a date at
least twenty (20) days after the Board gives written notice to Participants
specifying the terms and conditions of such termination.
18.3 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.4 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. The Plan shall become
effective on the date that it is adopted by the Board (the "Effective Date").
The Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
months before or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to the Plan; provided, however, that: (a) no Option
may be exercised prior to initial stockholder approval of the Plan; (b) no
Option granted pursuant to an increase in the number of Shares approved by the
Board shall be exercised prior to the time such increase has been approved by
the stockholders of the Company; and (c) in the event that stockholder approval
is not obtained within the time period provided herein, all Awards granted
hereunder shall be canceled, any Shares issued pursuant to any Award shall be
canceled and any purchase of Shares hereunder shall be rescinded.
20. TERM OF PLAN. The Plan will terminate ten (10) years from the
Effective Date or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to the Plan; provided, however, that the Board shall not, without the approval
of the stockholders of the Company, amend the Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.
40
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 14
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by
the Board, the submission of the Plan to the stockholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. GOVERNING LAW. The Plan and all agreements, documents and
instruments entered into pursuant to the Plan shall be governed by and construed
in accordance with the internal laws of the State of California, excluding that
body of law pertaining to conflict of laws.
24. DEFINITIONS. As used in the Plan, the following terms shall have
the following meanings:
"Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"Award" means any award under the Plan, including any Option,
Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
"Company" means Macromedia, Inc., a corporation organized under
the laws of the State of Delaware, or any successor corporation.
"Disability" means a disability, whether temporary or permanent,
partial or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
41
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 15
"Fair Market Value" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the NASDAQ National
Market System, its last reported sale price on the NASDAQ
National Market System or, if no such reported sale takes place
on such date, the average of the closing bid and asked prices;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, the last reported sale price or,
if no such reported sale takes place on such date, the average
of the closing bid and asked prices on the principal national
securities exchange on which the Common Stock is listed or
admitted to trading;
(c) if such Common Stock is publicly traded but is not quoted on
the NASDAQ National Market System nor listed or admitted to
trading on a national securities exchange, the average of the
closing bid and asked prices on such date, as reported by The
Wall Street Journal, for the over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in good faith.
"Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
"Outside Director" shall mean any director who is not (i) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (ii) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan), (iii) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company or
(iv) currently receiving compensation for personal services in any capacity,
other than as a director, from the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however, that at such time as the term
"Outside Director", as used in Section 162(m) is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director" shall have the
meaning set forth in such regulations, as amended from time to time and as
interpreted by the Internal Revenue Service.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
42
Macromedia, Inc.
1992 Equity Incentive Plan
As Amended Through February 10, 1997
Page 16
"Participant" means a person who receives an Award under the
Plan.
"Plan" means this Macromedia, Inc. 1992 Equity Incentive Plan,
as amended from time to time.
"Restricted Stock Award" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock, $0.001 par
value, reserved for issuance under the Plan, as adjusted pursuant to Sections 2
and 15, and any successor security.
"Stock Bonus" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
"Termination" or "Terminated" means, for purposes of the Plan
with respect to a Participant, that the Participant has ceased to provide
services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee shall have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
43
MACROMEDIA, INC.
1993 EMPLOYEE STOCK PURCHASE PLAN
Adopted by the Board of Directors on October 15, 1993 and Amended Through
June 27, 1997
1. ESTABLISHMENT OF PLAN. Macromedia, Inc. (the "Company") proposes
to grant options for purchase of the Company's Common Stock to eligible
employees of the Company and its Subsidiaries (as hereinafter defined) pursuant
to this Employee Stock Purchase Plan (this "Plan"). For purposes of this Plan,
"Parent Corporation" and "Subsidiary" (collectively, "Subsidiaries") shall have
the same meanings as "parent corporation" and "subsidiary corporation" in
Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code"). The Company intends the Plan to qualify as an "employee
stock purchase plan" under Section 423 of the Code (including any amendments to
or replacements of such section), and the Plan shall be so construed. Any term
not expressly defined in the Plan but defined for purposes of Section 423 of the
Code shall have the same definition herein. A total of 800,000 shares of the
Company's Common Stock is reserved for issuance under the Plan. Such number
shall be subject to adjustments effected in accordance with Section 14 of the
Plan.
2. PURPOSE. The purpose of the Plan is to provide employees of the
Company and Subsidiaries designated by the Board of Directors of the Company
(the "Board") as eligible to participate in the Plan with a convenient means of
acquiring an equity interest in the Company through payroll deductions, to
enhance such employees' sense of participation in the affairs of the Company and
Subsidiaries, and to provide an incentive for continued employment.
3. ADMINISTRATION. This Plan may be administered by the Board or a
committee appointed by the Board (the "Committee"). If, at the time the Company
registers under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a majority of the Board is not comprised of Disinterested Persons as
defined in Rule 16b-3(d) promulgated under the Exchange Act, the Board shall
appoint a committee consisting of at least two (2) members of the Board, each of
whom is a Disinterested Person. As used in this Plan, references to the
"Committee" shall mean either such committee or the Board if no committee has
been established. After registration of the Company under the Exchange Act,
Board members who are not Disinterested Persons may not vote on any matters
affecting the administration of this Plan, but any such member may be counted
for determining the existence of a quorum at any meeting of the Board. Subject
to the provisions of the Plan and the limitations of Section 423 of the Code or
any successor provision in the Code, all questions of interpretation or
application of the Plan shall be determined by the Board and its decisions shall
be final and binding upon all participants. Members of the Board shall receive
no compensation for their services in connection with the administration of the
Plan, other than standard fees as established from time to time by the Board for
services rendered by Board members serving on Board committees. All expenses
incurred in connection with the administration of the Plan shall be paid by the
Company.
4. ELIGIBILITY. Any employee of the Company or the Subsidiaries is
eligible to participate in an Offering Period (as hereinafter defined) under the
Plan except the following:
(a) employees who are not employed by the Company or
Subsidiaries on the fifteenth (15th) day of the month before the beginning of
such Offering Period;
(b) employees who are customarily employed for less than 20
hours per week;
(c) employees who are customarily employed for less than 5
months in a calendar year;
(d) employees who, together with any other person whose
stock would be attributed to such employee pursuant to Section 424(d) of the
Code, own stock or hold options to purchase stock or who, as a result of being
granted an option under the Plan with respect to such Offering Period, would own
stock or hold options to purchase stock possessing 5 percent or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Subsidiaries.
5. OFFERING DATES. The Offering Periods of the Plan (the "Offering
Period") shall be of 6 months duration commencing February 16 and August 16 of
each year and ending on August 15 and February 15 respectively, during which
payroll deductions of the participant are accumulated under this Plan. The first
day of each Offering Period is referred to as the "Offering Date". The last
business day of each Offering Period is referred to as the "Purchase Date". The
Board shall have the power to change the duration of Offering Periods with
respect to future offerings without
44
stockholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.
6. PARTICIPATION IN THE PLAN. Eligible employees may become
participants in an Offering Period under the Plan on the first Offering Date
after satisfying the eligibility requirements by delivering a subscription
agreement to the Company's or Subsidiary's (whichever employs such employee)
treasury department (the "Treasury Department") not later than the 15th day of
the month before such Offering Date unless a later time for filing the
subscription agreement authorizing payroll deductions is set by the Board for
all eligible employees with respect to a given Offering Period. An eligible
employee who does not deliver a subscription agreement to the Treasury
Department by such date after becoming eligible to participate in such Offering
Period shall not participate in that Offering Period or any subsequent Offering
Period unless such employee enrolls in the Plan by filing a subscription
agreement with the Treasury Department not later than the 15th day of the month
preceding a subsequent Offering Date. Once an employee becomes a participant in
an Offering Period, such employee will automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering
Period unless the employee withdraws from the Plan or terminates further
participation in the Offering Period as set forth in Section 11 below. Such
participant is not required to file any additional subscription agreement in
order to continue participation in the Plan.
7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible
employee in the Plan with respect to an Offering Period will constitute the
grant (as of the Offering Date) by the Company to such employee of an option to
purchase on the Purchase Date up to that number of shares of Common Stock of the
Company determined by dividing the amount accumulated in such employee's payroll
deduction account during such Offering Period by the lower of (i) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Offering Date (the "Entry Price") or (ii) eighty-five percent (85%) of
the fair market value of a share of the Company's Common Stock on the Purchase
Date; provided, however, that the number of shares of the Company's Common Stock
subject to any option granted pursuant to this Plan shall not exceed the lesser
of (a) the maximum number of shares set by the Board pursuant to Section 10(c)
below with respect to the applicable Offering Period, or (b) 200% of the number
of shares determined by using 85% of the fair market value of a share of the
Company's Common Stock on the Offering Date as the denominator. Fair market
value of a share of the Company's Common Stock shall be determined as provided
in Section 8 hereof.
8. PURCHASE PRICE. The purchase price per share at which a share of
Common Stock will be sold in any Offering Period shall be 85 percent of the
lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date.
For purposes of the Plan, the term "fair market value" on a
given date shall mean the fair market value of the Company's Common Stock as
determined by the Committee from time to time in good faith. If a public market
exists for the shares, the fair market value shall be the average of the last
reported bid and asked prices for the Common Stock of the Company on the last
trading day prior to the date of determination, or, in the event the Common
Stock of the Company is listed on the NASDAQ National Market System, the fair
market value shall be the average of the high and low prices of the Common Stock
on the determination date as quoted on the NASDAQ National Market System and
reported in The Wall Street Journal.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS;
ISSUANCE OF SHARES.
(a) The purchase price of the shares is accumulated by
regular payroll deductions made during each Offering Period. The deductions are
made as a percentage of the participant's compensation in one percent increments
not less than 2 percent nor greater than 10 percent, not to exceed $25,000 per
year or such lower limit set by the Committee. Compensation shall mean all W-2
compensation, including, but not limited to base salary, wages, commissions,
overtime, shift premiums and bonuses, plus draws against commissions; provided,
however, that for purposes of determining a participant's compensation, any
election by such participant to reduce his or her regular cash remuneration
under Sections 125 or 401(k) of the Code shall be treated as if the participant
did not make such election.
-2-
45
Payroll deductions shall commence on the first payday following the Offering
Date and shall continue to the end of the Offering Period unless sooner altered
or terminated as provided in the Plan.
(b) A participant may lower (but not increase) the rate of
payroll deductions during an Offering Period by filing with the Treasury
Department a new authorization for payroll deductions, in which case the new
rate shall become effective for the next payroll period commencing more than 15
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one change may be made effective
during any Offering Period. A participant may increase or decrease the rate of
payroll deductions for any subsequent Offering Period by filing with the
Treasury Department a new authorization for payroll deductions not later than
the 15th day of the month before the beginning of such Offering Period.
(c) All payroll deductions made for a participant are
credited to his or her account under the Plan and are deposited with the general
funds of the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.
(d) On each Purchase Date, so long as the Plan remains in
effect and provided that the participant has not submitted a signed and
completed withdrawal form before that date which notifies the Company that the
participant wishes to withdraw from that Offering Period under the Plan and have
all payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of the Plan. Any cash remaining in a participant's account after such purchase
of shares shall be carried forward, without interest, into the next Offering
Period; provided, however, that any cash remaining in such participant's account
on a Purchase Date due to the limitations of Sections 10(a) and 10(d) shall be
returned to the participant as soon as practicable after the end of the Offering
Period, without interest. No Common Stock shall be purchased on a Purchase Date
on behalf of any employee whose participation in the Plan has terminated prior
to such Purchase Date.
(e) As promptly as practicable after the Purchase Date, the
Company shall arrange the delivery to each participant of a certificate
representing the shares purchased upon exercise of his option.
(f) During a participant's lifetime, such participant's
option to purchase shares hereunder is exercisable only by him or her. The
participant will have no interest or voting right in shares covered by his or
her option until such option has been exercised. Shares to be delivered to a
participant under the Plan will be registered in the name of the participant or
in the name of the participant and his or her spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) No employee shall be entitled to purchase stock under
the Plan at a rate which, when aggregated with his or her rights to purchase
stock under all other employee stock purchase plans of the Company or any
Subsidiary, exceeds $25,000 in fair market value, determined as of the Offering
Date (or such other limit as may be imposed by the Code) for each calendar year
in which the employee participates in the Plan.
(b) No more than 200% of the number of shares determined by
using 85% of the fair market value of a share of the Company's Common Stock on
the Offering Date as the denominator may be purchased by a participant on any
single Purchase Date.
(c) No employee shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any single Purchase Date. Not less
than thirty days prior to the commencement of any Offering Period, the Board
may, in its sole discretion, set a maximum number of shares which may be
purchased by any employee at any single Purchase Date (hereinafter the "Maximum
Share Amount"). In no event shall the Maximum Share Amount exceed the amounts
permitted under Section 10(b) above. If a new Maximum Share Amount is set, then
all participants must be notified of such Maximum Share Amount not less than
fifteen days prior to the commencement of the next Offering Period. Once the
Maximum Share Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Board as
set forth above.
-3-
46
(d) If the number of shares to be purchased on a Purchase
Date by all employees participating in the Plan exceeds the number of shares
then available for issuance under the Plan, the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Board shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares to
be purchased under a participant's option to each participant affected thereby.
11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period
under the Plan by signing and delivering to the Treasury Department notice on a
form provided for such purpose. Such withdrawal may be elected at any time at
least 15 days prior to the end of an Offering Period.
(b) Upon withdrawal from the Plan, the accumulated payroll
deductions shall be returned to the withdrawn participant, without interest, and
his or her interest in the Plan shall terminate. In the event a participant
voluntarily elects to withdraw from the Plan, he or she may not resume his or
her participation in the Plan during the same Offering Period, but he or she may
participate in any Offering Period under the Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
the Plan.
12. TERMINATION OF EMPLOYMENT. Termination of a participant's
employment for any reason, including retirement, death or the failure of a
participant to remain an eligible employee, immediately terminates his or her
participation in the Plan. In such event, the payroll deductions credited to the
participant's account will be returned to him or her or, in the case of his or
her death, to his or her legal representative, without interest. For purposes of
this Section 12, an employee will not be deemed to have terminated employment or
failed to remain in the continuous employ of the Company in the case of sick
leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's
interest in the Plan is terminated by withdrawal, termination of employment or
otherwise, or in the event the Plan is terminated by the Board, the Company
shall promptly deliver to the participant all payroll deductions credited to his
account. No interest shall accrue on the payroll deductions of a participant in
the Plan.
14. CAPITAL CHANGES. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each option under the Plan which has not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but have not yet been placed under option (collectively, the "Reserves"), as
well as the price per share of Common Stock covered by each option under the
Plan which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split or the payment of a stock dividend (but only on the Common
Stock) or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination shall be final, binding and
conclusive. Except as expressly provided herein, no issue 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 of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under the Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, each option under
the Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the participant shall have the right to
exercise the option as to all of the optioned stock. If the Board makes an
option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets,
-4-
47
the Board shall notify the participant that the option shall be fully
exercisable for a period of twenty (20) days from the date of such notice, and
the option will terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.
15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect.
16. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Each participant shall receive promptly after the end
of each Offering Period a report of his or her account setting forth the total
payroll deductions accumulated, the number of shares purchased, the per share
price thereof and the remaining cash balance, if any, carried forward to the
next Offering Period.
17. NOTICE OF DISPOSITION. Each participant shall notify the Company
if the participant disposes of any of the shares purchased in any Offering
Period pursuant to this Plan if such disposition occurs within two years from
the Offering Date or within one year from the Purchase Date on which such shares
were purchased (the "Notice Period"). Unless such participant is disposing of
any of such shares during the Notice Period, such participant shall keep the
certificates representing such shares in his or her name (and not in the name of
a nominee) during the Notice Period. The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to the Plan requesting the Company's transfer agent to notify
the Company of any transfer of the shares. The obligation of the participant to
provide such notice shall continue notwithstanding the placement of any such
legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the
grant of any option hereunder shall confer any right on any employee to remain
in the employ of the Company or any Subsidiary, or restrict the right of the
Company or any Subsidiary to terminate such employee's employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have
equal rights and privileges with respect to the Plan so that the Plan qualifies
as an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
the Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company or the Board, be
reformed to comply with the requirements of Section 423. This Section 19 shall
take precedence over all other provisions in the Plan.
20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. TERM; STOCKHOLDER APPROVAL. This Plan shall become effective on
the date that it is adopted by the Board of the Company. This Plan shall be
approved by the stockholders of the Company, in any manner permitted by
applicable corporate law, within twelve months before or after the date this
Plan is adopted by the Board. No purchase of shares pursuant to the Plan shall
occur prior to such stockholder approval. Thereafter, no later than twelve (12)
months after the Company becomes subject to Section 16(b) of the Exchange Act,
the Company will comply with the requirements of Rule 16b-3 with respect to
stockholder approval. The Plan shall continue until the earlier to occur of
termination by the Board, issuance of all of the shares of Common Stock reserved
for issuance under the Plan, or one (1) year from the adoption of the Plan by
the Board (unless extended by the Board for a period of up to ten (10) years
from the adoption date.)
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48
22. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the end of an Offering Period but prior to delivery to him of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to a Purchase Date.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF
SHARES. Shares shall not be issued with respect to an option unless the exercise
of such option and the issuance and delivery of such shares pursuant thereto
shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
24. APPLICABLE LAW. The Plan shall be governed by the substantive
laws (excluding the conflict of laws rules) of the State of California.
25. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time
amend, terminate or the extend the term of the Plan, except that any such
termination cannot affect options previously granted under the Plan, nor may any
amendment make any change in an option previously granted which would adversely
affect the right of any participant, nor may any amendment be made without
approval of the stockholders of the Company obtained in accordance with Section
21 hereof within 12 months of the adoption of such amendment (or earlier if
required by Section 21) if such amendment would:
(a) increase the number of shares that may be issued under
the Plan;
(b) change the designation of the employees (or class of
employees) eligible for participation in the Plan; or
(c) constitute an amendment for which stockholder approval
is required in order to comply with Rule 16b-3 (or any successor rule) of the
Exchange Act.
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49
PROXY
MACROMEDIA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
August 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Robert K. Burgess and John C. Parsons, Jr., or
either of them, each with power of substitution, to represent the undersigned
at the Annual Meeting of Stockholders of Macromedia, Inc. (the "Company") to be
held at 600 Townsend Street, San Francisco, California 94103 on August 15, 1997
at 9:00 a.m. P.D.T., and any adjournment or postponement thereof, and to vote
the number of shares the undersigned would be entitled to vote if personally
present at the meeting on the following matters:
The Board of Directors recommends a vote FOR all nominees for election and FOR
Proposals 2, 3 and 4.
1. ELECTION OF DIRECTORS WITHHELD
Nominees: FOR FOR ALL
Robert K. Burgess C. Richard Kramlich [ ] [ ]
John C. Colligan Donald L. Lucas
L. John Doerr James R. Von Ehr, II
John (Ian) Giffen William B. Welty
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:
- ------------------------------------------------
2. AMENDMENT TO THE COMPANY'S 1993 EMPLOYEE FOR AGAINST ABSTAIN
STOCK PURCHASE PLAN [ ] [ ] [ ]
3. AMENDMENT TO THE COMPANY'S 1992 EQUITY FOR AGAINST ABSTAIN
INCENTIVE PLAN [ ] [ ] [ ]
4. RATIFICATION OF SELECTION OF KPMG PEAT FOR AGAINST ABSTAIN
MARWICK LLP AS THE COMPANY'S INDEPENDENT [ ] [ ] [ ]
AUDITORS
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN THE ABSENCE OF DIRECTION, THIS
PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEES FOR ELECTION AND FOR PROPOSALS
2, 3 AND 4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities
and Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED, POSTAGE PAID ENVELOPE SO THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
Signature(s)__________________________________________ Dated:_____________, 1997
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares are held of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president
and the secretary or assistant secretary, Executors, administrators, or other
fiduciaries who execute the above proxy for a deceased stockholder should give
their full title. Please date the proxy.