SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
WIND RIVER SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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Registrant)
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/X/ No fee required.
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and 0-11.
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PRELIMINARY PROXY
[LOGO]
500 WIND RIVER WAY
ALAMEDA, CA 94501
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2000
TO THE STOCKHOLDERS OF WIND RIVER SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Wind River
Systems, Inc., a Delaware corporation ("Wind River" or the "Company"), will be
held on Wednesday, July 26, 2000 at 10:00 a.m. local time at 500 Wind River Way,
Alameda, California for the following purposes:
1. To elect seven directors to serve for the ensuing year and until their
successors are elected and have qualified.
2. To approve Wind River's 1993 Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of common stock authorized for
issuance under such plan by 1,500,000 shares.
3. To approve an amendment to Wind River's Restated Certificate of
Incorporation, as amended to increase the authorized number of shares of
common stock from 125,000,000 to 325,000,000 shares.
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending January 31, 2001.
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.
The Board of Directors has fixed the close of business on June 10, 2000, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
RICHARD W. KRABER
SECRETARY
Alameda, California
June , 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
WIND RIVER SYSTEMS, INC.
500 WIND RIVER WAY
ALAMEDA, CA 94501
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
July 26, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Wind
River Systems, Inc., a Delaware corporation ("Wind River" or the "Company"), for
use at the Annual Meeting of Stockholders to be held on July 26, 2000 at
10:00 A.M. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at 500 Wind River Way,
Alameda, California. Wind River intends to mail this proxy statement and
accompanying proxy card on or about June , 2000 to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
Wind River will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of common stock beneficially owned
by others to forward to such beneficial owners. Wind River may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of Wind River or,
at Wind River's request, D.F. King & Co., Inc. No additional compensation will
be paid to directors, officers or other regular employees for such services, but
D.F. King & Co., Inc. will be paid its customary fee, estimated to be about
$5,500, if it renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of common stock at the close of business on June 10,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on June 10, 2000, the Company had outstanding and entitled to
vote 72,XXX,XXX shares of common stock.
Each holder of record of common stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Except for Proposal 3, broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether a matter has been approved. With respect to Proposal 3, abstentions and
broker non-votes will have the same effect as negative votes.
VOTING VIA THE INTERNET OR BY TELEPHONE
Stockholders may grant a proxy to vote their shares by means of the
telephone or on the Internet. The law of Delaware, under which the Company is
incorporated, specifically permits electronically transmitted proxies, provided
that each such proxy contains or is submitted with information from which the
inspectors of election can determine that such proxy was authorized by the
stockholder.
THE TELEPHONE AND INTERNET VOTING PROCEDURES BELOW ARE DESIGNED TO
AUTHENTICATE STOCKHOLDERS' IDENTITIES, TO ALLOW STOCKHOLDERS TO GRANT A PROXY TO
VOTE THEIR SHARES AND TO CONFIRM THAT STOCKHOLDERS' INSTRUCTIONS HAVE BEEN
RECORDED PROPERLY. STOCKHOLDERS VOTING VIA THE INTERNET SHOULD UNDERSTAND THAT
THERE MAY BE COSTS ASSOCIATED WITH ELECTRONIC ACCESS, SUCH AS USAGE CHARGES FROM
INTERNET ACCESS PROVIDERS AND TELEPHONE COMPANIES, THAT MUST BE BORNE BY THE
STOCKHOLDER.
FOR SHARES REGISTERED IN YOUR NAME
Stockholders of record may go to http://www.voteproxy.com to grant a proxy
to vote their shares by means of the Internet. They will be required to provide
the company number and control number contained on their proxy cards. The voter
will then be asked to complete an electronic proxy card. The votes represented
by such proxy will be generated on the computer screen and the voter will be
prompted to submit or revise them as desired. Votes submitted using the Internet
must be received by 12:00 noon, Eastern Daylight Time on July 26, 2000. Any
stockholder using a touch-tone telephone may also grant a proxy to vote shares
by calling 1-800-PROXIES and following the recorded instructions. Votes
submitted by telephone must be received by 2:30 p.m., Eastern Daylight Time on
July 25, 2000.
FOR SHARES REGISTERED IN THE NAME OF A BROKER OR BANK
Most beneficial owners whose stock is held in street name receive
instruction for granting proxies from their banks, brokers or other agents,
rather than the Company's proxy card.
A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers the means to grant
proxies to vote shares by means of the telephone and Internet. If your shares
are held in an account with a broker or bank participating in the ADP Investor
Communications Services program, you may grant a proxy to vote those shares
telephonically by calling the telephone number shown on the instruction form
received from your broker or bank, or via the Internet at ADP Investor
Communication Services' web site at http://www.proxyvote.com. Votes submitted
pursuant to instructions under this paragraph must be received by 11:59 p.m.,
Eastern Daylight Time on July 25, 2000.
GENERAL INFORMATION FOR ALL SHARES VOTED VIA THE INTERNET OR BY TELEPHONE
Submitting your proxy via the Internet or by telephone will not affect your
right to vote in person should you decide to attend the Annual Meeting.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 500 Wind
River Way, Alameda, California, 94501, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is February , 2001. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so between April , 2001 and May , 2001. Stockholders are also
advised to review the Company's Bylaws, which contain additional requirements
with respect to advance notice of stockholder proposals and director
nominations.
2
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the seven Board positions presently authorized
in the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of stockholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, four directors
having been elected by the stockholders, and three directors, John C. Bolger,
Narendra K. Gupta and Thomas St. Dennis, having been elected by the Board.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the seven nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
Set forth below is biographical information for each person nominated.
JERRY L. FIDDLER, 48, co-founded Wind River in February 1983, and currently
serves as chairman of the board. From February 1983 to March 1994 he served as
chief executive officer of Wind River. He served as interim CEO from April to
September 1999. Prior to founding Wind River, he w`as a computer scientist in
the Real-Time Systems Group at Lawrence Berkeley Laboratory. Mr. Fiddler holds a
B.A. in music and photography and an M.S. in computer science from the
University of Illinois.
NARENDRA K. GUPTA, 51, became a director and Vice-Chairman of Wind River in
February 2000 in connection with Wind River's acquisition of Integrated
Systems Inc. He is a founder of Integrated Systems and was a director since its
formation in 1980. Before joining Wind River, Dr. Gupta was Chairman of the
Board of Integrated Systems since March 1993 and Secretary since
September 1989. Dr. Gupta was Chief Executive Officer from 1988 to May 1994 and
President from Integrated Systems' formation in 1980 to May 1994. Dr. Gupta
holds a B.Tech degree in engineering from the India Institute of Technology, an
M.S. in engineering from the California Institute of Technology and a Ph.D. in
engineering from Stanford University. He was elected a Fellow of the Institute
of Electrical and Electronic Engineers in 1991. Dr. Gupta is a director of
Numerical Technologies, Inc. and Quick Eagle Networks.
THOMAS ST. DENNIS, 47, joined Wind River in September 1999 as Chief
Executive Officer and a director. From July 1992 to September 1999, Mr. St.
Dennis was employed at Applied Materials, Inc., a supplier of semiconductor
processing equipment, where he last served as Group Vice President and President
of the Planarization and Dielectric Deposition Product business group. From 1987
to 1992, Mr. St. Dennis was Vice President of Technology at the Silicon Valley
Group, a supplier of automated wafer processing equipment for the semiconductor
industry. From 1983 to 1987 he served as Vice President of Sales and Marketing
at Semiconductor Systems, Inc., a manufacturer of photoprocessing tools for the
semiconductor industry. Mr. St. Dennis has an M.S. and a B.S. in physics from
the University of California at Los Angeles.
JOHN C. BOLGER, 53, became a director of Wind River in February 2000 in
connection with Wind River's acquisition of Integrated Systems Inc. From
July 1993 to February 2000, Mr. Bolger was a director of Integrated Systems. He
served as Vice President, Finance and Administration, and Secretary of Cisco
Systems, Inc., a networking systems company, from 1989 until his retirement in
1992. Mr. Bolger is also a director of Integrated Device Technology, Inc., a
semiconductor manufacturer; TCSI, a communication
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software company; Sanmina Corporation, a contract assembly manufacturer; and
Mission West Properties, a REIT. He holds a B.A. in English Literature from the
University of Massachusetts and an M.B.A. from Harvard University.
WILLIAM B. ELMORE, 47, was elected a director of Wind River in August 1990.
He has been a general partner of Foundation Capital, a venture capital
investment firm since 1995. From 1987 to 1995, he was a general partner of
Inman & Bowman and Inman & Bowman Entrepreneurs, venture capital investment
firms. Mr. Elmore currently serves as a director of ParcPlace-Digitalk, Inc. and
Onyx Software, Inc. Mr. Elmore holds a B.S. and an M.S. in electrical
engineering from Purdue University and an M.B.A. from Stanford University.
GRANT M. INMAN, 58, is currently the President of Inman Investment
Management, a private venture capital investment firm. From 1985 to 1998 he was
a general partner of Inman & Bowman, a private venture capital investment firm.
Mr. Inman serves as a director of LAM Research Corporation, My Software Company,
Paychex, Inc. and several privately held companies. He is a trustee of the
University of California, Berkeley Foundation, and is also a trustee of the
University of Oregon Foundation. Mr. Inman holds a B.A. degree in economics from
the University of Oregon and an M.B.A. in finance from the University of
California, Berkeley.
DAVID B. PRATT, 60, became a director of Wind River in April 1995. He has
been the president and chief executive officer of FlashPoint Technology, Inc.
since January 1999. He was a Venture Partner with Foundation Capital from
January 1998 to June 1998. From 1988 to December 1997, he was an officer, most
recently Executive Vice President and Chief Operating Officer of Adobe Systems
Incorporated, a developer of software for printing and publishing. From 1987 to
1988, he was Executive Vice President and Chief Operating Officer of Logitech
Corporation. From 1986 to 1987, he was Senior Vice President and Chief Operating
Officer of Quantum Corporation. Mr. Pratt holds a B.S.E.E. degree from the
Massachusetts Institute of Technology and an M.B.A. from the University of
Chicago.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended January 31, 2000, the Board of Directors acted
14 times. The Board has an Audit Committee and a Compensation Committee. It has
no nominating committee.
The Audit Committee (i) recommends to the Board the independent accountants
to audit the company's accounts and records, (ii) reviews, with Wind River
management and the independent accountants, the scope and plans for audit
procedures to be utilized; results of audits; and internal reviews,
(iii) reviews the adequacy and effectiveness of the company's internal
accounting controls, and (iv) performs any other duties and functions required
by any organization under which Wind River's securities may be listed. The Audit
Committee is composed of three non-employee directors: John C. Bolger, Grant M.
Inman and David B. Pratt. The Audit Committee met four times during fiscal year
2000.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
Wind River's stock option plans and otherwise determines compensation levels and
performs such other functions regarding compensation as the Board may delegate.
The Compensation Committee is composed of two non-employee directors:
William B. Elmore and David B. Pratt. The Compensation Committee acted 12 times
during fiscal year 2000. The Non-Officer Stock Option Committee, a sub-committee
of the Compensation Committee, may make awards of stock options to employees who
are not officers, in amounts of up to 10,000 shares per employee annually. The
Non-Officer Stock Option Committee is comprised of Jerry L. Fiddler. Generally,
the Non-Officer Stock Option Committee acted by written consent at or after the
hiring of new employees during the fiscal year to grant options to such
employees, as appropriate.
4
PROPOSAL 2
APPROVAL OF AMENDMENT OF THE COMPANY'S 1993 EMPLOYEE STOCK PURCHASE PLAN
In March 1993, the Board of Directors adopted, and the stockholders
subsequently approved, the Company's 1993 Employee Stock Purchase Plan (the
"Purchase Plan"). As a result of an amendment to the Purchase Plan in 1999, an
aggregate of 1,500,000 shares of common stock have been reserved for issuance
under the Purchase Plan.
In May 2000, the Board amended the Purchase Plan, subject to stockholder
approval, to increase the number of shares of Common Stock authorized for
issuance under the Purchase Plan by 1,500,000 shares to a total of 3,000,000
shares. The Board adopted this amendment in order to ensure that the Company can
continue to grant purchase rights at levels determined appropriate by the Board.
During the last fiscal year, shares of common stock were purchased in the
amounts and at the weighted average prices per share under the Purchase Plan as
follows: David G. Fraser 542 shares ($13.653125) and 553 shares ($13.546875),
all current executive officers as a group 2,189 shares ($13.653125) and 1,732
shares ($13.546875), and all employees (excluding executive officers) as a group
101,405 shares ($13.653125) and 120,953 ($13.546875).
As of May 15, 2000, 1,221,544 shares of the Company's common stock had been
issued under the Purchase Plan. Only 278,456 shares of common stock remained
available for future issuance under the Purchase Plan.
Stockholders are requested in this Proposal 2 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the Purchase Plan, as amended.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Purchase Plan, as amended, are outlined below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which employees of
the Company (and any subsidiary of the Company designated by the Board to
participate in the Purchase Plan) may be given an opportunity to purchase common
stock of the Company through payroll deductions, to assist the Company in
retaining the services of its employees, to secure and retain the services of
new employees, and to provide incentives for such persons to exert maximum
efforts for the success of the Company. All of the Company's approximately 1,200
employees are eligible to participate in the Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
ADMINISTRATION
The Board administers the Purchase Plan and has the final power to construe
and interpret both the Purchase Plan and the rights granted under it. The Board
has the power, subject to the provisions of the Purchase Plan, to determine when
and how rights to purchase Common Stock of the Company will be granted, the
provisions of each offering of such rights (which need not be identical), and
whether employees of any parent or subsidiary of the Company will be eligible to
participate in the Purchase Plan.
The Board has the power to delegate administration of the Purchase Plan to a
committee composed of not fewer than two members of the Board, and has delegated
administration of the Purchase Plan to the
5
Compensation Committee. As used herein with respect to the Purchase Plan, the
"Board" refers to the Compensation Committee and to the Board.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. Generally, each offering is six months
long. Currently, offerings commence each January 1 or July 1 and terminate on
June 30 and December 31, respectively.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company, or by any parent or subsidiary of the
Company designated by the Board (each an "affiliate"), on the first day of an
offering is eligible to participate in that offering. Officers of the Company
and any designated affiliate who are "highly compensated" as defined in the Code
are eligible to participate in the offerings under the Purchase Plan. However,
no employee is eligible to participate in the Purchase Plan if, immediately
after the grant of purchase rights, the employee would own, directly or
indirectly, stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any parent or subsidiary of
the Company (including any stock which such employee may purchase under all
outstanding rights and options). In addition, no employee may purchase more than
$25,000 worth of common stock (determined at the fair market value of the shares
at the time such rights are granted) under all employee stock purchase plans of
the Company and its affiliates in any calendar year.
PARTICIPATION IN THE PLAN
Eligible employees enroll in the Purchase Plan by delivering to the Company,
prior to the date selected by the Board as the offering date for the offering,
an agreement authorizing payroll deductions of up to a maximum percentage
specified by the Board of such employees' total compensation during the
offering.
PURCHASE PRICE
The purchase price per share at which shares of common stock are sold in an
offering under the Purchase Plan is the lower of (i) 85% of the fair market
value of a share of common stock on first day of the offering or (ii) 85% of the
fair market value of a share of common stock on the last day of the offering.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions during
the offering. At any time during the offering, a participant may reduce or
terminate his or her payroll deductions as the Board provides in the offering. A
participant may not increase or begin such payroll deductions after the
beginning of an offering, except, if the Board provides, in the case of an
employee who first becomes eligible to participate as of a date specified during
the offering. All payroll deductions made for a participant are credited to his
or her account under the Purchase Plan and deposited with the general funds of
the Company. A participant may make additional payments into such account only
if specifically provided for in the offering.
6
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under the Purchase Plan. In connection with
offerings made under the Purchase Plan, the Board specifies a maximum number of
shares of common stock an employee may be granted the right to purchase and the
maximum aggregate number of shares of common stock that may be purchased
pursuant to such offering by all participants. If the aggregate number of shares
to be purchased upon exercise of rights granted in the offering would exceed the
maximum aggregate number of shares of common stock available, the Board would
make a pro rata allocation of available shares in a uniform and equitable
manner. Unless the employee's participation is discontinued, his or her right to
purchase shares is exercised automatically at the end of the offering at the
applicable price. See "Withdrawal" below.
WITHDRAWAL
A participant may withdraw from a given offering by terminating his or her
payroll deductions and by delivering to the Company a notice of withdrawal from
the Purchase Plan. Such withdrawal may be elected at any time up to 10 days
prior to the end of the applicable offering.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of common stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Purchase Plan at any time.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (i) increase the number of shares
of common stock reserved for issuance under the Purchase Plan, (ii) modify the
requirements relating to eligibility for participation in the Purchase Plan, or
(iii) modify any other provision of the Purchase Plan in a manner that would
materially increase the benefits accruing to participants under the Purchase
Plan, if such approval is required in order to comply with Section 423 of the
Code or the requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended. Rights granted before amendment or termination of the Purchase
Plan will not be altered or impaired by any amendment or termination of the
Purchase Plan without consent of the employee to whom such rights were granted.
STOCK SUBJECT TO PURCHASE PLAN
Subject to this proposal, an aggregate of 3,000,000 shares of common stock
has been reserved for issuance under the Purchase Plan. If rights granted under
the Purchase Plan expire, lapse or otherwise terminate without being exercised,
the shares of common stock not purchased under such rights again becomes
available for issuance under the Purchase Plan.
7
ADJUSTMENTS UPON CHANGES IN STOCK
If any change is made in the stock subject to the Purchase Plan, or subject
to any rights granted under the Purchase Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Purchase Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Purchase Plan and the class(es) and number of shares and
price per share of stock subject to outstanding rights.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving corporation, a reverse
merger in which the Company is the surviving corporation but the shares of
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, or any other capital reorganization in which more than 50% of
the shares of the Company entitled to vote are exchanged, then, as determined by
the Board in its sole discretion, any successor corporation may assume such
outstanding rights or substitute similar rights for those outstanding under the
Plan, such rights may continue in full force and effect or participants'
accumulated payroll deductions may be used to purchase common stock immediately
prior to the transaction described above and the participant's rights under the
then-ongoing offering terminated.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for favorable
federal income tax treatment associated with rights granted under an employee
stock purchase plan which qualifies under provisions of Section 423 of the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of common stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. Such capital gains currently are generally
subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of the
grant or exercise of rights under the Purchase Plan. The Company is entitled to
a deduction to the extent amounts are taxed as ordinary income to a participant
(subject to the requirement of reasonableness and the satisfaction of tax
reporting obligations)
8
PROPOSAL 3
APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Amended and Restated Certificate of Incorporation, as
amended (the "Restated Certificate") to increase the Company's authorized number
of shares of common stock from 125,000,000 shares to 325,000,000 shares.
The additional common stock to be authorized by adoption of the amendment
would have rights identical to the currently outstanding common stock of the
Company. Adoption of the proposed amendment and issuance of the common stock
would not affect the rights of the holders of currently outstanding common stock
of the Company, except for effects incidental to increasing the number of shares
of the Company's common stock outstanding, such as dilution of the earnings per
share and voting rights of current holders of common stock. If the amendment is
adopted, it will become effective upon filing of a Certificate of Amendment of
the Restated Certificate with the Secretary of State of the State of Delaware.
In addition to the 70,808,341 shares of common stock outstanding at
April 30, 2000, the Board has reserved approximately 26,003,714 shares for
issuance upon exercise of options and rights granted under the Company's stock
option and stock purchase plans, of which approximately 19,990,004 shares are
reserved under plans approved by the stockholders and approximately
1,269,319 shares are reserved under plans assumed by Wind River in connection
with recent business acquisitions; and approximately 4,329,897 shares are
reserved for conversion of outstanding convertible subordinated notes.
Although at present the Board of Directors has no other plans to issue the
additional shares of common stock, it desires to have such shares available to
provide additional flexibility to use its capital stock for business and
financial purposes in the future. The additional shares may be used, without
further stockholder approval, for various purposes including, without
limitation, raising capital, providing equity incentives to employees, officers
or directors, establishing strategic relationships with other companies and
expanding the company's business or product lines through the acquisition of
other businesses or products.
The additional shares of common stock that would become available for
issuance if the proposal were adopted could also be used by the Company to
oppose a hostile takeover attempt or delay or prevent changes in control or
management of the Company. For example, without further stockholder approval,
the Board could strategically sell shares of common stock in a private
transaction to purchasers who would oppose a takeover or favor the current
Board. Although this proposal to increase the authorized common stock has been
prompted by business and financial considerations and not by the threat of any
hostile takeover attempt (nor is the Board currently aware of any such attempts
directed at the Company), nevertheless, stockholders should be aware that
approval of proposal could facilitate future efforts by the Company to deter or
prevent changes in control of the Company, including transactions in which the
stockholders might otherwise receive a premium for their shares over then
current market prices.
The affirmative vote of the holders of a majority of the shares of the
common stock, will be required to approve this amendment to the Restated
Certificate. As a result, abstentions and broker non-votes will have the same
effect as negative votes.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
9
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending January 31, 2001 and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
the fiscal year ended January 31, 1990. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee and the Board in
their discretion may direct the appointment of different independent auditors at
any time during the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
10
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's common stock as of March 31, 2000 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table on page 15; (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its common stock.
BENEFICIAL OWNERSHIP(1)
-----------------------------------
BENEFICIAL OWNERS NUMBER OF SHARES PERCENT OF TOTAL
- ----------------- ---------------- ----------------
Firsthand Capital Management, Inc........................... 4,738,300 6.70%
101 Park Center Plaza
San Jose, CA 95113
Narendra K. Gupta(2)........................................ 4,383,876 6.20%
500 Wind River Way
Alameda, CA 94501
Jerry L. Fiddler(3)......................................... 4,336,226 6.12%
500 Wind River Way
Alameda, CA 94501
Franklin Advisers, Inc...................................... 3,743,000 5.30%
777 Mariners Island Blvd.
San Mateo, CA 94404
Ronald A. Abelmann(4)....................................... 906,826 1.27%
William B. Elmore(5)........................................ 355,782 *
Richard W. Kraber(6)........................................ 222,051 *
Peter J. Richards(7)........................................ 189,165 *
David G. Fraser(8).......................................... 170,770 *
Thomas St. Dennis(9)........................................ 136,000 *
Grant M. Inman(10).......................................... 144,000 *
John C. Bolger(11).......................................... 59,340 *
David B. Pratt(12).......................................... 42,107 *
All executive officers and directors as a group (21
persons)(13).............................................. 14,673,028 19.94%
- ------------------------
* Less than one percent.
(1) This table is based upon information known to the Company. Unless otherwise
indicated in the footnotes to this table and subject to community property
laws where applicable, the Company believes that each of the stockholders
named in this table has sole voting and investment power with respect to
the shares indicated as beneficially owned. Applicable percentages are
based on 70,692,511 shares outstanding on March 31, 2000, adjusted as
required by rules promulgated by the Securities and Exchange Commission.
(2) Includes 3,431,784 shares held by the Narendra and Vinita Gupta Living
Trust, dated 12/2/94, of which Mr. Gupta is a trustee; 920,000 shares held
by the Gupta Irrevocable Children Trust, of which Mr. Gupta is also a
trustee; and 7,176 shares held in an account under the Uniform Gift to
Minors Act, of which Mr. Gupta is the custodian. Also includes 24,916
shares subject to stock options exercisable within 60 days of March 31,
2000.
11
(3) Includes 3,262,930 shares held by the Fiddler and Alden Family Trust, of
which Mr. Fiddler is a trustee; 550,000 shares held by the Jazem II Family
Partners LP, of which Mr. Fiddler is a general partner; and 324,953 shares
held by Jazem III Family Partners LP, of which Mr. Fiddler is a partner.
Also includes 193,343 shares subject to stock options exercisable within
60 days of March 31, 2000.
(4) Includes 871,093 shares subject to stock options exercisable within
60 days of March 31, 2000.
(5) Includes 46,875 shares subject to stock options exercisable within 60 days
of March 31, 2000.
(6) Shares are subject to stock options exercisable within 60 days of
March 31, 2000.
(7) Shares are subject to stock options exercisable within 60 days of
March 31, 2000.
(8) Includes 162,477 shares subject to stock options exercisable within
60 days of March 31, 2000.
(9) Shares are held by the St. Dennis Family Trust, of which Mr. St. Dennis is
a trustee.
(10) Includes 75,000 shares held by the Inman Living Trust UAD 5/9/89, of which
Mr. Inman is a trustee; 42,000 shares held by the Grant N. Inman SSB Keogh
PS Custodian the West Ven Keogh, of which Mr. Inman is a custodian; 4,000
shares held by GWIK, a partnership, of which Mr. Inman is a partner;
11,500 shares held by the Bonner Trust 1988 MBI UAD 12/22/99, of which
Mr. Inman's wife is a trustee; and 11,500 shares held by the Bonner Trust
1988 CAI UAD 12/22/88, of which Mr. Inman's wife is a trustee.
(11) Includes 55,200 shares subject to stock options exercisable within
60 days of March 31, 2000.
(12) Includes 30,000 shares subject to stock options exercisable within
60 days of March 31, 2000.
(13) Includes 2,905,315 shares subject to stock options held by officers and
directors exercisable within 60 days of March 31, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended January 31, 2000,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that an
initial report of ownership was filed late by each of Mr. John C. Fogelin,
Ms. Marla A. Stark and Mr. Thomas St. Dennis, and each of Messrs. William B.
Elmore, Jerry L. Fiddler, David G. Fraser, Richard W. Kraber, David B. Pratt,
Graham Shenton, and Kamran Sokhanvari failed to report an option grant.
12
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each director who is not an employee of Wind River (a "Non-Employee
Director") receives a per meeting fee of $1,200. In accordance with Company
policy, Directors may be reimbursed for certain expenses in connection with
attendance at Board and committee meetings. Directors who are also executive
officers of Wind River are not separately compensated for their service as
directors.
All Non-Employee Directors participate in Wind River's 1995 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan"). The Directors' Plan
provides for the automatic grant of options to purchase common stock of Wind
River to Non-Employee Directors. Stock options granted under the Director's Plan
have an exercise price equal to the fair market value of the common stock on the
date of grant and expire ten years from the date of grant. Under the Directors'
Plan, each person who was a Non-Employee Director on April 27, 1995 was granted,
and each person after such date who is elected for the first time as a
Non-Employee Director is automatically granted, an option to purchase 15,000
shares of common stock upon the date of his or her election to the Board, which
vests in four equal annual installments. Additionally, on April 1 of each year,
each person who is then a Non-Employee Director automatically is granted an
option to purchase 3,000 shares of common stock vesting in full one year from
the grant date, provided the optionee has attended at least 75% of the meetings
of the Board and any committees on which he or she serves held during such
period. As of May 15, 2000, options to purchase 103,125 shares were outstanding
under the Directors' Plan and 217,500 shares remained available for grant.
During the last fiscal year, options were granted under the Directors' Plan
covering an aggregate of 3,000 shares to each of Messrs. Elmore and Pratt at an
exercise price per share of $16.4375. Options covering 15,000 shares were
granted to Mr. Inman at an exercise price per share of $16.1875 upon his initial
election as a director during the last fiscal year. All options have exercise
prices equal to the fair market value of the common stock at the time of the
grant. As of March 31, 2000, 16,875 options had been exercised under the
Directors' Plan.
13
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION(1)
The following table shows for the fiscal years ended January 31, 2000, 1999
and 1998 compensation awarded or paid to, or earned by, each person who served
as the Company's Chief Executive Officer during the fiscal year ended
January 31, 2000 and its other four most highly compensated executive officers
at January 31, 2000 (the "Named Executive Officers"):
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SHARES
FISCAL ------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS(#)(3) COMPENSATION(4)
- --------------------------- -------- -------- ---------- ------------- ---------------
Jerry L. Fiddler(5)................. 2000 $252,619 $ 164,063 55,000 $ 28,523
Chairman 1999 $124,833 $ 41,506 31,500 $ 28,523
1998 $109,729 $ 40,979 136,500 --
Thomas St. Dennis(5)................ 2000 $160,769 $1,281,321 1,100,000 $ 71,984
President and 1999 -- -- -- --
Chief Executive Officer 1998 -- -- -- --
Ronald A. Abelmann(5)............... 2000 $363,636(6) -- 112,500 $194,403(7)
Former President and 1999 $325,000 $ 132,075(8) 112,500 $187,553
Chief Executive Officer 1998 $271,250 $ 127,875(8) 325,000 --
David G. Fraser..................... 2000 $195,750 $ 107,037 80,000 $ 18,622
Vice President and General
Manager, 1999 $178,333 $ 68,226 45,000 $ 18,622
Wind River Networks business unit 1998 $153,417 $ 73,147 100,000 --
Richard W. Kraber................... 2000 $197,500 $ 99,537 60,000 $ 67,909
Vice President of Finance, 1999 $178,333 $ 67,714 45,000 $ 67,909
Chief Financial Officer and
Secretary 1998 $153,750 $ 72,992 100,000 --
Peter J. Richards(9)................ 2000 $212,500 $ 112,308 80,000 $ 88,509(10)
Vice President of Americas Sales 1999 $ 79,558 $ 27,659 420,000 --
1998 -- -- -- --
- ------------------------
(1) In accordance with the rules of the Commission, the compensation described
in this table does not include medical, group life insurance or other
benefits received by the Named Executive Officers which are available
generally to all salaried employees of the Company, and certain perquisites
and other personal benefits received by the Named Executive Officers which
do not exceed the lesser of $50,000 or 10% of any such officer's salary and
bonus disclosed in this table.
(2) Includes bonuses and sales commissions earned in respective fiscal year and
paid the following fiscal year pursuant to the Company's fiscal management
incentive arrangements.
(3) With the exception of the option grants to Mr. Fiddler, all options granted
have exercise prices equal to 100% of the fair market value of the common
stock at the time of the grant. Option grants to Mr. Fiddler were made at
110% of the fair market value of the common stock at the time of the grant.
(4) Amounts represent life insurance premiums paid on behalf of each Named
Executive Officer. Of the premiums paid in fiscal year 2000, the following
amounts were reported as taxable income to each individual: Mr. Fiddler
($102), Mr. St. Dennis ($1,575), Mr. Abelmann ($2,203), Mr. Fraser ($400),
Mr. Kraber ($632), and Mr. Richards ($910).
14
(5) In July 1999, Mr. Abelmann, Wind River's former Chief Executive Officer,
resigned as an officer of the Company. Mr. Fiddler served as chief
executive on an interim basis until Mr. St. Dennis joined the Company as
its President and Chief Executive Officer in September 1999.
(6) Compensation for fiscal year 2000 includes consulting payments made to
Mr. Abelmann following his resignation.
(7) Includes $6,850 of travel expenses for Mr. Abelmann's spouse.
(8) Payment of all of Mr. Abelmann's bonus for fiscal years 1998 and 1999 has
been deferred.
(9) Mr. Richards became an officer of the Company in September 1998.
(10) Includes $41,229 in relocation expenses and $6,850 of travel expenses for
Mr. Richards' spouse.
STOCK OPTION GRANTS AND EXERCISES
Wind River's executive officers are awarded stock options under the 1987
Equity Incentive Plan and 1998 Equity Incentive Plan (the "Equity Plans"). The
Equity Plans provide that, in the event of a dissolution or liquidation of the
company, specified type of merger or other corporate reorganization, at the sole
discretion of the Board and to the extent permitted by law, any surviving
corporation will be required to either assume options outstanding under the
Equity Plans or substitute similar awards for those outstanding under the Equity
Plans, outstanding options will continue in full force and effect or outstanding
options will be accelerated. In the event that any surviving corporation
declines to assume or continue options outstanding under the Equity Plans, or to
substitute similar awards, then the time during which such options may be
exercised will be accelerated and the options terminated if not exercised at or
prior to such event. The Equity Plans also provide for the acceleration of
vesting for options that otherwise would vest within the thirty (30) month
period following the occurrence of certain hostile changes of control. A
"hostile" change of control would involve either (i) the acquisition by any
person or related group of a majority of the Company's voting securities which
has not been approved by the Board of Directors or (ii) a change of a majority
of the members of the Board of Directors in a 24-month period where the new
directors were not approved by a majority of the members of the Board of
Directors at the beginning of such period or were seated as the result of a
proxy contest or other contest over election of members of the Board of
Directors.
15
The following tables show for the fiscal year ended January 31, 2000,
certain information regarding options granted to, exercised by, and held at year
end by the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SHARES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES PER SHARE OPTION TERM(4)
OPTIONS) IN FISCAL EXERCISE EXPIRATION -----------------------------
NAME GRANTED(#)(1) YEAR(2) PRICE DATE 5% 10%
- ---- ------------- ----------- --------- ---------- ------------- -------------
Jerry L. Fiddler..... 31,500 0.73% $14.9875 4/12/2009 $ 699,101 $ 1,113,202
23,500 0.55% $ 15.675 5/5/2009 $ 545,476 868,580
Thomas St. Dennis.... 1,100,000 25.66% $ 16.00 9/6/2009 $28,668,545 $45,649,867
Ronald A. Abelmann... 112,500 2.62% $ 13.625 4/12/2009 $ 2,496,790 $ 3,975,721
David G. Fraser...... 55,000 1.28% $ 13.625 4/12/2009 $ 1,220,653 $ 1,943,686
45,000 1.05% $ 14.25 5/5/2009 $ 1,044,529 $ 1,663,237
Richard W. Kraber.... 45,000 1.05% $ 13.625 4/12/2009 $ 998,716 $ 1,590,288
15,000 0.35% $ 14.25 5/5/2009 $ 348,176 $ 554,412
Peter J. Richards.... 80,000 1.87% $ 13.625 4/12/2009 $ 1,775,495 $ 2,827,179
- ------------------------
(1) Options generally become exercisable at a rate of 1/4 of the shares subject
to the option at the end of the first year and 1/48 of the shares subject to
the option at the end of each month thereafter.
(2) Based on options to purchase 4,286,377 shares of common stock granted in the
fiscal year ended January 31, 2000.
(3) For all options granted in fiscal year 2000 (with the exception of the
grants to Mr. Fiddler as explained in the summary compensation table), the
exercise price is equal to the fair market value of the Company's common
stock at the time of the grant.
(4) The potential realizable value is based on the term of the option at its
time of grant. In accordance with rules promulgated the Securities and
Exchange Commission, it is calculated by assuming that the stock price on
the data of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option and that the option is exercised
and sold on the last day of its term for the appreciated stock price. Unless
the market price of the Company's common stock appreciates over the option
term, no value will be realized from these option grants. There can be no
assurance that the values shown in this table will be achieved.
16
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000
AND VALUE OF OPTIONS AT END OF FISCAL YEAR 2000
The Named Executive Officers did not exercise any stock options during the
fiscal year ended January 31, 2000. The following table sets forth for each of
the Named Executive Officers the number and value of securities underlying
unexercised options held by the Named Executive Officers at January 31, 2000:
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT END OF IN-THE-MONEY OPTIONS AT
FISCAL 2000(#) END OF FISCAL 2000
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Jerry L. Fiddler............................ 164,937 128,938 $ 1,946,713 $ 999,816
Thomas St. Dennis........................... 0 1,100,000 $ 0 $14,987,500
Ronald A. Abelmann.......................... 783,125 387,813 $12,309,776 $ 3,097,667
David G. Fraser............................. 91,257 252,871 $ 1,141,395 $ 2,160,084
Richard W. Kraber........................... 158,859 216,141 $ 2,666,727 $ 1,599,257
Peter J. Richards........................... 109,998 390,002 $ 371,243 $ 2,326,257
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS
THOMAS ST. DENNIS. In September 1999, Wind River and Mr. St. Dennis entered
into an employment agreement providing for the employment of Mr. St. Dennis as
President and Chief Executive Officer. The agreement provided for Mr. St. Dennis
to receive, for fiscal year 2000, an annualized base salary of $400,000, an
annualized bonus of $800,000 for on-plan performance, as determined by the Board
of Directors, and a sign-on bonus of $959,121. For fiscal years subsequent to
2000, Mr. St. Dennis will receive a bonus equal to twice his base salary for on
plan performance and an additional performance bonus of up to 50% of such amount
for performance exceeding plan.
The employment agreement also provided that Mr. St. Dennis would receive an
option to purchase 1,100,000 shares of Wind River common stock. In addition, the
Company agreed to lend Mr. St. Dennis up to $2.4 million to purchase shares of
Wind River common stock during the first six months of his employment with the
Company, secured by a pledge of personal property.
In the event Mr. St. Dennis' employment with the Company is terminated other
than for Cause, or if he resigns his employment with Good Reason (as each is
defined in the employment agreement), in each case other than within 12 months
of a change of control (in which event Mr. St. Dennis would receive benefits
under the Change in Control Incentive and Severance Benefit Plan described
below), Mr. St. Dennis will provide certain consulting services for one year
thereafter in exchange for compensation in an amount equal to his annual salary
at the time of such termination and a pro rata share of the target on-plan bonus
for the year.
RONALD A. ABELMANN. In connection with Mr. Abelmann's resignation as Wind
River's chief executive officer in July 1999, the Company and Mr. Abelmann
entered into a retirement and consulting agreement under which, in exchange for
certain consulting services, the Company will pay Mr. Abelmann $29,356 per month
through March 31, 2002. The Company also will make three years of payments under
Mr. Abelmann's split dollar life insurance arrangement. In addition,
Mr. Ablemann's unvested options to purchase 225,723 shares of Wind River common
stock were accelerated to become fully vested as of the resignation date, and
options to purchase 207,500 shares were cancelled.
17
CHANGE IN CONTROL INCENTIVE AND SEVERANCE BENEFIT PLAN. In November 1995,
the Compensation Committee of the Board of Directors adopted the Change in
Control Incentive and Severance Benefit Plan (the "Severance Plan") to provide
an incentive to officers of Wind River with the title of Vice President or above
in the event of certain change of control transactions, and severance benefits
in the event of certain terminations of employment within 12 months of the
change of control.
Upon the occurrence of a change of control, all executive officers, except
the Chief Executive Officer, will receive acceleration of vesting for all shares
subject to stock options that otherwise would have vested within one year of the
date of the change of control. The Chief Executive Officer will receive two
years' worth of accelerated vesting, except to the extent that the option
acceleration would create adverse tax consequences for the Chief Executive
Officer and Wind River under the golden parachute provisions of sections 280G
and 49999 of the Internal Revenue Code of 1986, as amended, in which case the
Chief Executive Officer will have accelerated the maximum number of shares
allowed under the golden parachute provisions.
If an executive officer other than the Chief Executive Officer is terminated
without Cause or voluntarily terminates with Good Reason (as each is defined in
the Severance Plan), within 12 months of a change in control, the executive will
receive continued compensation for 12 months (including an estimated bonus
amount), continued health insurance for the same period, and accelerated vesting
of stock options that otherwise would vest within one year of the date of
termination. In addition, for the Chief Executive Officer, any shares which
would have received acceleration of vesting on account of the change in control
but did not because of the limitation to avoid the golden parachute tax
provisions shall receive accelerated vesting on the termination date. If the
total severance payments would cause an executive to become liable for golden
parachute excise tax payments, then Wind River shall pay that executive's excise
tax liability and all other taxes associated with Wind River's payment of the
excise tax in order to leave the executive in the same after-tax position as if
no excise tax had been imposed.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Board of Directors has delegated to the Compensation Committee of the
Board of Directors (the "Committee") the authority to establish and maintain the
compensation programs for all employees, including executives. The Committee
evaluates performance and determines compensation policies and levels for the
Company's executive officers. The Committee is presently comprised of two
non-employee directors, neither of whom has any interlocking or other type of
relationship that would call into question his independence as a committee
member.
The objectives of Wind River's executive compensation policies are to
attract, retain and reward executive officers who contribute to Wind River's
success, to align the financial interests of executive officers with the
performance of the Company, to strengthen the relationship between executive pay
and stockholder value, to motivate executive officers to achieve Wind River's
business objectives and to reward individual performance. In carrying out these
objectives, the Committee considers the level of compensation paid to executive
officers in positions of companies similarly situated in size and products, the
individual performance of each executive officer, corporate performance, and the
responsibility and authority of each position relative to other positions within
Wind River.
- ------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective of any general incorporation language
contained in such filing.
18
Executive compensation consists of base salary, cash awards under the
management incentive bonus program and stock options. The Committee, working
with an outside compensation consultant, has targeted executive officers' base
salaries and cash bonuses at the 50th percentile of companies in comparable
industries with revenues of similar size and has targeted equity awards at the
60th percentile. The companies used for comparison purposes may, but need not
be, included in the Nasdaq Computer and Data Processing Stocks Index. Each of
these components is discussed in turn below.
BASE SALARY
In establishing base salaries for executive officers, the Committee
considers the individual executive's performance, level of responsibility, and
comparative data as described above. Salaries for executives are reviewed on an
annual basis using a subjective analysis of the executive's individual
performance, Wind River's financial performance and changes in salary levels at
comparable companies.
MANAGEMENT INCENTIVE PROGRAM
The management incentive bonus program is designed to motivate Wind River's
executive officers by awarding cash bonuses based upon achievement of corporate
performance targets. At the beginning of the fiscal year, corporate performance
targets for the Company are established, and the Committee sets a target bonus,
as a percentage of base salary, for each executive. The determination of awards
at the end of the fiscal year is based upon the extent to which the corporate
performance targets are satisfied. The amount and nature of such targets may
vary from year to year.
STOCK OPTIONS
The Equity Plans were established to provide executive officers with an
opportunity to share, along with the stockholders of Wind River, in the
Company's long-term performance. Stock options generally have a four-year
vesting schedule and generally expire ten years from the date of grant. Certain
stock options vest in accordance with corporate performance criteria established
from time to time by the Committee. The exercise price of stock options is
typically 100% of fair market value of the underlying stock on the date of
grant. The Committee considers, periodically, the grant of stock-based
compensation to all executive officers. Such grants are made on the basis of a
subjective analysis of individual performance, Wind River's financial
performance, and the executive's existing options.
Section 162(m) of the Code limits Wind River to a deduction for federal
income tax purposes of no more than $1 million paid to certain Named Executive
Officers in a taxable year. Compensation above $1 million may be deducted if it
is "performance-based compensation" within the meaning of the Code. The
Committee has determined that stock options granted under the Equity Plans with
exercise prices at least equal to the fair market value of Wind River's common
stock on the date of grant shall be treated as "performance-based compensation."
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary established for Mr. Abelmann for fiscal year 2000 was
determined based upon reference to external competitive pay practices, the above
described compensation approach to executive officers and a subjective
assessment by the Committee of Mr. Abelmann's performance. In addition, as a
result of both Wind River's and his individual performance during fiscal year
2000, Mr. Abelmann was granted options to purchase 112,500 shares of common
stock. In July 1999, Mr. Abelmann resigned as Wind River's President and Chief
Executive Officer. Mr. Abelmann's compensation during fiscal year 2000 includes
payments under a Retirement and Consulting Agreement between Mr. Abelmann and
Wind River. See "Employment, Severance and Change of Control Agreements."
19
Mr. St. Dennis joined the Company as its President and Chief Executive
Officer in September 1999. Mr. St. Dennis was compensated for fiscal year 2000
in accordance with the terms of his employment agreement with Wind River, which
Mr. St. Dennis and the Company negotiated in an arms-length transaction prior to
his employment with the Company. See "Employment, Severance and Change of
Control Agreements."
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
William B. Elmore
David B. Pratt
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows a comparison of cumulative returns for Wind
River's common stock, the Nasdaq Stock Market (United States Companies) and the
Nasdaq Computer and Data Processing Stocks Index on April 15, 1993, when Wind
River's common stock commenced public trading, and at the end of fiscal years
1995 through 2000. The graph assumes an investment of $100 in each of Wind
River's common stock, Nasdaq Stock Market (United States Companies) and Nasdaq
Computer and Data Processing Stocks Index and that all dividends were
reinvested.
TOTAL RETURN TO STOCKHOLDERS
(DIVIDENDS REINVESTED MONTHLY)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL STOCKHOLDER RETURN
FISCAL YEAR ENDED
WIND RIVER NASDAQ US NASDAQ COMPUTER &
SYSTEMS, INC. INDEX COMPOSITE DATA PROCESSING
Jan95 $100.00 $100.00 $100.00
Jan96 $326.62 $141.30 $154.34
Jan97 $878.42 $185.26 $209.93
Jan98 $948.56 $218.66 $254.25
Jan99 $854.68 $342.21 $510.17
Jan00 $1,150.90 $534.53 $829.54
- ------------------------
(1) This section is not "soliciting material," is not deemed filed with the
SEC, and is not to be incorporated by reference into any filing of Wind
River under the Securities Act or the Securities Exchange Act, whether made
before or after the date hereof and irrespective of any general
incorporation language contained in such filing.
20
CERTAIN TRANSACTIONS
LOANS TO OFFICERS
In April 1999, Wind River loaned Mr. Richards $145,000 to purchase real
property. The loan bears interest at the rate of 7% per annum and has a five-
year term. The loan may be accelerated to become due 30 days following
Mr. Richards' termination of employment with Wind River. The loan is secured by
personal property. As of May 15, 2000, the principal and interest outstanding
under the loan totaled $155,714.
In September 1999, Wind River agreed to lend Mr. St. Dennis up to $2,400,000
to purchase Wind River common stock, of which Mr. St. Dennis has borrowed
$1,900,000. The loan bears interest at the rate of 5.98% per annum, and has a
nine-year term. The loan may be accelerated if certain events of default occur,
including termination of Mr. St. Dennis' employment with Wind River. As of
May 15, 2000, principal and interest outstanding under the loan totaled
$1,956,740.
In May 2000, Wind River loaned Curtis B. Schacker, Vice President of
Marketing and Corporate Development, $1,850,000 to purchase real property. The
loan bears interest at the rate of 7.125% per annum and has a two-year term. The
loan may be accelerated if certain events of default occur, including
termination of Mr. Schacker's employment with Wind River. The loan is secured by
real and personal property. As of May 25, 2000, principal and interest
outstanding under the loan totaled $1,850,000.
INDEMNIFICATION AND LIMITATION OF DIRECTOR AND OFFICER LIABILITY
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party be
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
RICHARD W. KRABER
SECRETARY
June , 2000
21
WIND RIVER SYSTEMS
EMPLOYEE STOCK PURCHASE PLAN
Adjusted for Stock Split May 24, 1996
Adjusted for Stock Split March 10, 1997
Adjusted for Stock Split February 4, 1999
Amended April 22, 1999
Approved by Stockholders June 24, 1999
Amended January __, 2000
Approved by Stockholders _______, 2000
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the
"Plan") is to provide a means by which employees of Wind River Systems, Inc., a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of its employees, to secure and retain the services of new employees,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the rights to purchase stock of
the Company granted under the Plan be considered options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) of the
Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
(the "Board") of the Company unless and until the Board delegates administration
to a Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase
stock of the Company shall be granted and the provisions of each offering of
such rights (which need not be identical).
(ii) To designate from time to time which Affiliates
of the Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
Committee composed of not fewer than two (2) members of the Board (the
"Committee"). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
rights granted under the Plan shall not exceed in the aggregate three million
(3,000,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having
been exercised, the Common Stock not purchased under such right shall again
become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or
provide for the grant of rights to purchase Common Stock of the Company under
the Plan to eligible employees (an "Offering") on a date or dates (the
"Offering Date(s)") selected by the Board or the Committee. Each Offering
shall be in such form and shall contain such terms and conditions as the
Board or the Committee shall deem appropriate. If an employee has more than
one right outstanding under the Plan, unless he or she otherwise indicates in
agreements or notices delivered hereunder: (1) each agreement or notice
delivered by that employee will be deemed to apply to all of his or her
rights under the Plan, and (2) a right with a lower exercise price (or an
earlier-
2
granted right, if two rights have identical exercise prices), will be
exercised to the fullest possible extent before a right with a higher
exercise price (or a later-granted right, if two rights have identical
exercise prices) will be exercised. The provisions of separate Offerings need
not be identical, but each Offering shall include (through incorporation of
the provisions of this Plan by reference in the Offering or otherwise) the
substance of the provisions contained in paragraphs 5 through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company
or, as the Board or the Committee may designate as provided in subparagraph
2(b), to employees of any Affiliate of the Company. Except as provided in
subparagraph 5(b), an employee of the Company or any Affiliate shall not be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee has been in the employ of the Company or any Affiliate for such
continuous period preceding such grant as the Board or the Committee may
require, but in no event shall the required period of continuous employment
be equal to or greater than two (2) years. In addition, unless otherwise
determined by the Board or the Committee and set forth in the terms of the
applicable Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan, unless, on the Offering Date,
such employee's customary employment with the Company or such Affiliate is at
least twenty (20) hours per week and at least five (5) months per calendar
year.
(b) The Board or the Committee may provide that, each
person who, during the course of an Offering, first becomes an eligible
employee of the Company or designated Affiliate will, on a date or dates
specified in the Offering which coincides with the day on which such person
becomes an eligible employee or occurs thereafter, receive a right under that
Offering, which right shall thereafter be deemed to be a part of that
Offering. Such right shall have the same characteristics as any rights
originally granted under that Offering, as described herein, except that:
(i) the date on which such right is granted shall be
the "Offering Date" of such right for all purposes, including determination
of the exercise price of such right;
(ii) the Purchase Period (as defined below) for such
right shall begin on its Offering Date and end coincident with the end of
such Offering; and
(iii) the Board or the Committee may provide that if
such person first becomes an eligible employee within a specified period of
time before the end of the Purchase Period (as defined below) for such
Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any
rights under the Plan if, immediately after any such rights are granted, such
employee owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of
any Affiliate. For purposes of this subparagraph 5(c), the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any
employee, and stock which such
3
employee may purchase under all outstanding rights and options shall be
treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the
Plan only if such rights, together with any other rights granted under
"employee stock purchase plans" of the Company and any Affiliates, as
specified by Section 423(b)(8) of the Code, do not permit such employee's
rights to purchase stock of the Company or any Affiliate to accrue at a rate
which exceeds twenty-five thousand dollars ($25,000) of fair market value of
such stock (determined at the time such rights are granted) for each calendar
year in which such rights are outstanding at any time.
(e) Officers of the Company and any designated Affiliate
shall be eligible to participate in Offerings under the Plan, provided,
however, that the Board may provide in an Offering that certain employees who
are highly compensated employees within the meaning of Section 423(b)(4)(D)
of the Code shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant
to an Offering made under the Plan, shall be granted the right to purchase up
to the number of shares of Common Stock of the Company purchasable with a
percentage designated by the Board or the Committee not exceeding fifteen
percent (15%) of such employee's Earnings (as defined in Section 7(a)) during
the period which begins on the Offering Date (or such later date as the Board
or the Committee determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no more than twenty-seven (27)
months after the Offering Date (the "Purchase Period"). In connection with
each Offering made under this Plan, the Board or the Committee shall specify
a maximum number of shares which may be purchased by any employee as well as
a maximum aggregate number of shares which may be purchased by all eligible
employees pursuant to such Offering. In addition, in connection with each
Offering which contains more than one Exercise Date (as defined in the
Offering), the Board or the Committee may specify a maximum aggregate number
of shares which may be purchased by all eligible employees on any given
Exercise Date under the Offering. If the aggregate purchase of shares upon
exercise of rights granted under the Offering would exceed any such maximum
aggregate number, the Board or the Committee shall make a pro rata allocation
of the shares available in as nearly a uniform manner as shall be practicable
and as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights
granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Exercise Date.
4
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an
Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each
such agreement shall authorize payroll deductions of up to the maximum
percentage specified by the Board or the Committee of such employee's
Earnings during the Purchase Period. "Earnings" is defined as the total
compensation paid to an employee, including all salary, wages (including
amounts elected to be deferred by the employee, that would otherwise have
been paid, under any cash or deferred arrangement established by the
Company), overtime pay, commissions, bonuses, and other remuneration paid
directly to the employee, but excluding profit sharing, the cost of employee
benefits paid for by the Company, education or tuition reimbursements,
imputed income arising under any Company group insurance or benefit program,
traveling expenses, business and moving expense reimbursements, income
received in connection with stock options, contributions made by the Company
under any employee benefit plan, and similar items of compensation. The
payroll deductions made for each participant shall be credited to an account
for such participant under the Plan and shall be deposited with the general
funds of the Company. A participant may reduce (including to zero), increase
or begin such payroll deductions after the beginning of any Purchase Period
only as provided for in the Offering. A participant may make additional
payments into his or her account only if specifically provided for in the
Offering and only if the participant has not had the maximum amount withheld
during the Purchase Period.
(b) At any time during a Purchase Period a participant may
terminate his or her payroll deductions under the Plan and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as
the Company provides. Such withdrawal may be elected at any time prior to the
end of the Purchase Period except as provided by the Board or the Committee
in the Offering. Upon such withdrawal from the Offering by a participant, the
Company shall distribute to such participant all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the participant) under the Offering, without
interest, and such participant's interest in that Offering shall be
automatically terminated. A participant's withdrawal from an Offering will
have no effect upon such participant's eligibility to participate in any
other Offerings under the Plan, but such participant will be required to
deliver a new participation agreement in order to participate in subsequent
Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan
shall terminate immediately upon cessation of any participating employee's
employment with the Company and any designated Affiliate, for any reason, and
the Company shall distribute to such terminated employee all of his or her
accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire stock for the terminated employee),
under the Offering, without interest.
(d) Rights granted under the Plan shall not be
transferable, and shall be exercisable only by the person to whom such rights
are granted.
5
8. EXERCISE.
(a) On each exercise date, as defined in the relevant
Offering (an "Exercise Date"), each participant's accumulated payroll
deductions and other additional payments specifically provided for in the
Offering (without any increase for interest) will be applied to the purchase
of whole shares of stock of the Company, up to the maximum number of shares
permitted pursuant to the terms of the Plan and the applicable Offering, at
the purchase price specified in the Offering. No fractional shares shall be
issued upon the exercise of rights granted under the Plan. The amount, if
any, of accumulated payroll deductions remaining in each participant's
account after the purchase of shares which is less than the amount required
to purchase one share of stock on the final Exercise Date of an Offering
shall be held in each such participant's account for the purchase of shares
under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after said
final Exercise Date, without interest. The amount, if any, of accumulated
payroll deductions remaining in any participant's account after the purchase
of shares which is equal to the amount required to purchase whole shares of
stock on the final Exercise Date of an Offering shall be distributed in full
to the participant after such Exercise Date, without interest.
(b) No rights granted under the Plan may be exercised to
any extent unless the Plan (including rights granted thereunder) is covered
by an effective registration statement pursuant to the Securities Act of
1933, as amended (the "Securities Act"). If on an Exercise Date of any
Offering hereunder the Plan is not so registered, no rights granted under the
Plan or any Offering shall be exercised on said Exercise Date and the
Exercise Date shall be delayed until the Plan is subject to such an effective
registration statement, except that the Exercise Date shall not be delayed
more than two (2) months and the Exercise Date shall in no event be more than
twenty-seven (27) months from the Offering Date. If on the Exercise Date of
any Offering hereunder, as delayed to the maximum extent permissible, the
Plan is not registered, no rights granted under the Plan or any Offering
shall be exercised and all payroll deductions accumulated during the purchase
period (reduced to the extent, if any, such deductions have been used to
acquire stock) shall be distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan,
the Company shall keep available at all times the number of shares of stock
required to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may
be required to issue and sell shares of stock upon exercise of the rights
granted under the Plan. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
6
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted
under the Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject to
rights granted under the Plan unless and until the participant's
shareholdings acquired upon exercise of rights under the Plan are recorded in
the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan,
or subject to any rights granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Plan and outstanding rights will be appropriately adjusted in (i) the
class(es) and maximum number of shares subject to the Plan, (ii) the
class(es), and number of shares and price per share of stock subject to
outstanding rights and (iii) any share limitations established by the Board
with respect to an offering.
(b) In the event of: (1) a dissolution or liquidation of
the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (4) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged,
then, as determined by the Board in its sole discretion (i) any surviving
corporation may assume outstanding rights or substitute similar rights for
those under the Plan, (ii) such rights may continue in full force and effect,
or (iii) participants' accumulated payroll deductions may be used to purchase
Common Stock immediately prior to the transaction described above and the
participants' rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in paragraph 12 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for rights
under the Plan;
7
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to obtain
employee stock purchase plan treatment under Section 423 of the Code or to
comply with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before
amendment of the Plan shall not be altered or impaired by any amendment of
the Plan, except with the consent of the person to whom such rights were
granted or except as necessary to comply with any laws or governmental
regulation.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom such
rights were granted or except as necessary to comply with any laws or
governmental regulation.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no rights granted under the Plan shall be exercised unless and until the
Plan has been approved by the stockholders of the Company.
8
WIND RIVER SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2000
The undersigned hereby appoints Thomas St. Dennis and Richard W.
Kraber, and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, to vote all of the shares of stock of Wind River Systems,
Inc. which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Wind River Systems, Inc. to be held at 500 Wind River Way,
Alameda, California on Wednesday, July 26, 2000 at 10:00 a.m. (local time), and
at any and all postponements, continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, AND 4, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS -> /______________________________ /
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
- ----------------------------------DETACH HERE-----------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors to hold office until the next Annual
Meeting of Stockholders and until their successors are
elected.
/ / FOR all nominees listed below (except / / WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed below.
NOMINEES: John C. Bolger, William B. Elmore, Jerry L. Fiddler,
Narendra K. Gupta, Grant M. Inman, David B. Pratt, Thomas St. Dennis.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 2, 3, AND 4.
PROPOSAL 2: To approve the Company's 1993 Employee Stock Purchase Plan,
as amended to increase the aggregate number of shares of
common stock authorized for issuance under such plan by
1,500,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3: To approve an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of
common stock from 125,000,000 to 375,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
PROPOSAL 4: To ratify selection of PricewaterhouseCoopers LLP as
independent auditors of the Company for its fiscal year ending
January 31, 2001.
/ / FOR / / AGAINST / / ABSTAIN
Dated _________________
-------------------------------------------
-------------------------------------------
SIGNATURE(S)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. IF THE STOCK IS REGISTERED IN THE
NAMES OF TWO OR MORE PERSONS, EACH SHOULD
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD
THEIR TITLES. IF SIGNER IS A CORPORATION,
PLEASE GIVE FULL CORPORATE NAME AND HAVE A
DULY AUTHORIZED OFFICER SIGN, STATING TITLE.
IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.