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:
[_] Preliminary Proxy Statement
[_] Confidential, For Use Of The
Commission Only (As Permitted By
Rule 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ADVENT SOFTWARE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
ADVENT SOFTWARE, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 4, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Advent Software, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 4, 1999 at 9:00 a.m., local time, at its corporate offices, located
at 301 Brannan Street, San Francisco, California 94107, for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To approve amendments to the Company's 1992 Stock Plan providing for an
increase in the number of shares of Common Stock reserved for issuance
thereunder by 600,000 shares, the adoption of a provision providing for
an annual increase in the number of shares reserved for issuance under
the Plan on the last day of each fiscal year, and to ratify and approve
the material terms of the 1992 Stock Plan.
3. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending December 31,
1999.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 5,
1999 are entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to sign and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Annual Meeting may vote in person even if he or she has returned a proxy.
Irv H. Lichtenwald
Secretary
San Francisco, California
March 26, 1999
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
================================================================================
ADVENT SOFTWARE, INC.
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
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PROCEDURAL MATTERS
GENERAL
The enclosed Proxy is solicited on behalf of Advent Software, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on Tuesday,
May 4, 1999 at 9:00 a.m., local time, and at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders.
The Annual Meeting will be held at the Company's corporate offices at
301 Brannan Street, San Francisco, California 94107. The Company's telephone
number is (415) 543-7696.
These proxy solicitation materials were mailed on or about March 26,
1999, together with the Company's 1998 Annual Report to Stockholders, to all
stockholders entitled to vote at the meeting.
RECORD DATE
Stockholders of record at the close of business on March 5, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, approximately 8,300,000 shares of the Company's common
stock, $.01 par value (the "Common Stock"), were issued and outstanding. For
information regarding security ownership by management and by the beneficial
owners of more than 5% of the Company's Common Stock, see "Beneficial Security
Ownership of Management and Certain Beneficial Owners."
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock
on all matters presented at the Annual Meeting. Stockholders do not have the
right to cumulate their votes in the election of directors.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation materials to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, telegram, letter or
facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock outstanding on the Record
Date. A plurality of the votes duly cast is required for the election of
directors. The affirmative vote of a majority of the votes duly cast is required
to approve the amendment to the Company's 1992 Stock Plan. The affirmative vote
of a majority of the votes duly cast is required to ratify the appointment of
auditors. The Company intends to include abstentions and broker non-votes as
present or represented for purposes of establishing a quorum for the transaction
of business, but to exclude broker non-votes from the tabulation of voting
results on the election of directors or on issues requiring approval of a
majority of the votes cast.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 2000 Annual Meeting of
Stockholders must be received by the Company no later than November 27, 1999 in
order to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws authorize a Board of five directors. A board of
five directors is to be elected at the Annual Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's five nominees named below, all of whom are presently directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Stockholders or until a
successor has been elected and qualified.
The name of and certain information regarding each nominee are set
forth below.
NAME AGE(1) PRINCIPAL OCCUPATION
- --------------------- ------ ----------------------------------------------
Stephanie G. DiMarco..... 41 Chairman of the Board and Chief Executive
Officer
Frank H. Robinson........ 55 Management Consultant
Wendell G. Van Auken..... 54 General Partner, Mayfield Fund
William F. Zuendt........ 52 President and Chief Operating Officer
(Retired), Wells Fargo and Company
Monte Zweben............. 35 Chief Executive Officer, Blue Martini Software
(1) As of the record date, March 5, 1999
Ms. DiMarco founded Advent in June 1983 and, since such date, has
served as its Chief Executive Officer. She also served as Advent's President
until April of 1997. She became Chairman of the Board in November 1995.
Ms. DiMarco holds a B.S. in Business Administration from the University of
California at Berkeley.
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Mr. Robinson has been a director of Advent since February 1985. Since
1982, Mr. Robinson has been a management consultant specializing in the
development of technology-based products and services. Mr. Robinson holds an
M.B.A. and a B.A. in Physics from the State University of New York at Buffalo.
Mr. Van Auken has been a director of Advent since September 1995.
Mr. Van Auken has been a general partner of Mayfield Fund, a venture
capital firm, since October 1986. Mr. Van Auken holds an M.B.A. from
Stanford University and a B.E.E. from Rensselaer Polytechnic Institute.
Mr. Van Auken is a director of Montgomery Street Income Securities, Inc., an
investment company.
Mr. Zuendt became a director in August 1997. Mr. Zuendt retired as
president and chief operating officer of Wells Fargo & Company and its principal
subsidiary, Wells Fargo Bank, in 1997. Mr. Zuendt joined Wells Fargo in 1973
with responsibility for its computer systems and operations. Throughout the
1980's he directed Wells Fargo's retail banking business and was elected
president in 1994. Mr. Zuendt earned a B.S. degree in mathematics from
Rensselaer Polytechnic Institute and an MBA degree from Stanford University. Mr.
Zuendt is a director of 3Com Corporation, a global data networking company;
TriStrata Security Inc., an information security management company; and
PanOceanic Bulk Carriers Limited, an international dry bulk cargo shipping
company.
Mr. Zweben became a director in November 1997. He has served as Chief
Executive Officer of Blue Martini Software, a leading provider of Internet
merchandising solutions, since June 1998. Mr. Zweben founded Red Pepper Software
in 1992 and served as Chief Executive Officer, President and Chairman until its
$250 million merger with PeopleSoft in September of 1996. Mr. Zweben received an
M.S. degree in Computer Science and Industrial Management at Carnegie-Mellon
University.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of five meetings (including
regularly scheduled and special meetings) during fiscal 1998. No incumbent
director during the last fiscal year, while a member of the Board of Directors,
attended fewer than 75% of (i) the total number of meetings of the Board of
Directors or (ii) the total number of meetings held by all committees on which
such director served.
The Board of Directors of the Company has two standing committees: an
Audit Committee and a Compensation Committee. It does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Audit Committee, which currently consists of Messrs. Zuendt and Van
Auken, is responsible for (i) recommending engagement of the Company's
independent auditors, (ii) approving the services performed by such auditors,
(iii) consulting with such auditors and reviewing with them the results of their
examination, (iv) reviewing and approving any material accounting policy changes
affecting the Company's operating results, (v) reviewing the Company's control
procedures and personnel, and (vi) reviewing and evaluating the Company's
accounting principles and its system of internal accounting controls. The Audit
Committee held one meeting during fiscal 1998.
The Compensation Committee, which currently consists of Messrs.
Robinson and Zweben, is responsible for (i) reviewing and approving the
compensation and benefits for the Company's officers and other employees, (ii)
administering the Company's stock purchase and stock option plans, and (iii)
making recommendations to the Board of Directors regarding such matters. The
Compensation Committee held one meeting during fiscal 1998.
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COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for their services as directors of the Company. However,
nonemployee members of the Board of Directors receive an annual cash retainer of
$5,000 and $1,250 for attendance at each meeting of the Board of Directors or
any committee thereof.
In addition, nonemployee directors participate in the Company's 1995
Director Option Plan (the "Director Plan"). The Director Plan was approved by
the Board in October 1995 and was ratified by stockholders in November 1995, at
which time a total of 75,000 shares of Common Stock were reserved for issuance
thereunder. As of March 5, 1999, there were 56,000 options outstanding under the
Director Plan. The Director Plan became effective on the date of the Company's
initial public offering on November 15, 1995, and is currently administered by
the Board of Directors. Under the Director Plan, each nonemployee director is
automatically granted a non-qualified option to purchase 10,000 shares on the
date upon which such person first becomes a director (the "Initial Option") with
an exercise price equal to the fair market value of the Company's Common Stock
as of the date of grant. Thereafter, each nonemployee director is automatically
granted an option to purchase 2,000 shares of Common Stock on December 1 of each
year, except in the year the Director Plan was adopted ("Subsequent Option"),
provided he or she has served as a director for at least six months as of such
date.
Options granted under the Director Plan have a term of ten years unless
terminated sooner upon termination of the optionee's status as a director or
otherwise pursuant to the Director Plan. Such options are transferable by the
optionee only in certain limited circumstances and each option is exercisable
during the lifetime of the director only by such director or a permitted
transferee. Initial Options granted under the Director Plan vest as to 20% of
the shares on the first anniversary date of grant and as to the remaining
shares, ratably each month over the ensuing four years. Subsequent Options begin
to vest on the fourth anniversary of the date of grant and vest ratably each
month over the next 12 month period. The Director Plan is designed to work
automatically, without administration; however, to the extent administration is
necessary, the Director Plan has been structured so that options granted to
nonemployee directors who administer the Company's other employee benefit plans
shall qualify as transactions exempt from Section 16(b) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to Rule 16b-3
promulgated thereunder.
REQUIRED VOTE
The five nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as directors, whether or not such affirmative votes constitute a
majority of the shares voted. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but they have no legal effect under Delaware law.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
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PROPOSAL NO. 2
RATIFICATION OF AND APPROVAL OF AMENDMENTS TO THE COMPANY'S
1992 STOCK PLAN
The Company's Board of Directors and stockholders have previously
adopted and approved the Company's 1992 Stock Plan. A total of 2,288,000 shares
of Common Stock are presently reserved for issuance under the Stock Plan. In
February 1999, the Board of Directors approved an amendment to the Stock Plan,
subject to stockholder approval, to increase the shares reserved for issuance
thereunder by 600,000 shares, bringing the total number of shares issuable under
the Stock Plan to 2,888,000. In addition, the Board approved an amendment to add
an automatic replenishment feature to the Stock Plan which would increase the
number of shares issuable under the Stock Plan on December 31 of 1999, 2000 and
2001 the lesser of (i) 500,000, (ii) 3% of the outstanding Common Stock on the
date of increase or (iii) a lesser amount determined by the Board (the
"Evergreen Provision"). As of March 5, 1999, 47,500 shares were available for
future issuance under the Stock Plan. The Company also has a Nonstatutory Stock
Plan which provides for the grant of nonstatutory stock options to non-executive
officer employees. As of March 5, 1999, 8,000 shares were available for future
issuance under the Nonstatutory Stock Plan.
At the Annual Meeting, the Stockholders are being requested to consider and
approve the proposed amendments to the Stock Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 600,000 shares,
bringing the total number of shares issuable under the Stock Plan to 2,888,000
and to approve the addition of the Evergreen Provision to the Stock Plan. The
Board believes that the amendments will enable the Company to continue its
policy of widespread employee stock ownership as a means to motivate high levels
of performance and to recognize key employee accomplishments. At the Annual
Meeting, the Stockholders will also be asked to ratify and approve the material
terms of the 1992 Stock Plan, including, without limitation, the share
limitations described below with respect to Section 162 (m) of the Internal
Revenue Code of 1986, as amended.
SUMMARY OF THE ADVENT SOFTWARE, INC. 1992 STOCK PLAN
GENERAL. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees and consultants of the
Company and to promote the success of the Company. Options and stock purchase
rights may be granted under the Plan. Options granted under the Plan may be
either "incentive stock options", as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock options.
ADMINISTRATION. The Plan may generally be administered by the Board
or a Committee appointed by the Board (as applicable, the "Administrator").
The Administrator may make any determinations deemed necessary or advisable for
the Plan.
ELIGIBILITY. Nonstatutory stock options and stock purchase rights may
be granted under the Plan to employees and consultants of the Company and any
parent or subsidiary of the Company. Incentive stock options may be granted only
to employees. The Administrator, in its discretion, selects the employees and
consultants to whom options and stock purchase rights may be granted, the time
or times at which such options and stock purchase rights shall be granted, and
the exercise price and number of shares subject to each such grant.
LIMITATIONS. Section 162(m) of the Code places limits on the
deductibility for federal income tax purposes of compensation paid to certain
executive officers of the Company. In order to preserve the Company's ability to
deduct the compensation income associated with options and stock purchase rights
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granted to such persons, the Plan provides that no employee may be granted, in
any fiscal year of the Company, options and stock purchase rights to purchase
more than 150,000 shares of Common Stock. Notwithstanding this limit, however,
in connection with such individual's initial employment with the Company, he or
she may be granted options or stock purchase rights to purchase up to an
additional 150,000 shares of Common Stock.
TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following terms and conditions:
(a) EXERCISE PRICE. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of the Common
Stock on the date such option is granted; provided, however, the exercise price
of an incentive stock option granted to a 10% shareholder may not be less than
110% of the fair market value of the Common Stock on the date such option is
granted. The fair market value of the Common Stock is generally determined with
reference to the closing sale price for the Common Stock (or the closing bid if
no sales were reported) on the date the option is granted.
(b) EXERCISE OF OPTION; FORM OF CONSIDERATION. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. The means of payment for
shares issued upon exercise of an option is specified in each option agreement.
The Plan permits payment to be made by cash, check, promissory note, other
shares of Common Stock of the Company (with some restrictions), cashless
exercises, a reduction in the amount of any Company liability to the optionee,
any other form of consideration permitted by applicable law, or any combination
thereof.
(c) TERM OF OPTION. The term of an incentive stock option may be no
more than ten (10) years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% shareholder, the term of the option may
be no more than five (5) years from the date of grant. No option may be
exercised after the expiration of its term.
(d) TERMINATION OF EMPLOYMENT. If an optionee's employment or
consulting relationship terminates for any reason (including death or
disability), then all options held by the optionee under the Plan expire on the
earlier of (i) the date set forth in his or her notice of grant or (ii) the
expiration date of such option. The Plan and the option agreement may provide
for a longer period of time for the option to be exercised after the optionee's
death or disability than for other terminations. To the extent the option is
exercisable at the time of such termination, the optionee (or the optionee's
estate or the person who acquires the right to exercise the option by bequest or
inheritance) may exercise all or part of his or her option at any time before
termination.
(e) NONTRANSFERABILITY OF OPTIONS: Unless otherwise determined by the
Administrator, options granted under the Plan are not transferable other than by
will or the laws of descent and distribution, and may be exercised during the
optionee's lifetime only by the optionee.
(f) OTHER PROVISIONS: The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
STOCK PURCHASE RIGHTS. In the case of SPRs, unless the Administrator
determines otherwise, the Restricted Stock Purchase Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock Purchase Agreement shall be the original price
paid by the purchaser and may be paid by
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cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option or stock purchase right outstanding under the Plan, and the exercise
price of any such outstanding option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options
or stock purchase rights will terminate. The Administrator may, in its sole
discretion, provide that each optionee shall have the right to exercise all of
the optionee's options and stock purchase rights, including those not otherwise
exercisable.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the Administrator shall have the discretion
to allow the optionee to exercise the option or stock purchase right as to all
the optioned stock, including shares not otherwise exercisable. In such event,
the Administrator shall notify the optionee that the option or stock purchase
right is fully exercisable for fifteen (15) days from the date of such notice
and that the option or stock purchase right terminates upon expiration of such
period.
AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter,
suspend or terminate the Plan, or any part thereof, at any time and for any
reason. However, the Company shall obtain shareholder approval for any amendment
to the Plan to the extent necessary and desirable to comply with applicable law.
No such action by the Board or shareholders may alter or impair any option or
stock purchase right previously granted under the Plan without the written
consent of the optionee. Unless terminated earlier, the Plan shall terminate in
August 2002.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is treated as
long-term capital gain or loss. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are allowed
in full against capital gains and up to $3,000 against other income. If these
holding periods are not satisfied, the optionee recognizes ordinary income at
the time of disposition equal to the difference between the exercise price and
the lower of (i) the fair market value of the shares at the date of the option
exercise or (ii) the sale price of the shares. Any gain or loss recognized on
such a premature disposition of the shares in excess of the amount treated as
ordinary income is treated as long-term or short-term capital gain or loss,
depending on the holding period. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. Unless limited by Section 162(m) of
the Code, the Company is entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income
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generally measured by the excess of the then fair market value of the shares
over the exercise price. Any taxable income recognized in connection with an
option exercise by an employee of the Company is subject to tax withholding by
the Company. Unless limited by Section 162(m) of the Code, the Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period. Net capital
gains on shares held more than 12 months may be taxed at a maximum federal rate
of 20%. Capital losses are allowed in full against capital gains and up to
$3,000 against other income.
STOCK PURCHASE RIGHTS. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code, because the Company may repurchase
the stock when the purchaser ceases to provide services to the Company. As a
result of this substantial risk of forfeiture, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the dates when the stock is no longer subject to a
substantial risk of forfeiture (i.e., when the Company's right of repurchase
lapses). The purchaser's ordinary income is measured as the difference between
the purchase price and the fair market value of the stock on the date the stock
is no longer subject to right of repurchase.
The purchaser may accelerate to the date of purchase his or her
recognition of ordinary income, if any, and begin his or her capital gains
holding period by timely filing, (i.e, within thirty days of the purchase), an
election pursuant to Section 83(b) of the Code. In such event, the ordinary
income recognized, if any, is measured as the difference between the purchase
price and the fair market value of the stock on the date of purchase, and the
capital gain holding period commences on such date. The ordinary income
recognized by a purchaser who is an employee will be subject to tax withholding
by the Company. Different rules may apply if the purchaser is also an officer,
director, or 10% shareholder of the Company.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS, AND THE COMPANY WITH
RESPECT TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE
PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
EMPLOYEE OR CONSULTANT MAY RESIDE.
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PARTICIPATION IN THE OPTION PLAN
The following table sets forth information with respect to options
granted under the Option Plan during the fiscal year ended December 31, 1998 to
(i) each of the officers named in the Summary Compensation Table on page 12
hereof, (ii) all executive officers as a group, and (iii) all other employees
(excluding executive officers) as a group:
WEIGHTED
SHARES SUBJECT AVERAGE
TO OPTIONS EXERCISE PRICE
NAME AND POSITION GRANTED PER SHARE
- ------------------------------------------------ -------------- --------------
Stephanie G. DiMarco, Chairman of the
Board and Chief Executive Officer............. - $ -
Peter M. Caswell, President and Chief
Operating Officer............................. - -
Lily S. Chang, Executive Vice President
and Chief Technology Officer................. - -
Irv H. Lichtenwald, Senior Vice President,
Chief Financial Officer and Secretary......... - -
All executive officers as a group (4 persons)... - -
All other employees (excluding executive
officers) as a group.......................... 758,000 33.72
REQUIRED VOTE
The approval of the amendment to the Stock Plan requires the
affirmative vote of a majority of the Votes Cast on the proposal at the Annual
Meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE AMENDMENT TO THE STOCK PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER. THE EFFECT OF AN ABSTENTION IS THE SAME AS A VOTE AGAINST
THE APPROVAL OF THE AMENDMENT OF THE 1992 STOCK PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent accountants, to audit the financial statements of the Company for
the fiscal year ending December 31, 1999. PricewaterhouseCoopers LLP has audited
the Company's financial statements since 1989. A representative of
PricewaterhouseCoopers LLP is expected to be present at the meeting and will
have the opportunity to make a statement, and is expected to be available to
respond to appropriate questions.
Required Vote
The Board of Directors has conditioned its appointment of the Company's
independent accountants upon the receipt of the affirmative vote of a majority
of the shares represented, in person or by proxy, and voting at the Annual
Meeting, which shares voting affirmatively also constitute at least a majority
of the required quorum. In the event that the stockholders do not approve the
selection of
-9-
PricewaterhouseCoopers LLP, the appointment of the independent accountants
will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, AS INDEPENDENT ACCOUNTANTS FOR
FISCAL YEAR ENDING DECEMBER 31, 1999. THE EFFECT OF AN ABSTENTION IS THE SAME
AS A VOTE AGAINST THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
ACCOUNTANTS.
BENEFICIAL SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Common Stock
of the Company as of March 5, 1999 for the following: (i) each person or entity
who is known by the Company to own beneficially more than 5% of the outstanding
shares of the Company's Common Stock; (ii) each of the Company's directors;
(iii) the Company's Chief Executive Officer and each of the officers ("Named
Officers") named in the Summary Compensation Table on page 12 hereof; and (iv)
all directors and executive officers of the Company as a group.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
5% STOCKHOLDERS, DIRECTORS AND OFFICERS OWNED(1) OWNED (1)
- ---------------------------------------------- ------------ ------------
5% STOCKHOLDERS(2)
DiMarco/Harleen Revocable Trust(3)............ 1,030,003 12.4%
c/o Advent Software, Inc.
301 Brannan Street
San Francisco, CA 94107
Pilgrim Baxter & Associates, Ltd.............. 639,300 7.7
825 Duportail Road
Wayne, PA 19087
Scudder Kemper Investments, Inc............... 534,300 6.4
345 Park Avenue
New York, NY 10154
Robert Fleming, Inc........................... 453,925 5.5
320 Park Avenue, 11th Floor
New York, New York 10022
Amerindo Investment Advisors, Inc............. 453,500 5.5
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
Maurice J. Duca............................... 432,058 5.2
1485 East Valley Rd.
Santa Barbara, CA 93108
DIRECTORS AND NAMED OFFICERS
Frank H. Robinson(4).......................... 28,833 *
Wendell G. Van Auken(5)....................... 26,833 *
Monte Zweben (6).............................. 2,833 *
William F. Zuendt (7)......................... 5,833 *
Stephanie G. DiMarco(3)....................... 1,030,003 12.4
Peter M. Caswell(8)........................... 171,831 2.1
Lily S. Chang(9).............................. 92,295 1.1
Irv H. Lichtenwald(10)........................ 20,581 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(8 persons)(11)............................ 1,379,042 16.6
-10-
- -------------------------
* Less than 1%
(1) The number and percentage of shares beneficially owned is determined under
rules of the Securities and Exchange Commission ("SEC"), and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within sixty days of March 5, 1999 through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes, each
person has sole voting and investment power (or shares such powers) with
respect to the shares shown as beneficially owned.
(2) This information was obtained from filings made with the SEC pursuant
to Sections 13(d) or 13(g) of the Exchange Act.
(3) Ms. DiMarco is also Chairman of the Board and Chief Executive Officer of
the Company. Includes 819,004 shares held by the DiMarco/Harleen Revocable
Trust and 143,500 shares held by the DiMarco/Harleen Charitable
Remainder Trust as to which Ms. DiMarco shares voting and dispositive
power. In addition, includes options to purchase 67,499 shares of Common
Stock exercisable within 60 days of March 5, 1997.
(4) Includes options to purchase 16,833 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(5) Includes options to purchase 6,833 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(6) Includes options to purchase 2,833 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(7) Includes options to purchase 2,833 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(8) Includes 2,000 shares held under a trust for his children. Includes
options to purchase 139,410 shares of Common Stock exercisable within
sixty days of March 5, 1998.
(9) Includes options to purchase 41,414 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(10) Includes options to purchase 13,581 shares of Common Stock exercisable
within sixty days of March 5, 1998.
(11) Includes options held by executive officers and directors of the
Company to purchase 291,236 shares of Common Stock exercisable within
sixty days of March 5, 1998.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers, Inc. Such officers, directors and ten-percent stockholders
are also required by SEC rules to furnish the Company with copies of all such
forms that they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that all
Forms 5 required for such persons were filed, the Company believes that during
fiscal 1998 all Section 16(a) filing requirements applicable to its officers,
directors and ten-percent stockholders were complied with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in October 1995 and is
currently composed of Messrs. Zweben and Robinson. No interlocking relationship
exists between any member of the Company's Board of Directors or Compensation
Committee and any member of the board of directors or compensation committee of
any other Company, nor has any such interlocking relationship existed in the
past. No member of the Compensation Committee is or was formerly an officer or
an employee of the Company or its subsidiaries.
During 1996, 1997 and 1998, Mr. Frank H. Robinson, a director of the
Company, served as a consultant to the Company and was paid $38,000, $32,000 and
$890, respectively, in consulting fees for his services.
The Company has entered into indemnification agreements with each of
its directors and officers. Such agreements require the Company to indemnify
such individuals to the fullest extent permitted by law.
-11-
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, as to the Chief Executive Officer and each
of the four other most highly compensated executive officers whose salary plus
bonus exceeded $100,000 during the last fiscal year, information concerning
compensation paid for services to the Company in all capacities during the last
three fiscal years.
Long-Term
Compensation
------------
Annual Compensation Awards
---------------------- -----------
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($)(1) Options (#) ($)(2)
Stephanie G. DiMarco................ 1998 $324,626 $ - - $ 8,367(3)
Chairman of the Board and 1997 313,110 - 150,000 5,124(3)
Chief Executive Officer 1996 275,581 - - 7,425(3)
- ------------------------------------ ------ ----------- ---------- ------------- --------------
Peter M. Caswell.................... 1998 300,000 50,000 - 8,074(3)
President and Chief Operating 1997 281,828 - 120,000 5,516(3)
Officer 1996 233,641 - 10,000 8,024(3)
- ------------------------------------ ------ ----------- ---------- ------------- --------------
Lily S. Chang....................... 1998 300,000 - - 2,821
Executive Vice President and 1997 268,935 - 15,000 2,294
Chief Technology Officer 1996 232,151 - 10,000 5,447
- ------------------------------------ ------ ----------- ---------- ------------- --------------
Irv H. Lichtenwald.................. 1998 300,000 - - 4,671(3)
Senior Vice President, Chief 1997 230,516 - 15,000 5,715(3)
Financial Officer and Secretary 1996 194,671 - - 7,240(3)
- -------------------------
(1) Includes bonuses earned or accrued with respect to services rendered in
the fiscal year indicated, whether or not such bonus was actually paid
during such fiscal year.
(2) Unless otherwise indicated, consists of profit sharing matching amounts
earned pursuant to the 401(k) Plan.
(3) Includes amounts paid for health care benefits.
CERTAIN TRANSACTIONS
In April 1997 the Board of Directors of the Company approved and issued
a $200,000 loan to Peter Caswell, President and Chief Operating Officer of the
Company, secured by Mr. Caswell's stock and options in the Company. The largest
amount outstanding in 1997 was $200,000. In February 1998 the Board forgave
$50,000 of the debt based upon Mr. Caswell's meeting certain performance goals,
and the total amount currently outstanding is $150,000. The loan is due April
2001, or upon termination of Mr. Caswell's employment with the Company if
earlier, and accrues interest at a rate of 8%.
-12-
Option Grants in Last Fiscal Year
The following table shows, as to each of the officers named in the
Summary Compensation Table, information concerning stock options granted during
the fiscal year ended December 31, 1998.
OPTION GRANTS IN FISCAL 1998
Individual Grants
-------------------------------------------------
Number of Percent of Potential Realizable Value
Securities Total Options at Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation for
Options Employees in Exercise Expiration Option Term(4)
Name Granted(1) Fiscal Year(2) Price Date(3) 5% 10%
- ------------------------- ---------- -------------- -------- ---------- ----------- -----------
Stephanie G. DiMarco..... - - - - - -
Peter M. Caswell......... - - - - - -
Lily S. Chang............ - - - - - -
Irv H. Lichtenwald....... - - - - - -
- -------------------------
(1) All options in this table are incentive stock options and were granted
under the 1992 Stock Option Plan and have exercise prices equal to the
fair market value on the date of grant. All such options have ten-year
terms and vest over a five-year period at the rate of one-fifth at the end
of one year from the date of grant and 1/60th each month thereafter.
(2) The Company granted options to purchase 758,000 shares of Common Stock to
employees in fiscal 1998.
(3) Options may terminate before their expiration upon the termination of
optionee's status as an employee or consultant, the optionee's death or an
acquisition of the Company.
(4) Potential realizable value assumes that the stock price increases from the
exercise price from the date of grant until the end of the option term (10
years) at the annual rate specified (5% and 10%). Annual compounding
results in total appreciation of approximately 62.9% (at 5% per year) and
159.4% (at 10% per year). The assumed annual rates of appreciation are
specified in SEC rules and do not represent the Company's estimate or
projection of future stock price growth. The Company does not necessarily
agree that this method can properly determine the value of an option.
OPTION EXERCISES AND HOLDINGS
The following table sets forth, for each of the officers in the Summary
Compensation Table, certain information concerning stock options exercised
during fiscal 1998, and the number of shares subject to both exercisable stock
options as of December 31, 1998. Also reported are values for "in-the-money"
options that represent the positive spread between the respective exercise
prices of outstanding stock options and the fair market value of the Company's
Common Stock as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND FISCAL 1998
YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at Fiscal Year End Fiscal Year End($)(1)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
Stephanie G. DiMarco... - $ - 55,000 95,000 $1,031,250 $1,781,250
Peter M. Caswell....... 42,500 1,672,813 133,243 93,836 4,837,713 1,881,530
Lily S. Chang.......... - - 39,081 20,919 1,564,326 483,674
Irv H. Lichtenwald..... 28,000 868,500 9,249 46,751 324,634 1,734,366
- -------------------------
(1) Market value of underlying securities based on the closing price of
Company's Common Stock on December 31, 1998 (the last trading day of
fiscal 1998) on the Nasdaq National Market of $47.125 minus the exercise
price.
-13-
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee")
consists of directors Monte F. Zweben and Frank H. Robinson, neither of whom is
an employee or officer of the Company. The Committee sets policy and administers
the Company's cash and equity incentive programs for the purpose of attracting
and retaining highly skilled executives who will promote the Company's business
goals and build long-term stockholder value. The Committee is also responsible
for reviewing and making recommendations to the Board of Directors regarding all
forms of compensation to be provided to the executive officers and directors of
the Company, including stock compensation and loans, and all bonus and stock
compensation to all employees.
To the extent appropriate, the Company intends to take the necessary
steps to conform its compensation practices to comply with the $1 million
compensation deduction cap under Section 162(m) of the Internal Revenue Code of
1986, as amended.
COMPENSATION PHILOSOPHY AND POLICIES
The policy of the Committee is to attract and retain key personnel
through the payment of competitive base salaries and to encourage and reward
performance through bonuses and stock ownership. The Committee's objectives are
to:
o ensure that the executive team has clear goals and accountability with
respect to corporate performance;
o establish pay opportunities that are competitive based on
prevailing practices for the industry, the stage of growth, and the
labor markets in which the Company operates;
o independently assess operating results on a regular basis in light of
expected Company performance; and
o align pay incentives with the long-term interests of the Company's
stockholders.
ELEMENTS OF COMPENSATION
Compensation for officers and key employees includes both cash and
equity elements.
Cash compensation consists of base salary, which is determined on the
basis of the level of responsibility, expertise and experience of the employee,
and competitive conditions in the industry. The Committee believes that the
salaries of its officers fall within the software industry norm. In addition,
cash bonuses may be awarded to officers and other key employees; however, no
executive officer received a cash bonus in 1998. Compensation of sales personnel
also includes sales commissions tied to quarterly targets.
Ownership of the Company's Common Stock is a key element of executive
compensation. Officers and other employees of the Company are eligible to
participate in the 1992 Stock Plan (the "Option Plan") and the 1995 Employee
Stock Purchase Plan (the "Purchase Plan"), which were adopted prior to the
Company's initial public offering in November 1995. The Option Plan permits the
Board of Directors or the Committee to grant stock options to employees on such
terms as the Board or the Committee may determine. The Committee has the sole
authority to grant stock options to executive officers of the Company and is
currently administering stock option grants to all employees. In determining the
size of a stock option grant to a new officer or other key employee, the
Committee takes
-14-
into account equity participation by comparable employees within the Company,
external competitive circumstances and other relevant factors. Additional
options may be granted to current employees to reward exceptional performance
or to provide additional unvested equity incentives. The Purchase Plan permits
employees to acquire Common Stock of the Company through payroll deductions
and promotes broad-based equity participation throughout the Company. The
Committee believes that such stock plans align the interests of the
employees with the long-term interests of the stockholders.
The Company also maintains a 401(k) Plan to provide retirement benefits
through tax deferred salary deductions for all its employees. The Company
matches up to 50% of an employee's contribution, not to exceed $500 per
employee.
1998 EXECUTIVE COMPENSATION
Executive compensation for 1998 included base salary, cash and
equity-based incentive compensation and, in the case of sales executives, sales
commissions. Cash incentive compensation is designed to motivate executives to
attain corporate, business unit and individual goals. The Company's policy is to
have a significant portion of an executive's total compensation at risk based on
the Company's overall performance. Since 1996, the Company has maintained a
profit sharing plan for its employees, and certain executive officers
participated in this program in 1998. Executive officers, like other employees,
were eligible for option grants under the Option Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation for the Chief Executive Officer is determined by a process
similar to that discussed above for executive officers. The Chief Executive
Officer's target base pay level has been analyzed using data for comparable
software companies. Ms. DiMarco receives no other material compensation or
benefits not provided to all executive officers.
The Committee has considered the potential impact of Section 162(m) of
the Internal Revenue Code of 1986, as amended, which limits the tax
deductibility of cash compensation paid to individual executive officers to $1
million per officer. The cash compensation to be paid to the Company's executive
officers in fiscal 1996 is not expected to exceed the $1 million limit per
individual officer.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Monte F. Zweben
Frank H. Robinson
-15-
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph sets forth the Company's total cumulative
stockholder return as compared to the Standard & Poor's 500 Index and the Nasdaq
Computer & Data Processing Index for the period November 16, 1995 (the date of
the Company's initial public offering) through December 31, 1998. Total
stockholder return assumes $100 invested at the beginning of the period in the
Common Stock of the Company, the stock represented in the Standard & Poor's 500
Index and the stocks represented in the Nasdaq Computer & Data Processing Index,
respectively.
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
Among Advent Software, Inc., the S&P 500 Index
and the Nasdaq Computer & Data Processing Index
[PERFORMANCE GRAPH APPEARS HERE]
- ----------
* $100 invested on 11/16/95 in Stock or Index including reinvestment of
dividends. Fiscal year ending December 31.
Cumulative Total Return
------------------------------------------
11/16/95 12/95 12/96 12/97 12/98
- --------------------------------- -------- ----- ----- ----- -----
Advent Software, Inc. 100 99 169 159 262
S&P 500 100 103 127 169 218
Nasdaq Computer & Data Processing 100 100 124 152 272
-16-
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Company may recommend.
It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
execute and return, at your earliest convenience, the accompanying proxy card in
the envelope which has been enclosed.
THE BOARD OF DIRECTORS
San Francisco, California
March 26, 1999
-17-
ADVENT SOFTWARE, INC.
1992 STOCK PLAN
(amended effective May 4, 1999)
1. Purposes of the Plan. The purposes of this 1992 Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees and Consultants of the Company and
its Subsidiaries and to promote the success of the Company's business. Options
granted under the Plan may be incentive stock options (as defined under Section
422 of the Code) or non-statutory stock options, as determined by the
Administrator at the time of grant of an option and subject to the applicable
provisions of Section 422 of the Code, as amended, and the regulations
promulgated thereunder. Stock purchase rights may also be granted under the
Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board of Directors
in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Advent Software, Inc., a Delaware corporation.
(g) "Consultant" means any person, who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services
and is compensated for such services. The term Consultant shall not
include directors who are not compensated for their services or who
are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any
Parent or Subsidiary is not interrupted or terminated. Continuous
Status as an Employee or Consultant shall not be considered
interrupted in the case of: (i) sick leave;(ii) military leave;
(iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than ninety
(90) days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the
case of
transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.
(i) "Disability" shall have the meaning set forth in Section 22(e)(3)
of the Code.
(j) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair
Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the
time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the Nasdaq National Market)or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low
asked pricesfor the Common Stock; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith
by the Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(o) "Option" means a stock option granted pursuant to the Plan.
(p) "Optioned Stock" means the Common Stock subject to an Option or a
Stock Purchase Right.
(q) "Optionee" means an Employee or Consultant who receives an Option or
Stock Purchase Right.
(r) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
-2-
(s) "Plan" means this 1992 Stock Plan.
(t) "Restricted Stock" means shares of Common Stock acquired pursuant to
a grant of a Stock Purchase Right under Section 11 below.
(u) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 12 below.
(v) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 below.
(w) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 2,888,000 shares of Common Stock, plus an annual increase
to be added on December 31 of the years 1999, 2000 and 2001 equal to the lesser
of (i) 500,000 shares, (ii) 3% of the outstanding shares as of December 31 of
each year, or (iii) an amount determined by the Board. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires, becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an option
exchange program approved by the Administrator, the unpurchased Shares that were
subject thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated). Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, and the original purchaser of such Shares did not
receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are
neither Directors nor Officers.
(ii) Administration With Respect to Directors and Officers Subject to
Section 16(b). With respect to Option or Stock Purchase Right
grants made to Employees who are also Officers or Directors
subject to Section 16(b) of the Exchange Act, the Plan shall be
administered by (A) the Board, if the Board may administer the
Plan in a manner complying with the rules under Rule 16b-3
relating to the disinterested administration of employee
benefit plans under
-3-
which Section 16(b) exempt discretionary grants and awards of
equity securities are to be made, or (B) a committee designated
by the Board to administer the Plan, which committee shall be
constituted to comply with the rules under Rule 16b-3 relating to
the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of
equity securities are to be made. Once appointed, such
Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause)
and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the rules
under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section
16(b) exempt discretionary grants and awards of equity
securities are to be made.
(iii) Administration With Respect to Other Persons. With respect to
Option or Stock Purchase Right grants made to Employees or
Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a committee
designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall
serve in its designated capacity until otherwise directed by
the Board. The Board may increase the size of the Committee
and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee
and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall
have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock Purchase
Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be covered by
each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price,
the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Option or Stock
Purchase Right or the
-4-
shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its
sole discretion, shall determine;
(vii) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase
Right shall have declined since the date the Option or Stock
Purchase Right was granted;
(viii) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred
tax treatment under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (subject to
Section 14(b) of the Plan), including the discretionary authority
to extend the post-termination exercisability period of Options
longer than is otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xii) to determine the terms and restrictions applicable to Options
and Stock Purchase Rights and any Restricted Stock; and
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options or Stock Purchase
Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. Incentive Stock Options may
be granted only to Employees. An Employee or Consultant who has
been granted an Option or Stock Purchase Right may, if he or she is
otherwise eligible, be granted additional Options or Stock Purchase
Rights.
(b) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of the Shares with respect to which
Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee
-5-
during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time the
Option with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
(e) The following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:
(i) No Employee shall be granted, in any fiscal year of the Company,
Options and Stock Purchase Rights to purchase more than 150,000
Shares.
(ii) In connection with his or her initial employment, an Employee
may be granted Options and Stock Purchase Rights to purchase up
to an additional 150,000 Shares which shall not count against the
limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as
described in Section 12.
(iv) If an Option or Stock Purchase Right is cancelled in the same
fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 12), the
cancelled Option or Stock Purchase Right will be counted against
the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option or Stock Purchase
Right is reduced, the transaction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant
of a new Option or Stock Purchase Right.
6. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the stockholders of
the Company as described in Section 18 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 14 of the
Plan.
7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of such
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
-6-
8. Option Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(1) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of
grant.
(2) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
(b) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including
the method of payment. In the case of an Incentive Stock Option,
the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist
entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A)in the case of Shares acquired upon exercise
of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required
to pay the exercise price;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation
program or arrangement;
(vii) any combination of the foregoing methods of payment; or
-7-
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance
criteria with respect to the Company and/or the Optionee, and as shall
be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment or Consulting Relationship. Upon termination
of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may
exercise his or her Option, but only within such period of time as is
specified in the Notice of Grant, and only to the extent that the
Optionee was entitled to exercise it at the date of termination
(but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). In the absence of a
specified time in the Notice of Grant, the Option shall remain
exercisable for three (3) months following the Optionee's termination.
In the case of an Incentive Stock Option, such period of time for
exercise shall not exceed three (3) months from the date of
termination. If, on the date of termination, the Optionee is not
entitled to exercise the Optionee's entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
Notwithstanding the above, in the event of an Optionee's change in
status from Consultant to Employee or Employee to Consultant, the Optionee's
Continuous Status as an Employee or
-8-
Consultant shall not automatically terminate solely as a result of such change
in status. However, in such event, an Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option three months and one
day following such change of status.
(c) Disability of Optionee. In the event that an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option
at any time within twelve (12)months from the date of such termination,
but only to the extent that the Optionee was entitled to exercise it at
the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant). If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following
the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the
Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent that the
Optionee was entitled to exercise the Option at the date of death. If,
at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after
death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.
(f) Rule 16b-3. Options granted to individuals subject to Section 16 of
the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions
or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with espect
to Plan transactions.
10. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights
under the Plan, it shall advise the offeree in writing of the terms,
conditions and restrictions related to the offer,
-9-
including the number of Shares that such person shall be entitled to
purchase, the price to be paid and the time within which such person
must accept such offer, which shall in no event exceed ninety (90)
days from the date upon which the Administrator made the determination
to grant the Stock Purchase Right. The offer shall be accepted by
execution of a purchase agreement (the "Restricted Stock Purchase
Agreement") in the form determined by the Administrator. Shares
purchased pursuant to the grant of a Stock Purchase Right shall be
referred to herein as "Restricted Stock".
(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any
reason (including death or Disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock Purchase Agreement shall
be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at such rate as the Administrator may
determine.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain
such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase
agreements need not be the same with respect to each purchaser.
(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of
the Company. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 12 of
the Plan.
(e) Rule 16b-3. Stock Purchase Rights granted to Insiders, and Shares
purchased by Insiders in connection with Stock Purchase Rights,
shall be subject to any restrictions applicable thereto in compliance
with Rule 16b-3. An Insider may only purchase Shares pursuant to the
grant of a Stock Purchase Right, and may only sell Shares purchased
pursuant to the grant of a Stock Purchase Right, during such time or
times as are permitted by Rule 16b-3.
12. Adjustments Upon Changes in Capitalization, Dissolution or Merger.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase
Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right,
as well as the price per share of Common Stock covered by each such
outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible
securities of the Company shall not
-10-
be deemed to have been "effected without receipt of consideration".
Such adjustment shall be made by the Administrator, whose determination
in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option or Stock
Purchase Right has not been previously exercised, it will terminate
immediately prior to the consummation of such proposed action. The
Board may, in the exercise of its sole discretion in such instances,
declare that any Option or Stock Purchase Right shall terminate as of
a date fixed by the Board and give each Optionee the right to
exercise his or her Option or Stock Purchase Right as to all or any
part of the Optioned Stock, including Shares as to which the Option
or Stock Purchase Right would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the
assets of the Company, each outstanding Option and Stock Purchase
Right shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or Subsidiary
of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock
Purchase Right, Administrator shall have the discretion to allow
the Optionee to exercise the Option or Stock Purchase Right as
to all of the Optioned Stock, including Shares as to which it
would not otherwise be exercisable. If an Option or Stock Purchase
Right is exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Administrator shall notify
the Optionee that the Option or Stock Purchase Right shall be fully
exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon
the expiration of such period. For the purposes of this paragraph,
the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers
the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the
merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of
the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common
stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
13. Date of Grant. The date of grant of an Option or Stock Purchase Right shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option or
-11-
Stock Purchase Right, or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Employee or
Consultant to whom an Option or Stock Purchase Right is so granted within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the
rights of any Optionee under any grant theretofore made without his or
her consent. In addition, to the extent necessary and desirable to
comply with Section 422 of the Code (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any
Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this
Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee and the Administrator, which agreement
must be in writing and signed by the Optionee and properly on behalf of
the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
17. Agreements. Options and Stock Purchase Rights shall be evidenced by written
agreements in such form as the Administrator shall approve from time to time.
Such agreements
-12-
may contain such other terms and conditions, including rights of repurchase and
rights of first refusal, as the Administrator may in its sole discretion
deem appropriate.
18. Stockholder Approval. Continuance of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months before or after
the date the Plan is adopted. Such stockholder approval shall be obtained in
the degree and manner required under applicable state and federal law.
-13-
ADVENT SOFTWARE, INC.
1992 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number_________________________
Date of Grant_________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted_________________________
Total Exercise Price $_________________________
Type of Option:___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date:_________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
20% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/60th of the Shares subject to the Option
shall vest each month thereafter.
-1-
Termination Period.
This Option may be exercised for _____ [days/months] after termination
of the Optionee's employment or consulting relationship with the Company. Upon
the death or Disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In the event of the Optionee's change in
status from Employee to Consultant or Consultant to Employee, this Option
Agreement shall remain in effect. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(b)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares
are then listed. Assuming such compliance, for income tax
-2-
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for
more than six (6)months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
4. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax and state income tax liability upon exercise of a NSO. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates)equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a percentage
of this compensation income at the time of
-3-
exercise, and may refuse to honor the exercise and refuse to deliver Shares
if such withholding amounts are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee
undergoes a change of status from Employee to Consultant, any Incentive Stock
Option of the Optionee that remains unexercised shall cease to qualify as an
Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option on the ninety-first (91st) day following such
change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or
she may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash
or out of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the
-4-
Plan and this Option Agreement. Optionee has reviewed the Plan and this
Option Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option Agreement and fully
understands all provisions of the Plan and Option Agreement. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: ADVENT SOFTWARE, INC.
____________________________________ By:_________________________________
Signature
____________________________________ Title:______________________________
Print Name
- ------------------------------------
Residence Address
- ------------------------------------
-5-
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
____________________________
Spouse of Optionee
-6-
EXHIBIT A
1992 STOCK PLAN
EXERCISE NOTICE
Advent Software, Inc.
301 Brannan Street
San Francisco, CA 94107
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, 199__, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of Advent Software, Inc. (the "Company") under and
pursuant to the 1992 Stock Plan (the "Plan") and the Stock Option Agreement
dated, 19___ (the "Option Agreement"). The purchase price for the Shares shall
be $__________, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 12 of the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
-1-
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
OPTIONEE: ADVENT SOFTWARE, INC.
_________________________________ By:_________________________________
Signature
_________________________________ Its:________________________________
Print Name
Address: Address:
_________________________________ 301 Brannan Street
_________________________________ San Francisco, CA 94107
PROXY
ADVENT SOFTWARE, INC.
PROXY FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of ADVENT SOFTWARE, INC., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated March 26, 1999, and hereby appoints Stephanie G.
DiMarco and Irv H. Lichtenwald, and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 1999 Annual Meeting of
Stockholders of ADVENT SOFTWARE, INC. to be held on Tuesday, May 4, 1999, at
9:00 a.m., local time, at its corporate offices located at 301 Brannan Street,
San Francisco, California and at any adjournment or adjournments thereof, and to
vote all shares of Common Stock which the undersigned would be entitled to vote,
if then and there personally present, on the matters set forth on the reverse
side.
A majority of such attorneys or substitutes as shall be present and shall act at
said meeting or any adjournment or adjournments thereof (or if only one shall
represent and act, then that one) shall have and may exercise all of the powers
of said attorneys-in-fact hereunder.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF THE 1992 STOCK
OPTION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------
[X] Please mark
votes as in
this example
1. Election of Directors
NOMINEES: Stephanie G. DiMarco; Frank H. Robinson;
Wendell G. Van Auken; William F. Zuendt; Monte Zweben
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] [_]
[_] _____________________________________________________________________
For all nominees except as noted above.
FOR AGAINST ABSTAIN
2. Proposal to approve certain amendments to the [_] [_] [_]
Company's 1992 Stock Plan providing for an
increase in number of shares of Common Stock
reserved for issuance thereunder by 600,000
shares, the adoption of a provision providing
for an annual increase in the number of shares
reserved for issuance under the Plan on the
last day of each fiscal year, and to ratify and
approve the material terms of the 1992 Stock
Plan.
FOR AGAINST ABSTAIN
3. Proposal to ratify the appointment of [_] [_] [_]
PricwaterhouseCoopers LLP, as the independent
accountants of the Company for fiscal 1999.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
Please sign exactly as your name(s) appear(s) hereon. All holders must sign.
When signing in a fiduciary capacity, please indicate full title as such. If a
corporation or partnership, please sign in full corporate or partnership name by
authorized person.
Signature:_________________ Date:______ Signature:_________________ Date:______