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:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement 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 ActRule 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 13, 1997
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 13, 1997 at 9:00 a.m., local time, at the Sheraton Palace Hotel
located at Two New Montgomery Street, San Francisco, California 94105, 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 an amendment to the Company's 1992 Stock Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by
600,000 shares.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors for the Company for the fiscal year ending December 31, 1997.
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 28, 1997 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.
/s/ IRV H. LICHTENWALD
Irv H. Lichtenwald
Secretary
San Francisco, California
April 10, 1997
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 13, 1997 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 Sheraton Palace Hotel, located at Two
New Montgomery Street, San Francisco, California 94105. The Company's
telephone number is (415) 543-7696.
These proxy solicitation materials were mailed on or about April 10, 1997,
together with the Company's 1996 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 28, 1997 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, 7,423,719 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
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 1998 Annual Meeting of Stockholders must
be received by the Company no later than December 5, 1997 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 three
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
three 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 is set forth
below.
NAME AGE(1) PRINCIPAL OCCUPATION
---- ------ --------------------
Stephanie G. DiMarco................ 39 Chairman of the Board, President
and Chief Executive Officer
Frank H. Robinson................... 53 Management Consultant
Wendell G. Van Auken................ 52 General Partner, Mayfield Fund
- - --------
(1) As of the record date, March 28, 1997
Ms. DiMarco founded Advent in June 1983 and, since such date, has served as
its President and Chief Executive Officer. 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.
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 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.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of six meetings (including regularly
scheduled and special meetings) during fiscal 1996. No incumbent director
during the last fiscal year, while a member of the Board of Directors,
attended fewer than 75% of the aggregate of (i) the total number of meetings
of the Board of Directors and (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 Maurice J. Duca, Mr.
Robinson and Mr. 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
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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 1996.
The Compensation Committee, which currently consists of Messrs. Duca,
Robinson and Van Auken, 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 1996.
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 28, 1997, there were 36,000 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. During 1996, no director was granted
an Initial Option. 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 three 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. 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
APPROVAL OF AMENDMENT TO THE COMPANY'S
1992 STOCK PLAN
GENERAL
The 1992 Stock Plan as amended (the "Option Plan") was adopted by the Board
of Directors and approved by the stockholders in August 1992. In March 1997,
the Board of Directors approved an amendment to the Option Plan to increase
the number of shares reserved for issuance thereunder by an additional 600,000
shares. There are currently 1,688,000 shares of Common Stock reserved for
issuance under the Option Plan. The Option Plan provides for the grant to
employees of the Company of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), for
the grant of nonstatutory stock options and stock purchase rights to employees
and consultants of the Company. The Option Plan may be administered by the
Board or a committee approved by the Board. As of March 28, 1997, options to
purchase 1,153,000 shares were outstanding under the Option Plan and 93,000
shares remained available for future grants (without giving effect to the
March 1997 amendment).
PROPOSAL
At the Annual Meeting, the stockholders are being requested to approve the
amendment approved by the Board of Directors in March 1997 to the Option Plan
to increase the number of shares reserved for issuance thereunder by 600,000
shares for an aggregate of 2,288,000 shares reserved for issuance thereunder.
The amendment to increase the number of shares reserved under the Option Plan
is proposed in order to give the Board of Directors greater flexibility to
grant stock options and stock purchase rights. The Company believes that
granting stock options motivates high levels of performance and provides an
effective means of recognizing employee contributions to the success of the
Company. The Company believes that this policy is of great value in recruiting
and retaining highly qualified technical and other key personnel who are in
great demand as well as rewarding and incenting current employees. The Board
of Directors believes that the ability to grant options and stock purchase
rights will be important to the future success of the Company by allowing it
to accomplish these objectives.
SUMMARY OF THE OPTION PLAN
Certain features of the Option Plan are outlined below.
Administration. The Option Plan may be administered by the Board or a
committee of the Board (the "Administrator"), which committee is required to
be constituted to comply with Section 16(b) of the Exchange Act and applicable
laws. Subject to the other provisions of the Option Plan, the Administrator
has the power to determine the terms of any options and stock purchase rights
granted, including the exercise price, the number of shares subject to the
option or stock purchase right and the exercisability thereof. The Option Plan
is currently administered by the Compensation Committee of the Board of
Directors.
Eligibility and Terms of Options. The Option Plan provides that nonstatutory
stock options and stock purchase rights may be granted only to employees and
consultants. Incentive stock options may be granted only to employees. An
optionee who has been granted an option may, if he or she is otherwise
eligible, be granted additional options or stock purchase rights. With respect
to any optionee who owns stock possessing more than 10% of the voting power of
all classes of stock of the Company (a "10% Stockholder"), the exercise price
of any incentive stock option granted must equal at least 110% of the fair
market value on the grant date and the maximum term of the option must not
exceed five years. The term of all other options under the Option Plan may not
exceed ten years. The Administrator selects the optionees and determines the
number of shares to be subject to each option. In making such determination,
there is taken into account the duties and responsibilities of the employee or
consultant, the value of his or her services, his or her present and potential
contribution to the success of the Company, the anticipated number of years of
future service and other relevant factors.
4
Terms and Conditions of Options. Each option granted under the Option Plan
is evidenced by a written stock option agreement between the optionee and the
Company and is subject to the following terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options to purchase shares of Common Stock at the time the options are
granted. However, the exercise price of an incentive stock option must not
be less than 100% (110% if issued to a 10% Stockholder) of the fair market
value of the Common Stock on the date the option is granted. For so long as
the Company's Common Stock is traded on the Nasdaq National Market, the
fair market value of a share of Common Stock shall be the closing sale
price for such stock (or the closing bid if no sales were reported) as
quoted on the Nasdaq National Market on the date the option is granted.
(b) Exercise of the Option. Each stock option agreement will specify the
term of the option and the date when the option is to become exercisable.
The terms of such vesting are determined by the Administrator. Options
granted under the Option Plan have a ten-year term and to date generally
become exercisable over five years at a rate of one-fifth of the shares
subject to the options at the end of one year from the date of grant and
1/60th each month thereafter. An option is exercised by giving written
notice of exercise to the Company, specifying the number of full shares of
Common Stock to be purchased and by tendering full payment of the purchase
price to the Company.
(c) Form of Consideration. The consideration to be paid for the shares of
Common Stock issued upon exercise of an option shall be determined by the
Administrator and is set forth in the option agreement. Such form of
consideration may vary for each option, and may consist entirely of cash,
check, promissory note, other shares of the Company's Common Stock meeting
certain criteria, any combination thereof, or any other legally permissible
form of consideration as may be provided in the Option Plan or the option
agreement.
(d) Termination of Employment. In the event an optionee's continuous
status as an employee or consultant terminates for any reason (other than
upon the optionee's death or disability), the optionee may exercise his or
her option to the extent that the optionee was entitled to exercise it at
the date of such termination, but only within such period of time set forth
in the option agreement (not to exceed three months in the case of an
incentive stock option) from the date of such termination (and in no event
later than the expiration of the term of such option as set forth in the
option agreement). If no period of time is specified in the option
agreement, the optionee may exercise his or her option for three months
following the date of such termination, subject to the same limitations set
forth above. Options granted under the Option Plan to date have generally
provided that optionees may exercise their options within ninety days from
the date of termination of employment (other than for death or disability).
(e) Disability. In the event an optionee's continuous status as an
employee or consultant terminates as a result of permanent and total
disability (as defined in Section 22(e)(3) of the Code), the optionee may
exercise his or her option to the extent that the optionee was entitled to
exercise it at the date of such termination, within twelve months from the
date of such termination (but in no event later than the expiration of the
term of such option as set forth in the option agreement).
(f) Death. In the event of an optionee's death, the optionee's estate or
a person who acquired the right to exercise the deceased optionee's option
by bequest or inheritance may exercise the option to the extent that the
optionee was entitled to exercise it at the date of death, within twelve
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 option
agreement).
(g) Termination of Options. Excluding incentive stock options issued to
10% Stockholders, options granted under the Option Plan expire on the date
set forth in the option agreement (not to exceed ten years from the date of
grant). Incentive stock options granted to 10% Stockholders expire five
years from the date of grant (or such shorter period set forth in the
option agreement). No option may be exercised by any person after the
expiration of its term.
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(h) Nontransferability of Options. An option is nontransferable by the
optionee, other than by will or the laws of descent and distribution, and
is exercisable during the optionee's lifetime only by the optionee. In the
event of the optionee's death, options may be exercised by a person who
acquires the right to exercise the option by bequest or inheritance.
(i) Value Limitation. If the aggregate fair market value of all shares of
Common Stock subject to an optionee's incentive stock option which are
exercisable for the first time during any calendar year exceeds $100,000,
the excess options shall be treated as nonstatutory options.
(j) Other Provisions. The stock option agreement may contain such other
terms, provisions and conditions not inconsistent with the Option Plan as
may be determined by the Administrator.
Terms and Conditions of Stock Purchase Rights. Each stock purchase right
granted under the Option Plan shall be evidenced by a written offer which sets
forth the terms, conditions and restrictions related to the offer, including
the number of shares subject to the offer, the price per share, and the time
in which the offeree must accept the offer (which may not exceed ninety days
from the date the Administrator granted the stock purchase right). The offer
must be accepted by executing a purchase agreement with such terms and
conditions as determined by the Administrator. The stock purchased pursuant to
a stock purchase right shall be subject to a repurchase option (unless the
Administrator determines otherwise) upon any termination of the purchaser's
employment with the Company (including termination as a result of death or
disability). Pursuant to such repurchase option, the Company shall be able to
repurchase any shares of stock as to which the repurchase option has not
lapsed at the price per share originally paid by the purchaser. The
Administrator shall determine the rate at which the repurchase option lapses.
A purchaser of stock pursuant to a stock purchase right shall the rights
equivalent to those of a stockholder.
Adjustment Upon Changes in Capitalization; Corporate Transactions. In the
event of changes in the outstanding Common Stock of the Company by reason of
any stock splits, reverse stock splits, stock dividends, mergers,
recapitalizations or other change in the capital structure of the Company, an
appropriate adjustment shall be made by the Administrator in the following:
(i) the number of shares of Common Stock subject to the Option Plan, (ii) the
number and class of shares of stock subject to any option or stock purchase
right outstanding under the Option Plan, (iii) and the exercise price of any
such outstanding option or stock purchase right. The determination of the
Administrator as to which adjustments shall be made shall be conclusive. In
the event of a proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately prior to the consummation of
such proposed action. The Board of Directors in its sole discretion may in
such circumstances declare that any outstanding option or stock purchase right
shall terminate as of a date fixed by the Board of Directors and give each
optionee the right to exercise his or her option or stock purchase right,
including as to shares for which the option or stock purchase right would not
otherwise be exercisable.
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 or stock purchase right will 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, the optionee shall have the right 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.
Amendment and Termination of the Option Plan. The Board may at any time
amend, alter, suspend or terminate the Option Plan. The Company shall obtain
stockholder approval of any amendment to the Option Plan in such a manner and
to such a degree as is necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or Section 422 of the Code (or any other applicable law or
regulation, including the requirements of any exchange or quotation system on
which the Common Stock is traded). Any amendment or termination of the Option
Plan shall not affect options already granted and such options shall remain in
full force and effect as if the Option Plan had not been amended or
terminated, unless mutually agreed otherwise between the optionee and the
Company, which agreement must be in writing and signed by the optionee and the
Company. In any event, the Option Plan shall terminate in August 2002. Any
options outstanding under the Option Plan at the time of its termination shall
remain outstanding until they expire by their terms.
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FEDERAL TAX INFORMATION
Options granted under the Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange 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. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director, or 10% Stockholder of the Company. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized
by the optionee. Any gain or loss recognized on such a premature disposition
of the shares in excess of the amount treated as ordinary income will be
characterized as long-term or short-term capital gain or loss, depending on
the holding period.
All of the options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any
taxable income at the time he is granted a nonstatutory option. However, upon
its exercise, the optionee will recognize taxable income generally measured as
the excess of the then fair market value of the shares purchased over the
purchase price. Any taxable income recognized in connection with an option
exercise by an optionee who is also an employee of the Company will be subject
to tax withholding by the Company. Upon resale of such shares by the optionee,
any difference between the sales price and the optionee's purchase price, to
the extent not recognized as taxable income as described above, will be
treated as long-term or short-term capital gain or loss, depending on the
holding period.
The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by the optionee with respect to shares acquired
upon exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Option Plan; it does not purport to be complete, and it does
not discuss the tax consequences of the optionee's death or the income tax
laws of any municipality, state or foreign country in which an optionee may
reside.
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, 1996 to (i)
each of the officers named in the Summary Compensation Table on page 11
hereof, (ii) all executive officers as a group, and (iii) all other employees
(excluding executive officers) as a group:
SHARES SUBJECT WEIGHTED AVERAGE
TO OPTIONS EXERCISE PRICE
NAME AND POSITION GRANTED PER SHARE
----------------- -------------- ----------------
Stephanie G. DiMarco, Chairman of the
Board, President and Chief Executive
Officer................................... -- $ --
Peter M. Caswell, Senior Vice President,
Sales and Marketing....................... 10,000 32.00
Lily S. Chang, Senior Vice President,
Technology................................ 10,000 32.00
Irv H. Lichtenwald, Senior Vice President,
Chief Financial Officer and Secretary..... -- --
All executive officers as a group (4
persons).................................. 20,000 32.00
All other employees (excluding executive
officers) as a group...................... 392,000 24.83
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REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Annual Meeting is required to approve and ratify
the amendment to the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
OPTION PLAN. THE EFFECT OF AN ABSTENTION IS THE SAME AS A VOTE
AGAINST THE AMENDMENT OF THE OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P., independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 1997. Coopers & Lybrand L.L.P. has audited the Company's
financial statements since 1989. A representative of Coopers & Lybrand L.L.P.
is expected to be present at the meeting, 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 auditors 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 Coopers & Lybrand L.L.P., the appointment of the independent
auditors will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND, L.L.P., AS INDEPENDENT AUDITORS FOR
FISCAL YEAR ENDING DECEMBER 31, 1997. THE EFFECT OF AN ABSTENTION IS
THE SAME AS A VOTE AGAINST THE RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT AUDITORS.
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 presented 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
April 10, 1997
8
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 28, 1997 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 11
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).................... 1,075,904 14.5%
c/o Advent Software, Inc.
301 Brannan Street
San Francisco, CA 94107
Amerindo Investment Advisors, Inc.(4)................. 912,500 12.3
One Embarcadero Center, Suite 2300
San Francisco, CA 94111
Mayfield Fund(5)...................................... 521,376 7.0
2800 Sand Hill Road
Menlo Park, CA 94025
DIRECTORS AND NAMED OFFICERS
Maurice J. Duca(6).................................... 773,177 10.4
Frank H. Robinson(7).................................. 35,167 *
Wendell G. Van Auken(5)............................... 554,724 7.5
Stephanie G. DiMarco(3)............................... 1,275,904 17.2
Peter M. Caswell(8)................................... 98,000 1.3
Lily S. Chang(9)...................................... 101,316 1.4
Irv H. Lichtenwald(10)................................ 31,267 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(7 persons)(11)...................................... 2,869,555 37.8
- - --------
* 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 28, 1997 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, President and Chief Executive
Officer of the Company. Includes 1,075,904 shares held by the
DiMarco/Harleen Revocable Trust and 200,000 shares held by the
DiMarco/Harleen Charitable Remainder Trust as to which Ms. DiMarco shares
voting and dispositive power.
9
(4) These securities are accrued in the aggregate by Amerindo Investment
Advisors, Inc. a California corporation, Amerindo Investment Advisors,
Inc. a Panama Corporation, Alberto W. Vilar and Gary A. Tanaka.
(5) Mr. Van Auken is a general partner of Mayfield Fund and shares voting and
dispositive power as to shares held by the following funds affiliated
with Mayfield Fund: Mayfield VII, a California limited partnership
(492,278 shares) and Mayfield Associates Fund II, a California limited
partnership (29,098 shares); Mr. Van Auken disclaims beneficial ownership
of all such shares held by these entities except to the extent of his
pecuniary interest therein arising from his general partnership interest
in the General Partner of Mayfield VII and Mayfield Associates Fund II.
Also includes 28,000 shares held by the W.G. Van Auken Trust for which
Mr. Van Auken is Trustee, 2,181 shares held by Mr. Van Auken and 3,167
shares subject to options exercisable within 60 days of March 28, 1997.
(6) Includes options to purchase 3,167 shares of Common Stock exercisable
within sixty days of March 28, 1997.
(7) Includes options to purchase 13,167 shares of Common Stock exercisable
within sixty days of March 28, 1997.
(8) Represents options to purchase 98,000 shares of Common Stock exercisable
within sixty days of March 28, 1997.
(9) Includes options to purchase 36,666 shares of Common Stock exercisable
within sixty days of March 28, 1997.
(10) Includes options to purchase 9,666 shares of Common Stock exercisable
within sixty days of March 28, 1997.
(11) Includes options held by executive officers and directors of the Company
to purchase 163,833 shares of Common Stock exercisable within sixty days
of March 28, 1997.
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 1996 all Section 16(a) filing requirements applicable to its officers,
directors and ten-percent stockholders were complied with, except that Mr.
Duca filed a Form 4 late covering two transactions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in October 1995 and is
currently composed of Messrs. Duca, Van Auken 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 1994, 1995 and 1996, Mr. Frank H. Robinson, a director of the
Company, served as a consultant to the Company and was paid $71,610, $33,909
and $37,845, respectively, in consulting fees for his services.
10
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.
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 $100,000 during the last fiscal year, information concerning
compensation paid for services to the Company in all capacities during the
last three fiscal years.
LONG-TERM
COMPENSATION
------------
ANNUAL
COMPENSATION AWARDS
---------------- ------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) OPTIONS (#) ($)(2)
- - --------------------------- ---- -------- ------- ------------ ------------
Stephanie G. DiMarco....... 1996 $275,581 $ -- -- $7,425(4)
Chairman of the Board,
President and Chief 1995 253,584 65,350 -- 2,989(3)(4)
Executive Officer 1994 189,583 22,110 -- 4,077(3)(4)
- - -------------------------------------------------------------------------------
Peter M. Caswell........... 1996 233,641 -- 10,000 8,024(4)
Senior Vice President,
Sales and Marketing 1995 203,765 350 10,000 3,768(4)
1994 148,942 17,383 -- --
- - -------------------------------------------------------------------------------
Lily S. Chang.............. 1996 232,151 -- 10,000 1,847
Senior Vice President,
Technology 1995 211,285 350 10,000 3,054
1994 156,242 33,312 -- 1,027
- - -------------------------------------------------------------------------------
Irv H. Lichtenwald(5)...... 1996 194,671 -- -- 3,640(4)
Senior Vice President, 1995 141,622 37,500 140,000 1,190(4)
Chief Financial Officer
and
Secretary 1994 -- -- -- --
- - --------
(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 by the Company for premiums for a life insurance
policy payable to beneficiaries designated by Ms. DiMarco.
(4) Includes amounts paid for health care benefits.
(5) Mr. Lichtenwald began working for the Company on March 20, 1995.
11
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, 1996.
OPTION GRANTS IN FISCAL 1996
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
--------------------------------------------- RATES OF STOCK
NUMBER OF PERCENT OF PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(4)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------
NAME GRANTED(1) FISCAL YEAR(2) PRICE DATE(3) 5% 10%
---- ---------- -------------- -------- ---------- -------- --------
Stephanie G. DiMarco.... -- --% $ -- -- $ -- $ --
Peter M. Caswell........ 10,000 2.4 32.00 11/19/06 201,280 510,080
Lily S. Chang........... 10,000 2.4 32.00 11/19/06 201,280 510,080
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 412,000 shares of Common Stock to
employees in fiscal 1996.
(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.
12
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 1996, and the number of shares subject to both exercisable stock
options as of December 31, 1996. 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, 1996.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL 1996 YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
SHARES VALUE END FISCAL YEAR END($)(1)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
Stephanie G. DiMarco.... -- $ -- -- -- $ -- $ --
Peter M. Caswell........ -- -- 84,000 66,000 2,173,500 1,449,000
Lily S. Chang........... 65,000 1,267,500 23,666 54,334 680,526 1,173,849
Irv H. Lichtenwald...... 39,000 560,500 10,000 91,000 253,750 2,309,125
- - --------
(1) Market value of underlying securities based on the closing price of
Company's Common Stock on December 31, 1996 (the last trading day of
fiscal 1996) on the Nasdaq National Market of $30.375 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 Maurice J. Duca, Wendell G. Van Auken and Frank H.
Robinson, none 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:
. ensure that there is an appropriate relationship between executive
compensation and the creation of stockholder value;
. ensure that the total compensation program will motivate, retain and
attract executives of outstanding abilities; and
. ensure that current cash and equity incentive opportunities are
competitive with comparable companies.
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 1996. 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 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.
14
1996 Executive Compensation
Executive compensation for 1996 included base salary and, in the case of
sales executives, sales commissions. Executive officers, like other employees,
were eligible for option grants under the Option Plan. Prior to the Company's
initial public offering in November 1995, the Board of Directors, consistent
with the Company's status as a privately-held corporation, took primary
responsibility for establishing and administering the Company's executive
compensation policies. For 1996, the Company also implemented a profit sharing
plan for its employees.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Maurice J. Duca
Wendell G. Van Auken
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, 1996. 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 13 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
-------- ----- -----
Advent Software, Inc. ..................................... 100 99 169
S&P 500.................................................... 100 103 127
Nasdaq Computer & Data Processing.......................... 100 100 124
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
April 10, 1997
17
SKU#1454-PS-97
ADVENT SOFTWARE, INC.
1992 STOCK PLAN
(amended effective September 12, 1995)
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 prices for 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.
(s) "Plan" means this 1992 Stock Plan.
----
(t) "Restricted Stock" means shares of Common Stock acquired
----------------
pursuant to a
-2-
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 1,288,000 shares of Common Stock. 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
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
-3-
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
-4-
Right or the 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 designa tions, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options
-5-
designated as Incentive Stock Options are exercisable for the first time by any
Optionee 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
-6-
five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
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
(A) 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.
(B) 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,
-7-
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
(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 autho rized 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
-8-
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 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 respect to Plan transactions.
10. Non-Transferability of Options. The Option may not be sold, pledged,
------------------------------
assigned,
-9-
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, 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.
-----------------------------------------------------------------
-10-
(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 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
-11-
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 Stock Purchase Right, or such other date
as is determined by the Administrator. Notice of the deter mination 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
-12-
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 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.
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.
------------------
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.
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
-2-
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 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:
cash;
check;
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
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.
Exercising the Option.
---------------------
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
-3-
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 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.
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.
Disposition of Shares.
---------------------
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.
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.
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
-4-
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 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
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.
Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.
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.
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.
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.
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
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing
-7-
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
-8-
ADVENT SOFTWARE, INC.
PROXY FOR 1997 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 April 10, 1997, 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 1997 Annual Meeting
of Stockholders of ADVENT SOFTWARE, INC. to be held on Tuesday, May 13, 1997, at
9:00 a.m., local time, at the Sheraton Palace Hotel located at Two New
Montgomery 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 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.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
-----------
[X] Please mark
votes as in
this example
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 TO THE 1992 STOCK
OPTION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND,
L.L.P. AS INDEPENDENT ACCOUNTANTS OF THE COMPANY, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
1. Election of Directors
NOMINEES: Stephanie G. DiMarco; Frank H. Robinson; Wendell G. Van Auken
FOR WITHHELD
[_] [_]
[_] _____________________________________________________________________
For all nominees except as noted above.
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the [_] [_] [_]
Company's 1992 Stock Option Plan to increase
the number of shares reserved for issuance
thereunder by 600,000 shares.
FOR AGAINST ABSTAIN
3. Proposal to ratify the appointment of [_] [_] [_]
Coopers & Lybrand L.L.P., as the independent
accountants of the Company for fiscal 1997.
In their discretion the Proxies are authorized to vote upon such other
matter or matters which may properly come before the meeting or any
adjournment or adjournments thereof.
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in this enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
Signature:_________________ Date:______ Signature:_________________ Date:______