SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[x] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
MACROMEDIA, INC.
----------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state
how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
[LOGO]
June 28, 1999
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of Macromedia, Inc. to be held at 600 Townsend Street, San
Francisco, California, on Thursday, July 29, 1999, at 1:00 p.m. P.D.T.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of Annual Meeting of Stockholders and Proxy
Statement.
It is important that you use this opportunity to take part in the
affairs of Macromedia by voting on the business to come before this meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
Elizabeth A. Nelson
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
MACROMEDIA, INC.
600 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94103
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Macromedia, Inc. (the "Company") will be held at 600 Townsend Street, San
Francisco, California, on Wednesday, July 29, 1999, at 1:00 p.m. P.D.T.
for the following purposes:
1. To elect directors of the Company, each to serve until the next
Annual Meeting of Stockholders and until his successor has been
elected and qualified or until his earlier resignation or removal.
The Company's Board of Directors intends to present the following
nominees for election as directors:
Stewart Alsop Donald L. Lucas
Robert K. Burgess Roger Siboni
John (Ian) Giffen William B. Welty
Mark D. Kvamme
2. To consider and vote upon a proposal to amend the Company's 1992
Equity Incentive Plan to increase the number of shares reserved for
issuance thereunder by 2,100,000 shares, from 13,300,000 shares to
15,400,000 shares.
3. To ratify the selection of KPMG LLP as independent auditors for the
Company for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Only stockholders of record at the close of business on June 7, 1999 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
Elizabeth A. Nelson
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
San Francisco, California
June 28, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
MACROMEDIA, INC.
600 TOWNSEND STREET
SAN FRANCISCO, CALIFORNIA 94103
-----------
PROXY STATEMENT
-----------
JUNE 28, 1999
The accompanying proxy is solicited on behalf of the Board of Directors of
Macromedia, Inc., a Delaware corporation (the "Company" or "Macromedia"), for
use at the Annual Meeting of Stockholders of the Company to be held at 600
Townsend Street, San Francisco, California, on Thursday, July 29, 1999 at 1:00
p.m. P.D.T. (the "Meeting"). Only holders of record of the Company's Common
Stock at the close of business on June 7, 1999 will be entitled to vote at the
Meeting. At the close of business on June 7, 1999 (the "Record Date"), the
Company had 42,395,227 shares of Common Stock outstanding and entitled to vote.
A majority of the shares outstanding on the Record Date will constitute a quorum
for the transaction of business. This Proxy Statement and the accompanying form
of proxy were first mailed to stockholders on or about June 28, 1999. An annual
report for the fiscal year ended March 31, 1999 is enclosed with the Proxy
Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each
share held as of the above record date. Shares of Common Stock may not be voted
cumulatively.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Proposals No. 2 and 3 require for
approval the affirmative vote of the majority of shares of Common Stock present
in person or represented by proxy at the Meeting and entitled to vote on such
proposals. All votes will be tabulated by the inspector of election appointed
for the Meeting who will separately tabulate, for each proposal, affirmative and
negative votes, abstentions and broker non-votes. Abstentions will be counted
towards a quorum and will have the same effect as negative votes with regard to
Proposals No. 2 and 3. Broker non-votes will also be counted towards a quorum
but will not be counted for any purpose in determining whether a proposal has
been approved.
The expenses of soliciting proxies to be voted at the Meeting will be paid
by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, telegraph, electronic means or in person. The Company has
retained a proxy solicitation firm, Corporate Investor Communications, to aid in
the solicitation process and will pay a fee of approximately $4,000 to such firm
for such services. Following the original mailing of the proxies and other
soliciting materials, the Company will request that brokers, custodians,
nominees and other record holders of the Company's Common Stock forward copies
of the proxy and other soliciting materials to persons for whom they hold shares
of Common Stock and request authority for the exercise of proxies. In such
cases, the Company, upon the request of the record holders, will reimburse such
holders for their reasonable expenses.
REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the Meeting or at the Meeting prior to the
vote pursuant to the proxy. A proxy may be revoked by a writing delivered to the
Company stating that the proxy is revoked, by a subsequent proxy that is signed
by the person who signed the earlier proxy and is presented at the Meeting or by
attendance at the Meeting and voting in person. Please note, however, that if a
stockholder's shares are held of record by a broker, bank or other nominee and
that stockholder wishes to vote at the Meeting, the stockholder must bring to
the Meeting a letter from the broker, bank or other nominee confirming that
stockholder's beneficial ownership of the shares.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Meeting, stockholders will elect directors to hold office until the
next Annual Meeting of Stockholders and until their respective successors have
been elected and qualified or until such directors' earlier resignation or
removal. Seven nominees will be elected at the Meeting to be the seven directors
of the Company. Shares represented by the accompanying proxy will be voted for
the election of the seven nominees recommended by the Company's Board of
Directors (the "Board") unless the proxy is marked in such a manner as to
withhold authority so to vote. If any nominee for any reason is unable to serve
or for good cause will not serve, the proxies may be voted for such substitute
nominee as the proxy holder may determine. The Company is not aware of any
nominee who will be unable to or for good cause will not serve as a director.
DIRECTORS/NOMINEES
The names of the nominees, and certain information about them as of June
7, 1999, are set forth below:
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- -----
Stewart Alsop (1) 48 Venture Partner of New Enterprise 1998
Associates; Columnist for FORTUNE
Magazine
Robert K. Burgess 41 Chairman and Chief Executive Officer 1996
of the Company
John (Ian) Giffen (2) 41 Independent Consultant to software 1997
companies
Mark D. Kvamme (2) 38 Chairman of the Board of USWeb/CKS 1998
Donald L. Lucas (1)(2) 69 Venture Capitalist 1992
Roger Siboni 44 President and Chief Executive 1998
Officer of E.piphany, Inc.
William B. Welty (3) 57 President and Chief Executive 1993
Officer of agincourt partners, llc
2
- ------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
Each of the director nominees listed above was elected to be a director at
the Company's Annual Meeting of Stockholders held on July 30, 1998, except for
Mr. Siboni, who was appointed by unanimous consent of the board of directors in
September, 1998.
Mr. Alsop has been a director of the Company since July 1998. Mr. Alsop
has been employed by New Enterprise Associates ("NEA"), a venture capital
firm, since June 1996. Mr. Alsop is also currently a columnist for FORTUNE
magazine. Prior to working for NEA, Mr. Alsop served as Executive Vice
President of InfoWorld Publishing Company, Inc., which publishes INFOWORLD,
a weekly newspaper for information technology professionals. Mr. Alsop
worked for InfoWorld Publishing from 1985 until he joined NEA. Mr. Alsop
also founded Industry Publishing Company, the publisher of a fortnightly
newsletter for computer industry insiders and producer of the Agenda and Demo
conferences for computer industry executives. Before 1985, Mr. Alsop served
in several executive editorial positions at business and trade magazines,
including, INC. Mr. Alsop received a Bachelor of Science degree in English
from Occidental College. Mr. Alsop is also a director of 2Bridge
Software, Inc., Instructive Technologies, Inc., Netcentives, Inc., TiVo,
Inc. and Visto, Inc.
Mr. Burgess has been Chief Executive Officer and a director of the Company
since November 1996 and has served as Chairman of the Board since July 1998.
Prior to joining the Company, Mr. Burgess was Senior Vice President of Silicon
Graphics, Inc., responsible for the Silicon Interactive Strategic Business Unit.
Prior to this position, he was President of Alias/Wavefront, a wholly-owned
independent software subsidiary of Silicon Graphics, created from the 1995
merger of Alias Research, Inc., and Wavefront Technologies, Inc. From 1992 to
1995, he was President, Chief Executive Officer, Chief Operating Officer and a
director of Alias Research. Prior to joining Alias Research, Mr. Burgess held a
number of senior management positions at Silicon Graphics, including Vice
President of Marketing, Applications and Business Development (1991), Vice
President of Applications (1990) and President of Silicon Graphics Canada, Inc.,
(1984-90). A Canadian, Mr. Burgess earned a Bachelors degree in Commerce from
McMaster University. Mr. Burgess is also a director of Paraform Technologies,
Inc.
Mr. Giffen has been a director of the Company since July 1997. Mr. Giffen
is currently serving as an independent consultant to software and venture
capital companies, which he has done since October 1996. Mr. Giffen was a Vice
President of Helix Investments (Canada) Inc., a venture capital company, from
January 1997 through April 1998. Mr. Giffen has also held senior finance
positions with various technology-related companies, including serving as Vice
President, Finance and Chief Financial Officer of Algorithmics Incorporated, a
developer of risk management software, from February 1996 through September
1996, and Vice President, Finance and Chief Financial Officer of Alias Research
Inc., a developer of advanced graphics software, from January 1992 until
January 1996. Mr. Giffen holds a degree in Business Administration from the
University of Strathclyde (Scotland) and is a member of the Canadian Institute
of Chartered Accountants and the Institute of the Chartered Accountants of
Scotland.
Mr. Kvamme has been a director of the Company since July 1998. Mr. Kvamme
has been Chairman of the Board and a director of USWeb/CKS since the
consummation of the USWeb-CKS merger in December 1998. In 1989, Mr. Kvamme
became a Partner in CKS Group and from 1991 until December 1998 served as the
Chairman of its Board and its Chief Executive Officer. Prior to joining CKS
Group, Mr. Kvamme held management and marketing positions as Wyse Technology,
Inc., a
3
terminal and personal computer manufacturer, International Solutions,
Inc., a computer products distributor, and Apple Computer, a personal computer
manufacturer. Mr. Kvamme holds a Bachelor of Arts degree in French Economics and
Literature from the University of California at Berkeley.
Mr. Lucas has been a director of the Company since March 1992. Mr. Lucas
served as a director of Authorware from July 1988 until the formation of the
Company in March 1992. Since 1967, Mr. Lucas has been actively engaged in
venture capital activities as a private individual. Mr. Lucas holds a Bachelor
of Arts degree in economics and a Master of Business Administration from
Stanford University. Mr. Lucas is also a director of Cadence Design Systems,
Inc., Coulter Pharmaceutical, Inc., Oracle Systems Corporation, Transcend
Services, Inc. (formerly Tri-Care, Inc.) and Tricord Systems, Inc.
Mr. Siboni has been the Chief Executive Officer of E.piphany Inc., a
Delaware Corporation, since August 1998. Prior to joining E.piphany, from
October 1996 to July 1998, Mr. Siboni was Deputy Chairman and Chief Operating
Officer of KPMG Peat Marwick LLP, a member firm of KPMG International. Before
that, from June 1993 to October 1996, he was the national managing partner of
KPMG'S information and communications practice. Mr. Siboni serves on the boards
of FileNET Corp. and the Walter A. Haas School of Business at the University of
California at Berkeley. He holds a Bachelor of Science degree in business from
the University of California at Berkeley.
Mr. Welty has been a director of the Company since April 1993. Mr. Welty
served as a director of MacroMind and its successor, Macromind/Paracomp, from
April 1991 to March 1992. Since April 1997, Mr. Welty has been President and
Chief Executive Officer of agincourt partners, llc, an investment management
firm. Since May 1997, Mr. Welty has also been Chief Executive Officer and
President of Action Technologies, Inc. From August 1988 to April 1997, Mr.
Welty was a general partner of Volpe, Welty and Company, a money management
firm. Mr. Welty holds Bachelor of Science degrees in industrial engineering
and business administration from Iowa State University. Mr. Welty is also a
director of Communities.com, Inc.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board met five (5) times, including telephone conference meetings,
during fiscal 1999 and acted by unanimous written consent four (4) times. No
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board (held during the period for which he was a director) and
the total number of meetings held by all committees of the Board on which he
served (during the period that he served).
Standing committees of the Board include an Audit Committee, a
Compensation Committee and a Nominating Committee.
Messrs. Lucas, Giffen and Kvamme are the members of the Audit Committee,
which met five (5) times during fiscal 1999. The Audit Committee meets with the
Company's independent accountants to review the adequacy of the Company's
internal control systems and financial reporting procedures; reviews the general
scope of the Company's annual audit and the fees charged by the independent
accountants; reviews and monitors the performance of non-audit services by the
Company's auditors, reviews the fairness of any proposed transaction between the
Company and any officer, director or other affiliate of the Company, and after
such review, makes recommendations to the full Board; and performs such further
functions as may be required by any stock exchange or over-the-counter market
upon which the Company's Common Stock may be listed.
Messrs. Lucas and Alsop are the members of the Compensation Committee,
which met one(1) time and acted by unanimous written consent twenty-seven (27)
times during fiscal 1999. The Compensation
4
Committee recommends compensation for officers and employees of the Company,
grants options and stock awards under the Company's employee benefit plans and
reviews and recommends adoption of and amendments to stock option and employee
benefit plans.
Mr. Welty is the sole member of the Nominating Committee, which did
not meet during fiscal 1999. The Nominating Committee identifies and
recommends candidates for the Company's Board.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS
5
PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO THE
1992 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's 1992
Equity Incentive Plan (the "Equity Incentive Plan" or the "1992 Plan") to
increase the number of shares of Common Stock reserved for issuance thereunder
from 13,300,000 shares to 15,400,000 shares (an increase of 2,100,000 shares).
The Compensation Committee (the "Committee") of the Board of Directors of the
Company (the "Board") approved the proposed amendment described above on April
1, 1999 to be effective upon stockholder approval.
Management believes that this amendment is in the best interests of the
Company because of the need to provide options to attract and retain quality
employees and remain competitive in the industry.
Below is a summary of the principal provisions of the 1992 Plan, assuming
approval of the above amendment, which summary is qualified in its entirety by
reference to the full text of the Equity Incentive Plan.
1992 EQUITY INCENTIVE PLAN
EQUITY INCENTIVE PLAN HISTORY. The Board adopted and stockholders approved the
Equity Incentive Plan on September 23, 1992 to offer eligible persons an
opportunity to participate in the Company's future performance through awards of
stock options, restricted stock and stock bonuses. The 1992 Plan has since been
amended to increase the number of shares available for issuance thereunder. The
following describes each of the amendments made to the Equity Incentive Plan
since its initial adoption and approval. On October 15, 1993, the Board approved
an amendment to the 1992 Plan to place a limitation on the maximum number of
shares available for issuance to certain executive officers at any time under
the Plan, to make certain other amendments in the administration of the 1992
Plan and to increase the number of shares in the reserve available for issuance
under the 1992 Plan by 600,000 to 3,600,000 shares. Stockholders approved these
amendments on November 17, 1993. On May 24, 1994, the Board approved an
amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,000,000 shares to 4,600,000 shares. Stockholders
approved the amendment on July 26, 1994. On October 25, 1994, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,400,000 shares to 6,000,000 shares. Stockholders
approved the amendment on January 19, 1995. On May 24, 1995, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,200,000 shares to 7,200,000 shares. Stockholders
approved the amendment on June 19, 1995. On April 29, 1996, the Board approved
an amendment to the 1992 Plan to increase the number of shares reserved for
issuance thereunder by 1,800,000 to 9,000,000. Stockholders approved the
amendment on May 31, 1996. On January 21, 1997, the Board approved an amendment
to the 1992 Plan to increase the number of shares reserved for issuance
thereunder by 1,800,000 shares to 10,800,000 shares. Stockholders approved the
amendment on March 3, 1997. On February 10, 1997, the Board adopted certain
technical amendments to the 1992 Plan to reflect the new Rule 16b-3 under the
Securities Act of 1933. On June 27, 1997, the Board approved an amendment to the
1992 Plan to increase the number of shares reserved for issuance thereunder by
1,000,000 shares to 11,800,000 shares. Stockholders approved the amendment on
August 15, 1997. On February 5, 1998, the Board amended the 1992 Plan to
expressly permit post-termination exercise periods of greater length as the
Board, in its sole discretion, may choose. On April 1, 1998, the Committee
approved an amendment to the 1992 Plan to increase the number of shares reserved
for issuance thereunder by 1,500,000 shares to 13,300,000 shares, to be
effective upon stockholder approval. Stockholders approved the increase on July
30, 1998. On April 1, 1999, following the SEC's release authorizing publicly
traded companies to permit their optionees to
6
transfer their compensatory stock options to family members, the Committee
amended the 1992 Plan to permit such transfers.
SHARES SUBJECT TO THE EQUITY INCENTIVE PLAN. An aggregate of 15,400,000 shares
(assuming approval of the proposed amendment) of the Company's Common Stock have
been reserved by the Board for issuance under the 1992 Plan. As of June 7, 1999,
2,111,858 shares remained available for grant under the 1992 Plan (assuming
approval of the proposed amendment). If any option granted pursuant to the 1992
Plan expires or terminates for any reason without being exercised in full, or
any award terminates without being issued, the unexercised shares released from
such option and award will again become available for issuance under the Plan.
In addition, any shares issuable upon exercise of options granted pursuant to
the Authorware 1988 Stock Option Plan and the MacroMind, Inc. 1989 Incentive
Stock Option Plan that expire or become unexercisable for any reason without
having been exercised in full also will become available for distribution under
the Equity Incentive Plan. The market value of the Company's Common Stock as of
June 7, 1999 was $45.125 per share. As soon as practicable after the 1999 Annual
Meeting of Stockholders of the Company, the Company will (assuming approval of
the proposed amendment) register with the Securities and Exchange Commission on
a registration statement on Form S-8 the exercise of stock options to be granted
under the 1992 Plan for 15,400,000 shares of the Company's Common Stock and the
subsequent sale of such securities.
ADMINISTRATION. The Equity Incentive Plan is administered by the Committee, the
members of which are appointed by the Board. The Committee currently consists of
Donald L. Lucas and Stewart Alsop each of whom are "non-employee directors" as
that term is defined under the Exchange Act, and "outside directors" as that
term is defined pursuant to Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code").
Subject to the terms of the Equity Incentive Plan, the Committee determines the
persons who are to receive awards, the number of shares subject to each such
award and the terms and conditions of such awards. The Committee also has the
authority to construe and interpret any of the provisions of the Equity
Incentive Plan or any awards granted thereunder.
ELIGIBILITY. Employees, officers, directors, independent contractors,
consultants, and advisors of the Company (and of any subsidiaries and
affiliates) whom the Board deems to have potential to contribute to the future
success of the Company (the "Participants") will be eligible to receive stock
options, restricted stock or stock bonuses under the Equity Incentive Plan. No
"Named Executive Officer" as that term is defined under Item 402(a)(3) of
Regulation S-K promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act is eligible to receive more than
1,800,000 shares of Common Stock at any time during the 1992 Plan. As of June 7,
1999, approximately 581 persons were eligible to receive awards under the 1992
Plan, and 8,297,687 shares were subject to outstanding options. Over the term of
the 1992 Plan, the following Named Executive Officers (as defined below) have
been granted options to purchase shares of Common Stock under the 1992 Plan as
follows: Robert K. Burgess, 125,000 shares; Brian Allum, 400,000 shares; Norman
K. Meyrowitz, 745,020 shares; Elizabeth A. Nelson, 288,055 shares; and Joseph D.
Dunn, 585,700 shares. Over the term of the 1992 Plan, current executive officers
as a group have been granted options to purchase 2,368,775 shares, all current
directors who are not executive officers as a group have been granted options to
purchase 175,000 shares, and all employees as a group, other than executive
officers, have been granted options to purchase 12,178,350 shares.
7
STOCK OPTIONS. The Equity Incentive Plan permits the granting of options that
are intended to qualify either as Incentive Stock Options ("ISOs") or
Nonqualified Stock Options ("NQSOs").
ISOs may be granted only to employees. The option exercise price for each ISO
must be no less than 100% of the fair market value (as defined in the 1992 Plan)
of a share at the time such option is granted. The option exercise price for
each NQSO must be no less than 85% of the fair market value of a share at the
time of grant. In the case of a 10% stockholder the exercise price for an ISO or
NQSO must be no less than 110% of the fair market value. Options are exercisable
within the times and upon the events determined by the Committee as set forth in
the optionee's option agreement. The Committee may approve the transfer of NQSOs
to family members of the Participant.
The Equity Incentive Plan provides for the payment of the exercise price of
options by any of the following means, subject to the provisions of the
optionee's option agreement: (1) in cash (by check); (2) by surrender of shares
of the Company's Common Stock owned for at least six months and having a fair
market value on the date of surrender equal to the aggregate exercise price of
the option; (3) where permitted by applicable law and approved by the Committee,
in its sole discretion, by tender of a full recourse promissory note; (4) by
cancellation of indebtedness of the Company to the Participant; (5) by waiver of
compensation due to or accrued by the Participant for services rendered; (6) by
tender of property; (7) by a "same-day sale" commitment; (8) by a "margin"
commitment; or (9) by any combination of the foregoing, when approved by the
Committee in its sole discretion.
RESTRICTED STOCK AWARDS. The Committee may grant Participants restricted stock
awards to purchase stock either in addition to, or in tandem with, other awards
under the Equity Incentive Plan, under such terms, conditions and restrictions
as the Committee may determine. The purchase price for such awards must be no
less than 85% of the fair market value of a share on the date of the award (and
100% of the fair market value in the case of a 10% stockholder), and can be paid
for with the types of consideration described under Stock Options above with the
exception of a same-day sale or margin commitment which are available only for
options.
STOCK BONUS AWARDS. The Committee may grant Participants stock bonus awards
either in addition to, or in tandem with, other awards under the Equity
Incentive Plan, under such terms, conditions and restrictions as the Committee
may determine.
MERGERS, CONSOLIDATIONS, CHANGE OF CONTROL. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all the assets of the Company or any other similar corporate
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Equity Incentive Plan
or provide substantially similar consideration, shares or other property subject
to repurchase restrictions no less favorable to the Participants under the
Equity Incentive Plan. In the event that the successor corporation does not
assume or substitute the awards, the awards, including outstanding options,
shall expire on such transaction at the time and upon the conditions as the
Committee determines.
AMENDMENT OF THE EQUITY INCENTIVE PLAN. The Board may at any time terminate or
amend the Equity Incentive Plan, including amending any form of award agreement
or instrument to be executed pursuant to the Equity Incentive Plan.
TERM OF THE EQUITY INCENTIVE PLAN. The Equity Incentive Plan will terminate on
September 22, 2002, ten years from the date the Equity Incentive Plan was
adopted by the Board.
8
FEDERAL INCOME TAX INFORMATION
THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT OF THE
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND PARTICIPANTS UNDER THE EQUITY
INCENTIVE PLAN. THE FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES FOR ANY PARTICIPANT WILL DEPEND UPON HIS OR HER INDIVIDUAL
CIRCUMSTANCES. THIS SUMMARY DOES NOT ADDRESS THE TAX CONSEQUENCES TO FAMILY
MEMBERS TO WHOM AN OPTION IS TRANSFERRED OR TO THE PARTICIPANT THAT TRANSFERS
THE OPTION. EACH PARTICIPANT, AND FAMILY MEMBER WHO HOLDS AN OPTION HAS BEEN AND
IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE PLAN.
INCENTIVE STOCK OPTIONS. A Participant will recognize no income upon grant of an
ISO and incur no tax on its exercise (unless the Participant is subject to the
alternative minimum tax ("AMT")). If the Participant holds the stock acquired
upon exercise of an ISO (the "ISO Shares") for more than one year after the date
the option was exercised and for more than two years after the date the option
was granted, the Participant generally will realize capital gain or loss (rather
than ordinary income or loss) upon disposition of the ISO Shares. This gain or
loss will be equal to the difference between the amount realized upon such
disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of either
required holding period described above (a "disqualifying disposition"), the
gain realized upon such disposition, up to the difference between the fair
market value of the ISO Shares on the date of exercise (or, if less, the amount
realized on a sale of such shares) and the option exercise price, will be
treated as ordinary income. Any additional gain will be long-term, mid-term, or
short-term capital gain, depending upon the amount of time the ISO Shares were
held by the Participant.
ALTERNATIVE MINIMUM TAX. The difference between the fair market value of the ISO
Shares on the date of exercise and the exercise price is an adjustment to income
for purposes of the AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in excess
of $175,000). Alternative minimum taxable income is determined by adjusting
regular taxable income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market value of the
ISO Shares on the date of exercise and the exercise price) and reducing this
amount by the applicable exemption amount ($45,000 in case of a joint return,
subject to reduction under certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
NONQUALIFIED STOCK OPTIONS. A Participant will not recognize any taxable income
at the time a NQSO is granted. However, upon exercise of a NQSO the Participant
will include in income as compensation an amount equal to the difference between
the fair market value of the shares on the date of exercise and the
Participant's exercise price. The included amount will be treated as ordinary
income by the Participant and may be subject to withholding by the Company
(either by payment in cash or withholding out of the Participant's salary). Upon
resale of the shares by the Participant, any subsequent appreciation or
depreciation in the value of the shares will be treated as capital gain or loss.
9
RESTRICTED STOCK AND STOCK BONUS AWARDS. Restricted stock and stock bonus awards
will generally be subject to tax at the time of receipt, unless there are
restrictions that enable the Participant to defer tax. At the time that tax is
incurred, the tax treatment will be similar to that discussed above for NQSOs.
MAXIMUM TAX RATES. The maximum rate applicable to ordinary income is 39.6%. Long
term capital gain on stock held for more than twelve months will be taxed at a
maximum rate of 20%. Capital gains will continue to be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
TAX TREATMENT OF THE COMPANY. The Company generally will be entitled to a
deduction in connection with the exercise of a NQSO by a Participant or the
receipt of restricted stock or stock bonuses by a Participant to the extent that
the Participant recognizes ordinary income and the Company properly reports the
income received by the Participant in connection with the award. The Company
will be entitled to a deduction in connection with the disposition of ISO Shares
only to the extent that the Participant recognizes ordinary income on a
disqualifying disposition of the ISO Shares and the Company properly reports the
income received by the Participant in connection with the award.
ERISA
The Equity Incentive Plan is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
THE BOARD RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1992 EQUITY INCENTIVE PLAN
10
PROPOSAL NO. 3 -- RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Company has selected KPMG LLP as its independent auditors to perform
the audit of the Company's financial statements for fiscal 2000, and the
stockholders are being asked to ratify such selection. Representatives of KPMG
LLP will be present at the Meeting, will have the opportunity to make a
statement at the Meeting if they desire to do so and will be available to
respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF KPMG LLP
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of June 7, 1999,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director/nominee, (iii) each of the
Named Executive Officers of the Company (as defined below) and (iv) all
directors and executive officers as a group.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------ ----------------------- ----------------
Putnam Investments, Inc. (2) ................ 4,456,572 10.5%
James R. Von Ehr, II (3) .................... 2,989,424 7.1%
Capital Gurdian Trust Company (4) ........... 2,124,500 5.0%
Geocapital LLC (5) .......................... 2,166,000 5.1%
Robert K. Burgess (6) ....................... 685,454 1.6%
Norman K. Meyorwitz (7) ..................... 336,134 *
Joseph D. Dunn (8) .......................... 166,763 *
Brian Allum (9) ............................. 139,999 *
Donald L. Lucas (10) ........................ 31,400 *
Elizabeth A. Nelson (11) .................... 81,716 *
William B. Welty (12) ....................... 7,794 *
John (Ian) Giffen (13) ...................... 54,167 *
Stewart Aslop (14) .......................... 13,542 *
Mark D. Kvamme (15) ......................... 13,542 *
Rober Siboni (16) ........................... 10,417 *
All directors and executive officers
as a group (_13_persons)(17) ................ 4,560,040 10.8%
- -------------------
* Less than 1%
(1) Unless otherwise indicated below, the persons and entities named in the
table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable. Unless otherwise indicated below, the address for each person
and entity named in the table is: c/o Macromedia, Inc., 600 Townsend
Street, San Francisco, California 94103.
(2) In its Schedule 13G under the Exchange Act filed May 5, 1999, Putnam
Investments, Inc. reported shared voting power as to 167,900 shares of
the Company's Common Stock and shares dispositive power as to 4,456,572
shares. Also on the Schedule 13G, Putnam Investment Management, Inc.
reported shared dispositive power as to 3,986,948 shares; The Putnam
Advisory Company, Inc. reported shared voting power as to 167,900 shares
and shared dispositive power as to 469,624 shares; and Marsh & McLennan
Companies, Inc., a holding company, reported no voting or dispositive
power. These entities listed their principal business address as One Post
Office Square, Boston, Massachusetts 02109, except Marsh & McLennan
Companies, Inc., which listed its principal business address as 1166
Avenue of the Americas, New York, New York 10036.
12
(3) Includes 433,274 shares held of record by Mr. Von Ehr's spouse to which
Mr. Von Ehr disclaims beneficial ownership.
(4) In Amendment No. 1 to its Schedule 13G filed on February 12, 1999,
Capital Guardian Trust Company reported sole voting power as to 2,014,000
shares of the Company's Common Stock and sole dispositive power as to
2,124,500 shares. Capital Guardian Trust Company disclaimed beneficial
ownership as to 2,124,500 shares of the Company's Common Stock pursuant
to Rule 13d-4. Capital Guardian Trust Company listed its principal
business office as 11100 Santa Monica Boulevard, Los Angeles, California
90029-3384.
(5) In Amendment No. 1 to its Schedule 13G filed on February 10, 1999,
Geocapital LLC reported sole dispositive power as to 2,166,000 shares of
the Company's Common Stock. Geocapital LLC listed its principal business
office as 767 Fifth Avenue, 45th Floor, New York, New York 10153-4590.
(6) Includes 654,063 shares subject to options held by Mr. Burgess that are
exercisable within 60 days of June 7, 1999.
(7) Includes 334,803 shares subject to options held by Mr. Meyrowitz that
are exercisable within 60 days of June 7, 1999.
(8) Represents 166,763 shares subject to options held by Mr. Dunn that are
exercisable within 60 days of June 7, 1999.
(9) Represents 139,999 shares subject to options held by Mr. Allum that are
exercisable within 60 days of June 7, 1999.
(10) Represents 6,297 shares held of record by the Donald L. Lucas & Lygia
S. Lucas Trust and 25,103 shares subject to options held by Mr. Lucas
that are exercisable within 60 days of June 7, 1999.
(11) Represents 65,499 shares subject to options held by Ms. Nelson that are
exercisable within 60 days of June 7, 1999.
(12) Represents 7,794 shares subject to options held by Mr. Welty that are
exercisable within 60 days of June 7, 1999.
(13) Represents 54,167 shares subject to options held by Mr. Giffen that are
exercisable within 60 days of June 7, 1999.
(14) Represents 13,542 shares subject to options held by Mr. Alsop that are
exercisable within 60 days of June 7, 1999.
(15) Represents 13,542 shares subject to options held by Mr. Kvamme that are
exercisable within 60 days of June 7, 1999
(16) Represents 10,417 shares subject to options held by Mr. Kvamme that are
exercisable within 60 days of June 7, 1999
(17) Includes 1,528,296 shares subject to options that are exercisable within
60 days of June 7, 1999.
13
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to or earned or
paid for services rendered in all capacities to the Company and its subsidiaries
during each of fiscal 1997, 1998 and 1999 by (i) the Company's chief executive
officer and (ii) the Company's four other most highly compensated executive
officers who were serving as executive officers at the end of fiscal 1999
(together, the "Named Executive Officers"). This information includes the dollar
values of base salaries and bonus awards, the number of shares subject to stock
options granted and certain other compensation, whether paid or deferred.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER^
-------------------
OTHER ANNUAL UNDERLYING COMPENSATION
------------ ---------- ------------
------------ ---------- ------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS(#) ($)(1)
--------------------------- ---- --------- -------- ------------ ---------- -----
--------------------------- ---- --------- -------- ------------ ---------- -----
($)
---
---
Robert K. Burgess (2)........ 1999 $200,000 $508,985 125,000 $2,000
Chief Executive Officer and 1998 300,055 185,195 1,000,000(3)
President 1997 125,110 83,333 $100,000(4) 1,000,000
Brian Allum (5)..............
Senior Vice President, 1999 200,000 309,779 357,131(4 ) 0 1,000
Worldwide Field Operations 1998 155,759 415,064(6) 209,996(4) 400,000 2,000
Norman K. Meyrowitz.......... 1999 200,000 300,037 75,000 1,000
President, Macromedia Products 1998 193,804 163,750 570,200 1,000
1997 175,151 115,000 1,000
Elizabeth A. Nelson (8)...... 1999 150,000 225,028 193,055 1,000
Senior Vice President, Chief 1998 144,220 64,344 95,000(9) 1,000
Financial Officer and 1997 85,612 20,000 25,000 2,000
Secretary
Joseph D. Dunn............... 1999 155,000 199,196 100,000 1,000
Senior Vice President, 1998 154,999 56,368 240,000(10) 1,000
Products and Technology 1997 71,317 0 1250
(1) Represents the Company's 401(k) plan contributions.
(2) Mr. Burgess joined the Company in November 1996 as Chief Executive Offer
and President.
(3) Represents repricing of an option for 1,000,000 shares
granted in fiscal 1997.
(4) Represents relocation expenses.
(5) Mr. Allum joined the Company in July 1997.
(6) Represents $140,259 in bonus earned, plus a one-time signing bonus of
$150,000 grossed up to cover taxes to $274,805.
(7) Represents new option grants of 350,000 shares in fiscal 1998 and a
repricing of 220,200 option shares granted prior to fiscal 1998.
(8) Ms. Nelson joined the Company in July 1996 and became Chief Financial
Officer in February 1998.
(9) Represents new option grants of 70,000 shares in fiscal 1998 and a
repricing of 25,000 option shares granted prior to fiscal 1998.
(9) Represents new option grants of 70,000 shares in fiscal 1998 and a
repricing of 25,000 option shares granted prior to fiscal 1998.
14
(10) Represents new option grants of 200,000 shares in fiscal 1998 and a
repricing of 40,000 option shares granted prior to fiscal 1998.
The following table sets forth further information regarding individual
grants of stock options during fiscal 1999 to each of the Named Executive
Officers. In accordance with the rules of the Securities and Exchange Commission
(the "SEC"), the table sets forth the hypothetical gains or "option spreads"
that would exist for the options at the end of their respective ten-year terms
based on assumed annualized rates of compound stock price appreciation of 5% and
10% from the dates the options were granted to the end of the respective option
terms. Actual gains, if any, on option exercises are dependent on the future
performance of the Company's Common Stock and overall market conditions. There
can be no assurance that the potential realizable values shown in this table
will be achieved. The table also shows the value to one executive officer of an
option granted with an exercise price below fair market value; all other options
were granted with exercise prices equal to fair market value on the dates of
grant.
OPTION GRANTS IN FISCAL 1999
INDIVIDUAL GRANTS
------------------------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE
NUMBER OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS PER SHARE OF STOCK PRICE
UNDERLYING GRANTED PER SHARE MARKET APPRECIATION FOR OPTION
OPTIONS TO EXERCISE PRICE ON TERM(2)
GRANTED EMPLOYEES IN PRICE GRANT DATE EXPIRATION -------------------------
NAME (#)(1) FISCAL 1999 ($/SH)(1) ($/SH) DATE 5%($) 10%($)
- ---- -------------- ----------- --------- ------ ------------ ----- ------
Robert K. Burgess......... 125,000 4.3 14.9380 14.9380 4/30/2008 1,174,303 2,975,916
Brian Allum............... 0
Norman K. Meyrowitz....... 75,000 2.6 15.9380 15.9380 10/29/2008 751,749 1,905,080
Joseph D. Dunn............ 50,000 1.7 14.8750 14.8750 04/01/2008 467,740 1,185,346
50,000 1.7 12.9375 12.9375 08/28/2008 406,816 1,030,952
Elizabeth A. Nelson....... 118,055 4.1 14.8750 14.8750 04/01/2008 1,104,382 2,798,720
75,000 2.6 15.9380 15.9380 10/29/2008 751,749 1,905,080
- -------------
(1) Stock options are generally awarded with an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant.
Options granted to new employees become exercisable, so long as the
employee continues to provide services to the Company, as to 25% of the
shares at the end of the first year and as to 2.0833% per month
thereafter. Options granted to existing employees become exercisable with
respect to 2.0833% of the shares for each full month that the optionee
renders services to the Company. Options expire ten years from the date of
grant or at the time of the optionee's termination of employment.
(2) The 5% and 10% assumed rates of annual compound stock price appreciation
are prescribed by rules of the SEC and do not represent the Company's
estimate or projection of future Common Stock prices.
15
The following table sets forth certain information concerning the exercise
of stock options during fiscal 1999 by each of the Named Executive Officers and
the number and value at March 31, 1999 of unexercised options held by said
individuals.
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND
MARCH 31, 1999 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
SHARES VALUE UNEXERCISED OPTIONS AT AT FISCAL YEAR-END(2)($)
ACQUIRED ON REALIZED FISCAL YEAR-END (#)
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Robert K. Burgess........ 135,000 $2,964,568 560,313 429,687 $20,824,368 $15,437,192
Brian Allum.............. 40,000 $923,667 126,665 233,335 $ 4,753,927 $8,757,413
Norman K. Meyrowitz...... 70,000 $1,577,412 275,470 364,550 $10,467,382 $13,047,340
Joseph D. Dunn........... 40,000 $831,449 136,580 217,016 $5,158,266 $7,581,387
Elizabeth A. Nelson...... 37,500 $858,232 39,033 211,522 $1,205,923 $6,711,014
- --------------------------
(1) "Value Realized" represents the fair market value of the shares underlying
the option on the date of exercise less the aggregate exercise price.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized, and are based on the
positive spread between the respective exercise prices of outstanding stock
options and the closing price of the Company's Common Stock on March 31,
1999 ($45.3125 per share).
16
COMPENSATION OF DIRECTORS
Each non-employee director is reimbursed for actual business expenses
incurred in attending each Board meeting. No cash compensation is paid to
non-employee directors. In any calendar year, there are approximately four
meetings of the Board held per year.
In addition, under the Company's Directors Plan, each director of the
Company who is not an employee of the Company (or of any parent or subsidiary of
the Company) ("Outside Director") receives automatic grants of stock options.
Each Outside Director who first becomes a member of the Board is automatically
granted an option to purchase 50,000 shares of Common Stock on the date the
Outside Director first becomes a member of the Board (an "Initial Grant"). Each
Outside Director subsequently automatically receives a new 50,000 share option
grant on the first day of the month following the full vesting of his or her
prior option grant, so long as he or she continuously remains a director of the
Company (a "Succeeding Grant"). In addition, an Outside Director who was an
Outside Director on July 30, 1998 automatically received a Succeeding Grant in
the amount of 50,000 shares less the number of unvested option shares then held
by such Outside Director. Notwithstanding the foregoing, the Board may increase
or decrease the number of option shares that may be granted to an Outside
Director under the Directors Plan.
EMPLOYMENT AGREEMENTS
ROBERT K. BURGESS EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Mr. Burgess in
August 1996. The employment agreement specified that Mr. Burgess' annual base
salary be $300,000, and that he would have the opportunity to earn an annual
target bonus of $200,000, if he met 100% of the objectives established by the
Board and up to a maximum annual bonus of $480,000, if he had exceeded 100% of
certain objectives. For Fiscal 1999, Mr. Burgess volunteered to reduce his
annual base salary from $300,000 to $200,000, and increase his target variable
compensation from $200,000 to $300,000 based upon 100% achievement of the
Company's financial plan, with the variable compensation to be proportionally
adjusted in accordance with the Company's earnings performance. In accordance
with his employment agreement, Mr. Burgess was granted a non-plan stock option
grant for 1,000,000 shares of the Company's Common Stock which vests, so long as
Mr. Burgess continues to provide services to the Company, as to 25% of the
shares at the end of twelve months of employment and monthly thereafter for the
next three years.
The Company made a recourse loan to Mr. Burgess for $2,000,000 at an
interest rate of 6% per year to refinance his residence. The principal and
accrued interest on the loan, which is secured by his residence, is payable in
full three years from the date of the loan, or if earlier, his termination of
employment or the sale of such residence. Mr. Burgess has since repaid the loan
entirely.
Upon termination for other than cause or constructive termination, Mr.
Burgess will continue to receive his salary and bonus at the target plan for a
period of twelve months. In addition, Mr. Burgess will be entitled to continue
vesting in his options for the greater of (i) twenty-four months, reduced by the
number of months from the grant date to his date of termination or (ii) twelve
months. In the event Mr. Burgess is constructively terminated as president or
voluntarily terminates within 180 days following a change in control, he will
continue to receive his salary and bonus for twelve months, and Mr. Burgess'
options will immediately become exercisable and vest as if he had remained
employed for an additional twenty-four months, and will remain exercisable for
twenty-four months following the later of his termination of employment as
President or the date of his option acceleration.
17
BRIAN ALLUM EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Brian Allum, who is
Senior Vice President of Worldwide Field Operations for the Company, in July
1997. Pursuant to his employment agreement, Mr. Allum's base salary is $200,000
and he is eligible to earn an annual target bonus of $200,000 per year if he
meets 100% of the objectives established each year by the Board and up to a
maximum annual bonus of $600,000 per year, if he exceeds 100% of certain
specified objectives. Mr. Allum is guaranteed base salary and bonus compensation
of $400,000 for his first year of employment. Mr. Allum received a payment of
$150,000, net of taxes, as a signing bonus and to cover his miscellaneous
relocation expenses. In addition, Mr. Allum was granted an option for 400,000
shares of the Company's Common Stock under the Company's 1992 Equity Incentive
Plan, which vests and becomes exercisable, for so long as Mr. Allum continues to
provide services to the Company, as to 25% of the shares at the end of twelve
months of employment and monthly thereafter for the next three years.
The Company made a recourse loan to Mr. Allum for up to $2,400,000 for
the purchase of his primary residence and improvements to it. No interest
accrues on the loan to Mr. Allum during the first two years through July 15,
1999 (the "Initial Period") and the Company agreed to provide Mr. Allum with a
tax gross-up of the resulting taxable benefits. After the Initial Period,
interest will accrue at an annually compounded rate of 6.65% per year. The
principal and accrued interest on the loan, which is secured by Mr. Allum's
residence, is payable in full on the earliest of (a) seven years from the date
of the loan; (b) 180 days after the termination of Mr. Allum's employment with
the Company for any reason; or (c) immediately upon the sale of Mr. Allum's
house. During the Initial Period, the Company also agreed to pay the property
taxes and property insurance with respect to Mr. Allum's California residence,
with a tax gross-up of the resulting taxable benefits, and the cost of repairs,
maintenance and other one-time incremental expenses associated with his Canadian
residence incurred as a result of the Company's desire to have Mr. Allum rapidly
relocate to California. In addition, during the Initial Period, the Company has
agreed that it will, upon Mr. Allum's request, repurchase the California
residence at Mr. Allum's cost, plus the cost of any improvements made thereto.
Upon termination other than for cause or a voluntary termination, Mr.
Allum will continue to receive his base salary and health and life insurance
benefits for a period of twelve months and the Company shall reimburse Mr. Allum
for his relocation costs in moving back to Canada. In the event of a change in
control of the Company, the vesting of all of Mr. Allum's options will
immediately be accelerated by eighteen months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board (the "Committee") makes all
decisions involving the compensation of executive officers of the Company. The
Committee consists of the following non-employee directors: Donald L.
Lucas and Stewart Alsop.
18
REPORT OF THE COMPENSATION COMMITTEE
This Report of the Compensation Committee is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such acts.
To the Board of Directors:
Final decisions regarding executive compensation and stock option grants
to executives are made by the Compensation Committee of the Board of Directors
(the "Committee"). The Committee is composed of two independent non-employee
Directors, neither of whom have any interlocking relationships as defined by the
SEC. Although Robert K. Burgess (the Company's Chairman and Chief Executive
Officer) and Elizabeth A. Nelson (the Company's Chief Financial Officer),
attended the meetings of the Committee, they do not participate in deliberations
that relate to their own compensation.
GENERAL COMPENSATION POLICY
The Committee acts on behalf of the Board to establish the general
compensation policy of the Company for all employees of the Company. The
Committee typically reviews base salary levels and target bonuses for the Chief
Executive Officer ("CEO") and other executive officers and employees of the
Company at or about the beginning of each fiscal year. The Committee administers
the Company's incentive and equity plans, including the 1992 Equity Incentive
Plan (the "1992 Plan"), the Executive Incentive Plan (the "Incentive Plan") and
the 1993 Employee Stock Purchase Plan.
The Committee's philosophy in compensating executive officers, including
the CEO, is to relate compensation to corporate performance. Consistent with
this philosophy, the incentive component of the compensation of the executive
officers of the Company is contingent on corporate profits and sales performance
(including revenue and product sell-through performance measurements). Long-term
equity incentives for executive officers are effected through the granting of
stock options under the 1992 Plan. Stock options generally have value for the
executive only if the price of the Company's stock increases above the fair
market value on the grant date and the executive remains in the Company's employ
for the period required for the shares to vest.
The base salaries, incentive compensation and stock option grants of the
executive officers are determined in part by the Committee informally reviewing
data on prevailing compensation practices in technology companies with whom the
Company competes for executive talent and by their evaluating such information
in connection with the Company's corporate goals. Subject to the limitations
regarding available data, the Committee compared the compensation of the
Company's executive officers with the compensation practices of comparable
companies to determine base salary, target bonuses and target total cash
compensation. In addition to their base salaries, the Company's executive
officers, including the CEO, are each eligible to receive a quarterly cash bonus
under the Incentive Plan and are entitled to participate in the 1992 Plan.
In preparing the performance graph for this Proxy Statement, the Company
used the Hambrecht & Quist Stock Index as its published line of business index.
The compensation practices of most of the companies in the Hambrecht & Quist
Stock Index were not reviewed by the Company when the Committee reviewed the
compensation information described above because such companies were determined
not to be competitive with the Company for executive talent.
19
FISCAL 1999 EXECUTIVE COMPENSATION
BASE COMPENSATION. The Committee reviewed the recommendations and
performance and market data outlined above and established a base salary level
for each executive officer, including the CEO.
INCENTIVE COMPENSATION. Under the Incentive Plan, cash bonuses are awarded
only if the Company meets predetermined objectives set by the Board at the
beginning of the year. For fiscal 1999, the objectives used by the Company as
the basis for incentive compensation for the CEO and other executives were based
on a combination of revenue, predictability of results, channel sell-through
performance, and profitability. The target amount of bonus and the actual amount
of bonus are determined by the Committee, in its discretion. For fiscal 1999,
executive bonuses ranged from no bonus to $508,985.
STOCK OPTIONS. In fiscal 1999, stock options were granted to certain
executive officers as incentives for them to become employees or to aid in the
retention of executive officers and to align their interests with those of the
stockholders. Stock options typically have been granted to executive officers
when the executive first joins the Company, in connection with a significant
change in responsibilities and, occasionally, to achieve equity within a peer
group. The Committee may, however, grant additional stock options to executives
for other reasons. The number of shares subject to each stock option granted is
within the discretion of the Committee and is based on anticipated future
contribution and ability to impact corporate and/or business unit results, past
performance or consistency within the executive's peer group. In fiscal 1999,
the Committee considered these factors, as well as the number of options held by
such executive officers as of the date of grant that remained unvested. In the
discretion of the Committee, executive officers may also be granted stock
options under the 1992 Plan to provide greater incentives to continue their
employment with the Company and to strive to increase the value of the Company's
Common Stock. The stock options generally become exercisable over a four-year
period and are granted at a price that is equal to the fair market value of the
Company's Common Stock on the date of grant.
COMPANY PERFORMANCE AND CEO COMPENSATION. For fiscal 1999, Robert K.
Burgess, the President and CEO of the Company, received a base salary of
$ 200,000 and was eligible to earn a target bonus of $300,000 based on
attainment of 100% of the Macromedia Executive Bonus Plan objectives, with a
total bonus potential of in excess of that based on proportional achievement
above the objectivs. For fiscal 1999, Mr. Burgess received a bonus of $508,985.
In addition, the Company granted him a non-qualified stock option over 125,000
shares. For fiscal 2000, Mr. Burgess will receive a base salary of $ 200,000
with a target bonus of $ 400,000 based on attainment of 100% of the Macromedia
Executive Bonus Plan objectives, with his bonus to be proportionally adjusted
for his performance.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986. The
Company intends to comply with the requirements of Section 162(m) of the
Internal Revenue Code of 1986 for fiscal 2000. The 1992 Plan is already in
compliance with Section 162(m) by limiting stock awards to named executive
officers. The Company does not expect cash compensation for fiscal 2000 to be in
excess of $1,000,000 or consequently affected by the requirements of Section
162(m).
COMPENSATION COMMITTEE
DONALD L. LUCAS
WILLIAM B. WELTY
STEWART ALSOP
20
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such acts.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company from March 31, 1994 through and including March 31,
1999 with the cumulative total return on The Nasdaq (US only) Stock Market and
the Hambrecht & Quist Technology Index (assuming the investment of $100 in the
Company's Common Stock and in each of the indexes on March 31, 1994 and
reinvestment of all dividends). Unless otherwise specified, all dates refer to
the last day of each month presented.
[GRAPH]
21
DATA FOR MACROMEDIA, INC.
COMMON STOCK PRICE PERFORMANCE GRAPH
QUARTERLY DATA SERIES
SCALED PRICES: Stock and index prices scaled
to 100 as of March 31, 1994.
Date MACR H&Q Technology Index NASDAQ
---- ---- -------------------- ------
Dec-93 100.000 100.000 100.000
Mar-94 89.552 103.588 95.708
Jun-94 52.239 94.666 90.881
Sep-94 92.537 107.842 98.390
Dec-94 152.239 119.653 96.802
Mar-95 201.493 133.875 105.202
Jun-95 258.209 166.876 120.166
Sep-95 341.045 188.486 134.338
Dec-95 623.881 178.383 135.444
Mar-96 510.448 181.713 141.787
Jun-96 261.194 194.533 152.551
Sep-96 247.761 206.373 157.945
Dec-96 214.925 221.181 166.199
Mar-97 108.209 210.716 157.273
Jun-97 102.985 253.519 185.642
Sep-97 144.030 307.140 217.004
Dec-97 99.254 258.741 202.156
Mar-98 177.612 313.282 236.313
Jun-98 223.134 320.682 243.916
Sep-98 194.030 284.921 218.054
Dec-98 402.239 402.073 282.272
Mar-99 541.045 437.740 316.864
22
CERTAIN TRANSACTIONS
From April 1, 1998 to the present, there have been no (and there are no
currently proposed) transactions in which the amount involved exceeded $60,000
to which the Company or any of its subsidiaries was (or is to be) a party and in
which any executive officer, director, 5% beneficial owner of the Company's
Common Stock or member of the immediate family of any of the foregoing persons
had (or will have) a direct or indirect material interest, except as set forth
below and under "Executive Compensation" and "Employment Agreements."
When the Company acquired Altsys Corporation ("Altsys") in January 1995,
the Company assumed a lease from Altsys entered into with Renner Plaza
Properties, Inc. ("RPP") with respect to its use of the office space occupied by
it located in Richardson, Texas. RPP is wholly owned by Mr. Von Ehr, a director
of the Company who is not standing for reelection, and his wife, Gayla J. Von
Ehr. The Company moved from these facilities in September, 1998 and is no longer
paying rental fees to RPP.
The Company entered into a consulting agreement with John (Ian) Giffen, a
director of the Company, in February 1998, pursuant to which Mr. Giffen agreed
to advise the Company's Chief Financial Officer, senior finance staff and
investment relations staff in certain areas and work on special projects for the
Company, for a minimum of one week per month. To accomplish these services, Mr.
Giffen agreed to spend approximately three days per month on site at the Company
in San Francisco. In consideration for these services which are beyond his
duties as a director of the Company, Mr. Giffen was granted a stock option for
75,000 shares of the Company's Common Stock and receives $8,334 per month. His
stock option vests and becomes exercisable at the rate of 2.78% per month. Upon
a change of control of the Company that occurs while Mr. Giffen is providing
services to the Company, his stock option for 75,000 shares becomes immediately
vested and exercisable as to all shares. The consulting agreement has a term of
two years and is terminable only for just cause.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2000
annual meeting of stockholders must be received by the Company at its principal
executive offices no later than February 18, 2000 in order to be included in the
Company's proxy statement and form of proxy relating to that meeting.
Stockholders wishing to bring a proposal before the 2000 annual meeting of
stockholders (but not include it in the Company proxy materials) must provide
written notice of such proposal to the Secretary of the Company at the principal
executive offices of the Company by April 30, 2000.
23
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of the Company's Common Stock to
file initial reports of ownership and reports of changes in ownership with the
SEC and the Nasdaq National Market. Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements were met, except
that due to an error in record keeping of the Company, Form 5 filings for the
year ended March 31, 1999 were not promptly filed by for Mr. Dunn or Mr.
Meyrowitz and Mr. Siboni's initial Form 3 filing was late.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the Notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
24
MACROMEDIA, INC.
1992 EQUITY INCENTIVE PLAN
As Adopted September 23, 1992
and Amended Through April 1, 1999
1. PURPOSE. The purpose of the Plan is to provide incentives
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
24.
2. SHARES SUBJECT TO THE PLAN.
2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2
and 18, the total number of Shares reserved and available for grant and issuance
pursuant to the Plan shall be 15,400,000 Shares. Any Shares issuable upon
exercise of options granted pursuant to the Authorware 1988 Stock Option Plan,
the Macromind, Inc. 1989 Incentive Stock Option Plan and 1989 Nonstatutory Stock
Option Plan, and the Paracomp, Inc. 1989 Stock Option Plan (the "PRIOR PLANS")
that expire or become unexercisable for any reason without having been exercised
in full, shall no longer be available for distribution under the Prior Plans,
but shall be available for distribution under this Plan. Subject to Sections 2.2
and 18, Shares shall again be available for grant and issuance in connection
with future Awards under the Plan that: (a) are subject to issuance upon
exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option, (b) are subject to an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price, or (c) are subject to an Award that otherwise terminates without
Shares being issued.
2.2 ADJUSTMENT OF SHARES. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
PROVIDED, HOWEVER, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee; and PROVIDED, FURTHER, that the
Exercise Price of any Option may not be decreased to below the par value of the
Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisers of the Company or any Parent, Subsidiary or
Affiliate of the Company; PROVIDED such consultants, contractors and advisers
(a) are natural persons; (b) render bona fide services to the Company; and (c)
the services are not in connection with the offer and sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities. No "Named Executive Officer" (as
that
25
term is defined in Item 402(a)(3) of Regulation S-K promulgated under the
Exchange Act) shall be eligible to receive more than 1,800,000 Shares at any
time during the term of this Plan pursuant to the grant of Awards hereunder. A
person may be granted more than one Award under the Plan.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. The Plan shall be administered
by the Committee or the Board acting as the Committee. Subject to the general
purposes, terms and conditions of the Plan, and to the direction of the Board,
the Committee shall have full power to implement and carry out the Plan. The
Committee shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement and
any other agreement or document executed pursuant to the
Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination, in tandem, in replacement of, or as
alternatives to, other Awards under the Plan or any other
incentive or compensation plan of the Company or any
Parent, Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for
the administration of the Plan.
4.2 COMMITTEE DISCRETION. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under the
Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under the Plan to Participants who are not Insiders
of the Company.
26
4.3 COMPLIANCE WITH CODE SECTION 162(m). If two or more
members of the Board are Outside Directors, the Committee shall be comprised of
at least two members of the Board, all of whom are Outside Directors.
5. OPTIONS. The Committee may grant Options to eligible
persons and shall determine whether such Options shall be Incentive Stock
Options within the meaning of the Code ("ISOS") or Nonqualified Stock Options
("NQSOS"), the number of Shares subject to the Option, the Exercise Price of the
Option, the period during which the Option may be exercised, and all other terms
and conditions of the Option, including, in the case of a NQSO and subject to
the limits in Section 11 on such transfers, whether the Option or an interest
therein may be transferred during the Participant's lifetime, all subject to the
following:
5.1 FORM OF OPTION GRANT. Each Option granted under the
Plan shall be evidenced by an Award Agreement which shall expressly identify the
Option as an ISO or NQSO ("STOCK OPTION AGREEMENT"), and be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and be
subject to the terms and conditions of the Plan.
5.2 DATE OF GRANT. The date of grant of an Option shall
be the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of the Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 EXERCISE PERIOD. Options shall be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement; PROVIDED, HOWEVER, that no Option shall be exercisable
after the expiration of one hundred twenty (120) months from the date the Option
is granted, and provided further that no Option granted to a person who directly
or by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") shall be exercisable after the expiration of
five (5) years from the date the Option is granted. The Committee also may
provide for the exercise of Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number or percentage as the
Committee determines.
5.4 EXERCISE PRICE. The Exercise Price shall be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that
(i) the Exercise Price of an ISO shall be not less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
Option granted to a Ten Percent Stockholder shall not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of the Plan.
5.5 METHOD OF EXERCISE. Options may be exercised only by
delivery by the Holder to the Company of a written stock option exercise
agreement (the "EXERCISE AGREEMENT") in a form approved by the Committee (which
need not be the same for each Holder), stating the number of Shares being
purchased, the restrictions imposed on the Shares, if any, and such
27
representations and agreements regarding Holder's investment intent and access
to information, if any, as may be required or desirable by the Company to comply
with applicable securities laws, together with payment in full of the Exercise
Price for the number of Shares being purchased.
5.6 TERMINATION. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except
death or Disability, then Holder may exercise such Holder's
Options only to the extent that such Options would have
been exercisable upon the Termination Date no later than
ninety (90) days after the Termination Date (or such
shorter time period as may be specified in the Stock Option
Agreement or such longer time period, not exceeding five
(5) years, after the Termination Date as may be determined
by the Committee and specified in the Stock Option
Agreement, with any exercise beyond three (3) months after
the Termination Date deemed to be an NQSO), but in any
event, no later than the expiration date of the Options.
(b) If the Participant is terminated because of death or
Disability (or the participant dies within three months of
such termination), then Participant's Options may be
exercised only to the extent that such Options would have
been exercisable by Participant on the Termination Date and
must be exercised by the Holder no later than twelve (12)
months after the Termination Date (or such shorter time
period as may be specified in the Stock Option Agreement or
such longer time period, not exceeding five (5) years,
after the Termination Date as may be determined by the
Committee and specified in the Stock Option Agreement (with
any exercise beyond (i) three (3) months after the
Termination Date when the Termination is for any reason
other than the Participant's death or disability, within
the meaning of Section 22(e)(3) of the Code, or (ii) twelve
(12) months after the Termination Date when the Termination
is for Participant's death or disability, within the
meaning of Section 22(e)(3) of the Code, deemed to be an
NQSO), but in any event no later than the expiration date
of the Options.
5.7 LIMITATIONS ON EXERCISE. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Holder from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 LIMITATIONS ON ISOS. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
the Plan or under any other incentive stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year shall be ISOs and the Options for the amount
in excess of $100,000 that become exercisable in that calendar year shall be
28
NQSOs. In the event that the Code or the regulations promulgated thereunder are
amended after the Effective Date of the Plan to provide for a different limit on
the Fair Market Value of Shares permitted to be subject to ISOs, such different
limit shall be automatically incorporated herein and shall apply to any Options
granted after the effective date of such amendment.
5.9 MODIFICATION, EXTENSION OR RENEWAL. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
PROVIDED, HOWEVER, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of the Plan for Options
granted on the date the action is taken to reduce the Exercise Price; provided,
further, that the Exercise Price shall not be reduced below the par value of the
Shares, if any.
5.10 NO DISQUALIFICATION. Notwithstanding any other
provision in the Plan, no term of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer
by the Company to sell to an eligible person Shares that are subject to
restrictions. The Committee shall determine to whom an offer will be made, the
number of Shares the person may purchase, the price to be paid (the "PURCHASE
PRICE"), the restrictions to which the Shares shall be subject, and all other
terms and conditions of the Restricted Stock Award, subject to the following:
6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under
a Restricted Stock Award made pursuant to the Plan shall be evidenced by an
Award Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that shall be in such
form (which need not be the same for each Participant) as the Committee shall
from time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. The offer of Restricted Stock shall be accepted by the
Holder's execution and delivery of the Restricted Stock Purchase Agreement and
full payment for the Shares to the Company within thirty (30) days from the date
the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer shall terminate, unless otherwise determined by the Committee.
6.2 PURCHASE PRICE. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award shall be determined by the Committee and
shall be at least 85% of the Fair Market Value of the Shares when the Restricted
Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price shall be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
the Plan.
29
6.3 RESTRICTIONS. Restricted Stock Awards shall be
subject to such restrictions as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award
of Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company pursuant to an Award Agreement (the
"STOCK BONUS AGREEMENT") that shall be in such form (which need not be the same
for each Participant) as the Committee shall from time to time approve, and
shall comply with and be subject to the terms and conditions of the Plan. A
Stock Bonus may be awarded upon satisfaction of such performance goals as are
set out in advance in Participant's individual Award Agreement (the "PERFORMANCE
STOCK BONUS AGREEMENT") that shall be in such form (which need not be the same
for each Participant) as the Committee shall from time to time approve, and
shall comply with and be subject to the terms and conditions of the Plan. Stock
Bonuses may vary from Participant to Participant and between groups of
Participants, and may be based upon the achievement of the Company, Parent,
Subsidiary or Affiliate and/or individual performance factors or upon such other
criteria as the Committee may determine.
7.2 TERMS OF STOCK BONUSES. The Committee shall
determine to whom a Stock Bonus shall be granted, the number of Shares to be
awarded to the Participant, whether such Shares shall be Restricted Stock and
all other terms and conditions of the Stock Bonus. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee shall determine: (a) the nature,
length and starting date of any period during which performance is to be
measured (the "PERFORMANCE PERIOD") for each Stock Bonus; (b) the performance
goals and criteria to be used to measure the performance, if any; (c) the number
of Shares that may be awarded to the Participant; and (d) the extent to which
such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 FORM OF PAYMENT. The earned portion of a Stock Bonus
may be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
shall determine.
30
7.4 TERMINATION DURING PERFORMANCE PERIOD. If a
Participant is Terminated during a Performance Period for any reason, then such
Holder shall be entitled to payment (whether in Shares, cash or otherwise) with
respect to the Stock Bonus only to the extent earned as of the date of
Termination in accordance with the Performance Stock Bonus Agreement, unless the
Committee shall determine otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 PAYMENT. Payment for Shares purchased pursuant to
the Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) in the case of exercise by the Participant, Participant's
guardian or legal representative or the authorized legal
representative of Participant's heirs or legatees after
Participant's death, by cancellation of indebtedness of the
Company to the Participant;
(b) by surrender of Shares that either: (1) have been owned by
Holder for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such
Shares); or (2) were obtained by Holder in the public
market;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing
interest at a rate sufficient to avoid imputation of income
under Sections 483 and 1274 of the Code; PROVIDED, HOWEVER,
that Holders who are not employees of the Company shall not
be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other
than the Shares; PROVIDED, FURTHER, that the portion of the
Purchase Price equal to the par value of the Shares, if
any, must be paid in cash;
(d) in the case of exercise by the Participant, Participant's
guardian or legal representative or the authorized legal
representative of Participant's heirs or legatees after
Participant's death, by waiver of compensation due or
accrued to Participant for services rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock
exists:
(1) through a "same day sale" commitment from Holder and
a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER")
whereby Holder irrevocably elects to exercise the
Option and to sell a portion of the Shares so
purchased to
31
pay for the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from Holder and an
NASD Dealer whereby Holder irrevocably elects to
exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the
Company; or
(g) by any combination of the foregoing.
8.2 LOAN GUARANTEES. The Committee may help the
Participant pay for Shares purchased under the Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be
issued in satisfaction of Awards granted under the Plan, the Company may require
the Holder to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan, payments
in satisfaction of Awards are to be made in cash, such payment shall be net of
an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 STOCK WITHHOLDING. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "TAX DATE"). All elections by a Participant to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Committee and
shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made the election shall be irrevocable as to the
particular Shares as to which the election is made; and
(c) all elections shall be subject to the consent or
disapproval of the Committee.
32
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 VOTING AND DIVIDENDS. No Holder shall have any of
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Holder. After Shares are issued to the Holder, the Holder shall be
a stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; PROVIDED, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Holder may become entitled to receive with respect to such Shares by virtue
of a stock dividend, stock split or any other change in the corporate or capital
structure of the Company shall be subject to the same restrictions as the
Restricted Stock; PROVIDED, FURTHER, that the Holder shall have no right to
retain such dividends or distributions with respect to Shares that are
repurchased at the Participant's original Purchase Price pursuant to Section 12.
10.2 FINANCIAL STATEMENTS. The Company shall provide
financial statements to each Holder prior to such Holder 's purchase of Shares
under the Plan, and to each Holder annually during the period such Holder has
Options outstanding; PROVIDED, HOWEVER, the Company shall not be required to
provide such financial statements to Holders who are also Participants and whose
services in connection with the Company assure them access to equivalent
information.
11. TRANSFERABILITY. Except as otherwise provided in this
Section 11, no Award and no interest therein may be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will and by
the laws of descent and distribution and no Award may be made subject to
execution, attachment or similar process:
(a) ALL AWARDS OTHER THE NQSO'S. All Awards other than
NQSO's shall be exercisable: (i) during the Participant's lifetime, only by (A)
the Participant, or (B) the Participant's guardian or legal representative; and
(ii) after Participant's death, by the legal representative of the Participant's
heirs or legatees; and
(b) NQSOS. Unless otherwise restricted by the Committee,
an NQSO Option shall be exercisable: (i) during the Participant's lifetime only
by (A) the Participant, (B) the Participant's guardian or legal representative,
(C) a Family Member of the Participant who has acquired the Option by Permitted
Transfer; and (ii) after Participant's death, by the legal representative of the
Participant's heirs or legatees.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee,
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
(a) a right of first refusal to purchase all Shares that a Holder may propose to
transfer to a third party, and/or (b) a right to repurchase a portion of or all
Shares held by a Holder following the related Participant's Termination at any
time within ninety (90) days after the later of Participant's Termination Date
and the date Participant purchases Shares under the Plan, for cash or
cancellation of purchase money indebtedness, at: (A) with respect to Shares that
are "Vested" (as defined in the Award Agreement), the higher of: (l) the
original Purchase Price under the Award, or (2) the Fair Market Value of such
Shares on Participant's Termination Date, PROVIDED, such right of repurchase
terminates when the Company's securities become publicly traded; or (B) with
respect to Shares that are not "Vested" (as
33
defined in the Award Agreement), at the original Purchase Price under the Award,
PROVIDED, that the right to repurchase at the original Purchase Price lapses at
the rate of at least 20% per year over 5 years from the date the Shares were
purchased, and if the right to repurchase is assignable, the assignee must pay
the Company, upon assignment of the right to repurchase, cash equal to the
excess of the Fair Market Value of the Shares over the original Purchase Price.
13. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Holder's Shares, the Committee may require the Holder to deposit all
certificates, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates. Any Participant
who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under the Plan shall be required to pledge and
deposit with the Company all or part of the Shares so purchased as collateral to
secure the payment of Participant's obligation to the Company under the
promissory note; PROVIDED, HOWEVER, that the Committee may require or accept
other or additional forms of collateral to secure the payment of such obligation
and, in any event, the Company shall have full recourse against the Participant
under the promissory note notwithstanding any pledge of the Participant's Shares
or other collateral. In connection with any pledge of the Shares, Participant
shall be required to execute and deliver a written pledge agreement in such form
as the Committee shall from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro-rata basis as the
promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Holders, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Holder shall agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
shall not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in the Plan, the Company shall have no
obligation to issue or deliver certificates for Shares under the Plan prior to
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) completion of any registration
or other qualification of such shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company shall be under no obligation
34
to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company shall have
no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or other relationship with, the Company
or any Parent, Subsidiary or Affiliate of the Company or limit in any way the
right of the Company or any Parent, Subsidiary or Affiliate of the Company to
terminate Participant's employment or other relationship at any time, with or
without cause.
18. CORPORATE TRANSACTIONS.
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In
the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company and the Awards granted under the Plan are assumed or replaced by the
successor corporation, which assumption shall be binding on all Holders), (b) a
dissolution or liquidation of the Company, (c) the sale of substantially all of
the assets of the Company, or (d) any other transaction which qualifies as a
"corporate transaction" under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company
(EXCEPT for the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company), any or all outstanding Awards may be assumed
or replaced by the successor corporation, which assumption or replacement shall
be binding on all Holders. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Holders as was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Holder, substantially similar
shares or other property subject repurchase restrictions no less favorable to
the Holder.
18.2 EXPIRATION OF OPTIONS. In the event such successor
corporation, if any, refuses to assume or substitute the Options, as provided
above, pursuant to a transaction described in Subsection 18.1(a) above, such
Options shall expire on such transaction at such time and on such conditions as
the Board shall determine. In the event such successor corporation, if any,
refuses to assume or substitute the Options as provided above, pursuant to a
transaction described in Subsections 18.1(b), (c) or (d) above, or there is no
successor corporation, and if the Company ceases to exist as a separate
corporate entity, then, notwithstanding any contrary terms in the Award
Agreement, the Options shall expire on a date at least twenty (20) days after
the Board gives written notice to Holders specifying the terms and conditions of
such termination.
18.3 OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Holders under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
35
18.4 ASSUMPTION OF AWARDS BY THE COMPANY. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. The Plan shall become
effective on the date that it is adopted by the Board (the "EFFECTIVE DATE").
The Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
months before or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to the Plan; PROVIDED, HOWEVER, that: (a) no Option
may be exercised prior to initial stockholder approval of the Plan; (b) no
Option granted pursuant to an increase in the number of Shares approved by the
Board shall be exercised prior to the time such increase has been approved by
the stockholders of the Company; and (c) in the event that stockholder approval
is not obtained within the time period provided herein, all Awards granted
hereunder shall be canceled, any Shares issued pursuant to any Award shall be
canceled and any purchase of Shares hereunder shall be rescinded.
20. TERM OF PLAN. The Plan will terminate ten (10) years from
the Effective Date or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to the Plan; PROVIDED, HOWEVER, that the Board shall not, without the approval
of the stockholders of the Company, amend the Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board, the submission of the Plan to the stockholders of the Company
for approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. GOVERNING LAW. The Plan and all agreements, documents and
instruments entered into pursuant to the Plan shall be governed by and construed
in accordance with the internal laws of the State of California, excluding that
body of law pertaining to conflict of laws.
36
24. DEFINITIONS. As used in the Plan, the following terms shall
have the following meanings:
"AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
"AWARD" means any award under the Plan, including any
Option, Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
"COMPANY" means Macromedia, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the NASDAQ National
Market System, its last reported sale price on the NASDAQ
National Market System or, if no such reported sale takes
place on such date, the average of the closing bid and
asked prices;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, the last reported sale
price or, if no such reported sale
37
takes place on such date, the average of the closing bid
and asked prices on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading;
(c) if such Common Stock is publicly traded but is not quoted
on the NASDAQ National Market System nor listed or admitted
to trading on a national securities exchange, the average
of the closing bid and asked prices on such date, as
reported by THE WALL STREET JOURNAL, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in good faith.
"FAMILY MEMBER" includes any of the following:
(a) child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of
the Participant, including any such person with such relationship to the
Participant by adoption;
(b) any person (other than a tenant or employee) sharing
the Participant's household;
(c) a trust in which the persons in (a) and (b) have more
than fifty percent of the beneficial interest;
(d) a foundation in which the persons in (a) and (b) or
the Participant control the management of assets; or
(e) any other entity in which the persons in (a) and (b)
or the Participant own more than fifty percent of the voting interest.
"HOLDER" means the following person to the extent such
person has or controls an interest in an Award at the time in question: (a) the
Participant; (b) the Participant's guardian or legal representative; (c) a
Family Member who is a transferee of an Award from the Participant in a
Permitted Transfer, and (d) the authorized legal representative of such person's
heirs or legatees after such person's death.
"INSIDER" means an officer or director of the Company or
any other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"OUTSIDE DIRECTOR" shall mean any director who is not (i) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (ii) a former employee of
38
the Company or any Parent, Subsidiary or Affiliate of the Company who is
receiving compensation for prior services (other than benefits under a
tax-qualified pension plan), (iii) a current or former officer of the Company or
any Parent, Subsidiary or Affiliate of the Company or (iv) currently receiving
compensation for personal services in any capacity, other than as a director,
from the Company or any Parent, Subsidiary or Affiliate of the Company;
provided, however, that at such time as the term "Outside Director", as used in
Section 162(m) is defined in regulations promulgated under Section 162(m) of the
Code, "Outside Director" shall have the meaning set forth in such regulations,
as amended from time to time and as interpreted by the Internal Revenue Service.
"PARENT" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under
the Plan.
"PERMITTED TRANSFER" means, as authorized by this Plan and
the Committee in an NQSO Option, any transfer effected by the Participant during
the Participant's lifetime of an interest in such Option but only such transfers
which are by gift or domestic relations order. A Permitted Transfer does not
include any transfer for value and neither of the following are transfers for
value: (a) a transfer of under a domestic relations order in settlement of
marital property rights or (b) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members or the Participant
in exchange for an interest in that entity.
"PLAN" means this Macromedia, Inc. 1992 Equity Incentive
Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant
to Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SHARES" means shares of the Company's Common Stock, $0.001
par value, reserved for issuance under the Plan, as adjusted pursuant to
Sections 2 and 15, and any successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the time
of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
39
"TERMINATION" or "TERMINATED" means, for purposes of the
Plan with respect to a Participant, that the Participant has ceased to provide
services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee, PROVIDED, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee shall have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "TERMINATION
DATE").
40
MACROMEDIA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
July 29, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Robert K. Burgess and
Elizabeth A. Nelson, or either of them, each with power of
substitution, to represent the undersigned at the Annual
Meeting of Stockholders of Macromedia, Inc. (the "Company") to
be held at 600 Townsend Street, San Francisco, California
94103 on July 28, 1999, at 1:00 p.m. P.D.T., and any
adjournment or postponement thereof, and to vote the number of
shares the undersigned would be entitled to vote if personally
present at the meeting on the following matters:
-------------
SEE REVERSE
SIDE
-------------
- PLEASE MARK
X YOUR CHOICES
- LIKE THIS
-------------- ------
ACCOUNT NUMBER COMMON
- -------------------------------------------------------------------------------
WIT 2. AMMENDMENT TO THE FOR AGA ABS
1. ELECTION FOR HHE COMPANY'S 1992 EQUITY --- INST TAI
OF DIRECTORS --- LD INCENTIVE PLAN ---- N
FOR ---
ALL
--- ---- ---
3. RATIFICATION OF FOR AGA ABS
SELECTION OF KPMG LLP --- INST TAI
AS THE COMPANY'S ---- N
INDEPENDENT AUDITORS ---
Nominees: Stewart Alsop Donald L. Lucas --- --- ---
Robert K. Burgess Roger Siboni --- --- ---
John (Ian) Giffen William B. Welty
Mark D. Kvamme --- --- ---
--- --- ---
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space
provided below:
-----------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------
The Board of Directors recommends a vote
FOR all nominees for election and FOR
Proposals 2 and 3.
THIS PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF DIRECTION, THIS
PROXY WILL BE VOTED FOR THE COMPANY'S
NOMINEES FOR ELECTION AND FOR PROPOSALS 2
and 3. In their discretion, the proxies
are authorized to vote upon such other
business as may properly come before the
meeting or any adjournment thereof to the
extent authorized by Rule 14a-4(c)
promulgated by the Securities and
Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
Dated:___, 1999
- ---------------
- ---------------
Signature(s)
Please sign exactly as your name(s) appear(s)
on your stock certificate. If shares are
held of record in the names of two or more
persons or in the name of husband and wife,
whether as joint tenants or otherwise, both or
all of such persons should sign the proxy.
If shares of stock are held of record by a
corporation, the proxy should be executed
by the president or vice president and
the secretary or assistant secretary.
Executors, administrators, or other
fiduciaries who execute the above proxy
for a deceased stockholder should give
their full title. Please date the proxy.
WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THIS PROXY IN THE ENCLOSED,
POSTAGE PAID ENVELOPE SO THAT YOUR SHARES
MAY BE REPRESENTED AT THE MEETING.
- ------------------------------------------