<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. _______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HYPERION SOLUTIONS CORPORATION
(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:
<PAGE> 2
[LOGO]
October 10, 2000
TO THE STOCKHOLDERS OF HYPERION SOLUTIONS CORPORATION
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Hyperion Solutions Corporation (the "Company"), which will
be held at the Sheraton Four Points Hotel, 1100 N. Mathilda Avenue, Sunnyvale,
California 94089, on Wednesday, November 15, 2000, at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
It is important that your shares be represented and voted at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Returning the proxy does NOT deprive you of your right to attend the
Annual Meeting. If you decide to attend the Annual Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Jeffrey R. Rodek
Jeffrey R. Rodek
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 3
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2000
------------------------
The Annual Meeting of Stockholders (the "Annual Meeting") of Hyperion
Solutions Corporation (the "Company") will be held at the Sheraton Four Points
Hotel, 1100 N. Mathilda Avenue, Sunnyvale, California 94089, on Wednesday,
November 15, 2000, at 10:00 a.m. for the following purposes:
1. To elect two Class II directors to serve on the Board of Directors
for a three-year term;
2. To approve an amendment to the Company's 1995 Stock Option/Stock
Issuance Plan (the "Option Plan") to increase the number of shares of
Common Stock reserved for issuance thereunder by 1,600,000 shares;
3. To approve an amendment to the Option Plan to increase the number
of options granted to non-employee members of the Board of Directors under
the Automatic Option Grant Program of the Option Plan;
4. To approve an amendment to the Company's Employee Stock Purchase
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 700,000 shares;
5. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending June
30, 2001; and
6. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Only stockholders of record at the close of business on September 29, 2000
are entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's headquarters located at 1344 Crossman
Avenue, Sunnyvale, California, during ordinary business hours for the ten-day
period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ LARRY J. BRAVERMAN
Larry J. Braverman
Secretary
Sunnyvale, California
October 10, 2000
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
<PAGE> 4
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2000
------------------------
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Hyperion Solutions
Corporation, a Delaware corporation (the "Company"), for the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Sheraton Four Points
Hotel, 1100 N. Mathilda Avenue, Sunnyvale, California 94089, on Wednesday,
November 15, 2000, at 10:00 a.m., and at any adjournment or postponement of the
Annual Meeting. These proxy materials were first mailed to stockholders on or
about October 10, 2000.
The Company's principal executive offices are located at 1344 Crossman
Avenue, Sunnyvale, California 94089. The telephone number at that address is
(408) 744-9500.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders. Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock is the only type of security entitled to vote at
the Annual Meeting. On September 29, 2000, the record date for determination of
stockholders entitled to vote at the Annual Meeting, there were 32,720,094
shares of Common Stock outstanding. Each stockholder of record on September 29,
2000 is entitled to one vote for each share of Common Stock held by such
stockholder on that date. Shares of Common Stock may not be voted cumulatively.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes.
QUORUM REQUIRED
The Company's Bylaws provide that the holders of a majority of the
Company's Common Stock issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted as present for the purpose of determining the presence
of a quorum; abstentions have the same effect as negative votes, while broker
non-votes are not be counted as having been voted on the proposal.
VOTES REQUIRED
Proposal 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person or represented by proxy and entitled to
vote at the Annual Meeting. The two nominees for Class II director receiving the
highest number of affirmative votes will be elected.
Proposal 2. Approval of the amendment to increase the number of shares
reserved for issuance under the Hyperion Solutions Corporation 1995 Stock
Option/Stock Issuance Plan (the "Option Plan") requires the affirmative vote of
a majority of those shares present in person, or represented by proxy.
<PAGE> 5
Proposal 3. Approval of the amendment to increase the number of options
granted to non-employee members of the Board under the Automatic Option Grant
Program of the Option Plan requires the affirmative vote of a majority of those
shares present in person, or represented by proxy.
Proposal 4. Approval of the amendment to the Company's Employee Stock
Purchase Plan requires the affirmative vote of a majority of those shares
present in person, or represented by proxy.
Proposal 5. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent public accountants for the fiscal year ending June
30, 2001 requires the affirmative vote of a majority of those shares present in
person, or represented by proxy.
PROXIES
Whether or not you are able to attend the Company's Annual Meeting, you are
urged to complete and return the enclosed proxy, which is solicited by the Board
and which will be voted as you direct on your proxy when properly completed. In
the event no directions are specified, such proxies will be voted FOR Proposals
Nos. 1 - 5 and, as to other matters that may properly come before the Annual
Meeting, in the discretion of the proxy holders. You may also revoke or change
your proxy at any time before the Annual Meeting. To do this, send a written
notice of revocation or another signed proxy with a later date to the Secretary
of the Company at the Company's principal executive offices before the beginning
of the Annual Meeting. You may also automatically revoke your proxy by attending
the Annual Meeting and voting in person. All shares represented by a valid proxy
received prior to the Annual Meeting will be voted.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation. The Company may retain a proxy solicitation firm to
assist in the solicitation of proxies in connection with the Meeting. If the
Company retains a proxy solicitation firm, it will pay such firm customary fees,
expected to be approximately $15,000, plus expenses.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to the Company's Amended Certificate of Incorporation, the Board
is divided into three classes -- Class I, II and III Directors. Each director is
elected for a three-year term of office, with one class of directors being
elected at each annual meeting of stockholders. Each director holds office until
his successor is elected and qualified or until his earlier death, resignation
or removal.
The nominees for Class II Directors, Messrs. Rodek and Papone, are
currently serving as directors of the Company. Shares represented by all proxies
received by the Board and not so marked as to withhold authority to vote for any
of Mr. Rodek or Mr. Papone (by writing the nominee's name where indicated on the
proxy) will be voted FOR the election of the nominees for Class II Director; the
Board knows of no reason why any of the nominees would be unable or unwilling to
serve, but in such case, proxies may be voted for the election of another
nominee of the Board.
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The information below sets forth the current members of the Board,
including the nominees for Class II Director:
NOMINEES TO SERVE AS DIRECTORS SERVING FOR A TERM EXPIRING AT THE 2003 ANNUAL
MEETING OF STOCKHOLDERS (CLASS II DIRECTORS):
Jeffrey R. Rodek
Mr. Rodek, age 47, has been the Chairman of the Board and Chief Executive
Officer of the Company since October 1999 and has been a director of the Company
since January 1998. He is a member of the Nominating Committee. From January
1995 to October 1999, Mr. Rodek served as President and Chief Operating Officer
of Ingram Micro Inc. Prior to joining Ingram Micro Inc., Mr. Rodek spent 16
years at Federal Express in several executive positions, including Senior Vice
President of Operations, the Americas, Senior Vice President, Central Support
Services, and Vice President Financial Planning. Mr. Rodek serves on the board
of directors of EXE Technologies, Inc.
Aldo Papone
Mr. Papone, age 68, was elected to the Board in August 1998. He is a member
of the Compensation Committee, the Audit Committee and the Nominating Committee.
From April 1994 until August 1999, he served on the board of directors of
Hyperion Software Corporation. He has served as a Senior Advisor to American
Express Company since 1991. Mr. Papone served as Chairman and Chief Executive
Officer from 1989 to 1990, and as President and Chief Operating Officer from
1985 to 1989, of American Express Travel Related Services Company, Inc. Mr.
Papone served as a Director of American Express Company from 1990 to 1998.
DIRECTOR SERVING FOR A TERM EXPIRING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
(CLASS III DIRECTOR):
Henry R. Autry
Mr. Autry, age 52, was elected to the Board in June 2000. He is a member of
the Compensation Committee and the Nominating Committee. Since February 2000,
Mr. Autry has served as Chief Executive Officer of Brigade Corporation, a
provider of outsourced Internet customer support. From November 1997 until
December 1999, Mr. Autry was the Senior Vice President and General Manager for
American Express Traveler's Cheque Group. From January 1995 to October 1997, he
was Vice President and Chief Administration Officer of Baxter International, a
life sciences company.
Kenneth A. Goldman
Mr. Goldman, age 51, was elected to the Board in June 2000. He is a member
of the Audit Committee. In August 2000, Mr. Goldman became Senior Vice
President, Finance and Administration, and Chief Financial Officer of Siebel
Systems, Inc., an eBusiness applications software company. From July 1996 until
July 2000, Mr. Goldman was employed by At Home Corporation (Excite@Home), a
broadband services company, most recently as its Executive Vice President and
Chief Financial Officer. From July 1992 to July 1996, he was Senior Vice
President and Chief Financial Officer of Sybase, Inc., a database software and
services company. Mr. Goldman also serves on the board of directors of Legato
Systems, Inc.
DIRECTOR SERVING FOR A TERM EXPIRING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS
(CLASS I DIRECTOR):
Gary G. Greenfield
Mr. Greenfield, age 45, was elected to the Board in August 1998. He is a
member of the Audit Committee. He currently serves as President, Chief Executive
Officer and member of the board of directors of MERANT, plc., an enterprise
software application development solutions company. Mr. Greenfield joined Sage
Software (a predecessor of MERANT through merger) in 1987 as Vice President of
Marketing. Mr. Greenfield also serves on the board of directors of Mobius
Systems, Inc.
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BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended June 30, 2000, the Board held six meetings and
acted by written consent eight times. For the fiscal year, each of the current
directors attended at least 75% of the aggregate of (i) the total number of
meetings of the Board and (ii) the total number of meetings held by all
Committees of the Board on which each such director served. The Board has three
standing committees: the Audit Committee, the Compensation Committee and the
Nominating Committee.
During the fiscal year ended June 30, 2000, the Audit Committee met five
times. The Audit Committee reviews, acts on and reports to the Board with
respect to various auditing and accounting matters, including the selection of
the Company's auditors, the scope of the annual audits, fees to be paid to the
Company's auditors, the performance of the Company's auditors and the accounting
practices of the Company. The members of the Audit Committee are Messrs.
Greenfield, Goldman and Papone.
During the fiscal year ended June 30, 2000, the Compensation Committee of
the Board held three meetings and acted by written consent 12 times. The
Compensation Committee reviews the performance and sets the compensation of the
Chief Executive Officer of the Company, and approves the compensation of the
executive officers of the Company and reviews the compensation programs for
other key employees, including salary and cash bonus levels, as set by the Chief
Executive Officer. The Compensation Committee also administers the Stock Option
Plan with respect to the Company's executive officers. The members of the
Compensation Committee are Messrs. Papone and Autry.
The Nominating Committee of the Board was formed in July 2000. The
Nominating Committee considers and recommends to the full Board candidates to
serve as members of the Board. The Committee considers the recommendations of
individual Board members and members of management and considers such factors as
experience and subject matter expertise in making its recommendations. The
members of the Nominating Committee are Messrs. Rodek, Autry and Papone.
DIRECTOR COMPENSATION
Non-employee Board members receive retainers of $15,000 per year and fees
of $1,500 for each meeting of the Board they attend in person and $500 for each
meeting they participate in by telephone. The Company does not pay compensation
for special assignments of the Board. For committee meetings that occur on days
separate from Board meetings, members receive $750 for each meeting in person
and $500 for participation by telephone.
Non-employee members of the Board customarily receive option grants
pursuant to the provisions of the Automatic Option Grant Program and the
Discretionary Option Grant Program of the Stock Option Plan. Each individual who
becomes a non-employee member of the Board is granted options to purchase 20,000
shares on the date such individual joins the Board. In addition, each individual
who continues to serve as a non-employee Board member receives options to
purchase 7,000 shares of Common Stock on each 12-month anniversary of being
elected to the Board.
In January 1999, the Company entered into an agreement with James Perakis,
a director of the Company until August 7, 2000, under which he was compensated
an annual rate of $145,000 through September 30, 1999 for acting as a senior
advisor to the President of the Company and was eligible for a performance bonus
of up to 50% of his base compensation under the agreement. In addition, the
agreement provides that the Company will continue to provide Mr. Perakis and his
family with certain fringe benefits, including health and life insurance, until
he reaches the age of 65.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
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PROPOSAL NO. 2
AMENDMENT OF 1995 STOCK OPTION/STOCK ISSUANCE PLAN
TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER
The stockholders are being asked to vote on a proposal to approve an
amendment to the Option Plan to increase the number of shares of Common Stock
available for issuance under the Option Plan by 1,600,000 shares to a total of
9,607,577 shares of Common Stock. The Board adopted the amendment in September
2000, subject to stockholder approval at the 2000 Annual Meeting. The following
is a description of the Option Plan. The Company established the Option Plan as
a successor to the 1992 Stock Option Plan ("Predecessor Plan") to provide a
means whereby employees, officers, directors, consultants, and independent
advisors of the Company or parent or subsidiary corporations may be given an
opportunity to purchase shares of Common Stock. The Option Plan was adopted by
the Board on August 31, 1995 and approved by the stockholders on September 15,
1995. The Board adopted an amendment to the Option Plan on June 6, 1996
increasing the number of shares of Common Stock available for issuance under the
Option Plan by 1,000,000 shares to a total of 2,257,577. Such amendment was
approved by the stockholders at the 1996 Annual Meeting on July 23, 1996. The
Board adopted amendments to the Option Plan on June 30, 1997 increasing the
number of shares of Common Stock available for issuance under the Option Plan by
750,000 shares and changing the vesting provisions applicable to non-employee
members of the Board. Such amendments were approved by the stockholders at the
1997 Annual Meeting on August 13, 1997. The Board adopted an amendment to the
Option Plan in June 1998 increasing the number of shares of Common Stock
available for issuance under the Option Plan by 5,000,000 shares. Such amendment
was approved by the stockholders at the 1998 Annual Meeting on August 21, 1998.
The Board believes that option grants under the Option Plan play an important
role in the Company's efforts to attract, employ, and retain employees,
directors, and consultants of outstanding ability.
The principal terms and provisions of the Option Plan are summarized below.
The summary, however, is not intended to be a complete description of all the
terms of the Option Plan. A copy of the Option Plan will be furnished by the
Company to any stockholder upon written request to the Corporate Secretary at
the executive offices of the Company in Sunnyvale, California.
Structure. The Option Plan contains four separate equity incentive
programs: (i) a Discretionary Option Grant Program under which employees,
consultants and Board members may be granted stock options to purchase shares of
Common Stock, (ii) an Automatic Option Grant Program under which option grants
will be made at specified intervals to the non-employee Board members, (iii) a
Salary Investment Option Grant Program under which employees may elect to have
their base salary reduced each year in return for options to purchase shares of
Common Stock at a discount from current fair market value equal to the amount of
their salary reduction, and (iv) a Stock Issuance Program under which eligible
individuals may be issued shares of Common Stock directly, through the immediate
purchase of the shares, or as a bonus tied to the performance of services.
Administration. The Compensation Committee of the Board, which is comprised
of two or more Board members ("Committee"), administers the Option Plan.
Committee members serve for such period of time as the Board may determine. The
Option Plan may also be administered by the Board or a secondary committee
comprised of one or more Board members with respect to optionees who are not
executive officers subject to the short-swing profit rules of the Federal
securities laws.
The Committee (or Board or secondary committee to the extent acting as plan
administrator) has full authority (subject to the express provisions of the
Option Plan) to determine the eligible individuals who are to receive grants
under the Option Plan, the number of shares to be covered by each granted
option, the date or dates on which the option is to become exercisable, the
maximum term for which the option is to remain outstanding, whether the granted
option will be an incentive stock option ("Incentive Option") that satisfies the
requirements of Section 422 of the Internal Revenue Code (the "Code") or a
non-statutory option not intended to meet such requirements, and the remaining
provisions of the option grant. The Committee also has full authority to
determine the eligible individuals who are to receive stock issuances, the
number of shares to be issued to each participant, the time or times when such
issuances are to be made, and the remaining
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provisions of the stock issuance. The Committee has sole and exclusive authority
to select the individuals eligible to participate in the Salary Investment
Option Grant Program.
Eligibility. Employees (including officers), consultants and independent
contractors who render services to the Company or its subsidiary corporations
(whether now existing or subsequently established) are eligible to receive
option grants under the Discretionary Option Grant Program and stock issuances
under the Stock Issuance Program. A non-employee member of the Board of the
Company or any parent or subsidiary corporation is also eligible for option
grants under the Discretionary Option Grant Program and stock issuances under
the Stock Issuance Program. Only the Company's employees are eligible to
participate in the Salary Investment Option Grant Program, and only non-employee
directors of the Company are eligible to participate in the Automatic Option
Grant Program.
As of September 15, 2000, approximately 2,400 persons (including seven
executive officers and four non-employee directors) were eligible to participate
in the Option Plan.
Securities Subject to Option Plan. The number of shares of Common Stock
which may be issued over the term of the Option Plan shall not exceed 9,607,577
including the increase of 1,600,000 shares which is part of this Proposal No. 2.
Such share reserve will be subject to further adjustment in the event of
subsequent changes to the capital structure of the Company. The shares may be
made available either from the Company's authorized but unissued Common Stock or
from Common Stock reacquired by the Company, including shares purchased on the
open market.
No one person participating in the Option Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 500,000 shares of Common Stock per calendar year.
Should an option expire or terminate for any reason prior to exercise in
full, including options incorporated from the Predecessor Plan, the shares
subject to the portion of the option not so exercised will be available for
subsequent option grants under the Option Plan.
DISCRETIONARY OPTION GRANT PROGRAM
Price and Exercisability. The option exercise price per share in the case
of an Incentive Option may not be less than 100% of the fair market value of the
Common Stock on the grant date and, in the case of a non-statutory option, 85%
of the fair market value of the Common Stock on the grant date. All options
intended to be exempt from the limitation on compensation deductions set forth
in Section 162(m) of the Internal Revenue Code will be granted with an exercise
price equal to or greater than 100% of fair market value. Options granted under
the Discretionary Option Grant Program become exercisable at such time or times,
and during such period, as the Committee may determine and set forth in the
instrument evidencing the option grant. In any event, options granted under the
Option Plan may not have a term in excess of ten years.
The exercise price may be paid in cash or in shares of Common Stock.
Options may also be exercised through a same-day sale program, pursuant to which
a designated brokerage firm is to effect the immediate sale of the shares
purchased under the option and pay over to the Company, out of the sale proceeds
on the settlement date, sufficient funds to cover the exercise price for the
purchased shares plus all applicable withholding taxes. The Committee may also
assist any optionee (including an officer or director) in the exercise of his or
her outstanding options by authorizing a Company loan to the optionee. The terms
and conditions of any such loan will be established by the Committee in its sole
discretion.
No optionee is to have any stockholder rights with respect to the option
shares until the optionee has exercised the option and paid the exercise price.
Options are not assignable or transferable other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order,
and during the optionee's lifetime, the option may be exercised only by the
optionee.
Termination of Service. Any option held by the optionee at the time of
cessation of service will not remain exercisable beyond the designated
post-service exercise period. Under no circumstances, moreover, may any option
be exercised after the specified expiration date of the option term. Each such
option will
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<PAGE> 10
normally, during such limited period, be exercisable only to the extent of the
number of shares of Common Stock in which the optionee is vested at the time of
cessation of service. The optionee will be deemed to continue in service for so
long as such individual performs services for the Company (or any parent or
subsidiary corporation), whether as an employee, independent contractor,
consultant or Board member.
The Committee has complete discretion to extend the period following the
optionee's cessation of service during which his or her outstanding options may
be exercised and/or to accelerate the exercisability of such options in whole or
in part. Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.
The shares of Common Stock acquired upon the exercise of one or more
options may be subject to repurchase by the Company at the original exercise
price paid per share upon the optionee's cessation of service prior to vesting
in such shares. The Committee has complete discretion in establishing the
vesting schedule to be in effect for any such unvested shares and may cancel the
Company's outstanding repurchase rights with respect to those shares at any
time, thereby accelerating the vesting of the shares subject to the canceled
rights.
Incentive Options. Incentive Options may only be granted to individuals who
are employees of the Company or its parent or subsidiary corporations. During
any calendar year, the aggregate fair market value (determined as of the grant
date(s)) of the Common Stock for which one or more options granted to any
employee under the Option Plan (or any other option plan of the Company or its
parent or subsidiary corporations) may for the first time become exercisable as
incentive stock options under Section 422 of the Code shall not exceed $100,000.
If an employee to whom an Incentive Option is granted is the owner of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its parent or subsidiary corporations, then the
option price per share will be at least 110% of the fair market value per share
on the grant date, and the option term will not exceed five years, measured from
the grant date.
Limited Stock Appreciation Rights. One or more officers of the Company
subject to the short-swing profit restrictions of the Federal securities laws
may, at the discretion of the Committee, be granted limited stock appreciation
rights in connection with their option grants under the Option Plan. Any option
with such a limited stock appreciation right in effect for at least six months
may be unconditionally surrendered by the officer, to the extent exercisable for
one or more vested option shares, upon the successful completion of a hostile
tender offer for more than 50% of the Company's outstanding voting stock. In
return, the officer will be entitled to a cash distribution from the Company in
an amount per canceled option share equal to the excess of (i) the highest price
per share of Common Stock paid in the tender offer or, if greater, the fair
market value per share of the Common Stock over (ii) the option exercise price.
Tandem Stock Appreciation Rights. The Committee is authorized to issue
tandem stock appreciation rights in connection with option grants under the
Discretionary Option Grant Program. Tandem stock appreciation rights provide the
holders with the right, subject to the Committee's approval, to surrender their
options for a distribution from the Company equal in amount to the excess of (i)
the fair market value of the vested shares of Common Stock subject to the
surrendered option over (ii) the aggregate exercise price payable for such
shares. Such distribution may, at the discretion of the Committee, be made in
cash or in shares of Common Stock.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, non-employee Board members will
receive option grants at specified intervals over their period of Board service.
These special grants may be summarized as follows:
- Each individual who first becomes a non-employee Board member, whether
through election by the stockholders or appointment by the Board, will
automatically be granted, at the time of such election or appointment, a
nonstatutory stock option to purchase 10,000 (20,000 if Proposal No. 3 is
approved) shares of Common Stock, provided such individual has not
previously been in the employ of the Company.
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<PAGE> 11
- Each individual who continues as a non-employee Board member will receive
an additional grant of a nonstatutory stock option under the Option Plan
to purchase 5,000 (7,000 if Proposal No. 3 is approved) shares of Common
Stock on each 12-month anniversary of his election to the Board.
Each option grant under the Automatic Option Grant Program will be subject
to the following terms and conditions:
- The option price per share will be equal to 100% of the fair market value
per share of Common Stock on the automatic grant date, and each option is
to have a maximum term of ten years measured from the grant date.
- Each automatic option grant will be immediately exercisable for all of
the option shares, but the shares purchasable under the option will be
subject to repurchase at the original exercise price in the event the
optionee's Board service should cease prior to full vesting. With respect
to each initial grant, the repurchase right will lapse and the optionee
will vest in two successive equal annual installments, measured from the
grant date, provided such optionee continues service as a Board member.
Each annual grant will vest upon the optionee's completion of one year of
service as a Board member, measured from the option grant date.
- The option will remain exercisable for a 12-month period following the
optionee's termination of service as a Board member for any reason.
Should the optionee die while serving as a Board member or during the
12-month period following his or her cessation of Board service, then
such option may be exercised during the 12-month period following such
optionee's cessation of service by the personal representatives of the
optionee's estate or the person to whom the grant is transferred by the
optionee's will or the laws of inheritance. In no event, however, may the
option be exercised after the expiration date of the option term. During
the applicable exercise period, the option may not be exercised for more
than the number of vested shares (if any) for which it is exercisable at
the time of the optionee's cessation of Board service.
- The option shares will become fully vested in the event of a Corporate
Transaction or a Change in Control (each as defined below). The option
shares will become fully vested in the event of the optionee's cessation
of Board service by reason of death or permanent disability.
- Upon the occurrence of a hostile tender offer, the optionee shall have a
30-day period in which to surrender to the Company each automatic option
which has been in effect for at least six months (whether or not the
optionee is vested in such option) and the optionee will in return be
entitled to a cash distribution from the Company in an amount per
canceled option share equal to the excess of (i) the highest reported
price per share of Common Stock paid in the tender offer or, if greater,
the fair market value per share of the Common Stock over (ii) the option
exercise price payable per share.
- Option grants under the Automatic Option Grant Program will be made in
strict compliance with the express provisions of that program. The
remaining terms and conditions of the options will in general conform to
the terms described above for option grants under the Discretionary
Option Grant Program and will be incorporated into the option agreement
evidencing the automatic grant.
STOCK ISSUANCE PROGRAM
Shares may be sold under the Stock Issuance Program at a price per share
not less than 85% of fair market value, payable in cash or through a promissory
note payable to the Company. Shares may also be issued solely in consideration
of past services.
The issued shares may either be immediately vested upon issuance or subject
to a vesting schedule tied to the performance of service or the attainment of
performance goals. The Committee will, however, have the discretionary authority
at any time to accelerate the vesting of any and all unvested shares outstanding
under the Option Plan.
All outstanding repurchase rights under the Stock Issuance Program will
terminate automatically (and all shares subject to such terminated rights will
fully vest) in the event of a Corporate Transaction (as defined
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<PAGE> 12
below) unless such repurchase rights are assigned. If the repurchase rights are
assigned pursuant to a Corporate Transaction, such rights will automatically
terminate, and the shares subject to such rights fully vest, if the
participant's service should subsequently terminate by reason of an involuntary
or constructive termination within 18 months following the effective date of
such Corporate Transaction.
SALARY INVESTMENT OPTION GRANT PROGRAM
The Committee will have complete discretion in selecting the individuals
who are to participate in the Salary Investment Option Grant Program. As a
condition to such participation, each selected individual must, prior to the
start of the calendar year of participation, file with the Committee an
irrevocable authorization directing the Company to reduce, by a designated
multiple of 1%, his or her base salary for the upcoming calendar year. Such
salary reduction will be in an amount not less than 5% of base salary. To the
extent the Committee approves one or more salary reduction authorizations, the
affected individuals will be granted options under the program.
Each option will be subject to substantially the same terms and conditions
applicable to option grants made under the Discretionary Option Grant Program,
except for the following differences:
- The exercise price per share will be equal to one-third of the fair
market value per share of Common Stock on the grant date.
- The number of option shares will be determined by dividing the total
dollar amount of the approved reduction in the participant's base salary
by two-thirds of the fair market value per share of Common Stock on the
grant date. As a result, the total spread on the option (the fair market
value of the option shares on the grant date less the aggregate exercise
price payable for those shares) will equal the dollar amount of the
reduction to the optionee's base salary to be in effect for the calendar
year for which the grant is made.
- Provided the optionee continues in service, the option will become
exercisable in a series of 12 equal successive monthly installments in
the calendar year for which the salary reduction is in effect.
- Each option will have a term of ten years measured from the grant date.
GENERAL PROVISIONS
Acceleration of Options/Termination of Repurchase Rights. Upon the
occurrence of either of the following transactions (a "Corporate Transaction"):
- the sale, transfer, or other disposition of all, or substantially all, of
the Company's assets in complete liquidation or dissolution of the
Company, or
- a merger or consolidation in which securities possessing more than 50% of
the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction.
Each outstanding option under the Option Plan will, immediately prior to
the effective date of the Corporate Transaction, become fully exercisable for
all of the shares at the time subject to such option. However, an outstanding
option shall not accelerate if and to the extent: (i) such option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation (or parent) or to be replaced with a comparable option to purchase
shares of the capital stock of the successor corporation (or parent), (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares at
the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option or (iii) the
acceleration of such option is subject to other limitations imposed by the
Committee at the time of the option grant. Immediately following the
consummation of the Corporate Transaction, all outstanding options will
terminate and cease to be exercisable, except to the extent assumed by the
successor corporation.
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<PAGE> 13
Also upon a Corporate Transaction, the Company's outstanding repurchase
rights will terminate automatically unless assigned to the successor
corporation.
Any options which are assumed or replaced in the Corporate Transaction and
do not otherwise accelerate at that time shall automatically accelerate (and any
of the Company's outstanding repurchase rights which do not otherwise terminate
at the time of the Corporate Transaction shall automatically terminate and the
shares of Common Stock subject to those terminated rights shall immediately vest
in full) in the event the optionee's service should subsequently terminate by
reason of an involuntary or constructive termination within 18 months following
the effective date of such Corporate Transaction. Any options so accelerated
shall remain exercisable for fully-vested shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one-year period
measured from the effective date of the employment termination.
Upon the occurrence of the following transactions ("Change in Control"):
- any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Company) acquires beneficial ownership of
more than 50% of the Company's outstanding voting stock without the
Board's recommendation, or
- there is a change in the composition of the Board over a period of 36
consecutive months or less such that a majority of the Board members
ceases by reason of a proxy contest to be comprised of individuals who
(a) have been Board members continuously since the beginning of such
period or (b) have been elected or nominated for selection as Board
members by a majority of the Board in clause (a) above who were still in
office at the time such election or nomination was approved by the Board,
the Committee has the discretion to accelerate outstanding options and terminate
the Company's outstanding repurchase rights. The Committee also has the
discretion to accelerate outstanding options and terminate the Company's
outstanding repurchase rights upon the subsequent termination of the optionee's
service within a specified period following the Change in Control.
Valuation. For purposes of establishing the option price and for all other
valuation purposes under the Option Plan, the fair market value of a share of
Common Stock on any relevant date will be the closing sale price per share of
Common Stock on that date, as such price is reported on The Nasdaq National
Market. The closing sale price of the Common Stock on September 15, 2000 was
$28.313 per share.
Changes in Capitalization. In the event any change is made to the Common
Stock issuable under the Option Plan by reason of any stock split, stock
dividend, combination of shares, exchange of shares, or other change affecting
the outstanding Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments will be made to (i) the maximum number
and/or class of securities issuable under the Option Plan, (ii) the maximum
number and/or class of securities for which any one person may be granted
options, separately exercisable stock appreciation rights and direct stock
issuances per calendar year, (iii) the number and/or class of securities for
which automatic option grants are to be subsequently made per director under the
Automatic Option Grant Program and (iv) the number and/or class of securities
and the exercise price per share in effect under each outstanding option
(including any option incorporated from the Predecessor Plan) in order to
prevent the dilution or enlargement of benefits thereunder.
Each outstanding option that is assumed in connection with a Corporate
Transaction will be appropriately adjusted to apply to the number and class of
securities that would otherwise have been issued, in consummation of such
Corporate Transaction, to the option holder had the option been exercised
immediately prior to the Corporate Transaction. Appropriate adjustments will
also be made to the option price payable per share and to the class and number
of securities available for future issuance under the Option Plan on both an
aggregate and a per-participant basis.
Option Plan Amendments. The Board may amend or modify the Option Plan in
any and all respects whatsoever. However, the Board may not, without the
approval of the Company's stockholders, (i) materially increase the maximum
number of shares issuable under the Option Plan (except in connection with
certain
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<PAGE> 14
changes in capitalization), (ii) materially modify the eligibility requirements
for option grants, or (iii) otherwise materially increase the benefits accruing
to participants under the Option Plan.
Unless sooner terminated by the Board, the Option Plan will in all events
terminate on September 30, 2005. Any options outstanding at the time of such
termination will remain in force in accordance with the provisions of the
instruments evidencing such grants.
As of June 30, 2000, options covering 7,492,359 shares were outstanding
under the Option Plan, 2,370,738 shares remained available for future option
grants, and 7,718,747 shares have been issued under the Option Plan. The
expiration dates for all such options range from November 2000 to June 2010.
NEW PLAN BENEFITS
Because the Option Plan is discretionary, benefits to be received by
individual optionees are not determinable. The following table shows the number
of shares of Common Stock issuable upon exercise of stock options granted to the
named individuals and groups under the Option Plan during the fiscal year ended
June 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF
GROUP OR INDIVIDUAL OPTIONS
------------------- ---------
<S> <C>
Jeffrey R. Rodek............................................ 505,000
Stephen V. Imbler........................................... 200,000
Michael L. Sternad.......................................... 120,000
Larry J. Braverman.......................................... 40,000
Dyke J. Hensen.............................................. 95,000
Stephen L. Fioretti......................................... 60,000
All current executive officers as a group (7 persons)....... 1,070,000
All current directors who are not executive officers as a
group..................................................... 14,000
All employees (who are not executive officers) as a group... 4,039,360
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS GRANTED UNDER THE OPTION PLAN
THE FOLLOWING DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED
WITH PARTICIPATION IN THE OPTION PLAN IS BASED ON PROVISIONS OF THE CODE AND
ADMINISTRATIVE AND JUDICIAL INTERPRETATIONS THEREOF AS OF THE DATE OF THIS PROXY
STATEMENT. IT DOES NOT DESCRIBE APPLICABLE STATE, LOCAL, OR FOREIGN TAX
CONSIDERATIONS. THE APPLICABLE RULES ARE COMPLEX AND MAY VARY WITH A
PARTICIPANT'S INDIVIDUAL CIRCUMSTANCES. THE FOLLOWING DESCRIPTION IS THUS
NECESSARILY GENERAL AND DOES NOT ADDRESS ALL OF THE POTENTIAL FEDERAL AND OTHER
INCOME TAX CONSEQUENCES TO EVERY PARTICIPANT OF THE OPTION PLAN OR EVERY
TRANSACTION THEREUNDER. EACH PARTICIPANT SHOULD CONSULT A PERSONAL TAX ADVISOR
CONCERNING PARTICIPATION IN THE OPTION PLAN.
Options granted under the Option Plan may be either incentive stock options
intended to satisfy the requirements of Section 422 of the Code or non-statutory
options that are not intended to meet those requirements. The federal income tax
treatment of the two types of options differs, as follows.
Incentive Stock Options
Award; Exercise; Alternative Minimum Tax. If an optionee is granted an
incentive stock option under the Option Plan, the optionee will not have taxable
income upon the award or exercise of such option. However, the "option spread"
(the amount by which the fair market value of the option shares on the relevant
measurement date exceeds the exercise price) is includable in the optionee's
"alternative minimum taxable income" ("AMTI") in determining the optionee's
liability for the "alternative minimum tax." The option spread generally is
measured for this purpose on the day the option is exercised; however, if both
(i) the purchased shares are subject to a "substantial risk of forfeiture"
(including, generally, a right of repurchase in favor of the Company) and (ii)
the optionee does not make an election under Section 83(b) of the Code with
respect to such shares within 30 days after the exercise date (a "Section 83(b)
Election"), the option spread
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<PAGE> 15
is measured, and is includable in AMTI, on the date the risk of forfeiture
lapses. (For purposes of the alternative minimum tax, the fair market value of
the shares acquired on exercise of an incentive stock option is determined by
ignoring any restriction which by its terms may eventually lapse.) The effect of
a Section 83(b) Election should be to cause an optionee to be taxable as though
restrictions amounting to a substantial risk of forfeiture did not exist, i.e.,
to have the option spread includable in AMTI as of the date the option is
exercised; however, the Internal Revenue Service has issued no definitive
guidance on this issue.
In general, the alternative minimum tax for individuals is equal to (i) 26
percent of AMTI up to $175,000 plus 28 percent of AMTI over $175,000, minus (ii)
a base amount (which varies depending upon filing status and income level), and
minus (iii) the optionee's regular federal income tax. AMTI includes specified
tax preference items and is not reduced by personal exemptions or by most
itemized deductions. Whether or not an optionee will be subject to the
alternative minimum tax depends upon the optionee's particular circumstances.
Payment of alternative minimum tax does not increase the optionee's basis in the
option shares for determining gain or loss for purposes of regular income tax.
However, any alternative minimum tax paid as a result of the exercise of an
incentive stock option is generally creditable against regular tax liability in
later years to the extent the optionee's regular tax exceeds his or her
alternative minimum tax in such years.
Sale of Option Shares; Disqualifying Dispositions. An optionee will be
entitled to long-term capital gain or loss treatment upon sale, other than to
the Company, of shares acquired pursuant to an incentive stock option if the
sale occurs more than two years after the grant date and more than one year
after the date the optionee receives the shares. If the shares are sold or
disposed of (including by gift, but not including dispositions in certain
tax-free exchanges) before both of these time periods have expired (a
"disqualifying disposition"), the option spread (or, if less, the amount of gain
on the sale) is taxable as ordinary income. For this purpose, the option spread
is measured at the exercise date unless the shares were subject to a substantial
risk of forfeiture upon purchase and the optionee did not file a Section 83(b)
Election, in which event the option spread is measured at the date the
restriction lapsed. If gain on a disqualifying disposition exceeds the amount
treated as ordinary income, the excess is capital gain, which will be long-term
if the shares were held for more than one year. For this purpose, the holding
period for option shares commences on the option exercise date unless the shares
are subject to restrictions and no Section 83(b) Election is filed, in which
event the holding period commences on the date the restrictions lapse. Under
current law, long-term capital gain is generally subject to tax at more
favorable rates than short-term capital gains and ordinary income.
Tax Consequences to the Company; Notice of Disqualifying Disposition. The
Company receives no income tax deduction upon award or exercise of an incentive
stock option but is generally entitled to a deduction equal to the ordinary
income taxable to the optionee upon a disqualifying disposition. To enable the
Company to learn of a disqualifying disposition and ascertain the amount of the
deduction to which it is entitled, the Company may require optionees to notify
the Company in writing, before the disqualifying disposition, of the intended
date and terms of the disposition and to comply with any other requirements that
may be included in the option agreement. The Company may also place legends on
share certificates or give appropriate instructions to its stock transfer agent
to ensure that such requirements are satisfied before stock may be transferred.
The Company anticipates that any compensation deemed paid to an optionee as
a result of a disqualifying disposition will not be taken into account for
purposes of the $1 million limitation on the deductibility of compensation paid
to certain officers of the Company.
Exercise with Stock. If an optionee tenders shares of stock (other than
certain "statutory option stock," described below, surrendered in a
disqualifying disposition) in payment of the exercise price of an incentive
stock option, any appreciation (or diminution) in value of the surrendered
shares is not then taxable. Instead, shares acquired upon exercise which are
equal in value to the fair market value of the surrendered shares take as their
basis and holding period for capital gain or loss purposes the basis and holding
period that the optionee had in the surrendered shares, but otherwise are
treated as newly acquired under the option (e.g., for purposes of the
disqualifying disposition holding periods described above). Additional shares
acquired by exercise of the
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<PAGE> 16
option are treated as newly acquired and take a zero basis. In the event of a
disqualifying disposition, shares with the lowest basis are deemed disposed of
first.
If "statutory option stock" (i.e., shares acquired by exercise of an
incentive stock option) is tendered as all or part of the exercise price of an
incentive stock option before the applicable disqualifying disposition holding
periods have expired, then the surrendered Stock is treated as sold in a
"disqualifying disposition" on the date of the surrender.
Non-statutory Options
Award; Exercise; Tax Consequences to the Company. An optionee is not taxed
upon the award of a non-statutory option. Federal income tax consequences upon
exercise will depend upon whether the shares thereby acquired are subject to a
"substantial risk of forfeiture," described above. If the shares are not subject
to a substantial risk of forfeiture (or if they are so restricted and the
optionee files a Section 83(b) Election with respect to the shares), the
optionee will have ordinary income at the time of exercise measured by the
option spread on the exercise date. The optionee's tax basis in the shares will
be their fair market value on the date of exercise, and the holding period for
purposes of determining whether capital gain or loss upon sale is long-or
short-term also will begin on that date. If the shares are subject to a
substantial risk of forfeiture and no Section 83(b) Election is filed, the
optionee will not be taxable upon exercise, but instead will have ordinary
income on the date the restrictions lapse in an amount equal to the spread as of
the date of lapse. In addition, the optionee's holding period will begin on the
date of lapse.
Whether or not the shares are subject to a substantial risk of forfeiture,
the amount of ordinary income taxable to an optionee who was an employee at the
time of grant constitutes "supplemental wages" subject to withholding of income
and employment taxes by the Company, and the Company will generally receive a
corresponding income tax deduction. The Company anticipates that any
compensation deemed paid to an optionee as a result of the exercise of a
non-statutory option will not be taken into account for purposes of the $1
million limitation on the deductibility of compensation paid to certain officers
of the Company.
Sale of Option Shares. Upon sale, other than to the Company, of shares
acquired under a non-statutory option, an optionee generally will recognize
capital gain or loss to the extent of the difference between the sale price and
the optionee's tax basis in the shares, which will be long-term gain or loss if
the shares are held more than one year.
Exercise with Stock. If an optionee tenders shares of Company stock to pay
all or part of the exercise price of a non-statutory option, the optionee will
not have a taxable gain or deductible loss on the surrendered shares. Instead,
shares acquired upon exercise that are equal in value to the fair market value
of the shares surrendered in payment are treated as if they had been substituted
for the surrendered shares, taking as their basis and holding period the basis
and holding period that the optionee had in the surrendered shares. The
additional shares are treated as newly acquired pursuant to the exercise of the
non-statutory options with the consequences described above.
If the surrendered shares are statutory option stock, described above, with
respect to which the applicable holding period requirements for favorable income
tax treatment have not expired, then the newly acquired shares substituted for
them should remain subject to the federal income tax rules governing the
surrendered shares. See "Incentive Stock Options," above.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to a deduction equal to the
appreciation distribution in the same year.
Stock Issuances
The tax principles applicable to direct stock issuances under the Option
Plan will be substantially the same as those summarized above for the exercise
of non-statutory options.
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<PAGE> 17
Additional Issues
Tender of Stock to Satisfy Withholding Obligation. If a participant tenders
stock in satisfaction of an income-tax withholding obligation described above,
the surrendered shares will be treated as redeemed by the Company at their then
fair market value. The amount of the withholding obligation thus satisfied could
be taxable to the participant as a dividend unless the redemption is "not
essentially equivalent to a dividend" within the meaning of the Code.
Participants should consult their personal tax advisors before tendering shares
in satisfaction of a withholding obligation.
Deductibility of Interest. Interest paid on indebtedness incurred to
exercise options or purchase stock should constitute "investment interest"
deductible for income tax purposes only against "investment income." Investment
income includes most interest and dividend income, but does not include earned
income (e.g., wages) or income from "passive activities" (e.g., income from most
limited partnership interests) of a participant.
Interest paid on indebtedness incurred to satisfy a withholding obligation
generally will be nondeductible "personal" interest.
Acceleration of Options. The Option Plan provides that the vesting of
options may be accelerated if the Company undergoes a change in control. Under
proposed Treasury Regulations, if the value of such an acceleration of an
optionee's non-statutory options (as determined in accordance with such proposed
regulations), when combined with other payments to be made to the optionee that
are contingent on the change in control, equals or exceeds three times the
optionee's average annual salary for the past five years (or such shorter period
during which the optionee performed services for the Company), then the optionee
may be liable for a 20 percent excise tax on that portion of the value of the
acceleration and such other payments that exceed one time the optionee's average
annual salary. This excise tax would be in addition to any income tax payable
with respect to such payments or on exercise of the options, as described above.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1995
STOCK OPTION/STOCK ISSUANCE PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER.
PROPOSAL NO. 3
AMENDMENT OF 1995 STOCK OPTION/STOCK ISSUANCE PLAN TO INCREASE THE
NUMBER OF OPTIONS GRANTED TO NON-EMPLOYEE BOARD MEMBERS
UNDER THE AUTOMATIC OPTION GRANT PROGRAM
The stockholders are being asked to approve an amendment to the Option Plan
to increase the number of options granted to non-employee members of the Board
under the Automatic Option Grant Program from 10,000 to 20,000 upon election to
the Board and from 5,000 to 7,000 on each anniversary of his or her election to
the Board. The Board adopted the amendment in September 2000, subject to
stockholder approval. The Company believes that the amendment is necessary to
permit the Company to attract and retain highly qualified individuals to serve
on the Board. If Proposal No. 3 is approved, the Company intends to discontinue
making discretionary initial and annual option grants to non-employee Board
members under the Discretionary Option Program of the Option Plan. For a
description of the Option Plan, see Proposal No. 2.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1995
STOCK OPTION/STOCK ISSUANCE PLAN TO INCREASE THE NUMBER OF OPTIONS GRANTED TO
NON-EMPLOYEE BOARD MEMBERS UNDER THE AUTOMATIC OPTION GRANT PROGRAM.
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<PAGE> 18
PROPOSAL NO. 4
AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
The stockholders are being asked to approve an amendment to the Hyperion
Solutions Corporation Employee Stock Purchase Plan (the "Purchase Plan") to
increase the number of shares of Common Stock issuable thereunder by 700,000
shares to a total of 2,000,000 shares of Common Stock. The Purchase Plan was
adopted by the Board on August 31, 1995, and approved by the stockholders on
September 15, 1995. The Board adopted an amendment to the Purchase Plan on June
30, 1997 increasing the number of shares of Common Stock available for issuance
under the Purchase Plan by 150,000 shares. Such amendment was approved by the
stockholders at the 1997 Annual Meeting on August 13, 1997. The Board adopted an
amendment to the Purchase Plan in June 1998 increasing the number of shares of
Common Stock available for issuance under the Purchase Plan by 1,000,000 shares.
Such amendment was approved by the stockholders at the 1998 Annual Meeting on
August 21, 1998. The Purchase Plan, and the right of participants to make
purchases thereunder, is intended to meet the requirements of an "employee stock
purchase plan" as defined in Section 423 of the Code.
The following summary of certain Purchase Plan provisions is qualified, in
its entirety, by reference to the Purchase Plan. Copies of the Purchase Plan
document may be obtained by a stockholder upon written request to the Secretary
of the Company at the executive offices in Sunnyvale, California.
Purpose. The purpose of the Purchase Plan is to provide employees of the
Company and designated parent or subsidiary corporations (collectively,
"Participating Companies") an opportunity to participate in the ownership of the
Company by purchasing Common Stock of the Company through payroll deductions.
The Company currently is the only Participating Company in the Purchase Plan.
The Purchase Plan is intended to benefit the Company as well as its
stockholders and employees. The Purchase Plan gives employees an opportunity to
purchase shares of Common Stock at a favorable price. The Company believes that
the stockholders will correspondingly benefit from the increased interest on the
part of participating employees in the profitability of the Company. Finally,
the Company will benefit from the periodic investments of equity capital
provided by participants in the Purchase Plan.
Administration. The Purchase Plan is administered by the Committee. All
costs and expenses incurred in plan administration will be paid by the Company
without charge to participants. All cash proceeds received by the Company from
payroll deductions under the Purchase Plan will be credited to a non-interest
bearing bank account.
Shares and Terms. The stock issuable under the Purchase Plan is the
Company's authorized but unissued or reacquired Common Stock. If this Proposal
No. 4 is approved, the maximum number of shares of Common Stock that may be
issued in the aggregate under the Purchase Plan will be 2,000,000, adjusted as
described in the "Adjustments" section of this description. Common Stock subject
to a terminated purchase right will be available for purchase pursuant to
purchase rights subsequently granted.
Adjustments. If any change in the Common Stock occurs (through
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, or other change affecting the outstanding Common Stock as a class
without the Company's receipt of consideration), appropriate adjustments will be
made by the Company to the class and maximum number of shares subject to the
Purchase Plan, to the class and maximum number of shares purchasable by each
participant on any one purchase date, and the class and number of shares and
purchase price per share subject to outstanding purchase rights in order to
prevent the dilution or enlargement of benefits thereunder.
Eligibility. Generally, any individual who is customarily employed by a
Participating Company more than 20 hours per week and for more than five months
per calendar year is eligible to participate in the Purchase Plan. Approximately
2,400 employees (including seven executive officers) were eligible to
participate in the Purchase Plan as of June 30, 2000.
Offering Periods. The Purchase Plan is implemented by offering periods
which generally have a duration of six months; each offering period is comprised
of a single purchase period which also has a duration of six
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<PAGE> 19
months. The next offering period, and its corresponding purchase period, will
commence on November 1, 2000 and will end on the last business day in April
2001, unless terminated earlier. The Committee in its discretion may vary the
beginning date and ending date of the offering periods, provided no offering
period may exceed 24 months in length.
The participant will have a separate purchase right for each offering
period in which he or she participates. The purchase right will be granted on
the participant's entry date into an offering period and will be automatically
exercised in successive installments on the last day of each purchase period
within the offering period.
Purchase Price. The purchase price per share under the Purchase Plan is 85%
of the lower of (i) the fair market value of a share of Common Stock on the
first day of the applicable offering period or, if later, the participant's
entry date into the offering period, or (ii) the fair market value of a share of
Common Stock on the purchase date. If a participant's entry date is on a day
other than the first day of an offering period, the clause (i) amount will in no
event be less than the fair market value of the shares on the first day of such
offering period. Generally, the fair market value of the Common Stock on a given
date is the closing price of the Common Stock, as reported on The Nasdaq
National Market.
Limitations. The plan imposes certain limitations upon a participant's
rights to acquire Common Stock, including the following:
- No purchase right will be granted to any person who immediately
thereafter would own, directly or indirectly, stock or hold outstanding
options or rights to purchase stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company or
any of its parent or subsidiary corporations.
- In no event will a participant be permitted to purchase more than 1,000
shares on any one purchase date.
- The right to purchase Common Stock under the Purchase Plan (or any other
employee stock purchase plan that the Company or any of its subsidiaries
may establish) in an offering intended to qualify under Section 423 of
the Code may not accrue at a rate that exceeds $25,000 in fair market
value of such Common Stock (determined at the time such purchase right is
granted) for any calendar year in which such purchase right is
outstanding.
The purchase right will be exercisable only by the participant during the
participant's lifetime and will not be assignable or transferable by the
participant.
Payment of Purchase Price; Payroll Deductions. Payment for shares by
participants shall be by accumulation of after-tax payroll deductions during the
purchase period. The deductions may not exceed 10% of a participant's cash
compensation paid during a purchase period. Cash compensation includes regular
base pay (including any pre-tax contributions made by a participant to any Code
Section 401(k) plan or Section 125 cafeteria benefit program) plus any of the
following amounts to the extent paid in cash: overtime payments, bonuses,
commissions, profit-sharing distributions and other incentive-type payments.
However, cash compensation does not include any contributions made on a
participant's behalf by the Corporation or any corporate affiliate to any
deferred compensation plan or welfare benefit program (other than a Section
401(k) or 125 plan) now or hereafter maintained by the Corporation.
The participant will receive a purchase right for each offering period in
which he or she participates to purchase up to the number of shares of Common
Stock determined by dividing such participant's payroll deductions accumulated
prior to the purchase date by the applicable purchase price (subject to the
"Limitations" section). No fractional shares may be purchased. Any payroll
deductions accumulated in a participant's account that are not sufficient to
purchase a full share will be retained in the participant's account for the
subsequent purchase period.
Termination and Change to Payroll Deductions. A purchase right will
terminate at the end of the offering period or earlier if (i) the participant
terminates employment, and then any payroll deductions which the participant may
have made with respect to a terminated purchase right will be refunded, or (ii)
the
16
<PAGE> 20
participant elects to withdraw from the Purchase Plan. Any payroll deductions
which the participant may have made with respect to a terminated purchase right
under clause (ii) will be refunded unless the participant elects to have the
funds applied to the purchase of shares on the next purchase date. Unless a
participant has irrevocably elected otherwise, he or she may decrease his or her
deductions once during a purchase period.
Amendment and Termination. The Purchase Plan shall continue in effect until
the earlier of (i) the last business day in October 2005, (ii) the date on which
all shares available for issuance under the Purchase Plan have been issued or
(iii) a Corporate Transaction, unless the Purchase Plan is earlier terminated by
the Board in its discretion.
The Board may at any time alter, amend, suspend or discontinue the Purchase
Plan, provided that, without the approval of the stockholders, no such action
may (i) alter the purchase price formula so as to reduce the purchase price
payable for shares under the Purchase Plan, (ii) materially increase the number
of shares issuable under the Purchase Plan or the maximum number of shares
purchasable per participant, or (iii) materially increase the benefits accruing
to participants under the Purchase Plan or materially modify the eligibility
requirements.
In addition, the Company has specifically reserved the right, exercisable
in the sole discretion of the Board, to terminate the Purchase Plan immediately
following any six-month purchase period. If such right is exercised by the
Board, then the Purchase Plan will terminate in its entirety and no further
purchase rights will be granted or exercised, and no further payroll deductions
will thereafter be collected under the Purchase Plan.
Corporate Transaction. In the event of (i) a merger or consolidation in
which securities possessing more than 50% of the total combined voting power of
the Company's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction or (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete liquidation or
dissolution of the Company (a "Corporate Transaction"), each purchase right
under the Purchase Plan will automatically be exercised immediately before
consummation of the Corporate Transaction as if such date were the last purchase
date of the offering period. The purchase price per share will be equal to 85%
of the lower of (i) the fair market value per share of Common Stock on the start
date of the offering period (or on the participant's entry date, if later) or
(ii) the fair market value per share of Common Stock immediately prior to the
effective date of such Corporate Transaction. If a participant's entry date is
not the first day of the offering period, the clause (i) amount will in no event
be lesser than the fair market value of such shares on the first day of the
offering period. Any payroll deductions not applied to such purchase will be
promptly refunded to the participant.
The grant of purchase rights under the Purchase Plan will in no way affect
the right of the Company to adjust, reclassify, reorganize, or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
Proration of Purchase Rights. If the total number of shares of Common Stock
for which purchase rights are to be granted on any date exceeds the number of
shares then remaining available under the Purchase Plan, the Committee shall
make a pro rata allocation of the shares remaining.
Federal Income Tax Consequences. The following is a general description of
certain federal income tax consequences of the Purchase Plan. This description
does not purport to be complete.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. No income is recognized by a participant at
the time a right to purchase shares is granted. Likewise, no taxable income is
recognized at the time of the purchase, even though the purchase price reflects
a discount from the market value of the shares at that time.
The Internal Revenue Service has indicated that it may require withholding
of employment (but not income) taxes on the purchases of shares on the lower of
(i) the excess of the fair market value of the shares at the time of purchase
over the purchase price and (ii) the excess of the fair market value of the
shares at the time the purchase right was granted over the purchase right.
17
<PAGE> 21
A participant must recognize taxable income upon a disposition of shares
acquired under the Purchase Plan. The tax treatment may be more favorable if the
disposition occurs after the holding-period requirements of Section 423 have
been satisfied (a "qualifying disposition"). To satisfy the holding-period
requirements of Section 423, shares acquired under the Purchase Plan cannot be
disposed of within two years after the first day of the offering period during
which the shares were purchased (or within two years after the participant's
entry date, if that date is later than the beginning of the offering period) nor
within one year after the shares were purchased. The U.S. income tax
consequences of a qualifying disposition (other than to the Company) are as
follows:
- The participant recognizes ordinary income equal to the lower of (a) the
excess of the fair market value of the shares on the date of the
disposition over the purchase price or (b) 15% of the fair market value
of the shares on the first day of the applicable offering period (or on
the participant's entry date, if that date is later than the first day of
the offering period and if the market value is higher on that date). The
Company will not be entitled to any deduction under these circumstances.
- The excess, if any, of the fair market value of the shares on the date of
the disposition over the sum of the purchase price plus the amount of
ordinary income recognized (as described above) will be taxed as a
long-term capital gain. If a taxable disposition produces a loss (i.e.,
the fair market value of the shares on the date of the disposition is
less than the purchase price) and the disposition involves certain
unrelated parties, then the loss will be a long-term capital loss.
A participant who disposes of shares acquired under the Purchase Plan
without meeting the holding-period requirements makes a disqualifying
disposition of such shares. The U.S. income tax consequences of a disqualifying
disposition are as follows:
- The entire difference between the purchase price and the market value of
the shares on the date of purchase will be taxed to the participant as
ordinary income in the year of disposition. The Company will be entitled
to a deduction for the same amount, subject to certain conditions.
- The excess, if any, of the market value of the shares on the date of
disposition over their market value on the date of purchase will be taxed
as a capital gain (long-term or short-term, depending on how long the
shares have been held). If the value of the shares on the date of
disposition is less than their value on the date of purchase, then the
difference will result in a capital loss (long-term or short-term,
depending upon the holding period), provided the disposition involves
certain unrelated parties. Any such loss will not affect the ordinary
income recognized upon the disposition.
New Purchase Plan Benefits. Since purchase rights are subject to
discretion, including an employee's decision not to participate in the Purchase
Plan, awards under the Purchase Plan for the current fiscal year are not
determinable. No purchase rights have been granted with respect to the
additional 700,000 shares for which approval is requested. The following table
shows the number of shares of Common Stock purchased by the named individuals
and groups under the Purchase Plan during the fiscal year ended June 30, 2000.
<TABLE>
<CAPTION>
NUMBER OF
GROUP OR INDIVIDUAL SHARES
------------------- ---------
<S> <C>
Jeffrey R. Rodek............................................ 972
Stephen V. Imbler........................................... 1,290
Michael L. Sternad.......................................... 547
Larry J. Braverman.......................................... 1,313
Dyke J. Hensen.............................................. 1,500
Stephen L. Fioretti......................................... 1,270
All current executive officers as a group (7 persons)....... 6,892
All current directors who are not executive officers as a
group..................................................... --(1)
All employees (who are not executive officers) as a group... 413,720
</TABLE>
---------------
(1) Ineligible to participate under the terms of the Purchase Plan.
18
<PAGE> 22
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE EMPLOYEE
STOCK PURCHASE PLAN.
PROPOSAL NO. 5
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending June 30, 2001. In the event the stockholders fail to ratify
the appointment, the Board will reconsider its selection. Even if the
appointment is ratified, the Board, in its discretion, may direct the
appointment of a different independent accounting firm at any time during the
year if the Board feels that such a change would be in the Company's and its
stockholders' best interests. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so, and will be available to respond to
appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Board, the executive officers of the Company and persons
who hold more than 10% of the Company's outstanding Common Stock are subject to
the reporting requirements of Section 16(a) of the Securities Exchange Act of
1934, as amended, which require them to file reports with respect to their
ownership of the Company's Common Stock and their transactions in such Common
Stock. Based upon (i) the copies of Section 16(a) reports that the Company
received from such persons for their fiscal year 2000 transactions in the Common
Stock and their Common Stock holdings and (ii) the written representations
received from one or more such persons that no annual Form 5 reports were
required to be filed by them for fiscal year 2000, the Company believes that all
reporting requirements under Section 16(a) for such fiscal year were met in a
timely manner by its executive officers, Board members and greater than 10%
stockholders, except that Dyke J. Hensen, the Company's Chief Products Officer,
failed to timely file a Form 3. Such failure did not result in late reporting of
any otherwise reportable transactions.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2001 Annual
Meeting that are eligible for inclusion in the Company's proxy statement and
related proxy materials for that meeting under the applicable rules of the
Securities and Exchange Commission must be received by the Company not later
than July 20, 2001 in order to be included. Such stockholder proposals should be
addressed to Hyperion Solutions Corporation, 1344 Crossman Avenue, Sunnyvale,
California 94089, Attn: Investor Relations.
19
<PAGE> 23
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 29, 2000 certain information
with respect to shares beneficially owned by (i) each person who is known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
shares of Common Stock, (ii) each of the Company's directors and the executive
officers named in the Summary Compensation Table and (iii) all current directors
and executive officers as a group. Beneficial ownership has been determined in
accordance with Rule 13d-3 under the Exchange Act. In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within 60
days of the date as of which the information is provided. In computing the
percentage ownership of any person, the amount of shares is deemed to include
the amount of shares beneficially owned by such person (and only such person) by
reason of such acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not necessarily
reflect the person's actual voting power at any particular date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS
---------------- ----------------- --------
<S> <C> <C>
Nevis Capital Management, Inc.
1119 St. Paul St.
Baltimore, Maryland 21202(3).............................. 2,062,567 6.3%
Jeffrey R. Rodek(4)......................................... 428,888 1.3
Gary G. Greenfield(5)....................................... 16,400 *
Aldo Papone(6).............................................. 50,000 *
Kenneth A. Goldman.......................................... -- --
Henry R. Autry.............................................. -- --
Stephen V. Imbler(7)........................................ 314,259 *
Michael L. Sternad(8)....................................... 33,046 *
Larry J. Braverman(9)....................................... 48,479 *
Dyke J. Hensen(10).......................................... 21,079 *
Stephen L. Fioretti(11)..................................... -- --
All current directors and executive officers
as a group (11 persons)(12)............................... 962,561 2.9%
</TABLE>
---------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock. To the Company's knowledge, the entities named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Based on 32,720,094 shares outstanding as of September 29, 2000.
(3) As reported on a Schedule 13G filed with the Securities and Exchange
Commission on February 7, 2000.
(4) Includes options exercisable into 327,916 shares of Common Stock and
100,000 shares subject to a restricted stock award.
(5) Consists of options exercisable into shares of Common Stock.
(6) Includes options exercisable into 46,200 shares of Common Stock.
(7) Includes options exercisable into 290,790 shares of Common Stock under the
Option Plan.
(8) Includes options exercisable into 32,499 shares of Common Stock under the
Option Plan.
(9) Consists of options exercisable into shares of Common Stock under the
Option Plan.
(10) Includes options exercisable into 17,907 shares of Common Stock under the
Option Plan.
(11) Mr. Fioretti served as the Company's Vice President, Marketing until May
2000.
(12) Includes options exercisable into 830,191 shares of Common Stock.
20
<PAGE> 24
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
In May 2000, the Company entered into a 26-month employment agreement with
Beth E. Broderson, its Chief Marketing Officer, pursuant to which Ms. Broderson
is entitled to receive an annual base salary of not less than $200,000 and is
eligible for an annual incentive bonus target of 35% of her base compensation.
In addition, the agreement provides for 12 months of severance payment in the
event of early termination without cause or, under certain circumstances,
voluntary termination within 12 months of a change in control of the Company.
In October 1999, the Company entered into a 24-month employment agreement
with Jeffrey Rodek, its Chairman and Chief Executive Officer, pursuant to which
Mr. Rodek receives an annual salary of not less than $400,000. Beginning in
fiscal year 2002, Mr. Rodek is eligible to be considered for an annual incentive
bonus with a target amount equal to 50% of Mr. Rodek's base compensation. Also
in connection with Mr. Rodek's employment agreement, Mr. Rodek was granted
options to purchase 1,100,000 shares of Common Stock with an exercise price of
$19.06 per share and 100,000 shares of restricted stock and the Company loaned
Mr. Rodek $1,000,000, which loan has a six-year term and is evidenced by a full
recourse promissory note bearing interest at 6.02% annually. In addition, the
agreement provides for 30 months of severance payment in the event of early
termination without cause or, under certain circumstances, voluntary termination
within 12 months of a change in control of the Company.
In October 1999, the Company and Michael L. Sternad, the Company's Chief
Strategy officer, entered into a letter agreement related to Mr. Sternad's
employment with the Company pursuant to which Mr. Sternad receives an annual
base salary of not less than $185,000 and an annual incentive bonus target of up
to $75,000. In connection with the letter agreement, Mr. Sternad was granted an
option to purchase 120,000 shares of the Common Stock with an exercise price of
$19.06 per share.
In February 1999, the Company entered into a 23-month employment agreement
with Stephen V. Imbler, its President and Chief Operating Officer, pursuant to
which Mr. Imbler is entitled to receive an annual base salary of not less than
$250,000 and is eligible for an annual incentive bonus target of $150,000. In
addition, the agreement provides for 12 months of severance payment in the event
of early termination without cause or, under certain circumstances, voluntary
termination within 12 months of a change in control of the Company.
In February 1999, the Company entered into a 23-month employment agreement
with Larry J. Braverman, its Corporate Vice President, General Counsel and
Secretary, pursuant to which Mr. Braverman is entitled to receive an annual base
salary of not less than $175,000 and is eligible for an annual incentive bonus
target of not less than $60,000. In addition, the agreement provides for 12
months of severance payment in the event of early termination without cause or,
under certain circumstances, voluntary termination within 12 months of a change
in control of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board (the "Committee") has the authority
to establish the level of base salary payable to the Company's Chief Executive
Officer ("CEO") and to administer the Option Plan and the Purchase Plan. In
addition, the Committee has the responsibility for approving the individual
bonus program to be in effect for the CEO. The CEO has the authority to
establish the level of base salary payable to all other employees of the
Company, including all executive officers, subject to the approval of the
Committee. In addition, the CEO has the responsibility for approving the bonus
programs to be in effect for all other executive officers and other key
employees each fiscal year, subject to the approval of the Committee.
For fiscal year 2000, the process utilized by the CEO in determining
executive officer compensation levels took into account both qualitative and
quantitative factors. Among the factors considered by the CEO were informal
surveys conducted by the Company personnel among local companies. However, the
CEO made the compensation decisions concerning such officers, subject to
Committee review.
21
<PAGE> 25
General Compensation Policy. The CEO's fundamental policy is to offer the
Company's executive officers competitive compensation opportunities based upon
the Company's overall performance, their individual contribution to the
financial success of the Company and their personal performance. It is the CEO's
objective to have a substantial portion of each officer's compensation
contingent upon the Company's performance, as well as upon his or her own level
of performance. Accordingly, each executive officer's compensation package
consists of: (i) base salary, (ii) cash bonus awards and (iii) long-term
stock-based incentive awards.
Base Salary. The base salary for each executive officer is set on the basis
of personal performance and the salary level in effect for comparable positions
at companies that compete with the Company for executive talent on the basis of
informal surveys conducted by the Company.
Annual Cash Bonuses. Each executive officer other than the CEO has an
established bonus target each fiscal year. Actual bonuses are paid at the CEO's
discretion based on an individual's accomplishment of both corporate and
functional objectives.
Long-Term Incentive Compensation. During fiscal year 2000, the Committee
made option grants and a restricted stock award to Jeffrey R. Rodek and option
grants to Stephen V. Imbler, Michael L. Sternad, Larry J. Braverman, Dyke J.
Hensen, Beth E. Broderson and certain other individuals who served as executive
officers during fiscal year 2000. Generally, a significant grant is made in the
year that an officer commences employment and the size of each grant is set at a
level that the Committee deems appropriate to create a meaningful opportunity
for stock ownership based upon the individual's position with the Company, the
individual's potential for future responsibility and promotion, the individual's
performance in the recent period and the number of unvested options held by the
individual at the time of the new grant. The relative weight given to each of
these factors will vary from individual to individual at the Committee's
discretion.
Each grant allows the officer to acquire shares of the Company's Common
Stock at a fixed price per share (the market price on the grant date) over a
specified period of time. The option vests in periodic installments over a
four-year period, contingent upon the executive officer's continued employment
with the Company. Accordingly, the option will provide a return to the executive
officer only if he or she remains in the Company's employ, and then only if the
market price of the Company's Common Stock appreciates over the option term.
CEO Compensation. The annual base salary of Mr. Rodek, the Company's CEO as
of October 1999, was established by the Committee in October 1999. The
Committee's decision was made primarily on the basis of Mr. Rodek's
qualifications for the position and market data as of October 1999. There was no
bonus paid to Mr. Rodek in fiscal year 2000. Mr. Rodek's bonus plan does not
commence until fiscal year 2002. From June 1999 until October 1999, Mr. Imbler,
the Company's President and Chief Operating Officer, served as the Company's
interim CEO. The Committee's decision with respect to Mr. Imbler's salary was
based primarily on Mr. Imbler's performance of his duties.
22
<PAGE> 26
Tax Limitation. As a result of Federal tax legislation enacted in 1993, a
publicly held company such as the Company will not be allowed a Federal income
tax deduction for compensation paid to certain executive officers to the extent
that compensation exceeds $1 million per officer in any year. The stockholders
approved the Option Plan, which includes a provision that limits the maximum
number of shares of Common Stock for which any one participant may be granted
stock options per calendar year. Accordingly, if the options were granted by the
Compensation Committee and the members of the Compensation Committee were
"outside directors" as defined in Treasury Regulations Section 1.162-27 at the
time of grant, any compensation deemed paid to an executive officer when he or
she exercises options under the Option Plan with an exercise price equal to the
fair market value of the option shares on the grant date should generally
qualify as performance-based compensation that will not be subject to the $1
million limitation. The Company believes that all of its compensation paid to
date meets the requirements for deductibility, with the exception of
compensation which may be attributed to Mr. Rodek in connection with certain
options granted outside of the Option Plan to Mr. Rodek in October 1999. In
general, the Committee considers the deductibility limits of Section 162(m) in
determining executive compensation.
Compensation Committee
Aldo Papone
Henry Autry
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Autry and Papone.
Neither of these individuals was at any time during fiscal year 2000, or at any
other time, an officer or employee of the Company. No executive officer of the
Company serves as a member of the board of directors or compensation committee
of any entity that has one or more executive officers serving as a member of the
Board or the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since July 1, 1999, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which the Company is or is
to be a party in which the amount involved exceeds $60,000 and in which any
director, executive officer, holder of more than 5% of the Common Stock, or any
member of the immediate family of any of the foregoing persons, had or will have
a direct or indirect material interest, other than compensation agreements and
other arrangements which are described above under "EMPLOYMENT CONTRACTS AND
CHANGE IN CONTROL ARRANGEMENTS."
23
<PAGE> 27
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Company's Common Stock between November 7, 1995 (the date the Company's
Common Stock commenced public trading) and June 30, 2000 with the cumulative
total return of (i) The Nasdaq Stock Market Total Return Index (U.S. Companies)
(the "Nasdaq Stock Market -- U.S. Index") and (ii) the Hambrecht & Quist
Software Sector Index (the "H&Q Software Sector Index"), over the same period.
This graph assumes the investment of $100.00 on November 7, 1995 in the
Company's Common Stock, The Nasdaq Stock Market -- U.S. Index and the H&Q
Software Sector Index, and assumes the reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical data and
the Company cautions that the stock price performance shown in the graph below
is not indicative of, nor intended to forecast, the potential future performance
of the Company's Common Stock. Information used in the graph was obtained from
Research Data Group, a source believed to be reliable, but the Company is not
responsible for any errors or omissions in such information.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
HYPERION SOLUTIONS CORPORATION, THE NASDAQ STOCK
MARKET-U.S. INDEX AND THE H&Q SOFTWARE SECTOR INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
11/7/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hyperion Solutions 100 152 90 80 45 83
Nasdaq Stock
Market -- U.S 100 114 139 183 262 389
H&Q Software Sector 100 117 130 195 216 401
--------------------------------------------------------------------------------
</TABLE>
The Company effected its initial public offering on November 6, 1995 at a
per share price of $17.00. The graph above, however, commences with the closing
price of $39.25 per share on November 7, 1995, the date the Company's Common
Stock commenced public trading.
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Proxy
Statement or future filings made by the Company under those statutes, the
Compensation Committee Report and Stock Performance Graph are not deemed filed
with the Securities and Exchange Commission and shall not be deemed incorporated
by reference into any of those prior filings or into any future filings made by
the Company under those statutes.
24
<PAGE> 28
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth information concerning the compensation for
services in all capacities to the Company, for the fiscal years ended June 30,
2000, 1999 and 1998, of (i) each person who served as Chief Executive Officer
during fiscal year 2000; (ii) the Company's four other most highly compensated
executive officers who were serving as executive officers as of June 30, 2000;
and (iii) one additional individual who would have been one of the four most
highly compensated executive officers of the Company, but for the fact that the
individual was not serving as an executive officer of the Company at the end of
fiscal year 2000 (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------------------
COMPENSATION RESTRICTED SECURITIES
------------------------ STOCK UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS(1)(2) AWARDS($) OPTIONS(#)
--------------------------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Jeffrey R. Rodek(3)................... 2000 $290,909 -- $1,906,150(4) 1,105,000
Chairman and Chief Executive Officer 1999 -- -- -- 5,000
1998 -- -- -- 20,000
Stephen V. Imbler..................... 2000 312,500 325,000 -- 200,000
President and Chief Operating
Officer 1999 250,000 275,000 -- 175,000
1998 200,000 142,000 -- --
Michael L. Sternad(5)................. 2000 134,545 60,000 -- 120,000
Chief Strategy Officer
Larry J. Braverman.................... 2000 225,000 105,315 -- 40,000
Corporate Vice President, 1999 175,000 90,000 -- 40,350
General Counsel and Secretary 1998 147,500 34,000 -- --
Dyke J. Hensen........................ 2000 222,500 123,301 -- 95,000
Chief Products Officer 1999 121,667 184,551 -- 13,300
1998 86,250 119,906 -- --
Stephen L. Fioretti................... 2000 165,417 87,500 -- 60,000
Former Vice President, Marketing 1999 129,333 28,000 -- 25,100
1998 118,667 14,325 -- 1,000
</TABLE>
---------------
(1) Except where specifically noted, excludes perquisites and other personal
benefits, the aggregate annual amount of which for each officer was less
than the lesser of $50,000 or 10 percent of the total of annual salary and
bonus reported.
(2) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(3) Mr. Rodek became the Company's Chairman and Chief Executive Officer in
October 1999 and has been a director of the Company since January 1998.
(4) Represents the fair market value of 100,000 shares of restricted Common
Stock Mr. Rodek received in October 1999.
(5) Mr. Sternad served as the Company's Chief Financial Officer from October
1999 to August 2000, at which time he became the Company's Chief Strategy
Officer.
25
<PAGE> 29
The following table contains information concerning the stock option grants
made to each of the Named Officers during fiscal year 2000. No stock
appreciation rights were granted to these individuals during such fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS EXERCISE STOCK PRICE
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES PER FOR OPTION TERM(2)
OPTIONS IN FISCAL SHARE EXPIRATION -------------------------
NAME GRANTED(#)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey R. Rodek............ 1,100,000 21.47% $19.06 10/10/09 $13,182,569 $33,404,587
5,000 0.10 17.50 8/20/09 55,009 139,393
Stephen V. Imbler........... 200,000 3.90 19.06 10/10/09 2,396,831 6,073,561
Michael L. Sternad.......... 120,000 2.34 19.06 10/10/09 1,438,098 3,644,137
Larry J. Braverman.......... 30,000 0.59 20.56 9/27/09 387,890 982,797
10,000 0.20 44.66 2/27/10 280,705 711,364
Dyke J. Hensen.............. 25,000 0.49 30.94 3/29/10 486,180 1,232,074
35,000 0.68 20.56 9/27/09 452,538 1,146,597
35,000 0.68 44.66 2/27/10 982,468 2,489,775
Stephen L. Fioretti......... 50,000 0.98 20.56 8/26/00 646,483 1,637,995
10,000 0.20 44.66 8/26/00 280,705 711,364
</TABLE>
---------------
(1) Except where noted otherwise, each option becomes exercisable as to 25% of
the option shares on the first anniversary of the option grant date and as
to the balance of the shares ratably upon optionee's completion of the next
36 months of service thereafter.
(2) There can be no assurance provided to the executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the ten-year option term will be at the assumed 5% and 10% levels or at
any other defined level. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the option
grant made to the executive officer.
The following table sets forth information concerning option exercises in
fiscal year 2000 and option holdings as of the end of fiscal year 2000 with
respect to each of the Named Officers. No stock appreciation rights were
exercised during that fiscal year or outstanding at the end of that fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#)(1) AT FISCAL YEAR-END(#)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey R. Rodek........ -- $ -- 30,000 1,100,000 $ 30,000 $14,712,500
Stephen V. Imbler....... 35,000 1,485,899 261,102 209,898 4,384,273 2,487,485
Michael L. Sternad...... -- -- -- 120,000 -- 1,605,000
Larry J. Braverman...... -- -- 36,484 69,866 331,205 751,780
Dyke J. Hensen.......... 3,519 69,182 7,200 104,628 85,120 608,077
Stephen L. Fioretti..... 7,469 196,563 5,895 -- 87,006 --
</TABLE>
---------------
(1) Upon exercise of the options, an option holder did not necessarily receive
the amount reported above under the column "Value Realized." The amounts
reported above under the column "Value Realized" merely reflect the amount
by which the fair market value of the Common Stock of the Company on the
26
<PAGE> 30
date the option was exercised exceeded the exercise price of the option. The
option holder does not realize any cash until the shares of Common Stock
issued upon exercise of the options are sold.
(2) Based on the closing price of the Common Stock of the Company as reported on
The Nasdaq National Market System at June 30, 2000, the last day of trading
of the Company's Common Stock during fiscal year 2000, of $32.44 per share,
less the exercise price payable for such shares.
OTHER MATTERS
The Board knows of no other matters to be presented for stockholder action
at the Annual Meeting. However, if other matters do properly come before the
Annual Meeting or any adjournments or postponements thereof, the Board intends
that the persons named in the proxies will vote upon such matters in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ LARRY J. BRAVERMAN
Larry J. Braverman
Secretary
Sunnyvale, California
October 10, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING. IF
YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU
MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
27
<PAGE> 31
HYPERION SOLUTIONS CORPORATION
1995 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED THROUGH [NOVEMBER 15, 2000])
ARTICLE I
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option/Stock Issuance Plan is intended to
promote the interests of the Corporation by providing eligible persons with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into four separate equity programs:
(i) the Discretionary Option Grant Program under
which eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program
under which eligible employees may elect to have a portion of their base salary
reduced each year in return for options to purchase shares of Common Stock,
(iii) the Stock Issuance Program under which
eligible persons may, at the discretion of the Plan Administrator, be issued
shares of Common Stock directly, either through the immediate purchase of such
shares or as a bonus for services rendered the Corporation (or any Parent or
Subsidiary), and
(iv) the Automatic Option Grant Program under
which Eligible Directors shall automatically receive option grants at periodic
intervals to purchase shares of Common Stock.
B. The provisions of Articles I and VI shall apply to all equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
<PAGE> 32
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority
to administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to Section 16 Insiders.
B. Administration of the Discretionary Option Grant, Salary
Investment Option Grant and Stock Issuance Programs with respect to all other
persons eligible to participate in those programs may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or the
Board may retain the power to administer those programs with respect to all such
persons.
C. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee or transfer such powers and authority to
the Primary Committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant, Salary Investment Option Grant
and Stock Issuance Programs and to make such determinations under, and issue
such interpretations of, the provisions of such programs and any outstanding
options or stock issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an
interest in the Discretionary Option Grant, Salary Investment Option Grant or
Stock Issuance Program under its jurisdiction or any option or stock issuance
thereunder.
E. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
F. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to option
grants made thereunder.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs are as follows:
(i) Employees,
2
<PAGE> 33
(ii) non-employee members of the Board or the
board of directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors
who provide services to the Corporation (or any Parent or Subsidiary).
B. Only Employees shall be eligible to participate in the Salary
Investment Program.
C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine (i) with respect to the option grants under
the Discretionary Option Grant and Salary Investment Option Grant Programs,
which eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
to be paid for such shares.
D. The Plan Administrator shall have the absolute discretion
either to grant options in accordance with the Discretionary Option Grant and/or
Salary Investment Program or to effect stock issuances in accordance with the
Stock Issuance Program.
E. The individuals eligible to participate in the Automatic
Option Grant Program are described in Section I of Article V.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 9,607,577
shares. Such authorized share reserve is comprised of (i) the number of shares
which remained available for issuance, as of the Plan Effective Date, under the
Predecessor Plan as last approved by the Corporation's stockholders prior to
such date, including the shares subject to the outstanding options incorporated
into the Plan and any other shares which would have been available for future
option grants under the Predecessor Plan, and an increase of 250,000 shares
authorized by the Board under the Plan, and approved by the stockholders on
September 15, 1995; (ii) an increase of 1,000,000 shares authorized by the Board
under the Plan and approved by the stockholders at the 1996 Annual Meeting of
Stockholders; (iii) an additional increase of 750,000 shares authorized by the
Board under the Plan and approved by the stockholders at the 1997 Annual Meeting
of Stockholders; (iv) an additional increase of 5,000,000 shares authorized by
the Board under the Plan and approved by the stockholders at the 1998 Annual
Meeting of Stockholders; and [(v) an additional increase of
3
<PAGE> 34
1,600,000 shares authorized by the Board under the Plan and approved by the
stockholders at the 2000 Annual Meeting of Stockholders].
B. No one person participating in the Plan may receive options
for more than 500,000 shares of Common Stock in the aggregate per calendar year,
beginning with the 1995 calendar year.
C. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent (i) the
options (including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
canceled in accordance with the cancellation-regrant provisions of Article II.
All shares issued under the Plan (including shares issued upon exercise of
options incorporated from the Predecessor Plan), whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan. In addition,
should the exercise price of an option under the Plan (including any option
incorporated from the Predecessor Plan) be paid with shares of Common Stock or
should shares of Common Stock otherwise issuable under the Plan be withheld by
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Common Stock available for issuance under the
Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number of
shares of Common Stock issued to the holder of such option or stock issuance.
D. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
any one person may be granted options per calendar year, (iii) the number and/or
class of securities for which automatic option grants are to be subsequently
made per Eligible Director under the Automatic Option Grant Program and (iv) the
number and/or class of securities and the exercise price per share in effect
under each outstanding option (including any option incorporated from the
Predecessor Plan) in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
4
<PAGE> 35
ARTICLE II
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; PROVIDED, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the
Plan Administrator but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article VI and the documents evidencing the option, be payable in one or more of
the forms specified below:
(i) cash or check made payable to the
Corporation,
(ii) shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise
Date, or
(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant to which
the Optionee shall concurrently provide irrevocable written instructions to (a)
a Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
B. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.
5
<PAGE> 36
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator and
set forth in the documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part
by the Optionee at the time of death may be subsequently exercised by the
personal representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or beneficiary
designation or in accordance with the laws of descent and distribution.
(iii) During the applicable post-Service
exercise period, the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable on the date of
the Optionee's cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for
which the option has not been exercised. However, the option shall, immediately
upon the Optionee's cessation of Service, terminate and cease to be outstanding
to the extent it is not exercisable for vested shares on the date of such
cessation of Service.
(iv) Should the Optionee's Service be terminated
for Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(v) In the event of an Involuntary Termination
following a Corporate Transaction, the provisions of Section III of this Article
II shall govern the period for which the outstanding options are to remain
exercisable following the Optionee's cessation of Service and shall supersede
any provisions to the contrary in this Section I.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of Service
from the period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
(ii) permit the option to be exercised, during
the applicable post-Service exercise period, not only with respect to the number
of vested shares of Common Stock for which such option is exercisable at the
time of the Optionee's cessation of Service but
6
<PAGE> 37
also with respect to one or more additional installments in which the Optionee
would have vested under the option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of
the Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or transferable other than by will, beneficiary designation or the
laws of descent and distribution following the Optionee's death. However, a
Non-Statutory Option may be assigned in whole or in part during the Optionee's
lifetime in accordance with the terms of a Qualified Domestic Relations Order.
The assigned portion may only be exercised by the person or persons who acquire
a proprietary interest in the option pursuant to such Qualified Domestic
Relations Order. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles I, II and VI shall be applicable to Incentive Options.
Options that are specifically designated as Non-Statutory Options when issued
under the Plan shall NOT be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to
Employees.
B. Exercise Price. The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
7
<PAGE> 38
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, PROVIDED the
aggregate exercise price payable for such securities shall remain the same.
8
<PAGE> 39
E. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the EARLIER of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.
F. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent Involuntary Termination of the Optionee's
Service within a specified period following the effective date of such Change in
Control. Any options accelerated in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.
G. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
H. The grant of options under the Discretionary Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Discretionary
Option Grant Program (including outstanding options incorporated from the
Predecessor Plan) and to grant in substitution new options covering the same or
different number of shares of Common Stock but with an exercise price per share
based on the Fair Market Value per share of Common Stock on the new option grant
date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
9
<PAGE> 40
B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:
(i) One or more Optionees may be granted the
right, exercisable upon such terms as the Plan Administrator may establish, to
elect between the exercise of the underlying option for shares of Common Stock
and the surrender of that option in exchange for a distribution from the
Corporation in an amount equal to the excess of (a) the Fair Market Value (on
the option surrender date) of the number of shares in which the Optionee is at
the time vested under the surrendered option (or surrendered portion thereof)
over (b) the aggregate exercise price payable for such shares.
(ii) No such option surrender shall be effective
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the Optionee shall be entitled may be
made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is rejected
by the Plan Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion thereof) on
the option surrender date and may exercise such rights at any time prior to the
LATER of (a) five (5) business days after the receipt of the rejection notice or
(b) the last day on which the option is otherwise exercisable in accordance with
the terms of the documents evidencing such option, but in no event may such
rights be exercised more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be
granted limited stock appreciation rights with respect to their outstanding
options.
(ii) Upon the occurrence of a Hostile Take-Over,
each such individual holding one or more options with such a limited stock
appreciation right in effect for at least six (6) months shall have the
unconditional right (exercisable for a thirty (30)-day period following such
Hostile Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for vested shares of Common Stock.
In return for the surrendered option, the Optionee shall receive a cash
distribution from the Corporation in an amount equal to the excess of (A) the
Take-Over Price of the shares of Common Stock which are at the time vested under
each surrendered option (or surrendered portion thereof) over (B) the aggregate
exercise price payable for such shares. Such cash distribution shall be paid
within five (5) days following the option surrender date.
(iii) Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option surrender and cash distribution.
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(iv) The balance of the option (if any) shall
continue in full force and effect in accordance with the documents evidencing
such option.
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ARTICLE III
SALARY INVESTMENT OPTION GRANT PROGRAM
I. OPTION GRANTS
Each Employee selected by the Plan Administrator to participate
in the Salary Investment Program for any calendar year must, prior to the start
of that calendar year, file with the Plan Administrator (or its designate) an
irrevocable authorization directing the Corporation to reduce his or her base
salary for that calendar year by a designated multiple of one percent (1%), but
in no event less than five percent (5%). The Plan Administrator shall determine
whether to approve, in whole or in part, such authorization. To the extent the
Plan Administrator approves the authorization, the individual who filed that
authorization shall be granted an option under this Salary Investment Program.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or
more documents in the form approved by the Plan Administrator; PROVIDED,
however, that each such document shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be thirty-three
and one-third percent (33-1/3%) of the Fair Market Value per share of Common
Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. Number of Option Shares. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A - (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on
the option grant date.
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C. Exercise and Term of Options. Provided the Optionee continues
in Service, the option shall become exercisable for the option shares in a
series of twelve (12) successive equal monthly installments on the last day of
each of the twelve (12) calendar months in the calendar year for which the
option is granted. Each option shall have a maximum term of ten (10) years
measured from the option grant date.
D. Effect of Termination of Service.
1. Should the Optionee cease Service for any reason
AFTER his or her outstanding option has become exercisable in whole or in part,
then that option shall remain exercisable, for any or all of the shares for
which the option is exercisable on the date of such cessation of Service, until
the expiration of the option term. After the Optionee's death, such option may
be exercised, for any or all of the shares for which the option is exercisable
at the time of the Optionee's death, by the personal representative of the
Optionee's estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or beneficiary designation or in accordance with
the laws of descent and distribution. Such right of exercise shall lapse, and
the option shall terminate, upon the expiration of the option term. However, the
option shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding to the extent it is not exercisable on the date of
such cessation of Service.
2. Should the Optionee die BEFORE his or her outstanding
option becomes exercisable for any of the option shares, then the personal
representative of the Optionee's estate or the person or persons to whom the
option is transferred pursuant to the Optionee's will or beneficiary designation
or in accordance with the laws of descent and distribution shall have the right
to exercise such option for up to that number of option shares equal to (i)
one-twelfth (1/12) of the total number of option shares multiplied by (ii) the
number of full calendar months which have elapsed between the first day of the
calendar year for which the option is granted and the last day of the calendar
month during which the Optionee ceases Service. Such right of exercise shall
lapse, and the option shall terminate, upon the earlier of the expiration of the
option term or the third anniversary of the date of the Optionee's death.
However, the option shall, immediately upon the Optionee's death, terminate and
cease to be outstanding with respect to the balance of the shares subject to
that option.
3. Should the Optionee become Permanently Disabled and
cease by reason thereof to remain in Service BEFORE his or her outstanding
option becomes exercisable for any of the option shares, then the Optionee shall
have the right to exercise such option for up to that number of option shares
equal to (i) one-twelfth (1/12) of the total number of option shares multiplied
by (ii) the number of full calendar months which have elapsed between the first
day of the calendar year for which the option is granted and the last day of the
calendar month during which the Optionee ceases Service. Such right of exercise
shall lapse, and the option shall terminate, upon the expiration of the option
term. However, the option shall, immediately at the time Optionee becomes
Permanently Disabled, terminate and cease to be outstanding with respect to the
balance of the shares subject to that option.
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III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each such option shall terminate,
unless assumed by the successor corporation (or parent thereof).
B. In the event of a Change in Control while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Program shall automatically accelerate so that each such
option shall immediately become fully exercisable for all of the shares of
Common Stock at the time subject to such option and may be exercised for any or
all of such shares as fully-vested shares of Common Stock. The option shall
remain so exercisable until the expiration of the option term.
C. The grant of options under the Salary Investment Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary
Investment Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE IV
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.
A. Purchase Price.
1. The purchase price per share shall be fixed by the
Plan Administrator, but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the issuance date.
2. Subject to the provisions of Section I of Article VI,
shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the
Corporation, or
(ii) past services rendered to the Corporation
(or any Parent or Subsidiary).
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock
Issuance Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the
Participant or the performance objectives to be attained,
(ii) the number of installments in which the
shares are to vest,
(iii) the interval or intervals (if any) which
are to lapse between installments, and
(iv) the effect which death, Permanent
Disability or other event designated by the Plan Administrator is to have upon
the vesting schedule,
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shall be determined by the Plan Administrator and incorporated into the Stock
Issuance Agreement.
2. Any new, substituted or additional securities or
other property (including money paid other than as a regular cash dividend)
which the Participant may have the right to receive with respect to the
Participant's unvested shares of Common Stock by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
3. The Participant shall have full stockholder rights
with respect to any shares of Common Stock issued to the Participant under the
Stock Issuance Program, whether or not the Participant's interest in those
shares is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service
while holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) that would otherwise occur upon the
cessation of the Participant's Service or the non-completion of the vesting
schedule applicable to such shares. Such waiver shall result in the immediate
vesting of the Participant's interest in the shares of Common Stock as to which
the waiver applies. Such waiver may be effected at any time, whether before or
after the Participant's cessation of Service or the attainment or non-attainment
of the applicable performance objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the outstanding repurchase rights under the Stock
Issuance Program shall terminate automatically, and all the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the
event of any Corporate Transaction, except to the extent (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.
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B. Any repurchase rights that are assigned in the Corporate
Transaction shall automatically terminate, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
the Participant's Service should subsequently terminate by reason of an
Involuntary Termination within eighteen (18) months following the effective date
of such Corporate Transaction.
C. The Plan Administrator shall have the discretion, exercisable
either at the time the unvested shares are issued or at any time while the
Corporation's repurchase right remains outstanding, to (i) provide for the
automatic termination of one or more outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those rights upon the
occurrence of a Change in Control or (ii) condition any such accelerated vesting
upon the subsequent Involuntary Termination of the Participant's Service within
a specified period following the effective date of such Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.
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ARTICLE V
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. Eligibility and Grant Dates. Option grants shall be made as
specified below:
1. Each Eligible Director who is first elected or
appointed as a non-employee Board member after the Plan Effective Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 20,000 shares of Common Stock. Such option is
referred to below as the "Initial Grant." A non-employee Board member who has
previously been a member of the board of directors of Hyperion Software
Corporation, or who has previously been in the employ of the Corporation (or any
Parent or Subsidiary) or of Hyperion Software Corporation (or any parent or
subsidiary corporation of Hyperion Software Corporation), shall not be eligible
to receive an Initial Grant.
2. On each Anniversary Date, each non-employee Board
member who is to continue serving as a non-employee Board member after such
Anniversary Date shall automatically be granted a Non-Statutory Option to
purchase 7,000 shares of Common Stock; provided such individual has served as a
member of the Board or as a member of the board of directors of Hyperion
Software Corporation for at least six (6) months prior to such Anniversary Date.
Such option is referred to below as an "Annual Grant." There shall be no limit
on the number of Annual Grants that any one Eligible Director may receive over
his or her period of Board service. A non-employee Board member who has
previously been in the employ of the Corporation (or any Parent or Subsidiary)
or of Hyperion Software Corporation (or any parent or subsidiary corporation of
Hyperion Software Corporation) shall be eligible to receive Annual Grants. For
purposes of this Section I, the term "Anniversary Date" shall have the following
meanings:
(i) In the case of an Eligible Director who was
first elected or appointed as a non-employee Board member prior to the
Corporation's 1998 Annual Meeting of Stockholders, "Anniversary Date" shall mean
August 21 of each year, commencing with the year 1998.
(ii) In the case of an Eligible Director who is
first elected as a non-employee Board member at the Corporation's 1998 Annual
Meeting of Stockholders and who previously served as a member of the board of
directors of Hyperion Software Corporation, "Anniversary Date" shall mean each
anniversary of the date when he or she was first elected or appointed as a
member of the board of directors of Hyperion Software Corporation.
(iii) In the case of a non-employee Board member
not described in paragraph (i) or (ii) above, "Anniversary Date" shall mean each
anniversary of the date when he or she is first elected or appointed as a member
of the Board.
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B. Exercise Price.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall be payable in one or more of
the alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10) years
measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under an Initial Grant shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. Each Initial Grant shall
vest, and the Corporation's repurchase right shall lapse, in four (4) equal and
successive annual installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each Annual Grant shall be vested at all times.
E. Effect of Termination of Board Service. The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's
death, the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's will or
beneficiary designation or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date of such
cessation of Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise
period, an Initial Grant may not be exercised in the aggregate for more than the
number of vested shares of Common Stock for which the option is exercisable at
the time of the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a
Board member by reason of death or Permanent Disability, then all shares at the
time subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of Board
service, be exercised for all or any portion of such shares as fully-vested
shares of Common Stock.
(iv) In no event shall the option remain
exercisable after the expiration of the option term. Upon the expiration of the
twelve (12)-month exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be
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outstanding for any vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee's cessation of Board
service, terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Board service.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Immediately following the consummation of
the Corporate Transaction, each automatic option grant shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
B. In connection with any Change in Control, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Each such option shall remain exercisable
for such fully-vested option shares until the expiration or sooner termination
of the option term or the surrender of the option in connection with a Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation
each automatic option held by him or her for a period of at least six (6)
months. The Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to the surrendered option (whether or
not the Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the option to the
Corporation. No approval or consent of the Board shall be required in connection
with such option surrender and cash distribution.
D. The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE VI
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program or
the purchase price for shares issued under the Stock Issuance Program by
delivering a promissory note payable in one or more installments. The terms of
any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole
discretion. Promissory notes may be authorized with or without security or
collateral. In all events, the maximum credit available to the Optionee or
Participant may not exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee or the
Participant in connection with the option exercise or share purchase.
B. The Plan Administrator may, in its discretion, determine that
one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options or stock appreciation rights or upon the
issuance or vesting of such shares under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan (other than the options granted or the shares issued under the
Automatic Option Grant Program) with the right to use shares of Common Stock in
satisfaction of all or part of the Taxes incurred by such holders in connection
with the exercise of their options or the vesting of their shares. Such right
may be provided to any such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%)) designated by
the holder.
(ii) Stock Delivery: The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such holder
(other than in connection with the option
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exercise or share vesting triggering the Taxes) with an aggregate Fair Market
Value equal to the percentage of the Taxes (not to exceed one hundred percent
(100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Discretionary Option Grant, Salary Investment and Stock
Issuance Programs shall become effective on the Plan Effective Date and options
may be granted under the Discretionary Option Grant Program from and after the
Plan Effective Date. The Automatic Option Grant Program shall also become
effective on the Plan Effective Date and the initial options under the Automatic
Option Grant Program shall be made to the Eligible Directors at that time.
B. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants shall be made under the Predecessor Plan
after the Plan Effective Date. All options outstanding under the Predecessor
Plan as of such date shall, immediately upon the Plan Effective Date, be
incorporated into the Plan and treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article II relating to
Corporate Transactions and Changes in Control, may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan that do not otherwise contain such provisions.
D. On June 6, 1996, the Board approved an increase in the number
of shares issuable under the Plan by 1,000,000 shares to 2,286,408 shares, and
the Corporation's stockholders approved of such share increase at the 1996
Annual Meeting of Stockholders. On October 10, 1996, and June 30, 1997, the
Board approved a change in the vesting provisions applicable to Eligible
Directors under the Automatic Option Grant Program and an increase in the number
of shares issuable under the Plan by 750,000 shares to 3,007,577 shares,
respectively, and the Corporation's stockholders approved of such changes at the
1997 Annual Meeting of Stockholders. The provisions in the 1996 and 1997
restatements of the Plan shall apply only to options and stock awards granted
under the Plan from and after the effective date of such restatements. All
options and stock awards granted under the Plan immediately prior to the
effective date of such restatements shall continue to be governed by the terms
and conditions of the Plan (and the instrument evidencing each such option or
stock award) as in effect on the date each such option or stock award was
previously granted, and nothing in the 1996 and 1997 restatements shall be
deemed to affect or otherwise modify the rights or obligations of the holders of
such options or stock awards with respect to the acquisition of shares of Common
Stock thereunder. On July 13, 1998, the Board approved an increase in the number
of shares issuable under the Plan by 5,000,000 shares to 8,007,577 shares, and
the Corporation's stockholders approved such share increase at the 1998 Annual
Meeting of Stockholders. [On September 28, 2000, the Board approved an increase
in the number of shares issuable under the Plan by 1,600,000 shares to
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9,607,577 shares, and the Corporation's stockholders approved such share
increase at the 2000 Annual Meeting of Stockholders.]
E. The Plan shall terminate upon the EARLIEST of (i) September
30, 2005, (ii) the date on which all shares available for issuance under the
Plan shall have been issued pursuant to the exercise of the options or the
issuance of shares (whether vested or unvested) under the Plan or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options and unvested stock
issuances outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the documents evidencing such
options or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options, stock appreciation rights or unvested stock issuances at the
time outstanding under the Plan unless the Optionee or the Participant consents
to such amendment or modification. In addition, the Board shall not, without the
approval of the Corporation's stockholders, (i) materially increase the maximum
number of shares issuable under the Plan, the number of shares for which options
may be granted under the Automatic Option Grant Program or the maximum number of
shares for which any one person may be granted options per calendar year, except
for permissible adjustments in the event of certain changes in the Corporation's
capitalization, or (ii) materially modify the eligibility requirements for Plan
participation.
B. Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant and Salary Investment Option Grant Programs
and shares of Common Stock may be issued under the Stock Issuance Program that
are in each instance in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under those
programs are held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock available
for issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically canceled
and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
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VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or
stock appreciation right under the Plan and the issuance of any shares of Common
Stock (i) upon the exercise of any option or stock appreciation right or (ii)
under the Stock Issuance Program shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options and stock appreciation rights
granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
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<PAGE> 55
APPENDIX
The following definitions shall be in effect under the Plan:
A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic
option grant program in effect under the Plan.
B. BOARD shall mean the Corporation's Board of Directors.
C. CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation), of beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.
D. CODE shall mean the Internal Revenue Code of 1986, as
amended.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
G. CORPORATION shall mean Hyperion Solutions Corporation
(formerly known as Arbor Software Corporation), a Delaware corporation.
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H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.
I. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or
order (including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
J. ELIGIBLE DIRECTOR shall mean a non-employee Board member
eligible to participate in the Automatic Option Grant Program in accordance with
the eligibility provisions of Section I of Article V.
K. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
L. EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.
M. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing price
per share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the Common
Stock, as such price is officially quoted in the composite tape of transactions
on such exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
N. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the following transaction:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to
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<PAGE> 57
a tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, AND
(ii) more than fifty percent (50%) of the securities so
acquired are accepted from persons other than Section 16 Insiders.
O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
P. INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following
(A) a change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or her level
of compensation (including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual's place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's consent.
Q. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
R. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
S. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.
T. OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant, Salary Investment Option Grant or
Automatic Option Grant Program.
U. PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
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V. PARTICIPANT shall mean any person who is issued shares of
Common Stock under the Stock Issuance Program.
W. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for the purposes of the Automatic Option
Grant Program, Permanent Disability or Permanently Disabled shall mean the
inability of the non-employee Board member to perform his or her usual duties as
a Board member by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more.
X. PLAN shall mean the Corporation's 1995 Stock Option/Stock
Issuance Plan, as set forth in this document.
Y. PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction.
Z. PLAN EFFECTIVE DATE shall mean the date on which the
Underwriting Agreement is executed and the initial public offering price of the
Common Stock is established.
AA. PREDECESSOR PLAN shall mean the Corporation's 1992 Stock
Option Plan.
BB. PRIMARY COMMITTEE shall mean the committee of two (2) or
more non-employee Board members appointed by the Board to administer the
Discretionary Option Grant, Salary Investment Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders as well as other eligible persons.
CC. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic
Relations Order that would substantially comply with the requirements of Code
Section 414(p) if the Plan were subject to such section. The Plan Administrator
shall have the sole discretion to determine whether a Domestic Relations Order
is a Qualified Domestic Relations Order.
DD. SALARY INVESTMENT PROGRAM shall mean the salary reduction
grant program in effect under the Plan.
EE. SECONDARY COMMITTEE shall mean a committee of one (1) or
more Board members appointed by the Board to administer the Discretionary Option
Grant, Salary Investment Option Grant and Stock Issuance Programs with respect
to eligible persons other than Section 16 Insiders.
FF. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
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GG. SECTION 12(g) REGISTRATION DATE shall mean the first date on
which the Common Stock is registered under Section 12(g) of the 1934 Act.
HH. SERVICE shall mean the provision of services to the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.
II. STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.
JJ. STOCK ISSUANCE AGREEMENT shall mean the agreement entered
into by the Corporation and the Participant at the time of issuance of shares of
Common Stock under the Stock Issuance Program.
KK. STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under the Plan.
LL. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
MM. TAKE-OVER PRICE shall mean the GREATER of (i) the Fair
Market Value per share of Common Stock on the date the option is surrendered to
the Corporation in connection with a Hostile Take-Over or (ii) the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over. However, if the surrendered option is an Incentive
Option, the Take-Over Price shall not exceed the clause (i) price per share.
NN. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those options
or the vesting of those shares.
OO. 10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
PP. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
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HYPERION SOLUTIONS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED THROUGH [NOVEMBER 15, 2000)
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of the Corporation by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret
and construe any provision of the Plan and to adopt such rules and regulations
for administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
that may be issued over the term of the Plan shall be two million (2,000,000)
shares.(1)
B. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and class of securities
purchasable per Participant on any one Purchase Date and (iii) the number and
class of securities and the price per share in effect under each outstanding
purchase right in order to prevent the dilution or enlargement of benefits
thereunder.
----------
(1) The Board increased the number of shares authorized for issuance by 150,000
on June 30, 1997, which increase was approved by the Corporation's stockholders
at the 1997 Annual Meeting of Stockholders. The Board increased the number of
shares authorized for issuance by 1,000,000 on July 13, 1998, which increase was
approved by the Corporation's stockholders at the 1998 Annual Meeting of
Stockholders. [The Board increased the number of shares authorized for issuance
by 600,000 on September 28, 2000 which increase was approved by the
Corporation's stockholders at the 2000 Annual Meeting of Stockholders.]
<PAGE> 61
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of successive offering periods until such time as (i)
the maximum number of shares of Common Stock available for issuance under the
Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated.
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan Administrator prior to the
start date. The initial offering period shall commence at the Effective Time and
terminate on the last business day in October 1997. The next offering period
shall commence on the first business day in November 1997 and terminate on the
last business day in April 1998, and subsequent offering periods shall commence
and terminate as designated by the Plan Administrator.
C. Each offering period shall be comprised of a series of one or
more successive Purchase Periods. Purchase Periods shall begin on the first
business day in May and November each year and terminate on the last business
day in the following April and October, respectively, each year. However, the
first Purchase Period under the initial offering period shall commence at the
Effective Time and terminate on the last business day in April 1996.
V. ELIGIBILITY
A. Each Eligible Employee shall be eligible to enter an offering
period under the Plan on the start date of any Purchase Period within that
offering period, provided he or she remains an Eligible Employee on such start
date. The date such individual enters the offering period shall be designated
his or her Entry Date for purposes of that offering period.
B. To participate in the Plan for a particular offering period,
the Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization form) and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan may be any multiple
of one percent (1%) of the Cash Compensation paid to the Participant during each
Purchase Period within that offering period, up to a maximum of ten percent
(10%). The deduction rate so authorized shall continue in effect for the
remainder of the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become effective
as soon as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one
(1) such reduction per Purchase Period.
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<PAGE> 62
(ii) The Participant may, prior to the commencement of
any new Purchase Period within the offering period, increase the rate of
his or her payroll deduction by filing the appropriate form with the
Plan Administrator. The new rate (which may not exceed the ten percent
(10%) maximum) shall become effective as of the start date of the
Purchase Period following the filing of such form.
B. Payroll deductions shall begin on the first pay day following
the Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts so
collected shall be credited to the Participant's book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be held in
any segregated account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.
D. The Participant's acquisition of Common Stock under the Plan
on any Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date, whether within the
same or a different offering period.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than any Participant whose payroll
deductions have previously been refunded in accordance with the Termination of
Purchase Right provisions below) on each such Purchase Date. The purchase shall
be effected by applying the Participant's payroll deductions for the Purchase
Period ending on such Purchase Date (together with any carryover deductions from
the preceding Purchase Period) to the purchase of whole shares of Common Stock
(subject to the
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<PAGE> 63
limitation on the maximum number of shares purchasable per Participant on any
one Purchase Date) at the purchase price in effect for the Participant for that
Purchase Date.
C. Purchase Price. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
(i) the Fair Market Value per share of Common Stock on the Participant's Entry
Date into that offering period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date. However, for each Participant whose Entry Date is
other than the start date of the offering period, the clause (i) amount shall in
no event be less than the Fair Market Value per share of Common Stock on the
start date of that offering period.
D. Number of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Period ending with that Purchase Date (together with any carryover deductions
from the preceding Purchase Period) by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall be five
hundred (500) shares, subject to periodic adjustments in the event of certain
changes in the Corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied
to the purchase of shares of Common Stock on any Purchase Date because they are
not sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
Purchase Date in the offering period, terminate his or her outstanding
purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll deductions
shall be collected from the Participant with respect to the terminated
purchase right. Any payroll deductions collected during the Purchase
Period in which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of shares on
the next Purchase Date. If no such election is made at the time such
purchase right is terminated, then the payroll deductions collected with
respect to the terminated right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which the terminated purchase right was granted. In
order to resume participation in any subsequent offering period, such
individual must re-enroll in the Plan (by making a timely filing of
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<PAGE> 64
the prescribed enrollment forms) on or before his or her scheduled Entry
Date into that offering period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in
status) while his or her purchase right remains outstanding, then that
purchase right shall immediately terminate, and all of the Participant's
payroll deductions for the Purchase Period in which the purchase right
so terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an approved
unpaid leave of absence, then the Participant shall have the election,
exercisable up until the last business day of the Purchase Period in
which such leave commences, to (a) withdraw all the funds in the
Participant's payroll account at the time of the commencement of such
leave or (b) have such funds held for the purchase of shares at the end
of such Purchase Period. In no event, however, shall any further payroll
deductions be added to the Participant's account during such leave. Upon
the Participant's return to active service, his or her payroll
deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began, provided the Participant returns to
service prior to the expiration date of the offering period in which
such leave began.
G. Corporate Transaction. Unless the Plan is continued or
assumed by the surviving corporation after a Corporate Transaction, each
outstanding purchase right shall automatically be exercised, immediately prior
to the effective date of such Corporate Transaction, by applying the payroll
deductions of each Participant for the Purchase Period in which such Corporate
Transaction occurs to the purchase of whole shares of Common Stock at a purchase
price per share equal to eighty-five percent (85%) of the lower of (i) the Fair
Market Value per share of Common Stock on the Participant's Entry Date into the
offering period in which such Corporate Transaction occurs or (ii) the Fair
Market Value per share of Common Stock immediately prior to the effective date
of such Corporate Transaction. However, the applicable limitation on the number
of shares of Common Stock purchasable per Participant shall continue to apply to
any such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the offering period is other than the start
date of that offering period, be less than the Fair Market Value per share of
Common Stock on such start date.
Unless the Plan is continued or assumed by the surviving
corporation after a Corporate Transaction, the Corporation shall use its best
efforts to provide at least ten (10) days' prior written notice of the
occurrence of such Corporate Transaction and Participants shall, following the
receipt of such notice, have the right to terminate their outstanding purchase
rights prior to the effective date of such Corporate Transaction.
H. Proration of Purchase Rights. Should the total number of
shares of Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a pro
rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of
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<PAGE> 65
the aggregate purchase price payable for the Common Stock prorated to such
individual, shall be refunded.
I. Assignability. During the Participant's lifetime, the
purchase right shall be exercisable only by the Participant and shall not be
assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than twenty-five
thousand dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value of such stock on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations, the
following provisions shall be in effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of installments on
each successive Purchase Date during the offering period on which such
right remains outstanding.
(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the Participant
has already accrued in the same calendar year the right to acquire
Common Stock under one (1) or more other purchase rights at a rate equal
to twenty-five thousand dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value of such stock on the
date or dates of grant) for each calendar year such rights were at any
time outstanding.
C. If by reason of such accrual limitations, any purchase right
of a Participant does not accrue for a particular Purchase Period, then the
payroll deductions which the Participant made during that Purchase Period with
respect to such purchase right shall be promptly refunded.
D. In the event there is any conflict between the provisions of
this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
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<PAGE> 66
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on August 31, 1995, and
approved by the stockholders on September 15, 1995. The Plan shall become
effective at the Effective Time, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation.
B. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in October 2005, (ii)
the date on which all shares available for issuance under the Plan shall have
been sold pursuant to purchase rights exercised under the Plan or (iii) the date
on which all purchase rights are exercised in connection with a Corporate
Transaction (unless the Plan is continued or assumed by the surviving
corporation after such Corporate Transaction). No further purchase rights shall
be granted or exercised, and no further payroll deductions shall be collected,
under the Plan following its termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at
any time. However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan, except for permissible adjustments in the event of
certain changes in the Corporation's capitalization, or (ii) materially modify
the requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any
right to continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with or
without cause.
C. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws rules.
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Schedule A
Corporations Participating in
Employee Stock Purchase Plan
Hyperion Solutions Corporation
Hyperion Software Corporation (effective [November 15, 2000])
<PAGE> 68
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Compensation shall mean the (i) regular base salary paid
to a Participant by one or more Participating Companies during such individual's
period of participation in the Plan, plus (ii) any pre-tax contributions made by
the Participant to any Code Section 401(k) salary deferral plan or any Code
Section 125 cafeteria benefit program now or hereafter established by the
Corporation or any Corporate Affiliate, plus (iii) all of the following amounts
to the extent paid in cash: overtime payments, bonuses, commissions,
profit-sharing distributions and other incentive-type payments. However, Cash
Compensation shall not include any contributions (other than Code Section 401(k)
or Code Section 125 contributions) made on the Participant's behalf by the
Corporation or any Corporate Affiliate to any deferred compensation plan or
welfare benefit program now or hereafter established.
C. Code shall mean the Internal Revenue Code of 1986, as
amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation.
G. Corporation shall mean Hyperion Solutions Corporation
(formerly Arbor Software Corporation), a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Hyperion
Solutions Corporation which shall by appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the Underwriting
Agreement is executed and finally priced. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a
subsequent Effective Time with respect to its employee-Participants.
A-1
<PAGE> 69
I. Eligible Employee shall mean any person who is engaged, on a
regularly scheduled basis of more than twenty (20) hours per week for more than
five (5) months per calendar year, in the rendition of personal services to any
Participating Corporation as an employee for earnings considered wages under
Code Section 3401(a).
J. Entry Date shall mean the date an Eligible Employee first
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
price per share of Common Stock on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no closing
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing price on the last preceding date for which
such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. Plan shall mean the Corporation's Employee Stock Purchase
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or
more Board members appointed by the Board to administer the Plan.
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<PAGE> 70
Q. Purchase Date shall mean the last business day of each
Purchase Period. The initial Purchase Date shall be April 30, 1996.
R. Purchase Period shall mean each successive period within the
offering period at the end of which there shall be purchased shares of Common
Stock on behalf of each Participant.
S. Stock Exchange shall mean either the American Stock Exchange
or the New York Stock Exchange.
T. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
A-3
<PAGE> 71
PROXY PROXY
HYPERION SOLUTIONS CORPORATION
1344 CROSSMAN AVENUE
SUNNYVALE, CALIFORNIA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2000
The undersigned hereby appoints DAVID W. ODELL and LARRY J. BRAVERMAN, or
either of them, each with power of substitution, to represent the undersigned
at the Annual Meeting of Stockholders of Hyperion Solutions Corporation (the
"Company") to be held at the Sheraton Four Points Hotel, 1100 N. Mathilda
Avenue, Sunnyvale, California 94089 on Wednesday, November 15, 2000, at 10:00
a.m. P.D.T., and at 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 set forth on the reverse side.
----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------
[X] Please mark votes as in this example.
1. To elect two members of the Board of Directors to serve for a three-year
term as Class II directors.
Nominees: (01) Jeffrey R. Rodek, (02) Aldo Papone
FOR WITHHELD
[ ] [ ]
[ ] __________________________________________ MARK HERE [ ]
For all nominees except as noted above FOR ADDRESS
CHANGE AND
NOTE BELOW
2. To approve an amendment to the 1995 Stock Option/Stock Issuance Plan to
increase shares reserved for issuance.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve an amendment to the 1995 Stock Option/Stock Issuance Plan to
increase the number of options automatically granted to non-employee
Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve an amendment to the Employee Stock Purchase Plan to increase
shares reserved for issuance.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants for the fiscal year ending June 30, 2001.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
Please sign exactly as our name(s) appear(s) hereon. All holders must sign.
When signing in a fiduciary capacity, please indicate full title as such.
If a corporation or partnership, please sign in full corporate or partnership
name by authorized person.
Signature: _______________________________________ Date: ___________________
Signature: _______________________________________ Date: ___________________
