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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 Section240.14a-11(c) or
Section240.14a-12
FORTE SOFTWARE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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FORTE SOFTWARE, INC.
1800 HARRISON STREET
OAKLAND, CALIFORNIA 94612
July 22, 1999
TO THE STOCKHOLDERS OF FORTE SOFTWARE, INC.
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Forte Software, Inc. (the "Company"), which will be held at the Lakeview Club,
300 Lakeside Drive, 28th Floor, Oakland, California 94612, on Wednesday, August
18, 1999, at 11:00 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/ MARTIN J. SPRINZEN]
Martin J. Sprinzen
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
FORTE SOFTWARE, INC.
1800 HARRISON STREET
OAKLAND, CALIFORNIA 94612
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 1999
------------------------
The Annual Meeting of Stockholders ("Annual Meeting") of Forte (the
"Company") will be held at the Lakeview Club, 300 Lakeside Drive, 28th Floor,
Oakland, California 94612, on Wednesday, August 18, 1999, at 11:00 a.m. Pacific
Time for the following purposes:
1. To elect five directors of the Board of Directors to serve until the
next Annual Meeting or until their successors have been duly elected and
qualified;
2. To consider a proposal to amend the Forte Software, Inc. 1996 Stock
Option Plan by increasing the number of available shares by 800,000;
3. To consider a proposal to amend the Forte Software, Inc. Employee Stock
Purchase Plan by increasing the number of available shares by 200,000;
4. To consider a proposal to ratify the appointment of Ernst & Young LLP as
the Company's independent public accountants for the fiscal year ending
March 31, 2000; and
5. 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 July 1, 1999 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 1800 Harrison
Street, 24th Floor, Oakland, California during ordinary business hours for the
ten-day period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
[/S/ BOB L. COREY]
Bob L. Corey
SECRETARY
Oakland, California
July 22, 1999
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>
FORTE SOFTWARE, INC.
1800 HARRISON STREET
OAKLAND, CALIFORNIA 94612
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 1999
------------------------
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of Forte Software, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Lakeview Club, 300 Lakeside Drive, 28th Floor,
Oakland, California 94612, on Wednesday, August 18, 1999, at 11:00 a.m. Pacific
Time, and at any adjournment or postponement of the Annual Meeting. These proxy
materials were first mailed to stockholders on or about July 23, 1999.
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 July 1, 1999, the record date for determination of
stockholders entitled to vote at the Annual Meeting, there were 20,461,566
shares of Common Stock outstanding. Each stockholder of record on July 1, 1999
is entitled to one vote for each share of Common Stock held by such stockholder
on July 1, 1999. 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.
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 five nominees for director receiving the highest
number of affirmative votes will be elected. Abstentions and broker non-votes
are not counted toward a nominee's total. Stockholders may not cumulate votes in
the election of directors.
PROPOSAL 2. Approval of the amendment of the Company's 1996 Stock Option
Plan requires the affirmative vote of a majority of the votes present or
represented by proxy and entitled to vote at the Annual Meeting, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, either in person or by proxy. Abstentions and
broker non-votes will
1
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each be counted as present for purposes of determining the presence of a quorum.
Abstentions will have the same effect as a negative vote. Broker non-votes, on
the other hand, will have no effect on the outcome of the vote.
PROPOSAL 3. Approval of the amendment to the Company's Employee Stock
Purchase Plan requires the affirmative vote of a majority of the votes present
or represented by proxy and entitled to vote at the Annual Meeting, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present and voting, either in person or by proxy. Abstentions and
broker non-votes will each be counted as present for purposes of determining the
presence of a quorum. Abstentions will have the same effect as a negative vote.
Broker non-votes, on the other hand, will have no effect on the outcome of the
vote.
PROPOSAL 4. Ratification of the appointment of Ernst & Young LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2000 requires the affirmative vote of a majority of those shares present in
person, or represented by proxy, and cast either affirmatively or negatively at
the Annual Meeting. Abstentions and broker non-votes will not be counted as
having been voted on the proposal.
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
Company's Board of Directors 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 the Nominees of the Board of Directors (as set forth in
Proposal No. 1), FOR Proposals No. 2, 3 and 4, and in the discretion of the
proxy holders, as to other matters that may properly come before the Annual
Meeting. 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 Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy,
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees, or agents
of the Company. No additional compensation will be paid to these individuals for
any such services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The directors who are being nominated for election to the Board of Directors
(the "Nominees"), their ages as of June 1, 1999, their positions and offices
held with the Company and certain biographical information are set forth below.
The proxy holders intend to vote all proxies received by them in the
accompanying form FOR the Nominees listed below unless otherwise instructed. In
the event any Nominee is unable or declines to serve as a director at the time
of the Annual Meeting, the proxies will be voted for any nominee who may be
designated by the present Board of Directors to fill the vacancy. As of the date
of this Proxy Statement, the Board of Directors is not aware of any Nominee who
is unable or will decline to serve as a director. The five Nominees receiving
the highest number of affirmative votes of the shares entitled to vote at the
Annual Meeting will be elected directors of the Company to serve until the next
Annual Meeting or until their successors have been duly elected and qualified.
<TABLE>
<CAPTION>
NOMINEES AGE POSITION
- ---------------------------------------- --- ---------------------------------------------
<S> <C> <C>
Martin J. Sprinzen...................... 50 President, Chief Executive Officer and
Chairman of the Board of Directors
Bob L. Corey............................ 47 Senior Vice President, Finance and
Administration, Chief Financial Officer,
Secretary and Director
Alston Gardner(1)(2).................... 43 Director
Thomas A. Jermoluk(2)................... 42 Director
William H. Younger, Jr.(1)(2)........... 49 Director
</TABLE>
- ------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
MARTIN J. SPRINZEN co-founded the Company in February 1991 and has served as
its President, Chief Executive Officer and Chairman of the Board of Directors
since inception. Mr. Sprinzen also served as the Company's Secretary from
inception to January 1996. From May 1988 to November 1990, Mr. Sprinzen was
employed by Ingres Corp., an RDBMS company, as Executive Vice President,
International Operations. From October 1986 to May 1988, Mr. Sprinzen was
President and Chief Executive Officer of NASTEC, Corp., a computer-aided
software engineering company. From July 1984 to October 1986, Mr. Sprinzen was
employed by Ingres Corp. as Vice President, Engineering. From December 1979 to
June 1984, Mr. Sprinzen was employed by Candle Corp., a mainframe software
management tools company, where his last position was Vice President,
Technology. Mr. Sprinzen holds a B.S. degree in electrical engineering from The
Cooper Union.
BOB L. COREY, was appointed Senior Vice President of Finance and
Administration and Chief Financial Officer in May 1998. In February 1999, Mr.
Corey was elected to the Board of Directors. Prior to joining Forte, Mr. Corey
was Executive Vice President and Chief Financial Officer of SyQuest Technology
Inc., a provider of removable storage solutions, from July 1997 to April 1998.
Prior to that Mr. Corey was Vice President and Chief Financial Officer of
Primavera Systems, a provider of project management software and services for
PC's, from April 1996 to July 1997. From March 1993 to March 1996, Mr. Corey was
Executive Vice President and Chief Financial Officer of MTI Technology Inc., a
provider of storage solutions. Earlier in his career, Mr. Corey was Vice
President and Controller for Ashton Tate, a provider of 19 software solutions
for PC's. Mr. Corey holds a B.A. in business administration from California
State University at Fullerton. Mr. Corey joined Arthur Andersen & Co. after
completing college where he earned his certificate as a Certified Public
Accountant.
3
<PAGE>
ALSTON GARDNER has been a director of the Company since February 1999. Mr.
Gardner has served as Chief Executive Officer of OnTarget, Inc. (formerly Target
Marketing Systems, Inc.), a sales training and consulting firm, since June 1989.
Prior to founding Target Marketing Systems, Mr. Gardner was a consultant to
technology firms. From 1977 to 1988, Mr. Gardner held various sales and sales
management positions with Dun & Bradstreet Computing Services, Information
Science, Automatic Data Processing and Wallace Computer Services. Mr. Gardner
holds a B.A. degree from the University of North Carolina and has attended the
executive programs at Harvard Business School, Stanford and the University of
Virginia.
THOMAS A. JERMOLUK has been a director of the Company since February 1996.
Mr. Jermoluk currently serves as Chief Executive Officer and as Chairman of the
board of directors of Excite@Home, Inc., a distributor of high-speed interactive
services to residences and businesses using the cable industry's hybrid-fiber
coaxial infrastructure and its own network architecture. From 1986 to 1996, Mr.
Jermoluk was employed by Silicon Graphics, Inc., a manufacturer of high
performance visual computing systems, as President and a member of its board of
directors from 1994 to 1996, and as Chief Operating Officer from 1992 to 1996.
Mr. Jermoluk's other positions at Silicon Graphics included Executive Vice
President from 1991 to 1992 and Vice President/General Manager, Advanced Systems
Division, from 1988 to 1991. Mr. Jermoluk holds a B.S. degree in computer
science/electrical engineering and an M.S. degree in computer science from
Virginia Tech.
WILLIAM H. YOUNGER, JR., has been a director of the Company since February
1991. Mr. Younger has been a Managing Director of the general partner of Sutter
Hill Ventures, a venture capital firm, since 1983. Mr. Younger currently serves
as a director of Information Advantage Inc. and several private companies. Mr.
Younger holds a B.S.E.E. degree from the University of Michigan and an M.B.A.
from Stanford University.
The Company currently has authorized six directors. Each director holds
office until the next annual meeting of stockholders or until his successor is
duly elected and qualified. The officers serve at the discretion of the Board.
There are no family relationships between any of the directors or officers of
the Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended March 31, 1999, the Board of Directors held
four (4) meetings. For the fiscal year, each of the current directors during the
term of their tenure attended or participated in at least 75% of the aggregate
of (i) the total number of meetings or actions by written consent of the Board
of Directors and (ii) the total number of meetings held by all Committees of the
Board of Directors on which each such director served. The Board of Directors
has two standing committees: the Audit Committee and the Compensation Committee.
During the fiscal year ended March 31, 1999, the Audit Committee of the
Board of Directors met two (2) times. The Audit Committee reviews, acts on and
reports to the Board of Directors 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. Gardner and Younger.
During the fiscal year ended March 31, 1999, the Compensation Committee of
the Board of Directors met one (1) time. The Compensation Committee reviews the
performance and sets the compensation of the Chief Executive Officer of the
Company, and approves the compensation of the other executive officers of the
Company and reviews the compensation programs for other key employees, including
salary and cash bonus levels. The Compensation Committee administers the 1996
Stock Option Plan, the 1997 Stock Option Plan and the Employee Stock Purchase
Plan. The members of the Compensation Committee are Messrs. Gardner, Jermoluk
and Younger.
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DIRECTOR COMPENSATION
Each non-employee Board member receives a retainer of $2,000 per Board
meeting. The Company does not pay compensation for committee participation or
special assignments of the Board of Directors.
Non-employee Board members are also eligible for option grants pursuant to
the provisions of the Automatic Option Grant Program under the Company's 1996
Stock Option Plan. Under the Automatic Option Grant Program, each individual who
first becomes a non-employee Board member will be granted an option to purchase
15,000 shares on the date such individual joins the Board, provided such
individual has not been in the prior employ of the Company. In addition, at each
Annual Stockholders Meeting, each individual who continues to serve and has
served as a non-employee Board member for at least six months prior to such
Annual Meeting will receive an additional option grant to purchase 3,000 shares
of Common Stock, whether or not such individual has been in the prior employ of
the Company.
On August 26, 1998, each of Messrs. Jermoluk and Younger was granted an
option to purchase 3,000 shares of Common Stock at an exercise price of $4.06
per share under the Automatic Option Grant Program; such option shares vest over
24 months. On February 24, 1999, Mr. Gardener was granted an option to purchase
15,000 shares of Common Stock under the Automatic Option Grant Program at an
exercise price of $5.31 per share; the option shares vest over 48 months.
Directors who are also employees of the Company are eligible to receive
options under the 1996 Stock Option Plan. Such employee-directors are also
eligible to participate in the Company's Employee Stock Purchase Plan, provided
that such employee-director does not hold an amount of Common Stock equal to or
greater than five percent of the total outstanding Common Stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 31, 1999 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 five percent 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 Securities Exchange Act
of 1934, as amended. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). 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 sixty
(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>
SHARES
BENEFICIALLY OWNED
-------------------------
NUMBER OF PERCENTAGE OF
BENEFICIAL OWNER SHARES CLASS
- ----------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Alston Gardener(1)....................................................................... 15,000 *
Thomas A. Jermoluk(2).................................................................... 27,000 *
William H. Younger, Jr.(3)............................................................... 272,602 1.3
Martin J. Sprinzen(4).................................................................... 1,668,761 8.1
Paul Butterworth(5)...................................................................... 576,102 2.8
Bob L. Corey(6).......................................................................... 58,750 *
Michael Hedger........................................................................... 13,287 *
David Taber(7)........................................................................... 113,178 *
All directors and executive officers as a group (8 persons)(8)........................... 2,744,680 13.5
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Includes options immediately exercisable into 15,000 shares of Common Stock
under the 1996 Stock Option Plan.
(2) Includes options immediately exercisable into 27,000 shares of Common Stock
under the 1996 Stock Option Plan.
(3) Includes 93,018 shares of Common Stock held of record by Sutter Hill
Ventures, a California Limited Partnership, and beneficially owned by Mr.
Younger and options immediately exercisable into 9,000 shares of Common
Stock under the 1996 Stock Option Plan.
(4) Includes options immediately exercisable into 285,937 shares of Common Stock
under the 1996 Stock Option Plan.
(5) Includes options immediately exercisable or exercisable within 60 days of
May 31, 1999 into 190,875 shares of Common Stock under the 1996 Stock Option
plan. All shares beneficially owned by Paul Butterworth are held in a
revocable trust dated January 3, 1996. Mr. Butterworth is the trustee of the
revocable trust.
(6) Includes options immediately exercisable or exercisable within 60 days of
May 31, 1999 into 58,750 shares of Common Stock under the 1996 Stock Option
plan.
(7) Includes options immediately exercisable or exercisable within 60 days of
May 31, 1999 into 111,250 shares of Common Stock under the 1996 Stock Option
plan.
(8) Includes options immediately exercisable or exercisable within 60 days of
May 31, 1999 into 697,812 shares of Common Stock under the 1996 Stock Option
plan.
6
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EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Compensation Committee as administrator of the 1996 Stock Option Plan
has the authority to provide for the accelerated vesting of the shares of Common
Stock subject to outstanding options held by the Chief Executive Officer and any
other executive officer in connection with certain changes in control of the
Company or the subsequent termination of the officer's employment following the
change in control event.
In 1997, the Company entered into agreements with its executive officers
that provide for full acceleration of vesting of any executive officer's
unvested option shares or restricted stock in the event such officer's
employment is terminated for any reason other than cause, or the officer resigns
for good reason, within 12 months following certain changes in control of the
Company. "Cause" includes the unauthorized use or disclosure of the confidential
information or trade secrets of the Company, which use causes material harm to
the Company, conviction of or a plea of "guilty" or "no contest" to a felony,
gross negligence, material failure to comply with Company policy or continued
failure to perform assigned duties after receiving written notification from the
Company. During the six months immediately following the change in control,
"good reason" is defined as a reduction in base salary or target bonus (other
than a general reduction of senior management salaries) or a relocation of the
officer's principal place of work by 40 miles or more, and after the sixth month
following the change in control, "good reason" also includes a material
reduction in authority or responsibilities of the officer.
The change in control agreements described above do not affect the
enforceability of the change in control arrangements that were entered into in
1995, which provide for acceleration of vesting of 50% of an executive officer's
unvested option shares or restricted stock in the event the officer's employment
terminates for any reason other than his voluntary resignation within one year
following a change in control. These arrangements will apply to the extent the
1997 agreements do not apply.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company's Board of Directors (the
"Committee") has the authority to establish the level of base salary payable to
the Chief Executive Officer ("CEO") and to administer the Company's 1996 Stock
Option Plan, 1997 Stock Option Plan and Employee Stock Purchase Plan. In
addition, the Committee has the responsibility for approving the individual
bonus programs to be in effect for the CEO, all other executive officers and
certain other key employees of the Company.
Subject to the Committee's approval as described in the previous sentence,
the CEO has the responsibility for developing and approving the bonus programs
to be in effect for all executive officers other than the CEO and other key
employees each fiscal year. For fiscal 1999, 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 Company personnel and a formal survey
conducted by a consulting firm among local companies. The Committee approved the
final compensation decisions concerning such officers.
GENERAL COMPENSATION POLICY. The Committee's fundamental policy is to offer
the Company's executive officers competitive compensation opportunities based
upon overall Company 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.
In preparing the performance graph for this Proxy Statement, the Company has
selected the Nasdaq Stock Market--U.S. Companies Index and the Nasdaq Stock
Market Computer & Data Processing Index. The companies included in the formal
survey utilized by the Company and the Company's informal survey
7
<PAGE>
are not necessarily those included in the Indices, because the latter were
determined not to be competitive with the Company for executive talent or
because compensation information was not available to the Company.
BASE SALARY. The base salary for each executive officer is set on the basis
of personal performance, level of experience, and the salary level in effect for
comparable positions at companies that compete with the Company for executive
talent.
ANNUAL CASH BONUSES. Each executive officer has an established bonus target
each fiscal year. The annual pool of bonuses for executive officers is
determined on the basis of the Company's achievement of the financial
performance targets established at the start of the fiscal year and a range for
the executive's contribution. Actual bonuses paid reflect an individual's
accomplishment of both corporate and functional objectives.
LONG-TERM INCENTIVE COMPENSATION. During fiscal 1999, the Committee made
option grants to Messrs. Butterworth, Corey, Hedger, Sprinzen and Taber under
the 1996 Stock Option Plan. Generally, a significant grant is made in the year
that an officer commences employment. Grants in subsequent years may also occur,
depending on officers' performance. Generally, 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 for Mr. Sprinzen, the Company's
President and CEO, was established by the Committee primarily on the basis of
Mr. Sprinzen's personal performance of his duties and the salary level in effect
for comparable positions at companies that compete with the Company for
executive talent.
The components of the CEO's fiscal 1999 incentive compensation were
dependent upon the Company's financial performance and achievement of certain
corporate objectives, and provided no dollar guarantees. The bonus paid to the
CEO for fiscal 1999 was based on an incentive plan similar to the plans in place
for the other officers. Specifically, a target incentive was established at the
beginning of the fiscal year using an agreed-upon formula based on Company
revenue and profit. Each fiscal year, the annual incentive plan is reevaluated
with a new achievement threshold and new targets for revenue and profit.
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 Company's 1996 Stock 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, any
compensation deemed paid to an executive officer when he exercises an option
under the 1996 Stock Option Plan with an exercise price equal to the fair market
value of the option shares on the grant date generally will qualify as
performance-based compensation that will not be subject to the $1 million
limitation. Since it is not expected that the cash compensation to be paid to
the Company's executive officers for the 2000 fiscal year will exceed the $1
million limit, the Committee will
8
<PAGE>
defer any decision on whether to limit the dollar amount of the cash
compensation payable to the Company's executive officers to the $1 million cap.
OPTION REPRICING PROGRAM. Competition for skilled engineers, sales
personnel and other key employees in the software industry is intense, and the
use of stock options for retention and motivation of such personnel is
widespread in high-technology industries. The Committee believes that stock
options are a critical component of the compensation offered by the Company to
promote long-term retention of key employees, motivate high levels of
performance and recognize employee contributions to the success of the Company.
The market price of the Common Stock decreased from a high of $81.75 in May 1996
to a low of $2.75 in October 1998. In light of this substantial decline in
market price, the Committee believed that the outstanding stock options with an
exercise price in excess of the actual market price were no longer an effective
tool to encourage employee retention or to motivate high levels of performance.
As a result, in August 1998, the Committee approved an option repricing program
under which options to acquire 542,000 shares of Common Stock that were
originally issued with exercise prices ranging from $4.75 to $14.63 per share
were reissued with an exercise price of $4.13 per share, the fair market value
of the Common Stock at the repricing date. These options will continue to vest
under the original terms of the option grant, except that no options may be
exercised for a period of nine months from the repricing date. The following
table sets forth information concerning options held by an executive officer
that were repriced during the last ten completed fiscal years:
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
SECURITIES ORIGINAL
UNDERLYING OPTION
NUMBER MARKET PRICE OF EXERCISE PRICE TERM REMAINING
OF OPTIONS STOCK AT TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
- --------------------------------- --------- ------------ ----------------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Paul Butterworth................. 8/24/98 100,000 4.13 8.31 4.13 8.7 years
Bob L. Corey..................... 8/24/98 150,000 4.13 6.75 4.13 9.7 years
Bob L. Corey..................... 8/24/98 30,000 4.13 4.75 4.13 10.0 years
Michael Hedger................... 8/24/98 70,000 4.13 5.94 4.13 9.5 years
Michael Hedger................... 8/24/98 30,000 4.13 8.31 4.13 8.7 years
Michael Hedger(1)................ 8/24/98 12,000 4.13 8.31 4.13 8.0 years
Michael Hedger(2)................ 4/25/97 12,000 8.31 28.75 8.31 9.4 years
David Taber...................... 8/24/98 100,000 4.13 14.63 4.13 9.0 years
David Taber...................... 8/24/98 50,000 4.13 5.94 4.13 9.5 years
</TABLE>
- ------------------------
(1) These options were previously repriced on April 25, 1997.
(2) These options were not exercisable for a period of one year from the
repricing date.
Compensation Committee
Alston Gardner
Thomas A. Jermoluk
William H. Younger, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed in
May 1995, and the members of the Compensation Committee are Messrs. Gardner,
Jermoluk and Younger. None of these individuals was at any time during fiscal
1999, or at any other time, an officer or employee of the Company. No executive
officer of the Company served as a member of the board of directors of any
entity that had one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Company's Common Stock between March 11, 1996 (the date the Company
effected its initial public offering) and March 31, 1999 with the cumulative
total return of (i) the Nasdaq Stock Market--U.S. Companies Index (the "Nasdaq
Stock Market--U.S. Index") and (ii) the Nasdaq Stock Market Computer & Data
Processing Index (the "Nasdaq Computer & Data Processing Index"), over the same
period. This graph assumes the investment of $100.00 on March 11, 1996 in the
Company's Common Stock, the Nasdaq Stock Market-- U.S. Index and the Nasdaq
Computer & Data Processing 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
The Nasdaq Stock Market, 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 FORTE SOFTWARE, INC.,
THE NASDAQ STOCK MARKET-U.S. INDEX AND THE NASDAQ COMPUTER & DATA PROCESSING
INDEX
COMPARISON OF 36 MONTH CUMULATIVE TOTAL RETURN*
AMONG FORTE SOFTWARE, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ COMPUTER &
FORTE' SOFTWARE, INC. MARKET (U.S.) DATA PROCESSING
<S> <C> <C> <C>
3/11/96 $100 $100 $100
3/96 $193 $102 $103
3/97 $110 $114 $113
3/98 $36 $172 $197
3/99 $22 $231 $320
</TABLE>
* $100 INVESTED ON 3/11/96 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING MARCH 31.
The Company effected its initial public offering on March 11, 1996 at a per
share price of $21.00. The closing price of Common Stock on March 12, 1996, its
first day of public trading, was $38.25 per share. The graph above commences
with the initial public offering price of $21.00.
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.
10
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following Summary Compensation Table sets forth the compensation earned
for the three fiscal years ended March 31, 1999 by the Company's Chief Executive
Officer and the four other most highly compensated executive officers
(collectively, the "Named Officers"), each of whose aggregate compensation for
fiscal 1999 exceeded $100,000 for services rendered in all capacities to the
Company and its subsidiaries for that fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------------ SECURITIES
FISCAL SALARY BONUS OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) COMPENSATION ($) OPTIONS (#) COMPENSATION ($)(2)
- ----------------------------------- ------ ------- ----------- ---------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Martin J. Sprinzen ................ 1999 285,000 129,167 0 200,000 4,147
President and Chief Executive 1998 288,625 73,855 0 0 1,185
Officer 1997 250,075 112,260 0 0 2,053
Paul Butterworth .................. 1999 156,250 63,750 0 100,000(6) 1,183
Senior Vice President, Software 1998 150,000 56,000 0 100,000 1,185
Development and Support and Chief 1997 135,000 51,380 0 0 1,027
System Architect
Bob L. Corey(3) ................... 1999 198,094 66,136 0 375,000(7) 465
Senior Vice President, Finance
and Administration, Chief
Financial Officer and Secretary
Michael Hedger(4) ................. 1999 130,176 130,176(8) 125,083(9) 162,000(10) 6,149
Executive Vice President, 1998 152,000 102,400(8) 0 112,000(11) 3,000
Worldwide Field Operations 1997 152,000 122,860(8) 0 12,000 600
David Taber(5) .................... 1999 140,000 65,625 0 180,000(12) 755
Senior Vice President, Marketing 1998 79,600 25,208 0 150,000 252
</TABLE>
- ------------------------------
401(k) Plan.
(2) Represents premiums for term life insurance.
(3) Mr. Corey joined the Company in May 1998.
(4) Mr. Hedger left the Company in January 1999.
(5) Mr. Taber joined the Company in September 1997.
(6) Includes 100,000 options that were repriced in August 1998. See the
discussion of the option repricing program and the option repricing table
in the Compensation Committee Report.
(7) Includes 180,000 options that were repriced in August 1998. See the
discussion of the option repricing program and the option repricing table
in the Compensation Committee Report.
(8) Includes sales commissions.
(9) Includes $81,866 for reimbursement of housing expenses. The remainder
represents relocation, travel, and living expenses.
(10) Includes 112,000 options that were repriced in August 1998. See the
discussion of the option repricing program and the option repricing table
in the Compensation Committee Report.
(11) Includes 12,000 options that were repriced in April 1997. See the
discussion of the option repricing program and the option repricing table
in the Compensation Committee Report.
(12) Includes 150,000 options that were repriced in August 1998. See the
discussion of the option repricing program and the option repricing table
in the Compensation Committee Report.
11
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the Named Officers in the fiscal year ended March 31, 1999. No
stock appreciation rights were granted to these individuals during such year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
NUMBER OF ------------------------------------------ RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(3)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ------------------
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH)(2) DATE 5%($) 10%($)
- ---------------------------------------- ------------- ----------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Martin J. Sprinzen...................... 200,000(4) 4.4% 4.00 6/9/08 503,116 1,274,994
Paul Butterworth........................ 100,000(5) 2.2% 4.13 4/25/07 259,419 657,419
Bob L. Corey............................ 150,000(6) 3.3% 6.75 5/13/08 636,756 1,613,664
30,000(7) 0.7% 4.75 8/6/08 89,617 227,108
150,000(8) 3.3% 4.13 5/13/08 389,129 986,128
30,000(9) 0.7% 4.13 8/6/08 77,826 197,226
15,000(10) 0.3% 5.25 2/26/09 49,525 125,507
Michael Hedger.......................... 50,000(11) 1.1% 4.00 6/9/08 125,779 318,749
70,000(12) 1.5% 4.13 2/10/08 181,593 460,193
30,000(13) 0.7% 4.13 4/25/07 77,826 197,226
12,000(14) 0.3% 4.13 9/10/06 31,130 78,890
David Taber............................. 30,000(15) 0.7% 4.75 8/6/08 89,617 227,108
100,000(16) 2.2% 4.13 9/5/07 259,419 657,419
50,000(17) 1.1% 4.13 2/10/08 129,710 328,709
</TABLE>
- ------------------------
(1) Based on an aggregate of 4,537,870 options granted in the 1999 fiscal year,
including grants repriced on August 24, 1998.
(2) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date or through a
cashless exercise procedure involving a same-day sale of the purchased
shares. The Company may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased
shares, together with any federal and state income tax liability incurred
by the optionee in connection with such exercise.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
10-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
grants made to the executive officers.
(4) These options vest ratably over 36 months commencing on June 9, 1998,
except that no part of the option is exercisable until June 9, 1999.
(5) These options vest ratably over 48 months commencing on April 25, 1997; the
options were repriced August 24, 1998 and were not exercisable until May
24, 1999.
(6) These options, granted May 13, 1998, were cancelled at the time of
repricing on August 24, 1998.
(7) These options, granted August 6, 1998, were cancelled at the time of
repricing on August 24, 1998.
12
<PAGE>
(8) These options vest ratably over 48 months commencing on May 11, 1998,
except that no part of the option is exercisable until May 11, 1999; the
options were repriced August 24, 1998 and were not exercisable until May
24, 1999.
(9) These options vest ratably over 36 months commencing on August 6, 1998,
except that no part of the option is exercisable until August 6, 1999; the
options were repriced August 24, 1998 and were not exercisable until May
24, 1999.
(10) These options vest ratably over 48 months commencing on February 26, 1999.
(11) These options vest ratably over 36 months commencing on June 9, 1998,
except that no part of the option is exercisable until June 9, 1999.
(12) These options vest ratably over 36 months commencing on February 10, 1998,
except that no part of the option is exercisable until February 10, 1999;
the options were repriced August 24, 1998 and were not exercisable until
May 24, 1999.
(13) These options vest ratably over 48 months commencing on April 25, 1997;
the options were repriced August 24, 1998 and were not exercisable until
May 24, 1999.
(14) These options vest ratably over 60 months commencing on September 10,
1996; the options were repriced August 24, 1998 and were not exercisable
until May 24, 1999.
(15) These options vest ratably over 36 months commencing on August 6, 1998,
except that no part of the option is exercisable until August 6, 1999.
(16) These options vest ratably over 48 months commencing on September 5, 1997,
except that no part of the option is exercisable until September 5, 1998;
the options were repriced August 24, 1998 and were not exercisable until
May 24, 1999.
(17) 50% of these options vest on February 10, 1999, and the remaining options
vest ratably over 24 months commencing February 10, 1999.
13
<PAGE>
The following table sets forth information concerning option exercises in
fiscal 1999 and option holdings as of the end of fiscal 1999 with respect to
each of the Named Officers. No stock appreciation rights were outstanding at the
end of that year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE
REALIZED NUMBER OF SECURITIES VALUE OF UNEXERCISED
(MARKET PRICE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES AT EXERCISE OPTIONS AT FY-END(#) AT FY-END($)(2)
ACQUIRED ON LESS EXERCISE --------------------------------- ---------------------------------
NAME EXERCISE(#) PRICE)(1)($) EXERCISABLE(3) UNEXERCISABLE(3) EXERCISABLE(3) UNEXERCISABLE(3)
- ------------------------- ----------- ------------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Martin J. Sprinzen....... 179,685 607,732 -- 285,937 -- 465,164
Paul Butterworth......... -- -- 148,166 86,459 420,778 162,109
Bob L. Corey............. -- -- 313 194,687 -- 90,000
Michael Hedger........... 80,875 229,924 -- -- -- --
David Taber.............. -- -- 64,584 115,416 32,292 42,708
</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
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 Company's Common Stock at fiscal year-end
($4.63) less the exercise price payable for such shares.
(3) Certain of the options listed in the table are immediately exercisable. Any
shares purchased under such options before they have vested will be subject
to repurchase by the Company at the original exercise price per share upon
the optionee's cessation of service. The remaining options listed in the
table become exercisable in installments.
PROPOSAL NO. 2
AMENDMENT TO 1996 STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders will be asked to consider
and vote upon a proposal to amend the Forte Software, Inc. 1996 Stock Option
Plan (the "1996 Plan") to increase the number of shares available for issuance
by 800,000.
The following summary of the 1996 Plan is qualified, in its entirety, by
reference to the 1996 Plan. Copies of the text of the 1996 Plan may be obtained
by a stockholder upon written request to the Secretary of the Company at the
executive offices in Oakland, California.
SHARES RESERVED FOR GRANTS. The 1996 Plan was adopted by the Board of
Directors and approved by the stockholders in January 1996. Originally,
4,860,185 shares of Common Stock were authorized for issuance under the 1996
Plan. If Proposal No. 2 is approved, this number will be increased to 5,660,185
shares. Shares of Common Stock subject to outstanding options that expire or
terminate prior to exercise will be available for future issuance under the 1996
Plan. As of May 31, 1999, options covering 2,565,354 shares were outstanding
under the Plan, and 552,895 shares remained available for future option grants.
The expiration dates for these options range from 2005 to 2009.
14
<PAGE>
ELIGIBILITY. Under the 1996 Plan, employees (including officers) and
consultants may, at the discretion of the plan administrator, be granted options
to purchase shares of Common Stock. Non-employee members of the Board of
Directors are eligible solely for automatic option grants under the 1996 Plan,
as described below.
ADMINISTRATION. The 1996 Plan is administered by the Compensation Committee
of the Board. The Compensation Committee has complete discretion to determine
who is to receive option grants, the number of shares subject to each grant, the
status of any granted option as either an incentive option or a non-statutory
option under the Federal tax laws, the vesting schedule to be in effect for each
option grant and the term for which each granted option is to remain
outstanding. In no event, however, may any one participant in the 1996 Plan
acquire shares of Common Stock under the 1996 Plan in excess of two million
shares or, if less, 50% of the total share reserve. The Compensation Committee
also has the authority to effect, from time to time, the cancellation of
outstanding options under the 1996 Plan in return for the grant of new options
for the same or a different number of option shares with an exercise price per
share based upon the fair market value of the Common Stock on the new grant
date.
EXERCISE PRICE. The minimum exercise price of an incentive option is 100%
of the fair market value of the underlying shares on the grant date, and the
minimum exercise price of a non-statutory option is 85% of the fair market value
of the shares on the grant date. The exercise price may be paid in cash or in
outstanding shares of Common Stock. Options may also be exercised through the
same-day sale of the purchased shares. The Compensation Committee may permit the
optionee to pay the exercise price through a promissory note payable in
installments over a period of years. The amount financed may include any Federal
or state income and employment taxes incurred by reason of the option exercise.
STOCK APPRECIATION RIGHTS. Options granted under the 1996 Plan may include
a limited stock appreciation right. Such a right provides that, upon the
acquisition of 50% or more of the Company's outstanding voting stock pursuant to
a hostile tender offer, such option, if outstanding for at least six months,
will automatically be cancelled in exchange for a cash distribution based upon
the tender offer price. Options granted under the 1996 Plan may also include a
regular stock appreciation right. Such a right provides that such option may be
cancelled in exchange for a distribution in cash or stock based upon the fair
market value of the underlying shares, subject to the approval of the
Compensation Committee.
ACCELERATED VESTING. In the event that the Company is acquired by merger,
consolidation or asset sale, the shares of Common Stock subject to each option
outstanding at the time under the 1996 Plan will immediately vest in full,
except to the extent that the Company's repurchase rights with respect to those
shares are to be assigned to the acquiring entity, and options will accelerate
to the extent not assumed by the acquiring entity. The Compensation Committee
also has discretion to provide for full or partial acceleration of one or more
outstanding options under the 1996 Plan and the vesting of shares subject to
outstanding options upon the occurrence of certain hostile tender offers. Such
accelerated vesting may be conditioned upon the subsequent termination of the
affected optionee's service.
AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. Under the automatic grant
program, each non-employee director will receive an automatic option grant for
15,000 shares of Common Stock at the time of joining the Board. In addition, at
each annual stockholders' meeting, each non-employee director will automatically
be granted an option to purchase 3,000 shares of Common Stock, provided such
individual has served on the Board for at least six months prior to such
meeting. Each option will have an exercise price equal to the fair market value
of the Common Stock on the automatic grant date and a maximum term of 10 years,
subject to earlier termination if the optionee's Board service ends.
The option will be immediately exercisable for all of the shares, but the
shares will be subject to repurchase at the original cost. The repurchase right
will lapse and the optionee will vest in the initial grant in a series of 48
monthly installments over the optionee's period of Board service, beginning on
the grant date. The optionee will vest in the annual grant in a series of 24
monthly installments beginning on the
15
<PAGE>
grant date. However, vesting of the shares will automatically accelerate upon
(a) an acquisition of the Company by merger, consolidation or asset sale, (b) a
hostile take-over of the Company effected by a tender offer for more than 50% of
the outstanding voting stock or a proxy contest for Board membership or (c) the
death or disability of the optionee while serving as a Board member. In the
event that more than 50% of the Company's outstanding voting stock is acquired
pursuant to a hostile tender offer, each automatic option grant that has been
outstanding for at least six months may be surrendered to the Company in return
for a cash distribution from the Company based upon the tender offer price per
share of Common Stock.
AMENDMENT OF PLAN. The Board may amend or modify the 1996 Plan at any time.
The 1996 Plan terminates upon the earliest of (a) January 31, 2006, (b) the date
on which all shares available for issuance under the 1996 Plan have been issued
pursuant to the exercise of the options granted under the Plan or (c) the
termination of all outstanding options in connection with certain corporate
transactions. Upon a termination, all options then outstanding will remain in
effect in accordance with their terms.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS. The following is a general
description of certain federal income tax consequences of the 1996 Plan. This
description does not purport to be complete.
Neither the optionee nor the Company incurs any federal tax consequences as
a result of the grant of an option. The optionee has no taxable income upon
exercising an incentive stock option (except that the alternative minimum tax
may apply), and the Company receives no deduction when an incentive stock option
is exercised. Upon exercising a nonstatutory stock option, the optionee
generally must recognize ordinary income equal to the "spread" between the
exercise price and the fair market value of Common Stock on the date of
exercise; the Company ordinarily will be entitled to a deduction for the same
amount. In the case of an employee, the option spread at the time a nonstatutory
stock option is exercised is subject to income tax withholding, but the optionee
generally may elect to satisfy the withholding tax obligation by having shares
of Common Stock withheld from those purchased under the nonstatutory stock
option. The tax treatment of a disposition of option shares acquired under the
Plan depends on how long the shares have been held and on whether such shares
were acquired by exercising an incentive stock option or a nonstatutory stock
option. The Company is not entitled to a deduction in connection with a
disposition of option shares, except in the case of a disposition of shares
acquired under an incentive stock option before the applicable incentive stock
option holding periods have been satisfied.
If the exercisability of an option or stock appreciation right is
accelerated as a result of a change of control, all or a portion of the value of
the option or stock appreciation right at that time may be a parachute payment
for purposes of the excess parachute provisions of the Code. Those provisions
generally provide that if parachute payments equal or exceed three times an
employee's average compensation for the five tax years preceding the change of
control, the Company loses its deduction and the recipient is subject to a 20%
excise tax with respect to the amount of the parachute payments in excess of one
times such average compensation.
NEW PLAN BENEFITS. Awards under the 1996 Plan are discretionary. Therefore,
it is not possible to determine the benefits that will be received in the future
by participants in the 1996 Plan. To date, no grants have been made under the
1996 Plan with respect to the additional 800,000 shares that are subject to the
approval of Proposal No. 2.
RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE 1996 STOCK OPTION PLAN.
16
<PAGE>
PROPOSAL NO. 3
AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, the Company's stockholders will be asked to consider
and vote upon a proposal to amend the Forte Software, Inc. Employee Stock
Purchase Plan (the "Purchase Plan") to increase the number of shares available
for issuance by 200,000.
The Purchase Plan was adopted by the Board of Directors and approved by the
stockholders in January 1996. 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 Internal Revenue
Code (the "Code"). The Company also maintains the International Employee Stock
Purchase Plan ("International Purchase Plan"), pursuant to which eligible
individuals employed outside the United States by one of the Company's foreign
subsidiaries may purchase shares of Common Stock.
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 Oakland, 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 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 Compensation
Committee of the Board. 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 book account.
SHARES AND TERMS. The stock issuable under the Purchase Plan is the
Company's authorized but unissued or reacquired Common Stock. The maximum number
of shares of Common Stock that may be issued in the aggregate under the Purchase
Plan and the International Purchase Plan is 900,000 (including the 200,000
shares subject to this proposal), adjusted as described in the "Adjustment"
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
400 employees (including 4 executive officers) were eligible to participate in
the Purchase Plan as of May 31, 1999.
OFFERING PERIODS. The Purchase Plan is implemented by offering periods that
generally have a duration of 24 months; each offering period is comprised of a
series of one or more successive purchase
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periods, which will have a duration of six months. The first offering period
began on the date of execution of the underwriting agreement in connection with
the Company's initial public offering and ended on April 30, 1998; the next
offering period commenced on May 1, 1998 and will end on the last business day
in April 2000, unless terminated earlier. The Committee in its discretion may
vary the beginning date and ending date of the offering periods, provided that
no offering period may exceed 24 months in length, except for the initial
offering period.
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 (a) 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 (b) 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 (a) 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 System
National Market System. The market value of the Common Stock, as reported on The
Nasdaq National Market as of May 28, 1999, was $5.75 per share.
LIMITATIONS. The plan imposes certain limitations upon a participant's
rights to acquire Common Stock, including the following:
1. 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 five percent 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.
2. In no event will a participant be permitted to purchase more than
500 shares on any one purchase date.
3. 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 will 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, 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 Company 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 Company.
The participant will receive a 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"
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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 OR CHANGE TO PAYROLL DEDUCTIONS. A purchase right will
terminate at the end of the offering period or earlier if (a) the participant
terminates employment, and then any payroll deductions that the participant may
have made with respect to a terminated purchase right will be refunded, or (b)
the participant elects to withdraw from the Purchase Plan. Any payroll
deductions that the participant may have made with respect to a terminated
purchase right under clause (b) will be refunded unless the participant elects
to have the funds applied to the purchase of shares on the next purchase date.
He or she may decrease his or her deductions once during a purchase period.
AMENDMENT OR TERMINATION. The Purchase Plan will continue in effect until
the earliest of (a) the last business day in October 2006, (b) the date on which
all shares available for issuance under the Purchase Plan have been issued or
(c) 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 (a) alter the purchase price formula so as to reduce the purchase price
payable for shares under the Purchase Plan, (b) materially increase the number
of shares issuable under the Purchase Plan or the maximum number of shares
purchasable per participant, or (c) 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 (a) 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 (b) 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 the (a) 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
(b) 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 (a) amount will in no event
be less 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 will 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.
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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.
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 are 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 on 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 200,000 shares for which approval is requested.
RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN.
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PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of Ernst &
Young LLP as the Company's independent public accountants for the fiscal year
ending March 31, 2000. In the event the stockholders fail to ratify the
appointment, the Board of Directors will reconsider its selection. Even if the
appointment is ratified, the Board of Directors, in its discretion, may direct
the appointment of a different independent accounting firm at any time during
the year if the Board of Directors feels that such a change would be in the
Company's and its stockholders' best interests. Representatives of Ernst & Young
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 ERNST & YOUNG LLP TO SERVE AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Certificate of Incorporation limits the liability of its
directors for monetary damages arising from a breach of their fiduciary duty as
directors, except to the extent otherwise required by the Delaware General
Corporation Law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
officers and directors containing provisions that may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors' and
officers' insurance if available on reasonable terms.
During the fiscal year ended March 31, 1999, the Company loaned Martin J.
Sprinzen, the Company's President and Chief Executive Officer, a total of
$1,600,000. Of this amount, $1,000,000 was repaid during fiscal 1999. This
full-recourse debt is collateralized at 140% of the loan value by shares of
Common Stock of the Company held by Mr. Sprinzen. The loan is due and payable to
the Company in August 2000 and accrues interest at the rate of 7.5% per annum.
As of March 31, 1999, the total outstanding debt plus accrued and unpaid
interest was $700,000.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Board of Directors, 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 transactions in the Common
Stock and their Common Stock holdings for the fiscal year ending March 31, 1999
and (ii) the written representations received from one or more of such persons
that no annual Form 5 reports were required to be filed by them for the 1999
fiscal year, 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.
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FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S FORM 10-K REPORT FOR FISCAL 1999, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO FORTE SOFTWARE, INC.,
1800 HARRISON STREET, 7TH FLOOR, OAKLAND, CALIFORNIA 94612, ATTN: MARY
LLEWELLYN, INVESTOR RELATIONS.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals that are intended to be presented at the 2000 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 April 28, 2000 in order to be included. Such stockholder proposals should
be addressed to Forte Software, Inc.
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/ BOB L. COREY]
Bob L. Corey
SECRETARY
Oakland, California
July 22, 1999
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.
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DETACH HERE
PROXY
FORTE SOFTWARE, INC.
ANNUAL MEETING OF STOCKHOLDERS, AUGUST 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FORTE SOFTWARE, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held on August 18, 1999
and the Proxy Statement and appoints Martin J. Sprinzen and Bob L. Corey, and
each of them, the Proxy of the undersigned, with full power of substitution,
to vote all shares of Common Stock of Forte Software, Inc. (the "Company")
which the undersigned is entitled to vote, either on his or her own behalf
or on behalf of any entity or entities, at the Annual Meeting of Stockholders
to be held at the Lakeview Club, 300 Lakeside Drive, 28th Floor, Oakland,
California 94612 on Wednesday, August 18, 1999, at 11:00 a.m., local time and
at any adjournment or postponement thereof (the "Annual Meeting"), with the
same force and effect as the undersigned might or could do if personally
present thereat. The shares represented by this Proxy shall be voted in the
manner set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
<PAGE>
DETACH HERE
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS a vote FOR each of the nominees listed
below and a vote FOR the other proposals. This Proxy, when properly executed,
will be voted as specified below. This Proxy will be voted For the election
of the nominees listed below and FOR the other proposal if no specification
is made.
1. To elect the following directors to serve for a term ending upon the 2000
Annual Meeting of Stockholders or until their successors are elected and
qualified:
NOMINEES: Martin J. Sprinzen, William H. Younger, Jr., Thomas A. Jermoluk,
Alston Gardner and Bob L. Corey
FOR ALL NOMINEES / / / / WITHHELD FROM ALL NOMINEES
/ /_________________________________________________
For all nominees, except for any nominee(s) whose
name is written in the space provided above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder by 800,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve an amendment to the Company's Employee Stock Purchase Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder by 200,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
4. To ratify the appointment of Ernst & Young LLP as the Company's
Independent auditors for the fiscal year ending March 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
5. To transact such other business as may properly come before the Annual
Meeting and at any adjournment or postponement thereof.
Please sign your name and date this Proxy.
Signature:________________ Date:______ Signature:________________ Date:______
