CYBERMEDIA INC, DEF 14A, 1998-04-30

CYBERMEDIA INC
DEF 14A, 1998-04-30
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<PAGE> 1

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

[X] Filed by the Registrant
[ ] 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 Section 240.14a-11(c) or Section
240.14a-12 Section 240.14a-11(c) or Section 240.14a-12

CYBERMEDIA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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: N/A
--------

(2) Aggregate number of securities to which transaction applies: N/A
-----------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
------------------------------------

(4) Proposed maximum aggregate value of transaction: N/A
-----------------------

(5) Total fee paid: N/A
--------------------------------------------------------

[ ] 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: N/A
------------------------------------------------
(2) Form, Schedule, or Registration Statement No.: N/A
-------------------------
(3) Filing Party: N/A
----------------------------------------------------------
(4) Date Filed: N/A
-----------------------------------------------------------

<PAGE> 2

LOGO

MR. KANWAL REKHI
CHAIRMAN OF THE BOARD
AND
CHIEF EXECUTIVE OFFICER May 6, 1998

Dear Stockholder,

On behalf of our Board of Directors, I cordially invite you to attend
CyberMedia's 1998 Annual Meeting of Stockholders at 10:00 A.M. on Wednesday June
10, at the Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica,
California.

Our business will include electing four directors, all of whom are present
CyberMedia directors, ratifying the selection of independent public accountants,
and considering a proposal to approve amendments to the 1996 Director Option
Plan to enhance our ability to attract and retain highly qualified new board
members.

These matters are described in detail in the attached Proxy Statement for
the meeting.

The directors and officers of CyberMedia look forward to seeing you at the
meeting. As in the past, there will be a report on operations and an opportunity
for questions.

I encourage you to attend the meeting in person. Whether you do so or not,
I hope you will read and vote on the issues outlined in the enclosed Proxy
Statement. By voting, you are not only making sure that your shares are
represented, you are saving CyberMedia the additional expense of soliciting
proxies. For your convenience the proxy card includes instructions for mail-in,
telephonic or internet voting. Please note that you may vote in person at the
meeting even if you have previously voted the proxy. Whether you vote in person
or by proxy your vote will be kept confidential.

Sincerely yours,

LOGO
<PAGE> 3

CYBERMEDIA, INC.
2850 OCEAN PARK BLVD., SUITE 100
SANTA MONICA, CALIFORNIA 90405
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1998

MAY 6, 1998

TO THE STOCKHOLDERS OF CYBERMEDIA, INC.:

The Annual Meeting of Stockholders (the "Annual Meeting") of CyberMedia,
Inc. (the "Company") will be held on June 10, 1998, at 10:00 a.m., at the
Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica, California. 90401,
for the following purposes:

1. To elect four directors.

2. To ratify the selection of KPMG Peat Marwick, LLP as the Company's
independent auditors for the year ending December 31, 1998.

3. To consider and act upon a proposal to approve amendments to the
Company's 1996 Director Option Plan.

4. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

Only holders of record of the Common Stock at the close of business on
April 20, 1998 will be entitled to notice of and to vote at the Annual Meeting.
Please vote by telephone, through the internet or by signing, dating and mailing
the enclosed proxy card, so that your shares may be represented at the Annual
Meeting if you are unable to attend and vote in person.

Sincerely,

Alexander S. Klyce
Secretary
<PAGE> 4

CYBERMEDIA, INC.
2850 OCEAN PARK BLVD., SUITE 100
SANTA MONICA, CALIFORNIA 90405
------------------------

PROXY STATEMENT
------------------------

ANNUAL MEETING OF STOCKHOLDERS
May 6, 1998

This Proxy Statement is being furnished to the Stockholders (the
"Stockholders") of CyberMedia, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors for use at
the Annual Meeting of Stockholders (the "Annual Meeting") of the Company to be
held on June 10, 1998 and at any adjournments thereof.

At the Annual Meeting, the Stockholders will be asked: 1) to elect four
directors, 2) to ratify the selection of KPMG Peat Marwick, LLP as the Company's
independent auditors for the year ended December 31, 1998, 3) to consider and
act upon a proposal to approve amendments to the Company's 1996 Director Option
Plan, and 4) to transact such other business as may properly come before the
Annual Meeting or any adjournments of the Annual Meeting.

The Board of Directors has fixed the close of business on April 20, 1998 as
the record date for the determination of the holders of Common Stock entitled to
notice of and to vote at the Annual Meeting. Each such Stockholder will be
entitled to one vote for each share of Common Stock ("Common Share") held on all
matters to come before the Annual Meeting and may vote 1) in person, or via 2) a
toll-free telephone call from the U.S. and Canada, 3) the internet or 4) by
proxy authorized in writing. The telephone and internet voting procedures are
designed to authenticate stockholders' identities, to allow stockholders to vote
their shares and to confirm that their instructions have been properly recorded.
If your shares are held in the name of a bank or broker, you may be able to vote
electronically or by telephone; follow the instructions on the form you receive
from your bank or broker.

The Company has been advised by counsel that the procedures which have been
put in place are consistent with the requirements of applicable law. Specific
instructions to be followed by any registered shareholder interested in voting
via telephone or the internet are set forth on the enclosed proxy card.

This Proxy Statement and the accompanying form of proxy are first being
sent to holders of the Common Shares on or about May 6, 1998.

THE ANNUAL MEETING

DATE, TIME AND PLACE

The Annual Meeting will be held on June 10, 1998 at 10:00 a.m., local time,
at the Miramar Sheraton Hotel, 101 Wilshire Boulevard, Santa Monica, California
90401. The Company's telephone number is (310) 581-4700.

RECORD DATE AND SHARES ENTITLED TO VOTE

Stockholders of record at the close of business on April 20, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were 12,773,348 Common Shares outstanding and entitled
to vote, with each share entitled to one vote.

VOTING AND REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person. A stockholder who can vote
electronically or by telephone
<PAGE> 5

can revoke his or her proxy by voting his or her proxy in accordance with the
instructions included with the stockholders materials.

PROXY SOLICITATION

Proxies are being solicited by the Company. The cost of this solicitation
will be borne by the Company. The Company may reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited by certain of the Company's directors, officers, and regular
employees, without additional compensation, personally or by telephone or
telegram.

QUORUM; ABSTENTIONS; BROKER NON-VOTES

The Company's Bylaws provide that stockholders holding a majority of the
outstanding Common Shares of the Company entitled to vote on the Record Date and
represented by person or by proxy shall constitute a quorum at meetings of
stockholders. Shares that are voted "FOR," "AGAINST" or "WITHHELD" on a matter
are treated as being present at the meeting for purposes of establishing a
quorum and are also treated as "entitled to vote on the subject matter" (the
"Votes Cast") at the Annual Meeting with respect to such matter.

While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business and the total number of Votes Cast with
respect to a particular matter (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, with the exception of the proposal for
the election of directors, abstentions will have the same effect as a vote
against the proposal. Because directors are elected by a plurality vote,
abstentions in the election of directors have no impact once a quorum exists.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether a matter has been approved. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company that are intended to be presented
at the 1999 Annual Meeting of Stockholders must be received by the Company no
later than January 7, 1999 and must otherwise be in compliance with applicable
laws and regulations in order to be considered for inclusion in the proxy
statement and form of proxy related to that meeting.

ELECTION OF DIRECTORS

At the Annual Meeting, four directors are to be elected to serve until the
next Annual Meeting or until their successors are elected and qualified. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the election of the four nominees named below, all of whom are presently
directors of the Company. Each nominee has consented to be named a nominee in
this Proxy Statement and to continue to serve as a director if elected. Should
any nominee become unable or decline to serve as a director or should additional
persons be nominated at the meeting, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
nominees listed below as possible (or, if new nominees have been designated by
the Board of Directors, in such a manner as to elect such nominees) and the
specific nominees to be voted for will be determined by the proxy holders. The
Company is not aware of any reason that any nominee will be unable or will
decline to serve as a director. There are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
he is or was to be selected as a director or officer of the Company.

2
<PAGE> 6

The names of the nominees and certain information about them are set forth
below:

<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
--------------- ---- -------- --------
<S> <C> <C> <C>
Suhas Patil(1)....................... 53 Director 1995
Ronald S. Posner(1)(2)(3)............ 55 Director 1995
Kanwal Rekhi(2)(3)................... 50 Chairman of the Board and Chief Executive 1995
Officer
James R. Tolonen(2)(3)............... 48 Director, President and Chief Operating 1996
Officer
</TABLE>

- ---------------
(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

(3) Member of the Executive Committee.

The principal occupation of each of the Board members during the past five
years is set forth below. There is no family relationship between any director
or executive officer of the Company.

Dr. Suhas Patil has served as a director of the Company since September
1995. Since February 1984, Mr. Patil has served as Chairman of the Board of
Cirrus Logic, Inc., which he founded, a manufacturer of advanced integrated
circuits for personal computing, communications, industrial and consumer
markets. Dr. Patil holds a B. Tech. and a M.S. in Electronics and Electrical
Communication from the Indian Institute of Technology of Kharagpur, India and a
Sc.D. in Electrical Engineering from Massachusetts Institute of Technology.

Mr. Ronald S. Posner has served as a director of the Company since
September 1995. Since June 1997, he has served as Chairman of PS Capital, a
venture capital fund. From 1994 to 1996, he was Chairman of StarPress
Multimedia, Inc., a CD-ROM publishing company that merged with Graphix Zone in
July 1996. From September 1990 to October 1993, he served as Chairman of the
Board and Chief Executive Officer of WordStar International, Inc., a PC software
company. Mr. Posner holds a B.S. in Mathematics from Rensselaer Polytechnic
Institute and an M.B.A. from Harvard University.

Mr. Kanwal Rekhi has served as a director of the Company since September
1995 and has served as Chairman of the Board since February 1998. From March
1998 to April 1998, Mr. Rekhi served as Acting President, and in April 1998, Mr.
Rekhi became Chief Executive Officer of the Company. From June 1989 to January
1995, Mr. Rekhi served as an Executive Vice President and Chief Technology
Officer of Novell, Inc. ("Novell"), a computer network and software company. Mr.
Rekhi also served as a director of Novell from June 1989 to September 1995. Mr.
Rekhi currently serves as a director of Exodus Communications Inc., an internet
service provider. Mr. Rekhi holds a B.Tech from the Indian Institute of
Technology of Bombay, India and an M.S. in Electrical Engineering and two
honorary doctorate degrees from Michigan Technological University.

Mr. James R. Tolonen has served as a director of the Company since August
1996. In April 1998, Mr. Tolonen became President and Chief Operating Officer of
the Company. From June 1989 to April 1998, he has served as a Senior Vice
President and Chief Financial Officer of Novell. Mr. Tolonen also served as
Chief Financial Officer of Excelan, Inc., a networking company, from July 1983
through June 1989 before it was acquired by Novell. Mr. Tolonen is a Certified
Public Accountant and holds both a B.S. in Mechanical Engineering and an M.B.A.
from the University of Michigan. Mr. Tolonen is a member and two-term past Chair
of the Issuer Affairs Committee of the Nasdaq.

VOTE REQUIRED

Each stockholder is entitled to one vote for each share of Common stock
owned on all matters presented at the Annual Meeting. Stockholders do not have
the right to cumulate votes in the election of directors.

Directors will be elected by a plurality vote of the shares of the Common
Shares present or represented and entitled to vote on this matter at the
meeting. Accordingly, the four candidates receiving the highest number of
affirmative votes of shares represented and voting on this proposal at the
meeting will be elected directors of the Company. Votes withheld from a nominee
and broker non-votes will be counted for purposes of determining the presence or
absence of a quorum but because directors are elected by a plurality vote, will
have no impact once a quorum is present.

3
<PAGE> 7

MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
NOMINEES LISTED ABOVE.

BOARD MEETINGS AND COMMITTEES

The Board of Directors held a total of 9 meetings and took a total of 4
actions by unanimous written consent during the fiscal year ended December 31,
1997. No director serving during such fiscal year attended fewer than 75% of the
aggregate of all meetings of the Board of Directors and the committees of the
Board upon which such director served. The Board of Directors has three
committees, the Audit Committee, the Compensation Committee, and the Executive
Committee.

The Audit Committee of the Board of Directors, which consists of Messrs.
Posner, Rekhi and Tolonen, held 4 meetings during the last fiscal year. The
Audit Committee reviews and advises the Board of Directors regarding the
Company's accounting matters and is responsible for reviewing and recommending
the annual appointment of the independent public accountants, recommending the
engagement of the Company's independent public accountants and the services to
be performed by them, and reviewing and evaluating the accounting principles
being applied to the Company's financial reports.

The Compensation Committee of the Board of Directors, which consists of Mr.
Patil and Mr. Posner, held 1 meeting during the last fiscal year. The
Compensation Committee reviews and advises the Board of Directors regarding all
forms of compensation to be provided to the officers, employees, directors and
consultants of the Company.

The Executive Committee of the Board of Directors, which consists of
Messrs. Rekhi, Posner and Tolonen, held no formal meetings during the last
fiscal year. The Executive Committee is empowered to act for and on behalf of
the Board between Board meetings, subject to the Company's Bylaws, Certificate
of Incorporation and relevant law.

The Board of Directors has no nominating committee but performs such
functions as a full board.

DIRECTOR COMPENSATION

The Company reimburses its directors for the out-of-pocket expenses
incurred in the performance of their duties as directors of the Company. The
Company has not previously paid fees to its directors for attendance at board
meetings. Effective in April, 1998, the Company will pay an annual board fee of
$10,000 to each outside board member. This fee is initially payable for current
outside Board members on May 1, 1998, and then on each anniversary thereof,
subject to continued service as a director of the Company. New outside Board
members will be paid their board fee upon first joining the Board, and then on
each anniversary thereof while they remain on the Board. Outside Board members
will also receive a $1,500 per day stipend for in person attendance at board
meetings or committee meetings, with no more than one stipend per day per member
to be paid. Stipends will be paid within thirty days following the applicable
meeting.

The Company's 1996 Director Option Plan (the "Director Plan") which was
approved by the Board in June 1996 and Stockholders in August 1996, currently
provides for the automatic and nondiscretionary grant of nonstatutory stock
options to nonemployee directors ("Outside Directors) of the Company who are
first elected to the Board after August 1996. A total of 50,000 shares of Common
Stock are reserved for issuance thereunder. Each eligible Outside Director will
automatically be granted an option to purchase 5,000 shares on the date on which
such person first becomes an Outside Director ("First Option") at the fair
market value of the Company's Common Stock on the date of grant. Each First
Option will become exercisable as to one-fourth ( 1/4) of the shares subject to
the option on the first anniversary of the date of grant and as to one-forty-
eighth ( 1/48) of the shares subject to the option each month thereafter,
subject to continued service as an Outside Director. In addition, each eligible
Outside Director will be automatically granted an option to purchase 5,000
shares on December 1 of each year, provided he or she has served on the Board
for at least six months ("Subsequent Option"). Each Subsequent Option shall have
an exercise price equal to the fair market value of the Company's Common Stock
as of the date of grant and shall become exercisable as to one-fourth ( 1/4) of
the shares subject to the Subsequent Option four years and one month after the
date of grant and as to

4
<PAGE> 8

one-forty-eighth ( 1/48) of the shares on the last day of each month thereafter,
subject to continued service as an Outside Director. As of December 31, 1997, no
shares subject to options have been granted under the Director Plan and 50,000
shares of Common Stock remain available for future issuance.

Under the proposal listed in this proxy statement as item 3., the Director
Plan would be amended to enhance the Company's ability to attract and retain
highly qualified new board members. The changes proposed would apply only to
Outside Directors appointed to the board after April 30, 1998. See page 13 for a
complete description of the proposed amendment.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Mr. Patil and Mr. Posner. During
1997 Mr. Warrier also participated in discussions regarding salaries and
incentive compensation for all employees (including officers) and consultants to
the Company, except that Mr. Warrier was excluded from discussions regarding his
own salary and incentive compensation.

5
<PAGE> 9

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS
AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Shares as of the Record Date by: (i) each
persons (or group of affiliated persons) known to the Company to be the
beneficial owner of more than 5% of the Company's Common Shares, (ii) each
director of the Company, (iii) each of the Company's executive officers named in
the Summary Compensation Table appearing herein, and (iv) all directors and
executive officers of the Company as a group:

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
-----------------------
BENEFICIAL OWNER NUMBER PERCENT(1)
---------------- --------- ----------
<S> <C> <C>
Suhas Patil(2).............................................. 1,948,729 15.3%
c/o Cirrus Logic, Inc.
3100 West Warren Avenue
Fremont, CA 94538
Pilgrim Baxter & Associates, Ltd.(3)........................ 1,358,200 10.6%
825 Duportail Rd
Wayne, PA 19087
Unni S. Warrier(4).......................................... 831,964 6.2%
c/o CyberMedia, Inc.
3000 Ocean Park Blvd., Suite 2001
Santa Monica, CA 90405
Leonard L. Backus(5)........................................ 4,281 *
Jeffrey W. Beaumont(6)...................................... 78,167 *
Robert Davis................................................ -- *
Kanwal Rekhi(7)............................................. 291,375 2.3%
Ronald S. Posner(8)......................................... 264,200 2.1%
James R. Tolonen(9)......................................... 32,812 *
All Directors and Executive Officers as a group (8
persons)(10).............................................. 3,406,362 26.7%
</TABLE>

- ---------------
* Less than 1%

(1) Percent Ownership is based on 12,773,348 Common Shares outstanding as of
April 20, 1998. Unless otherwise indicated below, the persons and entities
named in the table have sole voting and sole investment power with respect
to all shares beneficially owned, subject to community property laws where
applicable. Common Shares subject to options that are currently exercisable
or exercisable within 60 days of the Record Date are deemed to be
outstanding and to be beneficially owned by the person holding such options
or warrants for the purpose of computing the percentage ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.

(2) Includes 75,000 shares of Common Stock registered to Personal Urban
Transport Corporation of which Mr. Patil is one of two directors. Mr. Patil
disclaims beneficial ownership as to these shares. Mr. Patil is the
individual owner of 1,723,968 shares subject to the community property laws
of the State of California with respect to the Reporting Persons's spouse,
Jayshree Patil. Additionally, 149,761 shares of Common Stock are held
jointly with Mayashree Patil. Includes 28,125 shares subject to the
Company's repurchase option which lapses over time.

(3) This information was obtained from filings made with the Securities and
Exchange Commission pursuant to Section 13(g) of the Securities Exchange
Act of 1934 ("Exchange Act"). Of such 1,358,200, shares, Pilgrim Baxter &
Associates, Ltd. has sole voting power over 1,333,500 shares, shared voting
power over 1,358,200 shares and sole dispositive power over 1,358,200
shares.

(4) Includes 80,000 shares held by Unnikrishnan S. Warrier, Trustee of the Anne
Lam 1996 Children's Trust UTA dated August 26, 1996, of which Mr. Warrier
disclaims beneficial ownership. Includes 156,508 shares subject to options
that are currently exercisable or exercisable within 60 days of the Record
Date.

6
<PAGE> 10

(5) Includes 4,167 shares subject to options that are currently exercisable or
exercisable within 60 days of the Record Date.

(6) Includes 75,375 shares subject to options that are currently exercisable or
exercisable within 60 days of the Record Date.

(7) Represents 37,836 shares held by Kanwal Rekhi, Ann Holt Rekhi and Navinder
Jain, Trustees of the Benjamin Rekhi Trust dated 12/15/89, 37,837 shares
held by Kanwal Rekhi, Ann Holt Rekhi and Navinder Jain, Trustees of the
Raj-Ann Kaur Rekhi Trust dated 12/15/89 and 208,559 shares held by Kanwal
Rekhi as Trustee of the Rekhi Family Trust dated 12/15/89 and 7,143 shares
held by Mr. Rekhi. Includes 28,125 shares subject to the Company's
repurchase option which lapses over time.

(8) Includes 28,125 shares subject to the Company's repurchase option which
lapses over time.

(9) Includes 32,812 shares subject to options that are currently exercisable or
exercisable within 60 days of the Record Date.

(10) Includes 268,862 shares subject to outstanding options which are currently
exercisable or exercisable within 60 days of the Record Date as referenced
in footnotes (2) through (9).

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows, as to the Chief Executive Officer and each of
the other most highly compensated executive officers who earned in excess of
$100,000 in annual salary or bonus (the "Named Officers"), information
concerning compensation awarded to, earned by or paid for services to the
Company in all capacities during 1997, 1996 and 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unni S. Warrier.................... 1997 150,000 169,228 229,000 --
President and Chief Executive 1996 203,461 150,050 2,053
Officer 1995 123,461 500 1,623
Leonard L. Backus.................. 1997 120,000 44,944 -- --
Vice-President, International 1996 76,154 33,120 50,000 2,851
Sales and Marketing 1995 -- -- -- --
Jeffrey W. Beaumont................ 1997 120,000 5,373 16,000 --
Chief Financial Officer 1996 100,000 -- -- --
1995 4,046 -- 75,000 --
Robert Davis....................... 1997 76,033 34,447 100,000 --
Vice-President, Marketing 1996 -- -- -- --
1995 -- -- -- --
</TABLE>

7
<PAGE> 11

STOCK OPTION GRANTS AND EXERCISES

The following table sets forth the number and terms of options granted to
the persons named in the Summary Compensation Table during the fiscal year ended
December 31, 1997.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unni S. Warrier.................. 20,000 1.5% 9.00 3/13/07 113,201 286,874
209,000 15.5% 14.75 7/30/07 1,938,725 4,913,110
Leonard L. Backus................ -- -- -- -- -- --
Jeffrey W. Beaumont.............. 16,000 1.2% 9.00 3/13/07 90,561 229,499
Robert Davis..................... 100,000 7.4% 14.75 7/30/97 927,620 2,350,770
</TABLE>

- ---------------
(1) Under rules promulgated by the Securities and Exchange Commission, the
amounts in these two columns represent the hypothetical gain or "option
spread" that would exist for the options in this table based on assumed
stock price appreciation from the date of grant until the end of such
options' ten-year term at assumed annual rates of 5% and 10%. The 5% and 10%
rates of appreciation are specified by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices. The Company does not necessarily
agree that this method properly values an option. Actual gains, if any, on
option exercises are dependent on the future performance of the Company's
Common Stock and overall market conditions and the timing of option
exercises, if any.

The following table provides information concerning option exercises by the
persons named in the Summary Compensation Table during the fiscal year ended
December 31, 1997 and the value of unexercised options at such date.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE (#)(2) ($)(3)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Unni S. Warrier................ -- -- 116,975 262,125 1,126,181 1,140,639
Leonard L. Backus.............. -- -- 20,833 29,167 240,892 337,258
Jeffrey W. Beaumont............ -- -- 53,500 37,500 656,621 551,613
Robert Davis................... -- -- -- 100,000 -- 31,300
</TABLE>

- ---------------
(1) Calculated by determining the difference between the estimated fair market
value of the security underlying the options on the date of exercise and the
exercise price of the options.

(2) The Company has not granted any stock appreciation rights and its stock
plans do not provide for the granting of such rights.

(3) Calculated by determining the difference between the fair market value of
the securities underlying the options at year end ($15.063 per share as of
December 31, 1997) and the exercise price of the options.

8
<PAGE> 12

EMPLOYMENT AGREEMENTS

In April, 1998, the Company entered into employment agreements with each of
Mr. Rekhi and Mr. Tolonen in connection with their appointments as Chief
Executive Officer, and President and Chief Operating Officer, respectively.

The agreements provide, among other things, for annual base salaries of
$275,000 and $250,000 for Messrs. Rekhi and Tolonen, respectively, with bonus
targets of 100% of base salary based upon achievement of performance objectives
and additional sign-on and two subsequent annual bonuses of $356,000, $300,000
and $300,000 for Mr. Rekhi, and $227,500, $200,000 and $200,000 for Mr. Tolonen,
based upon continued employment.

The agreements also provide for the fair market value purchase of 150,000
and 100,000 restricted shares of the Company's common stock by Messrs. Rekhi and
Tolonen respectively, in exchange for full-recourse, interest-bearing notes.
Such shares are subject to a thirty-six month declining repurchase right by the
Company that lapses in the event of certain share price attainment or certain
revenue and profitability achievement.

The agreements also provide for the grant to Mr. Rekhi of an option to
acquire 528,000 shares of the Company's common stock at a $10 per share price,
(a 57% premium over the fair market value on the date of grant); and for the
grant to Mr. Tolonen of an option to acquire 100,000 shares of the Company's
common stock at fair market value on the date of grant, and an option to acquire
306,000 shares at a $10 per share price, (a 57% premium over the fair market
value on the date of grant), all such options vesting over four years.

Certain elements of the salary, bonus, notes, stock option vesting and
lapsing of the Company's repurchase rights, accelerate in the event of
termination either following a change of control or not for cause.

The options and restricted shares granted in connection with these
agreements are not shown in the table of Security Ownership of Certain
Beneficial Owners, Directors, and Management on Page 6 because they were granted
after the record date.

1993 STOCK OPTION PLAN, AS AMENDED

On April 22, 1998 the Board of Directors approved the one-for-one repricing
of stock options granted to optionees who were employees, but not executive
officers ("eligible optionees"), on April 22, 1998. The repricing will be
offered to eligible optionees in exchange for their giving up vesting of 1) six
months, or 2) their length of service as employees of the Company, whichever is
less. The new exercise price of $6.375 per share was the closing sales price and
fair market value of the Company's common stock on the Nasdaq National Market
System on April 21, 1998. The number of stock options potentially affected is
946,627.

9
<PAGE> 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In October 1995, the Company granted options to purchase 75,000 shares
(after the two-for-one reverse stock split which occurred in 1996) of Common
Stock each to Mr. Patil, Mr. Posner and Mr. Rekhi. Such options had a four-year
vesting term but were exercisable immediately, subject to the Company's right to
repurchase which lapsed as the shares vested. These options were exercised by
Mr. Patil, Mr. Posner and Mr. Rekhi, and are included in the table of Security
Ownership of Certain Beneficial Owners, Directors, and Management on page 6.

The Company has entered into indemnification agreements with each of its
directors and officers. These agreements require the Company to indemnify such
individuals to the fullest extent allowed by Delaware law for certain
liabilities to which they may be subject as a result of their affiliation with
the Company.

The Company has a policy whereby all transactions between the Company and
its officers, directors and affiliates will be on terms no less favorable to the
Company than could be obtained from unrelated third parties and will be approved
by a majority of the disinterested members of the Company's Board of Directors.
The Company believes that all transactions set forth above were made on terms no
less favorable to the Company than would have been obtained from unaffiliated
third parties.

REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Exchange Act of 1933, as amended, or the
Securities Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph shall not be incorporated by reference into any such
filings.

GENERAL

The Compensation Committee (the "Committee") of the Board of Directors
establishes the overall executive compensation strategies of the Company and
approves compensation elements for the chief executive officer and other
executive officers. The Committee currently is comprised of two independent,
non-employee members of the Board of Directors, none of whom have interlocking
relationships as defined by the Securities and Exchange Commission. The
Committee has available to it such external compensation advice and data as the
Committee deems appropriate to obtain.

Compensation Philosophy and Relationship of Performance. This report
reflects the Compensation Committee's executive officer compensation philosophy
for the year ended December 31, 1997 as endorsed by the Board of Directors. The
resulting actions taken by the Company are shown in the compensation tables
supporting this report. The Compensation Committee either approves or recommends
to the Board of Directors compensation levels and compensation components for
the executive officers. With regard to compensation actions affecting the Chief
Executive Officer, all of the non-employee members of the Board of Directors are
required to approve all elements of the Chief Executive Officer's compensation.

The Compensation Committee's executive compensation policies are designed
to enhance the financial performance of the Company, and thus stockholder value,
by aligning the financial interests of the key executives with those of
stockholders.

The executive compensation program is viewed in total considering all of
the component parts: base salary, annual performance bonus, benefits and
long-term incentive opportunity in the form of stock options and stock
ownership. The annual compensation components consist generally of equal or
lower base salaries than those of companies within the industry combined with
incentive plans based on the Company's financial performance that can result in
total compensation generally in line with those at comparable companies.
Long-term incentives are tied to stock performance through the use of stock
options. Overall, the intent is to have more significant emphasis on variable
compensation components and less on fixed cost components. The Committee
believes this philosophy and structure are in the best interests of the
stockholders.

10
<PAGE> 14

Executive compensation for fiscal 1997 primarily consisted of base salary
and performance incentives awarded in the form of stock options for such period.

Annual Incentive Arrangements. The Company has adopted a program which
provides annual incentive compensation in the form of cash bonuses to key
employees, including the Named Officers, who by the nature of their positions
are deemed sufficiently accountable to impact directly the financial results of
the Company. The program is approved by the Compensation Committee, whose
members are not eligible to participate in the program.

The Committee believes that key executives should have a significant
proportion of total cash compensation subject to specific strategic and
financial measurements. At the beginning of each fiscal year, or upon an
individual being appointed an executive officer, the Committee sets a target
bonus range for each executive officer expressed as a percentage of the
executive's base salary. Performance goals for purposes of determining annual
incentive compensation are established, which include sales, profitability and
other strategic and financial measurements. Senior management, including the
Named Officers, have the potential to earn significantly higher levels of
incentive compensation if the Company exceeds its targets.

The performance goals established at the beginning of 1997 were based on
several strategic and financial measurements including a target level of
profitability and sales and attainment of certain other objectives.

Stock Options. The Compensation Committee of the Board of Directors
generally determines stock option grants to eligible employees including the
Named Officers. The Committee believes that options granted to management
reinforce the Committee's philosophy that management compensation should be
closely linked with stockholder value. Stock options have been granted to all of
the Company's management and key employees.

Other Compensation Plans. The Company has adopted certain broad-based
employee benefit plans in which all employees, including the Named Officers, are
permitted to participate on the same terms and conditions relating to
eligibility and generally subject to the same limitations on the amounts that
may be contributed or the benefits payable under those plans. Under the
Company's 401(k) Plan, which is a defined contribution plan qualified under
Sections 401(a) and 401(k) of the Code, participants, including the Named
Officers, can contribute a percentage of their annual compensation. Although the
401(k) Plan allows for the Company to make matching contributions, the Company
did not make a matching contribution for participants in 1997.

Mr. Warrier's 1997 Compensation. Compensation for the Chief Executive
Officer aligns with the philosophies and practices discussed above for executive
officers in general. All compensation determinations and stock option grants to
the Chief Executive Officer are required to be reviewed and approved by the
Compensation Committee and then ratified by the Board of Directors.

COMPENSATION COMMITTEE

Suhas Patil
Ronald Posner

11
<PAGE> 15

COMPANY PERFORMANCE

The following graph demonstrates a comparison of cumulative total
stockholder returns, calculated on a dividend reinvestment basis and based upon
an initial investment of $100 in the Company's Common Stock as compared with the
Nasdaq Composite Index and the Nasdaq Computer and Data Processing Index. No
dividends have been declared or paid on the Company's Common Stock during such
period. The stock price performance shown on the graph below is not necessarily
indicative of future price performance. The Company's Common Stock began trading
on the Nasdaq National Market on October 23, 1996. The graph reflects the
Company's stock price performance from the initial public offering through the
end of fiscal 1997.

COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG CYBERMEDIA, INC.,
NASDAQ COMPOSITE INDEX,
AND THE NASDAQ COMPUTER AND DATA PROCESSING INDEX

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) 'CYBERMEDIA, INC.' NASDAQ COMPOSITE NASDAQ COMPUTER
<S> <C> <C> <C>
10/23/96 100.0000 100.0000 100.0000
10/31/96 139.0630 100.0000 100.0000
11/30/96 126.5630 106.1970 107.2200
12/31/96 98.4375 106.0770 105.8990
1/31/97 118.7500 113.6650 115.4570
2/28/97 87.5000 107.3800 106.0940
3/31/97 54.6875 100.3700 98.2522
4/30/97 78.1250 103.5080 111.0740
5/31/97 107.8130 115.2440 123.2930
6/30/97 100.0000 118.7680 125.9960
7/31/97 91.4063 131.3050 139.0800
8/31/97 132.0310 131.1040 135.3700
9/30/97 166.8000 138.8580 137.7810
10/31/97 185.9380 131.6410 134.9260
11/30/97 140.6250 132.2920 138.3490
12/31/97 94.1437 130.2260 130.0340
</TABLE>

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires that directors, certain officers
of the Company and ten percent stockholders file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") as
to the Company's securities beneficially owned by them. Such persons are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms they file.

Based solely on its review of copies of Forms 3 and 4 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(e) and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and any written representations referred to in Item 405(b)(2)(i) of
Regulation S-K

12
<PAGE> 16

stating that no Forms 5 were required, the Company believes that, during the
Last Fiscal Year, all Section 16(a) filing requirements applicable to the
Company's officers, directors and ten percent stockholders were complied with.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors of the Company has selected KPMG Peat Marwick, LLP,
as the Company's independent auditors, to audit the financial statements of the
Company for the current fiscal year ending December 31, 1998, and recommends
that stockholders vote for ratification of such appointment. Representatives of
KPMG Peat Marwick LLP are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.

MANAGEMENT RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK, LLP.

APPROVAL OF THE AMENDMENTS THE 1996 DIRECTOR OPTION PLAN

The 1996 Director Option Plan (the "Director Plan") was adopted by the
Board of Directors in July 1996 and approved by the shareholders in August 1996.
A total of 50,000 shares of Common Stock are currently reserved for issuance
under the Director Plan, of which no options to purchase shares have been
granted, or are issued and outstanding, and options to purchase 50,000 shares
remain available for future grant.

The Director Plan is designed to attract and retain the best available
personnel for service as Outside Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board. An Outside Director is a
Director who is not an employee and is first elected to the Board after the
Director Plan was adopted.

In April 1998, the Board of Directors approved amendments to the Director
Plan to (i) increase the shares reserved for issuance thereunder by 100,000 to a
total of 150,000; (ii) increase the number of shares automatically granted to
each Outside Director appointed to the board after April 30, 1998 by 10,000 to
15,000 shares on the date on which such person first becomes an Outside Director
("First Option"); (iii) limit the automatic grant to each Outside Director of
5,000 shares on December 1 of each year ("Subsequent Option") to only those
Outside Directors appointed to the board after April 30, 1998; and (iv) amend
the vesting provisions of the First Option and the Subsequent Option.

THE FORM OF THE DIRECTOR OPTION PLAN, AS PROPOSED TO BE AMENDED IS ANNEXED
TO THIS PROXY STATEMENT AS ANNEX A.

PLAN SUMMARY

The essential features of the Director Plan, assuming adoption of the
proposed amendments, are outlined below. Capitalized terms have the same
meanings as defined in the Director Plan.

Purpose. The purposes of the Director Plan are to attract and retain the
best available personnel for service as Outside Directors (as defined herein) of
the Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.

Administration. All grants under the Director Plan shall be automatic and
nondiscretionary and shall be made in accordance with the provisions of Section
4.

Eligibility. The Director Plan provides for the grant of Non-Statutory
Stock Options to Outside Directors of the Company. Each Outside Director who
becomes an Outside Director after April 30, 1998, whether through election by
the shareholders of the Company or appointment by the Board to fill a vacancy,
shall be automatically granted an Option to purchase 15,000 Shares (the "First
Option"); provided, however, that an Inside Director who ceases to be an Inside
Director but who remains a Director shall not receive a First Option. Each
Outside Director who becomes an Outside Director after April 30, 1998, whether
through
13
<PAGE> 17

election by the shareholders of the Company or appointment by the Board to fill
a vacancy shall be automatically granted an Option to purchase 5,000 Shares (a
"Subsequent Option") on December 1 of each year provided he or she is then an
Outside Director, and if as of such date, he or she shall have served on the
Board for at least the preceding six (6) months.

Terms of Options. Options granted under the Director Plan have a term of
ten years. Each option is evidenced by a stock option agreement between the
Company and the director to whom such option is granted.

Rule 16b-3. Options granted to Outside Directors must comply with the
applicable provisions of Rule 16b-3 or any successor thereto and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify Plan transactions, and other transactions by Outside Directors that
otherwise could be matched with Plan transactions, for the maximum exemption
from Section 16 of the Exchange Act.

Exercise of the Options. The First Option becomes exercisable as to 1/3 of
the Shares subject to the option on the first anniversary of the date of grant
and as to 1/3 of the Shares each year thereafter, provided that the Optionee
continues to serve as a Director on such dates. Subsequent Options become
exercisable as to 1/12 of the Shares subject to the Subsequent Option two (2)
years and one month after its date of grant and as to 1/12 of the shares on the
last day of each month thereafter, provided that the Optionee continues to serve
as a Director on such dates. An option is exercised by giving written notice of
exercise to the Company, specifying the number of full shares of Common Stock to
be purchased and tendering payment to the Company of the purchase price.

Form of Consideration. The consideration to be paid for shares issued upon
exercise of Options granted under the Director Plan, including the method of
payment, shall consist of cash, check, or shares of Common Stock which, in the
case of shares acquired upon exercise of an Option, have been beneficially owned
for at least six months, with a fair market value on the exercise date equal to
the aggregate exercise price of the shares being purchased. The Company may also
authorize as payment the delivery of a properly executed notice and irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds required to pay the exercise price. The Company may also
authorize payments by any combination for the foregoing methods.

Option Price. The per share exercise price of Options is determined by the
Board of Directors and under the Director Plan is 100% of the fair market value
of the Company's Common Stock on the date of grant. In the event that the date
of grant of the Options is not a trading day, the exercise price per Share shall
be the Fair Market Value on the next trading day immediately following the date
of grant of the Options.

Termination of Continuous Status as a Director. The Director Plan provides
that if the Optionee ceases to serve as a director of the Company, the option
may be exercised within three months after the date he or she ceases to be a
director as to all or part of the Shares that the Optionee was entitled to
exercise at the date of such termination.

Death. In the event of the death of an Optionee, the Option may be
exercised at any time within twelve months after death, but only to the extent
that the Option would have been exercisable at the time of death.

Disability. If an Optionee is unable to continue his or her service as a
Director of the Company as a result of his or her total and permanent
disability, the Option may be exercised at any time within twelve months after
the date of his or her termination, but only to the extent he or she was
entitled to exercise it at the time of such termination.

Nontransferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

Adjustments upon changes in capitalization, dissolution, merger, asset sale
or change of control.

14
<PAGE> 18

issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding Option,
and the number of Shares issuable pursuant to the automatic grant provisions of
Section 4 of the Plan shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an Option.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option has not been previously
exercised, it shall terminate immediately prior to the consummation of such
proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation or the sale of substantially all of the assets of the
Company, the vesting of outstanding Options shall become fully vested and
exercisable, including as to Shares for which such Options would not otherwise
be exercisable. In such event the Board shall notify the Optionee that the
Option shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and upon the expiration of such period the Option shall
terminate.

Amendment and Termination. Except as set forth in Section 4, the Board of
Directors may amend, alter, suspend or discontinue the Director Plan at any
time, but such amendment, alteration, suspension or discontinuation shall not
adversely affect any stock options then outstanding under the Director Plan,
without the participant's consent. To the extent necessary and desirable to
comply with Rule 16b-3 under the Exchange Act, the Company will obtain
shareholder approval of any amendment to the Director Plan in such a manner and
to such a degree as required.

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of the Federal income tax consequences of
transactions under the Director Plan based on Federal securities and income tax
law in effect on January 1, 1998. This summary is not intended to be exhaustive
and does not discuss the tax consequences of a participant's death or provisions
of the income tax laws of any municipality, state or foreign country in which an
optionee may reside.

Options granted under the Director Plan are Non-Statutory Stock Options. An
optionee will not recognize any taxable income at the time he or she is granted
a Non-Statutory Stock Option. However, upon its exercise, the optionee will
recognize ordinary income for tax purposes measured by the excess of the then
fair market value of the shares over the option price. Because the appointee is
a director of the Company, the date of taxation (and the date of measurement of
taxable ordinary income) may be deferred unless the optionee files an election
under Section 83(b) of the Code. Upon resale of such shares by the optionee, any
difference between the sales price and the exercise price, to the extent not
recognized as ordinary income as provided above, will be treated as capital gain
or loss, and will qualify for long-term capital gain or loss treatment if the
shares have been held for more than one year. The Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
Optionee with respect to shares acquired upon exercise of a non-statutory
option.

The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the 1996 Director Plan and does not purport to be complete.
Reference should be made to the applicable provisions of the Code. In addition,
this summary does not discuss the tax consequences of the optionee's death or
the income tax laws of any municipality, state or foreign country in which an
optionee may reside.

The Company intends to register the shares under the Options on a
Registration Statement on Form S-8.

15
<PAGE> 19

REQUIRED VOTE

The amendments of the Director Plan to (i) increase the shares reserved for
issuance thereunder by 100,000 to a total of 150,000; (ii) increase the number
of shares automatically granted to each Outside Director appointed to the board
after April 30, 1998 by 10,000 to 15,000 shares on the date on which such person
first becomes an Outside Director ("First Option"); (iii) limit the automatic
grant to each Outside Director of 5,000 shares on December 1 of each year
("Subsequent Option") to only those Outside Directors appointed to the board
after April 30, 1998; and (iv) amend the vesting provisions of the First Option
and the Subsequent Option, require the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock represented in person or by
proxy and entitled to vote on the proposal, which shares voting affirmatively
must also constitute a majority of the required quorum.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENTS TO THE 1996
DIRECTOR PLAN.

OTHER MATTERS

The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed Proxy to vote the shares they represent as the
Board of Directors may recommend.

By Order of the Board of Directors.

SIG
Kanwal Rekhi
Chairman of the Board and Chief
Executive Officer

Dated: May 6, 1998

16
<PAGE> 20

ANNEX A

CYBERMEDIA, INC.

1996 DIRECTOR OPTION PLAN

1. Purposes of the Plan. The purposes of this 1996 Director Option Plan are
to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

All options granted hereunder shall be nonstatutory stock options.

2. Definitions. As used herein, the following definitions shall apply:

(a) "Board" means the Board of Directors of the Company.

(b) "Code" means the Internal Revenue Code of 1986, as amended.

(d) "Company" means CyberMedia, Inc., a Delaware corporation.

(e) "Director" means a member of the Board.

(f) "Employee" means any person, including officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(h) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

(i) If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation the Nasdaq National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common
Stock shall be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date
of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;

(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a
Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable,
or;

(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Board.

(iv) For purposes of Options granted on the effective date of this
Plan, the Fair Market Value shall be the initial price to the public as set
forth in the final prospectus included within the Registration Statement
filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended for the initial public offering of the Company's Common
Stock.

(i) "Inside Director" means a Director who is an Employee.

(j) "Option" means a stock option granted pursuant to the Plan.

(k) "Optioned Stock" means the Common Stock subject to an Option.

(l) "Optionee" means a Director who holds an Option.

17
<PAGE> 21

(m) "Outside Director" means a Director who is not an Employee and is first
elected to the Board after the adoption of this Plan.

(n) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(o) "Plan" means this 1996 Director Option Plan.

(p) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.

(q) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Internal Revenue Code of 1986.

3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 150,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

4. Administration and Grants of Options under the Plan.

(a) Procedure for Grants. The provisions set forth in this Section 4(a)
shall not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:

(i) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options granted to Outside Directors.

(ii) Each Outside Director who becomes an Outside Director after April 30,
1998, whether through election by the shareholders of the Company or appointment
by the Board to fill a vacancy, shall be automatically granted an Option to
purchase 15,000 Shares (the "First Option"); provided, however, that an Inside
Director who ceases to be an Inside Director but who remains a Director shall
not receive a First Option.

(iii) Each Outside Director who becomes an Outside Director after April 30,
1998, whether through election by the shareholders of the Company or appointment
by the Board to fill a vacancy shall be automatically granted an Option to
purchase 5,000 Shares (a "Subsequent Option") on December 1 of each year
provided he or she is then an Outside Director, and if as of such date, he or
she shall have served on the Board for at least the preceding six (6) months.

(iv) Notwithstanding the provisions of subsections (ii) and (iii) hereof,
any exercise of an Option granted before the Company has obtained shareholder
approval of the Plan in accordance with Section 16 hereof shall be conditioned
upon obtaining such shareholder approval of the Plan in accordance with Section
16 hereof.

(v) The terms of a First Option granted hereunder shall be as follows:

(A) the term of the First Option shall be ten (10) years.

(B) the First Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections
8 and 10 hereof.

(C) the exercise price per Share shall be 100% of the Fair Market
Value per Share on the date of grant of the First Option. In the event that
the date of grant of the First Option is not a trading day, the

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<PAGE> 22

exercise price per Share shall be the Fair Market Value on the next trading
day immediately following the date of grant of the First Option.

(D) subject to Section 10 hereof, the First Option shall become
exercisable as to thirty-three percent (33%) of the Shares subject to the
First Option one year after its date of grant and as to 1/3rd of the
shares each year thereafter, provided that the Optionee continues to serve
as a Director on such dates.

(vi) The terms of a Subsequent Option granted hereunder shall be as
follows:

(A) the term of the Subsequent Option shall be ten (10) years.

(B) the Subsequent Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections
8 and 10 hereof.

(C) the exercise price per Share shall be 100% of the Fair Market
Value per Share on the date of grant of the Subsequent Option. In the event
that the date of grant of the Subsequent Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading
day immediately following the date of grant of the Subsequent Option.

(D) subject to Section 10 hereof, the Subsequent Option shall become
exercisable as to one-twelfth ( 1/12) of the Shares subject to the
Subsequent Option two (2) years and one month after its date of grant and
as to one-twelfth ( 1/12) of the shares on the last day of each month
thereafter, provided that the Optionee continues to serve as a Director on
such dates.

(vii) In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

6. Term of Plan. The Plan shall become effective upon the effective date of
the first Registration Statement filed by the Company under the Securities Act
of 1933, as amended. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 11 of the Plan.

7. Form of Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.

8. Exercise of Option.

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4
hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

An Option may not be exercised for a fraction of a Share.

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<PAGE> 23

An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.

Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) Rule 16b-3. Options granted to Outside Directors must comply with the
applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any
successor thereto and shall contain such additional conditions or restrictions
as may be required thereunder to qualify Plan transactions, and other
transactions by Outside Directors that otherwise could be matched with Plan
transactions, for the maximum exemption from Section 16 of the Exchange Act.

(c) Termination of Continuous Status as a Director. Subject to Section 10
hereof, in the event an Optionee's status as a Director terminates (other than
upon the Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option, but
only within three (3) months following the date of such termination, and only to
the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

(d) Disability of Optionee. In the event Optionee's status as a Director
terminates as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), the Optionee may exercise his or her Option, but only
within twelve (12) months following the date of such termination, and only to
the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.

(e) Death of Optionee. In the event of an Optionee's death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance may exercise the Option, but only within twelve (12) months
following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

10. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.

(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such
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<PAGE> 24

outstanding Option, and the number of Shares issuable pursuant to the automatic
grant provisions of Section 4 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares subject to an Option.

11. Amendment and Termination of the Plan.

(a) Amendment and Termination. Except as set forth in Section 4, the Board
may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.

(b) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated.

12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof.

13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange upon which the
Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

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<PAGE> 25

16. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
Such shareholder approval shall be obtained in the degree and manner required
under applicable state and federal law.

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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

CYBERMEDIA, INC.

1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1998

The undersigned stockholder of CyberMedia, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement and hereby appoints Kanwal Rekhi and Alexander S. Klyce, or
either of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 1998 Annual Meeting of Stockholders of CyberMedia, Inc. to be
held on June 10, 1998, at 10:00 a.m., local time, at the Miramar Sheraton Hotel,
101 Wilshire Boulevard, Santa Monica, California, and at any adjournments
thereof and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:

1. ELECTION OF DIRECTORS:

[ ] FOR all nominees listed below [ ] WITHHOLD authority to vote for
(except as indicated) all nominees listed below

IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:

Suhas Patil Ronald S. Posner Kanwal Rekhi James R. Tolonen

2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK, LLP AS INDEPENDENT
AUDITORS:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. APPROVAL OF THE AMENDMENTS TO THE 1996 DIRECTOR OPTION PLAN:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

and, in their discretion, upon such other matter or matters which may properly
come before the meeting and any adjournment(s) thereof.

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THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S INDEPENDENT AUDITORS, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY
ADJOURNMENT(S) THEREOF.

Dated: ______________________, 1998

____________________________________
Signature

(This Proxy should be marked, dated,
signed by the stockholder(s) exactly
as his or her name appears hereon,
and returned promptly in the
enclosed envelope. Persons signing
in a fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both should sign.)