<PAGE>
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 (S) 240.14a-11(c) or (S) 240.14a-12
Rogue Wave Software, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement In Its Charter
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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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.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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<PAGE>
ROGUE WAVE SOFTWARE, INC.
5500 FLATIRON PARKWAY
BOULDER, COLORADO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 25, 2000
TO THE STOCKHOLDERS OF ROGUE WAVE SOFTWARE, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Rogue
Wave Software, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, January 25, 2000 at 8:00 a.m. local time at the offices of the Company,
located at 5500 Flatiron Parkway, Boulder, Colorado, 80301 for the following
purpose:
1. To elect directors to serve for the ensuing year and until their successors
are elected.
2. To approve the Company's Employee Stock Purchase Plan, as amended and
restated, to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 200,000 shares and to provide for
future automatic increases in the number of shares of Common Stock authorized
for issuance under such plan.
3. To ratify the selection of KPMG LLP as independent auditors of the Company
for its fiscal year ending September 30, 2000.
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on November 30,
1999, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Robert M. Holburn
Robert M. Holburn, Jr.
Secretary
Boulder, Colorado
December 10, 1999
All Stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign and
return the enclosed proxy as promptly as possible in order to ensure your
representation at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
<PAGE>
ROGUE WAVE SOFTWARE, INC.
5500 FLATIRON PARKWAY
BOULDER, COLORADO 80301
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JANUARY 25, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Rogue Wave Software, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on Tuesday, January 25, 2000 at
8:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the offices of the
Company, located at 5500 Flatiron Parkway, Boulder, Colorado, 80301. The Company
intends to mail this proxy statement and accompanying proxy card on or about
December 10, 1999, to all stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company
or, at the Company's request, ChaseMellon Shareholder Services. No additional
compensation will be paid to directors, officers or other regular employees for
such services, but ChaseMellon Shareholder Services will be paid its customary
fee, estimated to be about $12,500, if it renders solicitation services.
2
<PAGE>
Voting Rights And Outstanding Shares
Only holders of record of Common Stock at the close of business on November
30, 1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on November 30, 1999 the Company had outstanding and entitled
to vote 10,163,673 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
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. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 5500
Flatiron Parkway, Boulder, Colorado, 80301, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8, "Shareholder Proposals," of the
Securities and Exchange Commission is August 11, 2000. The deadline for
submitting a stockholder proposal or a nomination for director that is not to be
included in such proxy statement and proxy is November 26, 2000, however, unless
a stockholder notifies the Company of such matter prior to October 26, 2000,
management will have discretionary authority to vote all shares for which it has
proxies in opposition to such matter. Stockholders are also advised to review
the Company's By-laws, which contain additional requirements with respect to
advance notice of stockholder proposals and director nominations.
3
<PAGE>
Proposal 1
Election Of Directors
The Company's Restated Certificate of Incorporation and Bylaws provide that
the number of directors which shall constitute the whole Board of Directors
shall be fixed exclusively by one or more resolutions adopted by the Board of
Directors. Each director shall be elected at each annual meeting of stockholders
for a term of one year. Vacancies on the Board may be filled only by persons
elected by a majority of the remaining directors. A director elected by the
Board to fill a vacancy (including a vacancy created by an increase in the Board
of Directors) shall serve for the remainder of the full term in which the
vacancy occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of five members. Each of the
nominees for election is currently a director of the Company. If elected at the
Annual Meeting, each of the nominees would serve until the next Annual Meeting
of Stockholders and until his or her successor is elected and has qualified, or
until such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present or represented by
proxy and entitled to vote at the meeting. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the nominees named below. In the event that any nominee should be unavailable
for election as a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as management may propose. Each
person nominated for election has agreed to serve if elected, and management has
no reason to believe that any nominee will be unable to serve.
Nominees
The name of the nominees and certain biographical information about them
are set forth below:
Name Age Position
- ----------------------------- ----- -------------------------------------
Thomas Keffer, Ph.D./(1)/ 47 Chairman of the Board
Bruce T. Coleman 60 Chief Executive Officer and Director
Thomas M. Atwood/(2)/ 51 Director
Louis C. Cole/(1)/ 56 Director
Richard P. Magnuson/(2)/ 43 Director
________________
/(1)/ Member of the Compensation Committee
/(2)/ Member of the Audit Committee
4
<PAGE>
Set forth below is biographical information for each person nominated.
Thomas Keffer, Ph.D.
Dr. Keffer, Chairman of the Board of Directors, has been with the Company
since its inception in 1989. Dr. Keffer was a founder of the Company and served
as its President and Chief Executive Officer until October 22, 1998. Prior to
1989, Dr. Keffer was an Assistant Professor of Oceanography at the University of
Washington. Dr. Keffer received his Ph.D. in Physical Oceanography from Oregon
State University and his B.A. from Cornell University.
Bruce T. Coleman
Mr. Coleman has been a director of the Company since October 1999 and has
served as the Company's Chief Executive Officer since October 4, 1999. Mr.
Coleman also serves as the Chief Executive Officer of El Salto Advisors, a
consulting firm that provides interim management to computer software and
service companies since September 1991. In the years 1992 to 1999, Mr. Coleman
served as interim CEO for Computer Network Technology Corporation, Fischer
International, Image BSN Systems, Knowledge Systems Corporation, Resumix, Inc.,
Viewpoint Systems, NetPartners Inc. and Open Horizon, Inc. From 1988 to 1991,
Mr. Coleman managed Information Science, Inc., a human resource software and
service company. Mr. Coleman also serves as a director of Printronix, Inc.,
Websense, Inc., and Sirius Software, Inc. Mr. Coleman received his B.A. from
Trinity College and his M.B.A. with High Distinction from Harvard Business
School.
Thomas M. Atwood
Mr. Atwood has been a director of the Company since October 1994. He is
currently President/COO of an Internet professional services firm, site/X3.
Prior to that he was EVP of e-Motion, a software company that was sold in early
1999 to Cinebase Software. Mr. Atwood was Chief Executive Officer of Cinebase
Software, a software company, until June 1997. Prior to that, he founded Object
Design, a software company, in 1988 and served as its Chairman through December
1995.
Louis C. Cole
Mr. Cole has been a director of the Company since July 1997. Mr. Cole is
currently the President, Chief Executive Officer and Chairman of the Board of
Legato Systems, Inc., a network storage management software company. Prior to
that, from March 1987 until July 1988, Mr. Cole served as Executive Vice
President of Novell, Inc., a manufacturer of computer networking equipment and
software. Mr. Cole also serves as a director of NetIQ Corporation, an eBusiness
infrastructure management software company.
Richard P. Magnuson
Mr. Magnuson has been a director of the Company since November 1995. Mr.
Magnuson served as a general partner of Menlo Ventures, a venture capital firm,
from 1984 until December 1995. Mr. Magnuson also serves as a director of
California Water Service Group, a water utility, and several privately held
companies.
5
<PAGE>
Board Committees And Meetings
During the fiscal year ended September 30, 1999 the Board of Directors held
eight meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee has primary responsibility to review accounting
procedures and methods employed in connection with audit programs and related
management policies. Its duties include (1) recommending the independent
auditors for the Company, (2) reviewing the scope of the audit to be conducted
by them, (3) meeting with the independent auditors concerning the results of
their audit, and (4) overseeing the scope and accuracy of the Company's system
of internal accounting controls. The Audit Committee is the principal liaison
between the Board of Directors and the independent auditors for the Company. The
Audit Committee is currently composed of two non-employee directors, Mr. Atwood
and Mr. Magnuson. During the fiscal year ending September 30, 1999, the Audit
Committee conducted one meeting.
The Compensation Committee is responsible for continually reviewing the
Company's compensation and benefit programs and making recommendations regarding
these programs to the Board of Directors from time to time. The Committee
consists of Dr. Keffer and Mr. Cole. The Compensation Committee conducted one
meeting during the fiscal year ended September 30, 1999.
During the fiscal year ended September 30, 1999, each director, except Mr.
Cole attended at least 75% of the aggregated of the meetings of the Board and of
the committees on which he served, held during the period for which he was a
director or committee member, respectively.
6
<PAGE>
Proposal 2
Approval Of Employee Stock Purchase Plan, As Amended And Restated
In October 1999, the Board amended the Purchase Plan, subject to
stockholder approval, to increase the number of shares of Common Stock
authorized for issuance under the Purchase Plan from a total of 450,000 shares
to a total of 650,000 shares, subject to automatic increase as of each January 1
beginning with January 1, 2001, and continuing through and including January 1,
2009, by the lesser of (i) 3% of the total number of shares of Common Stock
outstanding on such date, or (ii) 300,000 shares. The Board adopted this
amendment in order to ensure that the Company can continue to grant purchase
rights at levels determined appropriate by the Board.
During the last fiscal year, shares of Common Stock were purchased in the
amounts and at the weighted average prices per share under the Purchase Plan as
follows: Michael Ernst 356 shares ($6.72), Michael Foreman 2,087 shares ($9.15),
Robert Holburn, Jr. 237 shares ($10.15), all current executive officers as a
group 2,680 shares ($8.91), and all employees (excluding executive officers) as
a group 84,477 shares ($6.77).
As of September 30, 1999 an aggregate of 218,970 shares of the Company's
Common Stock had been granted under the Purchase Plan. Only 231,030 shares of
Common Stock remained available for future grant under the Purchase Plan.
Stockholders are requested in this Proposal 2 to approve the amendment to
the Purchase Plan. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
meeting will be required to approve the amendment to the Purchase Plan.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 2.
The essential features of the Purchase Plan, as amended, are outlined
below:
Purpose
The purpose of the Purchase Plan is to provide a means by which employees
of the Company (and any parent or subsidiary of the Company designated by the
Board to participate in the Purchase Plan) may be given an opportunity to
purchase Common Stock of the Company through payroll deductions, to assist the
Company in retaining the services of its employees, to secure and retain the
services of new employees, and to provide incentives for such persons to exert
maximum efforts for the success of the Company. Substantially all of the
Company's approximately 346 employees are eligible to participate in the
Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
Administration
The Board administers the Purchase Plan and has the final power to construe
and interpret both the Purchase Plan and the rights granted under it. The Board
has the power, subject to the provisions of the Purchase Plan, to determine when
and how rights to purchase Common Stock of the Company will be granted, the
provisions of each offering of such rights (which need not be identical), and
whether employees of any parent or subsidiary of the Company will be eligible to
participate in the Purchase Plan.
The Board has the power to delegate administration of the Purchase Plan to
a committee composed of not fewer than two members of the Board. The Board may
abolish any such committee at any time and revest in the Board the
7
<PAGE>
administration of the Purchase Plan. As used herein with respect to the Purchase
Plan, the "Board" refers to any committee the Board appoints and to the Board.
Offerings
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. The length of each offering is
determined by the Board, not to exceed 27 months. During the offering, the Board
determines one or more purchase date(s) on which eligible employees may exercise
the rights granted under the Purchase Plan to purchase the Common Stock.
Eligibility
Unless otherwise specifically provided in any particular offering, any
person who is customarily employed at least 20 hours per week and five months
per calendar year by the Company (or by any parent or subsidiary of the Company
designated by the Board) on the first day of an offering is eligible to
participate in that offering, provided such employee has been continuously
employed by the Company or the designated affiliate for such period as the Board
may require, not exceeding two years, preceding the first day of the offering.
The Board may provide in any offering that officers of the Company who are
"highly compensated" as defined in the Code are not eligible to be granted
rights under the Purchase Plan.
Notwithstanding the foregoing, no employee is eligible to participate in
the Purchase Plan if, immediately after the grant of purchase rights, the
employee would own, directly or indirectly, stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of any parent or subsidiary of the Company (including any stock which such
employee may purchase under all outstanding rights and options). In addition, no
employee may purchase more than $25,000 worth of Common Stock (determined at the
fair market value of the shares at the time such rights are granted) under all
employee stock purchase plans of the Company and its affiliates in any calendar
year.
Participation In The Plan
Eligible employees enroll in the Purchase Plan by delivering to the
Company, prior to the date selected by the Board as the offering date for the
offering, an agreement authorizing payroll deductions of up to 15% of such
employees' "earnings" (determined by the board in each offering) during the
offering.
Purchase Price
The purchase price per share at which shares of Common Stock are sold in an
offering under the Purchase Plan is the lower of (i) 85% of the fair market
value of a share of Common Stock on first day of the offering or (ii) 85% of the
fair market value of a share of Common Stock on the purchase date.
Payment Of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions over
the offering. At any time during the offering, a participant may reduce or
terminate his or her payroll deductions as the Board provides in the offering. A
participant may increase or begin such payroll deductions after the beginning of
the offering only as provided for in the offering. All payroll deductions made
for a participant are credited to his or her account under the Purchase Plan and
deposited with the general funds of the Company. A participant may make
additional payments into such account only if specifically provided for in the
offering and only if the participant has not reached the maximum amount
permitted to be deposited to such account.
Purchase Of Stock
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under the Purchase Plan. In connection with
offerings made under the Purchase Plan, the Board specifies a maximum number of
shares of Common Stock an employee may be granted the right to purchase and the
maximum aggregate number of shares of Common Stock that may be purchased
pursuant to such offering by all participants. If the aggregate number of shares
to be purchased upon exercise of rights granted in the offering would exceed the
maximum aggregate number of shares of
8
<PAGE>
Common Stock available, the Board would make a pro rata allocation of available
shares in a uniform and equitable manner. Unless the employee's participation is
discontinued, his or her right to purchase shares is exercised automatically on
each purchase date at the applicable price. See "Withdrawal" below.
Withdrawal
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Such withdrawal may
be elected at any time, subject to any specific limitations in the offering.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of Common Stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
Termination Of Employment
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
Restrictions On Transfer
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
Duration, Amendment And Termination
The Board may suspend or terminate the Purchase Plan at any time.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (i) increase the number of shares
of Common Stock reserved for issuance under the Purchase Plan, (ii) modify the
requirements relating to eligibility for participation in the Purchase Plan (to
the extent such modification requires stockholder approval in order for the
Purchase Plan to obtain employee stock purchase plan treatment under the Code),
or (iii) modify any other provision of the Purchase Plan if such modification
requires stockholder approval in order for the Purchase Plan to obtain employee
stock purchase plan treatment under the Code.
Rights granted before amendment or termination of the Purchase Plan will
not be altered or impaired by any amendment or termination of the Purchase Plan
without consent of the employee to whom such rights were granted.
Effect Of Certain Corporate Events
In the event of a dissolution, liquidation or specified type of merger of
the Company, the surviving corporation either will assume the rights under the
Purchase Plan, substitute similar rights, or allow such rights to continue in
full force and effect, or the exercise date of any ongoing offering will be
accelerated such that the outstanding rights may be exercised immediately prior
to, or concurrent with, any such event.
Stock Subject To Purchase Plan
Subject to this Proposal, an aggregate of 650,000 shares of Common Stock is
reserved for issuance under the Purchase Plan, subject to automatic increase as
of each January 1, beginning with January 1, 2001, and continuing through and
including January 1, 2009, by the lesser of (i) 3% of the total number of shares
of Common Stock outstanding on such date, or (ii) 300,000 shares. If rights
granted under the Purchase Plan expire, lapse or otherwise terminate without
being
9
<PAGE>
exercised, the shares of Common Stock not purchased under such rights again
becomes available for issuance under the Purchase Plan.
Federal Income Tax Information
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of Common Stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. Such capital gains currently are generally
subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness and the satisfaction
of tax reporting obligations).
10
<PAGE>
Proposal 3
Ratification Of Selection Of Independent Auditors
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending September 30, 2000 and has further directed
that management submit the selection of independent auditors for ratification by
the stockholders at the Annual Meeting. Representatives of KPMG LLP are expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Stockholder ratification of the selection of KPMG LLP as the Company's
independent auditors is not required by the Company's By-laws or otherwise.
However, the Board is submitting the selection of KPMG LLP to the stockholders
for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the selection, the Audit Committee and the Board will reconsider
whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee and the Board in their discretion may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG LLP. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 3
11
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Security Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of September 30, 1999 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table employed by the Company in that capacity on September 30,
1999; (iii) all executive officers and directors of the Company as a group; and
(iv) all those known by the Company to be beneficial owners of more than five
percent of its Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned/(1)/
-------------------------------------------
Principal Stockholders, Directors and Executive Officers Number of Shares Percent of Total
- ----------------------------------------------------------- -------------------- --------------------
<S> <C> <C>
Thomas Keffer.............................................. 1,317,260 13.0%
Michael Scally/(2)/........................................ 271,338 2.6%
Bruce T. Coleman/(3)/...................................... 12,786 *
Robert M. Holburn, Jr./(4)/................................ 126,752 1.2%
Michael M. Foreman/(5)/.................................... 44,205 *
Michael Ernst/(6)/......................................... 40,330 *
Peter J. Weyman/(7)/....................................... 19,166 *
Thomas M. Atwood/(8)/...................................... 30,333 *
Richard P. Magnuson/(9)/................................... 33,666 *
Louis C. Cole/(10)/........................................ 13,089 *
All executive officers and directors
as a group (10 persons)/(11)/......................... 1,908,925 17.9%
</TABLE>
______________________
* Less than one percent.
/(1)/ This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G (if any) filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 10,116,929 shares outstanding on September 30,
1999, adjusted as required by rules promulgated by the SEC.
/(2)/ Includes 271,338 shares issuable pursuant to options exercisable within
60 days of September 30, 1999.
/(3)/ Includes 12,786 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(4)/ Includes 95,897 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(5)/ Includes 37,233 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(6)/ Includes 39,060 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(7)/ Includes 19,166 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(8)/ Includes 30,333 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
/(9)/ Represents 16,666 shares held by Richard P. and Amy C. Magnuson, Trustees
of the Magnuson Revocable Trust dated 1/14/94 and 17,000 shares issuable
pursuant to options exercisable within 60 days of September 30, 1999.
/(10)/ Includes 13,089 shares issuable pursuant to options exercisable within 60
days of September 30, 1999.
12
<PAGE>
/(11)/ Includes 1,373,023 shares of Common Stock, 535,902 shares subject to
options exercisable within 60 days of September 30, 1999 held by
directors and executive officers of the Company and entities affiliated
with such persons. See Notes 2 through 10 above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
13
<PAGE>
Executive Compensation
Compensation of Directors
The Company's non-employee directors will receive $1,500 for each Directors
meeting attended in addition to being reimbursed for certain expenses in
connection with their attendance at Board and committee meetings. In November
1996, Messrs. Atwood and Magnuson were each granted an option to purchase 10,000
shares of the Company's Common Stock at an exercise price of $12.00 per share.
In July 1997, Mr. Cole was granted an option to purchase 10,000 shares of the
Company's Common Stock at an exercise price of $12.50 per share. Each such grant
was made pursuant to the 1996 Equity Incentive Plan (or its predecessor). On the
date of each annual meeting of the Stockholders of the Company commencing after
September 30, 1997, each non-employee director who has continuously served as a
non-employee director since the last annual meeting will be granted an option to
purchase 3,500 shares of Common Stock, and each other person who is then a non-
employee director will be granted an option to purchase a prorated number of
shares of Common Stock based on the number of days such person has continuously
served as a non-employee director since the last annual meeting. These options
will be fully vested when granted.
Compensation of Executive Officers
Summary of Compensation
The following table shows for the fiscal year ended September 30, 1999,
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer, its other four most highly compensated executive officers at September
30, 1999 and its former Chief Executive Officer (the "Named Executive
Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------- --------------
Securities All Other
Fiscal Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) Options(#) ($) (1)
- --------------------------- ------- ------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Bruce T. Coleman (2)
Chief Executive Officer 1999 $ 0 $ 0 0 $ 14,000
Michael Scally 1999 $ 250,071 $ 50,000 75,000 $ 326,462/(3)/
Former President and Chief Executive 1998 $ 210,000 $ 35,000 100,000 $ 43,500/(3)/
Officer 1997 $ 182,296 $ 25,000 100,000 $ 65,803/(3)/
Peter J. Weyman 1999 $ 87,500 $ 250,000/(4)/ 115,000 $ 6,400
Vice President and Division Manager
Michael M. Foreman 1999 $ 153,333 $ 74,125 5,000 $ 12,101
Vice President, North American Sales 1998 $ 96,500 $ 118,038 45,000 $ 7,348
1997 $ 86,000 $ 84,576 10,000 $ 8,338
Robert M. Holburn, Jr. 1999 $ 170,000 $ 40,000 20,000 $ 7,512
Vice President, Chief Financial 1998 $ 150,000 $ 35,000 80,000 $ 50,100/(5)/
Officer and Secretary 1997 $ 118,336 $ 25,000 20,000 $ 5,926
Michael Ernst 1999 $ 150,000 $ 50,000 25,000 $ 9,485
Vice President, Professional Services 1998 $ 130,000 $ 42,749 0 $ 5,718
and Support 1997 $ 45,000/(6)/$ 16,820 50,000 $ 3,625
</TABLE>
(1) Consists of amounts received pursuant to the Company's Profit Sharing Plan,
401(k) Company Matching Funds, and employee stock purchase plan proceeds, as
applicable.
(2) Mr. Coleman joined the Company as its Chief Executive Officer on October 4,
1999, and was paid consulting fees of $14,000 during September 1999.
14
<PAGE>
(3) Includes severance compensation of $165,000, loan forgiveness of $150,000
and $1,000 for equipment transferred upon Mr. Scally's termination as
President and Chief Executive Officer. Includes relocation compensation of
$36,600 for 1998 and $54,643 for 1997.
(4) Mr. Weyman joined the Company in March 1999 as Vice President, Division
Manager, and was paid a signing bonus of $185,000 of which 67% of such bonus
is subject to repayment in the event that he voluntarily terminates his
employment with Rogue Wave or is terminated for cause prior to September 30,
2000.
(5) Includes relocation compensation of $41,000.
(6) Michael Ernst joined the Company in April 1997 as Vice President
Professional Services and was paid an annual salary of $117,000.
Stock Option Grants and Exercises
The Company has granted incentive stock options to its executive officers
under the 1996 Equity Incentive Plan.
The following tables show for the fiscal year ended September 30, 1999,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers"):
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Number of % of Total Potential Realized Value at
Securities Options Assumed Annual Rates of
Underlying Granted to Exercise or Stock Price Appreciation for
Options Employees in Base Option Term($)/(4)/
____________________________
Granted Fiscal Price Expiration
Name (#) /(1)/ Year /(2)/ ($/Sh)/(3)/ Date 5% 10%
- -------------------- --------------- --------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Coleman 0 0% N/A N/A - -
Mr. Scally 75,000 6.6% $ 5.125 10/13/2008 $ 214,713 $ 612,595
Mr. Weyman 115,000 10.1% $ 7.875 03/01/2009 $ 569,543 $ 1,443,333
Mr. Foreman 5,000 0.4% $ 5.125 10/13/2008 $ 16,115 $ 40,840
Mr. Holburn 20,000 1.8% $ 5.125 10/13/2008 $ 64,462 $ 163,359
Mr. Ernst 25,000 2.2% $ 5.125 10/13/2008 $ 80,577 $ 204,198
</TABLE>
(1) Options shown were granted under the Company's 1996 Equity Incentive Plan.
Options have a maximum term of 10 years measured from the date of grant,
subject to earlier termination upon the optionee's cessation of service with
the Company. One hundred percent (100%) of any unvested options become
immediately exercisable if there is a change in control.
(2) Based on options to purchase 1,137,875 shares granted to employees in fiscal
year 1999, including grants to the Named Executive Officers.
(3) The exercise price is equal to the fair market value of the Common Stock on
the date of grant, based on the closing sales price as reported on the
Nasdaq National Market.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years). It is calculated assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. These amounts represent certain assumed rates of appreciation only,
in accordance with the rules of the SEC, and do not reflect the Company's
estimate or projection of future stock price performance. Actual gains, if
any, are dependent on the actual future performance of the Company's Common
Stock.
15
<PAGE>
Aggregated Option Exercises in Last Fiscal Year, and September 30, 1999 Option
Values
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised In-the-
Unexercised Options Money Options at
at FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)(1) Unexercisable Unexercisable(2)
- ------------- --------------- -------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Mr. Coleman 0 N/A N/A N/A
Mr. Scally 0 N/A 266,034 / 183,962 $15,038 / $50,587
Mr. Weyman 0 N/A 14,374 / 100,626 $ 0 / $ 0
Mr. Foreman 0 N/A 34,420 / 37,834 $37,263 / $ 6,515
Mr. Holburn 0 N/A 90,203 / 73,128 $96,708 / $13,491
Mr. Ernst 0 N/A 35,936 / 39,064 $ 5,012 / $16,863
</TABLE>
_____________
(1) Based on the fair market value per share of the Common Stock (the closing
sales price reported by the Nasdaq National Market) at date of exercise,
less the exercise price.
(2) Based on the fair market value of the Common Stock ($6.00) as of September
30, 1999 as reported on the Nasdaq National Market, less the exercise
price, multiplied by the number of shares underlying the option.
16
<PAGE>
Report of The Compensation Committee of The Board of Directors
on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board with respect
to the Company's executive compensation policies. The Committee consists of
Thomas Keffer and Louis C. Cole.
Compensation Philosophy
The Company's executive compensation program is based on the following four
objectives: (i) to link the interests of management with those of stockholders
by encouraging stock ownership in the Company; (ii) to attract and retain
superior executives by providing them with the opportunity to earn total
compensation packages that are competitive with the industry; (iii) to reward
individual results by recognizing performance through salary, annual cash
incentives and long-term stock based incentives; and (iv) to manage compensation
based on the level of skill, knowledge, effort and responsibility needed to
perform the job successfully.
The components of the Company's compensation program for its executive
officers include (i) base salary, (ii) performance-based cash bonuses, and (iii)
incentive compensation in the form of stock options.
Base Salary. Base salary levels for the Company's executive officers are
determined, in part, through comparisons with companies in the software
industry, other companies with which the Company competes for personnel, and
general geographic market conditions. Additionally, the Committee evaluates
individual experience and performance and the overall performance of the
Company. The Committee reviews each executive's salary on an annual basis and
may increase each executive's salary based on (i) the individual's increased
contribution to the Company over the preceding year; (ii) the individual's
increased responsibilities over the preceding year; and (iii) any increase in
median competitive pay levels.
Annual Cash Bonuses. The Compensation Committee recommends the payment of
bonuses from time-to-time to the Company's employees, including its executive
officers, to provide an incentive to these persons to be productive over the
course of each fiscal year. These bonuses are awarded only if the Company
achieves or exceeds certain corporate performance objectives relating to revenue
and net income. The size of the cash bonus to each executive officer is based on
the individual executive's performance during the preceding year as well as that
level of combination of cash compensation and stock options that would be
required from a competitive point of view to retain the services of a valued
executive officer.
Equity Incentive Plan. The Company believes that a key component to the
compensation of its executive officers should be through stock options. Stock
options utilized by the Company for this purpose have been designed to provide
an incentive to these employees by allowing them to directly participate in any
increase in the long-term value of the Company. This incentive is intended to
reward, motivate and retain the services of executive employees. The Company has
historically rewarded its executive employees through the grant of Incentive
Stock Options and Nonstatutory Stock Options.
Incentive Stock Options and Nonstatutory Stock Options are allocated to
both executive and non-executive employees on an annual basis by either the
Compensation Committee or the Board of Directors. The Company's 1996 Equity
Incentive Plan (the "1996 Plan") provides for the grant of up to 3,500,000
shares of the Company's Common Stock (assuming stockholder approval of the
recent increase), of which as of September 30, 1999, 1,113,972 shares have been
issued upon the exercise of options, options to purchase 1,549,136 shares were
outstanding and 836,892 shares remained available for future grant. Stock
options are typically granted with exercise prices equal to the prevailing
market value of the Company's common stock on the date of grant, have 10-year
terms and are subject to vesting periods established from time to time by the
Committee.
The Compensation Committee employs no particular set of mechanical criteria
in awarding stock options. Rather, it evaluates a series of factors including:
(i) the overall performance of the Company for the fiscal year in question; (ii)
the performance of the individual in question; (iii) the anticipated
contribution by the individual to the Company on an overall basis; (iv) the
historical level of compensation of the individual; (v) the level of
compensation of similarly situated
17
<PAGE>
executives in the Company's industry; and (vi) that level of combination of cash
compensation and stock options that would be required from a competitive point
of view to retain the services of a valued executive officer.
CEO Compensation
Mr. Scally's base salary has been adjusted from time-to-time in accordance
with the criteria for the determination of executive officer compensation as
described above in the section captioned "Base Salary." In setting the
compensation for Mr. Scally for fiscal year 1999, the Company sought to retain a
key executive officer with a competitive salary. Mr. Scally takes no part in
discussions relating to his own compensation.
By the Compensation Committee
Thomas Keffer
Louis C. Cole
18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's compensation committee consists of Messrs.
Keffer and Cole. No member of the Compensation Committee of the Company serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of the Company's
Board of Directors or Compensation Committee. See "Certain Transactions" for a
description of transactions between the Company and entities affiliated with
members of the Compensation Committee.
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph and table show the total stockholder return of an investment
of $100 in cash on November 22, 1996 (the date of the Company's initial public
offering) for the Company's Common Stock, the Nasdaq Stock Market (U.S.) Index
and (iii) the Hambrecht & Quist High Technology Index, an index based on
companies in a group of public companies in the high technology industry. All
values assume reinvestment of the full amount of all dividends and are
calculated as of September 30, 1999:
Rogue Wave Software
Proxy Performance Graph Calculation
<TABLE>
<CAPTION>
Base
Period
---------------------------------------------------------------------------------------------
11/22/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RWAV 100 131 76 104 115 92 126 66 60
NASDAQ 100 102 96 114 133 125 146 150 135
H&Q Tech 100 97 93 112 135 114 138 141 127
---------------------------------------------------------------------------------------------
11/21/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98
---------------------------------------------------------------------------------------------
RWAV $ 12,000 $ 15.750 $ 9,125 $ 12.500 $ 13.750 $ 11.063 $ 15.063 $ 7.875 $ 7.250
NASDAQ 418.494 425.246 402.187 475.862 556.394 521.061 609.811 626.563 565.803
H&Q Tech 1,068.70 1,040.00 991,30 1,193.17 1,446.03 1,219.28 1,476.33 1,511.43 1,343.55
<CAPTION>
--------------------------------------------------------
12/31/98 3/31/99 6/30/99 9/30/99
--------------------------------------------------------
<S> <C> <C> <C> <C>
RWAV 73 67 76 50
NASDAQ 175 196 215 220
H&Q Tech 177 193 229 249
--------------------------------------------------------
RWAV $ 8.750 $ 8.000 $ 9.125 $ 6.000
NASDAQ 734.269 821345 898,642 919.26
H&Q Tech 1,895.52 2,085.47 2,446.24 2,587.88
-----------------------------------------------------------
</TABLE>
____________________________________
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
19
<PAGE>
CERTAIN TRANSACTIONS
In March 1999, the Company acquired all of the assets of NobleNet, Inc.
("NobleNet") in exchange for cash for all outstanding shares of NobleNet stock.
In connection with the NobleNet acquisition, Peter J. Weyman became an officer
of the Company.
In August 1999, the Company entered into a Separation and Release Agreement
with Michael Scally pursuant to which the Company paid Mr. Scally $125,000 in
severance and further agreed to forgive the home loan in the amount of $150,000
between the Company and Mr. Scally pursuant to a Loan Agreement, dated January
1998.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been otherwise
obtained from unaffiliated third parties.
20
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Robert M. Holburn
Robert M. Holburn, Jr.
Secretary
December 10, 1999
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended September 30, 1999 is
available without charge upon written request to: Corporate Secretary, Rogue
Wave Software, Inc., 5500 Flatiron Parkway, Boulder, Colorado 80301.
21
<PAGE>
ROGUE WAVE SOFTWARE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 25, 2000
The undersigned hereby appoints Thomas Keffer and Robert M. Holburn, Jr.,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Rogue Wave Software, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Rogue Wave Software, Inc. to be held at 5500 Flatiron Parkway,
Boulder, Colorado 80301 on Tuesday, January 25, 2000 at 8:00 a.m., local time,
and at any and all postponements, continuations and adjournments thereof, with
all powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors to hold office for the ensuing year and until
their successors are elected.
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees
below). listed below.
Nominees: Thomas Keffer, Ph.D., Thomas M. Atwood, Louis C. Cole, Bruce T.
Coleman and Richard P. Magnuson
To withhold authority to vote for any nominee(s) write such nominee(s)' name(s)
below:
________________________________________________________________________________
________________________________________________________________________________
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2: To approve an amendment and restatement of the Company's Employee
Stock Purchase Plan as described in the Proxy Statement,
including an increase in the aggregate number of shares of Common
Stock authorized for issuance thereunder from 450,000 shares to
650,000 shares and to provide for future automatic increases in
the number of shares of Common Stock authorized for issuance
under such plan.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 3.
PROPOSAL 3: To ratify the selection of KPMG LLP as independent auditors of
the Company for its fiscal year ending September 30, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
DATED______________ ___________________________________________
___________________________________________
SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have a
duly authorized officer sign, stating
title. If signer is a partnership, please
sign in partnership name by authorized
person.
Please vote, date and promptly return this proxy in the enclosed return envelope
that is postage prepaid if mailed in the United States.
