<PAGE> 1
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 Section 240.14a-11(c) or
Section 240.14a-12
SYBASE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Registrant
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
--------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------
(5) Total fee paid:
--------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: __________________________
(2) Form, Schedule or Registration Statement No.: ________________
(3) Filing Party: ______________________
(4) Date Filed: _______________________
<PAGE> 2
[SYBASE LETTERHEAD]
Dear Stockholder:
I am pleased to invite you to attend Sybase's 1997 Annual Meeting of
Stockholders which will be held on Tuesday, May 20, 1997. The meeting will begin
at 10:00 a.m. at the offices of the Company at 6603 Bay Street, Emeryville,
California. Please note that an area map has been provided for your convenience
on the back cover of the proxy statement.
Many things have changed at Sybase over the last year. Several new management
appointments were made, including my own appointment to the positions of Chief
Executive Officer and President. During the last half of 1996, we focused on the
immediate task at hand of returning the Company to operating profitability,
before a restructuring charge, over the third and fourth quarters of the year.
As part of that effort, we have created what we believe is a strong, unique road
map to reestablish Sybase's position in the marketplace. The details of our
performance and revised focus are included in our 1996 Annual Report. Critical
to the Company's future success with these plans is the ability to attract and
retain highly qualified personnel. Competition for skilled software engineers
and other key employees in the software industry is intense and the extensive
use of significant stock options and employee stock purchase plans for
recruitment, retention and motivation of such personnel is widespread. The Board
of Directors believes that Sybase's stock option and stock purchase plans are
vital components in the recruitment and retention of highly skilled personnel.
To enable the Company to continue its policies of using stock options, and to
encourage current employees to purchase stock in the Company, the Board has
approved amendments increasing the number of shares issuable under the Company's
1996 Stock Plan (the "Stock Option Plan") and under the 1991 Employee Stock
Purchase Plan and 1991 Foreign Subsidiary Employee Stock Purchase Plan (the
"Stock Purchase Plans"). Stockholders are being asked to approve the amendments
to the Stock Option Plan and Stock Purchase Plans, and reservation of shares
thereunder, at the Annual Meeting.
I would like to thank you for your support as a Sybase stockholder and urge you
to mark, sign, date and return the enclosed proxy as soon as possible.
Sincerely,
/s/ MITCHELL E. KERTZMAN
- -----------------------------------------------
Mitchell E. Kertzman
Chief Executive Officer and President
<PAGE> 3
SYBASE, INC.
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Sybase, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
May 20, 1997 at 10:00 a.m. at the offices of the Company, 6603 Bay Street,
Emeryville, California 94608, for the following purposes:
1. To elect three Class II directors to serve a three-year term expiring
upon the 2000 Annual Meeting of Stockholders or until a successor is
duly elected and qualified.
2. To approve an amendment to the 1996 Stock Plan increasing the total
number of shares of Common Stock reserved for issuance thereunder by
2,450,000 shares.
3. To approve an amendment to the Amended and Restated 1991 Employee Stock
Purchase Plan and Amended and Restated 1991 Foreign Subsidiary Employee
Stock Purchase Plan increasing the total number of shares of Common
Stock reserved for issuance thereunder by 1,300,000 shares.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the year ending December 31, 1997.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on March 24, 1997
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the postage
prepaid envelope provided for that purpose. Any stockholder attending the
meeting may vote in person even if he or she returned a Proxy.
By Order of the Board of Directors
/s/ Mitchell L. Gaynor
Mitchell L. Gaynor
Vice President, General Counsel,
Emeryville, California and Secretary
April 4, 1997
<PAGE> 4
SYBASE, INC.
----------
PROXY STATEMENT
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors
(the "Board") of Sybase, Inc. (the "Company" or "Sybase"), for the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on Tuesday, May 20,
1997 at 10:00 a.m. at the offices of the Company, 6603 Bay Street, Emeryville,
California 94608, or any adjournment or adjournments thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting. The Company's
principal executive offices are located at 6475 Christie Avenue, Emeryville,
California 94608, and its telephone number at that location is (510) 922-3500.
These Proxy materials were mailed to stockholders on or about April 7,
1997.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on March 24, 1997
(the "Record Date") are entitled to receive notice of and to vote at the
meeting. The outstanding voting securities of the Company on the Record Date
consisted of 78,439,005 shares of Common Stock. No shares of Preferred Stock are
outstanding.
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivery
to the Company of a written notice of revocation or a duly executed Proxy
bearing a later date. If a person who has executed and returned a Proxy is
present at the meeting and wishes to vote in person, he or she may elect to do
so and thereby suspend the power of the proxy holders to vote his or her Proxy.
VOTING AND SOLICITATION
Each share of Common Stock issued and outstanding as of the Record Date
shall have one vote on each of the matters presented herein. Stockholders do not
have the right to cumulate votes in the election of directors. The required
quorum for the transaction of business at the Annual Meeting is a majority of
the votes eligible to be cast by holders of shares of Common Stock issued and
outstanding on the Record Date. For purposes of determining the presence of a
quorum, abstentions and broker non-votes will be counted by the Company as
present at the meeting. Abstentions will also be counted by the Company in
determining the total number of votes cast with respect to a proposal (other
than the election of directors). Broker non-votes will not be counted in
determining the number of votes cast with respect to a proposal.
The cost of soliciting Proxies will be borne by the Company. Proxies
may be solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, in person or by telephone or
facsimile. In addition, the Company intends to retain the services of a firm to
assist in the solicitation of proxies for an estimated fee of $7,500 plus
reimbursement of expenses. The Company may also reimburse brokerage firms and
other persons representing beneficial owners of shares for their expenses in
forwarding solicitation materials to such beneficial holders.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's Annual Meeting of Stockholders
to be held in 1998 must be received by the Company no later than December 8,
1997 in order that they may be considered for possible inclusion in the proxy
statement and form of proxy relating to that meeting.
<PAGE> 5
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock
of the Company as of February 28, 1997 as to (a) each current director and
nominee for director; (b) each executive officer and former executive officer
named in the Summary Compensation Table (hereafter referred to as the "named
executive officers"); (c) all current directors and executive officers as a
group; and (d) each person known to the Company to beneficially own at that time
more than 5% of the outstanding shares of its Common Stock.
<TABLE>
<CAPTION>
Approximate
Shares Percent of
Name of Beneficial Owner Beneficially Class
Owned (1) Owned
------------ -------------
<S> <C> <C>
Entities affiliated with The Capital Group Companies, Inc. (2) ......... 13,835,500 17.67%
333 South Hope Street
Los Angeles, CA 90071
Massachusetts Financial Services Company(3) ............................ 7,952,345 10.16%
500 Boylston Street
Boston, MA 02116
Entities affiliated with George Soros and Purnendu Chatterjee (4) ...... 5,700,700 7.28%
888 Seventh Avenue
New York, NY 10106
Robert S. Epstein (5) .................................................. 1,560,316 1.99%
Mark B. Hoffman (6) .................................................... 1,545,808 1.96%
Mitchell E. Kertzman (7)................................................ 446,656 *
Richard C. Alberding (8)................................................ 29,041 *
Michael W. Bealmear .................................................... 2,997 *
Michael A. Forster ..................................................... 38,957 *
L. William Krause (9) .................................................. 26,833 *
David E. Liddle (10) ................................................... 49,416 *
David A. Litwack (11) .................................................. 347,169 *
Alan B. Salisbury (12) ................................................. 48,957 *
Robert P. Wayman (13) .................................................. 11,583 *
Jeffrey T. Webber (14) ................................................. 41,989 *
All current executive officers and directors as a group (17 persons) (15) 4,186,071 5.33%
</TABLE>
- ----------
* Less than one percent.
(1) The table is based upon information supplied by executive officers,
directors and principal stockholders. Unless otherwise indicated, each of
the stockholders named in the table has sole voting and investment power
with respect to all securities shown as beneficially owned, subject to
community property laws where applicable and to the information contained
in the footnotes to the table.
(2) Includes shares held by subsidiary companies and investor accounts
managed by subsidiary companies of The Capital Group Companies, Inc. The
beneficial owner has sole dispositive power over all such shares and sole
voting power only with respect to 5,648,800 of such shares.
(3) Massachusetts Financial Services Company has sole dispositive power over
all such shares and has sole voting power only with respect to 7,830,305
of such shares.
2
<PAGE> 6
(4) Includes 1,800,000 shares held by Mr. Soros, 1,050,000 shares held by
entities for which Mr. Soros may be deemed a beneficial owner,
2,000,700 shares held by entities for which Mr. Chatterjee may be
deemed a beneficial owner and 850,000 shares held by entities for which
each of Mr. Soros and Mr. Chatterjee may be deemed a beneficial owner.
(5) Includes 75,100 shares subject to options that are exercisable within
60 days of February 28, 1997.
(6) Includes 590,399 shares subject to options that are exercisable within
60 days of February 28, 1997.
(7) Includes 58,332 shares subject to options that are exercisable within
60 days of February 28, 1997.
(8) All such shares are subject to options that are exercisable within 60
days of February 28, 1997.
(9) All such shares are subject to options that are exercisable within 60
days of February 28, 1997.
(10) Includes 49,416 shares subject to options that are exercisable within
60 days of February 28, 1997.
(11) Includes 178,969 shares subject to options that are exercisable within
60 days of February 28, 1997.
(12) Includes 47,957 shares subject to options that are exercisable within
60 days of February 28, 1997.
(13) All such shares are subject to options that are exercisable within 60
days of February 28, 1997.
(14) Includes 33,416 shares subject to options that are exercisable within
60 days of February 28, 1997.
(15) Includes 1,119,819 shares subject to options that are exercisable
within 60 days of February 28, 1997.
3
<PAGE> 7
ELECTION OF DIRECTORS
DIRECTORS
The Company currently has nine directors divided among three classes as
follows: Class I-- Mark B. Hoffman and Alan B. Salisbury; Class II-- Robert S.
Epstein, Mitchell E. Kertzman and Richard C. Alberding; and Class III-- Robert
P. Wayman, L. William Krause, David E. Liddle and Jeffrey T. Webber. Frank A
Ingari, resigned as a Class I director in January 1997 and the number of
authorized directors was reduced to its current size in April 1997.
Three Class II directors are to be elected at the Annual Meeting for a
three-year term ending at the annual meeting of stockholders in 2000. The Board
has nominated each of Robert S. Epstein, Mitchell E. Kertzman and Richard C.
Alberding for election as a Class II director. Unless otherwise instructed, the
proxy holders will vote the Proxies received by them for Robert S. Epstein,
Mitchell E. Kertzman and Richard C. Alberding. In the event that a nominee is
unable or declines to serve as a director at the time of the Annual Meeting, the
Proxies will be voted for any nominee who shall be designated by the present
Board to fill the vacancy. The Company is not aware of any reason that any of
Robert S. Epstein, Mitchell E. Kertzman and Richard C. Alberding will be unable
or will decline to serve as a director.
Certain information regarding the nominees and the incumbent members of
the Board whose terms will continue after the Annual Meeting is set forth below.
<TABLE>
<CAPTION>
Name of Director or Nominee Age Current Term Expires
--------------------------- --- --------------------
<S> <C> <C>
Mitchell E. Kertzman 48 1997
Mark B. Hoffman 50 1999
Robert S. Epstein 44 1997
Richard C. Alberding 66 1997
L. William Krause 54 1998
David E. Liddle 52 1998
Alan B. Salisbury 60 1999
Robert P. Wayman 51 1998
Jeffrey T. Webber 44 1998
</TABLE>
Mr. Kertzman has served as a director since February 1995 and as
President and Chief Executive Officer since July 1996. Between February 1995 and
July, 1996 he served as an Executive Vice President. In February 1995, Sybase
merged with Powersoft Corporation ("Powersoft"), a leading provider of
application development tools. Mr. Kertzman served as Chief Executive Officer
and a director of Powersoft since he founded it in 1974. He also served as
President of Powersoft from 1974 to 1992. Mr. Kertzman is also a director of
Shiva Corporation and C-Net, Inc.
Mr. Hoffman is a founder of the Company and has served as Chairman of
the Board and a director since the Company's inception in November 1984. Mr.
Hoffman also served as Chief Executive Officer and President of the Company from
its inception to July 1996. Mr. Hoffman has been Chairman, Chief Executive
Officer and President of Commerce One, Inc., a developer of electronic commerce
technology, since September 1996.
Dr. Epstein is a founder of the Company and has served as Executive
Vice President and as a director since November 1984. Since November 1996, Dr.
Epstein has also served as Chief Information Officer of the Company. Dr. Epstein
is also a director of First Virtual Holding, Inc.
Mr. Alberding has served as a director since September 1993. From 1958
to 1991, he served in various management positions with Hewlett-Packard Company,
an electronics and computer manufacturer, serving most recently as Executive
Vice President. Mr. Alberding is now retired and is also a director of Digital
Microwave Corp., Paging Network Inc., Digital Link Corporation, Kennametal,
Inc., Quickturn Design Systems, Storm Technology, Inc. and Walker Interactive
Systems.
4
<PAGE> 8
Mr. Krause has served as a director since February 1995. Since 1991, he
has been President, Chief Executive Officer and a director of Storm Technology,
Inc., a developer of products for using photographs on a computer. He served as
Chief Executive Officer of 3Com Corporation, a provider of data networking
products, from 1981 to 1990 and as its Chairman of the Board from 1987 to 1993.
Mr. Krause has served as a director of Powersoft since January 1993 and
currently serves as a director of Aureal Semiconductor, Inc.
Dr. Liddle has served as a director since April 1985. Dr. Liddle
co-founded and since March 30, 1992 has served as President and Chief Executive
Officer of Interval Research Corporation, a computer-related research laboratory
based in Palo Alto, California. From November 1991 until March 1992, he served
as Vice President of New Systems Business Development, Personal Systems, for
International Business Machines Corporation, a computer and office equipment
manufacturer. Dr. Liddle is also a director of Broderbund Software, Inc.
Dr. Salisbury has served as a director since July 1993. Since April
1993, he has served as President and General Manager of Learning Tree
International USA, Inc., a provider of advanced technology and technical
management training. Between June 1991 and April 1993, Dr. Salisbury served as
Executive Vice President and Chief Operating Officer of Microelectronics and
Computer Technology Corp., an information technology research and development
consortium. From November 1984 through September 1987, Dr. Salisbury served as
the Commanding General of the U.S. Army Information Systems Engineering Command.
Dr. Salisbury is also a director of TelePad Corp., Template Software, Inc. and
Learning Tree International.
Mr. Wayman has served as a director since July 1995. He has served as
Executive Vice President, Finance and Administration and Chief Financial Officer
of Hewlett-Packard Company since 1992 and served as Senior Vice President and
Chief Financial Officer of Hewlett-Packard Company between 1987 and 1992. Mr.
Wayman is also a director of Hewlett-Packard Company and CNF Transportation,
Inc.
Mr. Webber has served as a director since October 1993. Mr. Webber
founded and since January 1991 has served as President of R.B. Webber & Company,
Inc., a management consulting firm. From 1987 to January 1991, he served as a
partner in Edgar, Dunn & Company, a management consulting firm. Mr. Webber is
also a director of Aurum Software, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held eight meetings during the fiscal year ended
December 31, 1996. The Board has an Audit Committee, a Compensation Committee
and a Stock Committee. The Board has no formal committee performing the
functions of a nominating committee. No incumbent director who was a director
during the year ended December 31, 1996 attended fewer than 75% of the aggregate
number of meetings of the Board and the committees of the Board on which he
served.
The Audit Committee currently consists of directors Alan Salisbury
(Chairman), Robert Wayman and Jeffrey Webber. The Audit Committee held four
meetings during the last fiscal year. The Audit Committee recommends the
engagement of the Company's independent auditors and is primarily responsible
for approving the services performed by the Company's independent auditors and
for reviewing and evaluating the Company's accounting principles, its system of
internal accounting controls, the charter and projects undertaken by the
Company's internal audit function and the adequacy of the Company's financial
reports. In connection with these reviews, the Audit Committee meets with
appropriate financial personnel of the Company and the organizations responsible
for internal audit.
The Compensation Committee currently consists of directors Richard
Alberding (Chairman), William Krause and David Liddle. The Compensation
Committee held six meetings during the last fiscal year. The principal functions
of the Compensation Committee are to review and approve the Company's executive
compensation policies and programs and, under certain circumstances, to
administer the Company's Stock Option and Employee Stock Purchase Plans. The
Stock Committee, currently consisting of Mitchell Kertzman and Robert Epstein,
is authorized to make grants of stock options to non-executive officers of the
Company within certain authorized limits. The Stock Committee acted by unanimous
written consents and held no meetings during the last fiscal year.
5
<PAGE> 9
In March 1996, the Board adopted corporate governance standards that
established certain guidelines for the conduct, operation of meetings and
deliberations of the Board. These guidelines provide for, among other things,
the election of one outside director as the lead outside director. David Liddle
has served as the lead outside director since his election by Sybase's outside
directors in March 1996. The outside directors meet separately from management
and employee directors in executive sessions conducted as part of regular board
meetings and also confer informally from time to time.
DIRECTOR COMPENSATION
Nonemployee directors received in 1996 and will receive in 1997 an
annual retainer of $20,000, paid in four quarterly installments. In addition,
the chairman of the Compensation Committee and the chairman of the Audit
Committee each receive an additional annual retainer of $2,000, paid in four
quarterly installments; and the lead nonemployee director (who presides over
executive sessions of the nonemployee directors) receives an additional annual
retainer of $4,000. In addition to the annual retainer, nonemployee directors
receive $1,500 for each Board meeting attended in person, $750 for each Board
meeting attended by video conference, $750 for each Committee meeting attended
in person, whether or not held on the same day as another Board or Committee
meeting, and $375 for each Committee meeting attended by video conference.
Nonemployee directors are also reimbursed for out-of-pocket travel expenses
associated with their attendance at meetings of the Board. For 1996, Messrs.
Alberding, Ingari, Krause, Liddle, Salisbury, Wayman and Webber received
aggregate fees and reimbursements of $46,318, $27,250, $35,500, $39,150,
$56,054, $37,500 and $40,750, respectively. Nonemployee directors also receive
annual stock option grants under the terms of the Company's 1992 Director Stock
Option Plan (the "Director Plan"). Under the Director Plan, Messrs. Alberding,
Ingari, Krause, Liddle, Salisbury, Wayman and Webber each received in 1996 a
stock option to purchase 8,000 shares at an exercise price of $34.00 per share,
which vests ratably over a four-year period. Employee directors do not receive
any compensation, expense reimbursement or stock option grants for serving as
directors or for attending Board or Committee meetings.
REQUIRED VOTE
The three nominees receiving the highest number of affirmative votes of
the shares of the Company's Common Stock voted at the Annual Meeting shall be
elected as the Class II directors. Votes withheld from any nominee will be
counted for purposes of determining the presence or absence of a quorum but are
not counted as affirmative votes.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
ELECTION OF EACH OF ROBERT S. EPSTEIN, MITCHELL E. KERTZMAN AND RICHARD C.
ALBERDING AS A CLASS II DIRECTOR OF THE COMPANY.
AMENDMENT OF 1996 STOCK PLAN
Competition for skilled software engineers and other key employees in
the client/server software industry is intense and the use of significant stock
options for recruitment, retention and motivation of such personnel is
widespread. More than 95% of the Company's employees had outstanding options as
of February 28, 1997. In March 1996 and May 1996, the Board and the
stockholders, respectively, approved the 1996 Stock Plan (the "Stock Plan") and
reserved for issuance thereunder 2,977,000 shares. The Board believes that an
increase in the number of shares available for grant under the Stock Plan is
critical to enabling the Company to recruit highly qualified new employees,
promote long-term retention of key employees, provide new incentives to
individuals who became employees as a result of an acquisition of their company
by Sybase, motivate high levels of performance and recognize employee
contributions to the success of the Company. The Board further believes that
without the ability to effectively grant options, the Company will be at a
competitive disadvantage in the market for skilled employees, particularly in
the Silicon Valley, Boston and Boulder technology centers.
PROPOSED AMENDMENT TO THE PLAN
In January 1997, the Board approved an amendment that would increase the total
number of shares reserved for issuance under the Stock Plan by 2,450,000 shares,
an amount that is equal to approximately 3.1% of the outstanding shares of
Common Stock on February 28, 1997. The amendment increases the total shares
authorized
6
<PAGE> 10
by the Plan to 5,427,000 shares. The stockholders are being asked to ratify and
approve the amendment to the Stock Plan at the Annual Meeting.
1996 STOCK OPTION ACTIVITY
As of December 31, 1996, no options to purchase shares under the Option
Plan had been exercised and options to purchase 1,891,000 shares were
outstanding. Without taking into account the proposed amendment to the Option
Plan, 1,086,000 shares remained available for future grant as of December 31,
1996. The grant of future options under the Stock Plan is subject to the
discretion of the Administrator (as defined below). Accordingly, the amount of
future awards to employees under the Stock Plan is not currently determinable.
The closing market price of the Company's Common Stock on the Nasdaq National
Market on March 24, 1997 was $13.50 per share.
The following table sets forth information with respect to options
granted under the Company's existing employee option plans during 1996 to the
named executive officers, to all executive officers as a group, and to
non-executive officers as a group (nonemployee directors are not eligible to
participate in the Option Plan). Several individuals received more than one
option grant during 1996.
<TABLE>
<CAPTION>
Name of Individual or Identity of Group Weighted Average Number of Shares
and Position of Individual During 1996 Exercise Price Per Share Underlying Options Granted
- -------------------------------------- ------------------------ --------------------------
<S> <C> <C>
Mitchell E. Kertzman, Chief Executive Officer $17.500 350,000
and President $19.250 45,000(1)
$19.250 100,000(2)
Mark B. Hoffman, Chairman of the Board and Former $35.000 80,000
Chief Executive Officer
Robert Epstein, Executive Vice President ---- ----
David A. Litwack, Executive Vice President $24.625 45,000
$16.250 100,000
Michael W. Bealmear, Senior Vice President $19.250 100,000(1)
$19.250 40,000(2)
Michael H. Forster, Senior Vice President $19.250 159,200(1)
$19.250 100,000(2)
All executive officers as a group $19.553 1,454,150(3)
Non-executive officer employees as a group $18.252 8,927,702(3)
</TABLE>
- -------------------
(1) Options to purchase the indicated number of shares were granted in exchange
for an equal number of options granted prior to 1996 that were cancelled in
connection with the Company's 1996 option repricing program ("repriced
options"). See "Board Compensation Committee Report on Executive Compensation
and Repricing of Options -- 1996 Option Repricing Program".
(2) Options to purchase the indicated number of shares were granted in exchange
for an equal number of options granted earlier in 1996 that were cancelled in
connection with the Company's 1996 option repricing program ("repriced
options"); such cancelled options granted earlier in 1996 are not shown
separately in the table. See "Board Compensation Committee Report on Executive
Compensation and Repricing of Options -- 1996 Option Repricing Program".
(3) Includes all options cancelled in connection with the 1996 option repricing,
including options initially granted both during and before 1996.
7
<PAGE> 11
SUMMARY OF THE 1996 STOCK PLAN
General. The Stock Plan provides for the grant to employees and
consultants of stock options and stock purchase rights pursuant to which shares
of the Company's Common Stock may be acquired. Options granted under the Stock
Plan may be either "incentive stock options," as defined in Section 422 of the
Internal Revenue Code of 1986 (the "Code"), or nonstatutory stock options.
Purpose. The purposes of the Stock Plan are to attract and retain the
best available personnel for the Company for positions of substantial
responsibility, provide additional incentive to the employees and consultants of
the Company and promote the success of the Company's business.
Administration of the Stock Plan. The Stock Plan may be administered by
multiple administrative bodies. With respect to officers who are subject to
Section 16 of the Securities Exchange Act of 1934 ("Exchange Act"), the Stock
Plan will be administered by either the Board or one or more committees
designated by the Board as may be necessary to comply with Rule 16b-3
promulgated under the Exchange Act. With respect to persons other than Section
16 officers, the Stock Plan will be administered by the Board or a committee
designated by the Board as necessary to comply with applicable law. These
multiple administrative bodies shall hereinafter be collectively referred to as
the "Administrator." The Administrator may, without stockholder approval, amend
the terms of outstanding stock options (subject to the consent of the optionee).
Eligibility. Nonstatutory stock options may be granted to employees and
consultants. Incentive stock options may be granted only to employees. The
Administrator selects the employees and consultants who will be granted options
and determines the number of shares to be subject to each option. In making such
determination, the Administrator takes into account the duties and
responsibilities of the employee or consultant, the value of the services of the
employee or consultant, his or her present and potential contributions to the
success of the Company and other relevant factors. As of February 28, 1997,
approximately 5,400 employees and consultants were eligible to receive options
under the Stock Plan.
Exercise of Options. Options become exercisable at such times as are
determined by the Administrator and set forth in the option agreement.
Generally, it is anticipated that options granted under the plan will become
exercisable over a four-year period. However, in 1996 the Company granted to
approximately 300 non-officer employees performance-oriented options to purchase
approximately 1,200,000 shares that become exercisable over a period as long as
six years or as short as one year depending on the achievement by the individual
and the Company of certain specified objectives. An option is exercised by
giving notice of exercise to the Company specifying the number of full shares of
Common Stock to be purchased and tendering payment of the purchase price to the
Company. The method of payment of the exercise price of the shares purchased
upon exercise of an option shall be determined by the Administrator, and may
include, among other methods, cash, check, other shares of Sybase Common Stock
or an agreement from an approved broker to remit the exercise price to the
Company from the proceeds of a same-day sale of such shares.
Limitations on Number of Options. No employee shall be granted under
the Stock Plan in any fiscal year options to purchase more than 500,000 shares,
except that in connection with his or her initial employment, an employee can be
granted up to an additional 500,000 shares.
Exercise Price. The exercise price of options granted under the Stock
Plan is determined by the Administrator. In the case of incentive stock options,
the exercise price must not be less than 100% of the fair market value of the
Common Stock. In the case of nonstatutory stock options, the exercise price must
not be less than 85% of the fair market value of the Common Stock; provided that
for any calendar year, the number of shares subject to stock options granted
with exercise prices below 100% of the fair market value on the respective grant
date can not exceed 5% of the total number of shares subject to options and
stock purchase rights granted in the preceding calendar year. During 1996, no
options with exercise prices below the fair market value on the date of grant
were granted under the Stock Plan or under the Company's 1988 Stock Option Plan.
Termination of Employment. Upon termination of an optionee's continuous
status as an employee or consultant, the options terminate as provided in such
employee's or consultant's option agreement; provided that an incentive stock
option that is not exercised within three months following such termination will
become a
8
<PAGE> 12
nonstatutory option, unless such termination resulted from the death or
permanent disability of the optionee, in which case such option will become a
nonstatutory option if not exercised within twelve months after termination. The
period in which options may be exercised following termination of employment
will generally be three months, except in the case of disability (one year),
death (two years) or retirement (the balance of the option's term).
Notwithstanding the foregoing, the post-termination exercise period may be
terminated five days following written notice in the event the optionee commits
an act of misconduct, as defined in the Stock Plan, such as a felony involving
dishonesty or moral turpitude or a breach of a non-disclosure or non-compete
agreement.
Term of Option. Options granted under the Stock Plan expire as
determined by the Administrator, but in no event later than 10 years after the
date of grant. No option may be exercised by any person after such expiration.
Non-Transferability of Options. An option is non-transferable by the
holder otherwise than by will or the laws of descent and distribution, and is
exercisable during the holder's lifetime only by the optionee, or in the event
of the optionee's death, by a person who acquires the right to exercise the
option by bequest or inheritance or by reason of the death of the holder.
Adjustment Upon Changes in Capitalization; Change of Control. In the
event any change is made in the Company's capitalization, such as a stock split
or stock dividend, appropriate adjustment shall be made in the exercise price
and in the number of shares subject to the option. In the event of a proposed
sale of all or substantially all of the assets of the Company, or the merger of
the Company with or into another corporation, each outstanding option that is
not fully exercisable will only be accelerated and become fully exercisable if
the successor corporation has not agreed to assume all outstanding options or
substitute equivalent options therefor. If the successor corporation has agreed
to assume or substitute such equivalent options, the options that are not fully
exercisable will not be so accelerated. Notwithstanding the foregoing, the Board
has authorized statement of employment terms agreements with certain designated
executive officers that provide for a partial acceleration of exercisability in
the event that the executive officer's employment is terminated within 18 months
following a change of control. See "Executive Compensation -- Employment
Agreements and Certain Transactions." All shares of Common Stock issued pursuant
to the Stock Plan and the 1991 Employee Stock Purchase Plan and 1991 Foreign
Subsidiary Employee Stock Purchase Plan discussed below will also include one
preferred stock purchase right ("Right") pursuant to the Company's Preferred
Share Rights Agreement, as amended (the "Rights Plan"), that was adopted in
1992. The Rights Plan provides for a dividend of Rights, which can not be
exercised until certain events occur, to purchase shares of Preferred Stock of
the Company or, after certain events, shares of Common Stock. Each stockholder
of record receives one Right for each share of Common Stock that the shareholder
owns, and until the occurrence of certain events, such Rights trade with the
shares of Common Stock. Each share of Common Stock outstanding on the Record
Date also includes a Right.
Stock Purchase Rights. The Stock Plan permits the Company to grant
rights to purchase Common Stock of the Company ("Stock Purchase Rights") either
alone, in addition to, or in tandem with other awards under the Stock Plan or
cash awards made outside the Plan at prices determined by the Administrator of
the Stock Plan; provided that for any calendar year, the number of shares
subject to Stock Purchase Rights granted with prices below 100% of the fair
market value on the respective grant date can not exceed 10% of the total number
of shares subject to options and stock purchase rights granted in the preceding
calendar year. Upon the granting of a Stock Purchase Right under the Stock Plan,
the offeree shall be advised in writing of the terms, conditions and
restrictions related to the offer, including the number of shares of Common
Stock that the offeree shall be entitled to purchase, the price to be paid and
the time within which the offeree must accept such offer (which shall in no
event exceed six months from the date upon which the Administrator made the
determination to grant the Stock Purchase Right). The offer shall be accepted by
execution of a stock purchase agreement between the Company and the offeree.
Unless the Administrator of the Stock Plan determines otherwise, the
stock purchase agreement shall grant the Company a repurchase option exercisable
upon the voluntary or involuntary termination of the purchaser's employment or
consulting relationship with the Company for any reason (including death or
permanent and total disability). The purchase price for shares repurchased
pursuant to the stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine. Upon exercise of a Stock Purchase Right, the
purchaser shall have rights equivalent to those of a shareholder of
9
<PAGE> 13
the Company. Stock Purchase Rights granted to persons subject to Section 16 of
the Exchange Act, and shares of Common Stock purchased in connection with such
Stock Purchase Rights, may impose or be subject to additional restrictions
necessary to comply with Rule 16b-3.
Amendment and Termination of the Stock Plan. The Board may at any time
amend or terminate the Stock Plan without approval of the stockholders except to
the extent required by the state and federal law. The Code and the rules and
regulations thereunder governing incentive stock option plans currently require
stockholder approval for any increase in the number of shares issuable under a
plan and for changes in the eligibility standards under a plan. In any event,
the Stock Plan shall terminate in March 2006. The termination of the Stock Plan
will not affect options previously granted under the Stock Plan.
UNITED STATES TAX INFORMATION
Options granted under the Stock Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is a director,
officer or 10% stockholder subject to Section 16 of the Exchange Act. The
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term or short-term capital gain or loss,
depending on the holding period.
All options that do not qualify as incentive stock options are referred
to as nonstatutory options. An optionee will not recognize any taxable income at
the time he or she is granted a nonstatutory option. However, upon its exercise,
the optionee will recognize taxable income generally measured as the excess of
the then fair market value of the shares exercised over the exercise price. A
different rule may apply if the optionee is a director, officer or 10%
stockholder subject to Section 16 of the Exchange Act. Any taxable income
recognized in connection with an option exercise by an optionee who is also an
employee of the Company will be subject to tax withholding by the Company by
payment in cash or out of the current earnings paid to the optionee. Upon resale
of such shares by the optionee, any difference between the sales price and the
optionee's exercise price, to the extent not recognized as taxable income as
described above, will be treated as long-term or short-term capital gain or
loss, depending on the holding period. Subject to the limitation on
deductibility imposed under Section 162(m) of the Code, 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 nonstatutory
option.
An individual will not recognize any taxable income at the time he or
she is granted a Stock Purchase Right. However, to the extent shares purchased
pursuant to a Stock Purchase Right are subject to a Company repurchase option,
the purchaser will recognize ordinary income for tax purposes as and when such
repurchase option lapses (i.e., "vests"), measured at that time by the excess of
the then fair market value of the shares over the purchase price. The date of
taxation (and the date of measurement of taxable ordinary income) and the
commencement of the purchaser's long-term capital gain holding period may be
accelerated to the date the shares are purchased if the purchaser files an
election under Section 83(b) of the Code. Upon the individual's resale of such
shares, any difference between the sales price and the purchase price, to the
extent not recognized as ordinary income as provided above, will be treated as
capital gain or loss. Subject to limitations on deductibility of compensation
paid to certain purchasers, the Company will be entitled to a tax deduction in
the same amount and at the same time that the individual recognizes ordinary
income with respect to the shares purchased.
THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME
TAXATION LAWS UPON THE OPTIONEE OR PURCHASER AND THE COMPANY IN CONNECTION WITH
THE STOCK PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO
THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT
10
<PAGE> 14
DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR
FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
REQUIRED VOTE
The approval of the amendment to the Stock Plan requires the
affirmative vote of a majority of the votes cast on this subject matter at the
Annual Meeting. An abstention is treated as a vote cast but not as an
affirmative vote and, therefore, will have the same effect as a vote against the
proposal. A broker non-vote will not be treated as a vote cast on this subject
matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE STOCK PLAN.
AMENDMENT TO EMPLOYEE STOCK PURCHASE PLANS
The Amended and Restated 1991 Employee Stock Purchase Plan (the
"Purchase Plan"), and the Amended and Restated 1991 Foreign Subsidiary Employee
Stock Purchase Plan, which contains terms and conditions mirroring the terms and
conditions of the Purchase Plan (the "Foreign Subsidiary Plan"), provide an
opportunity for employees to invest in the Company's Common Stock at a discount
from the market price through voluntary payroll deductions. Employee
participation in the Purchase Plan and Foreign Subsidiary Plan has been
broad-based. Approximately 2,700 employees, representing approximately 51% of
the Company's eligible employees, participated in these plans during the
purchase period ended February 28, 1997. The Board believes that the continued
opportunity for employee equity participation under the Purchase Plan and
Foreign Subsidiary Plan will be beneficial to the Company and its stockholders,
by promoting the attraction and retention of employees and by motivating
employees to contribute to the Company's success, and has resulted in increased
stock ownership by employees. As a result of the high levels of participation in
the plans, the Board of Directors has concluded that an increase in the number
of shares available for issuance under the plans is essential to continuation of
these plans. A summary of the Purchase Plan is set forth below.
PROPOSED AMENDMENT
The Purchase Plan and Foreign Subsidiary Plan were adopted by the
Board of Directors on April 30, 1991 and approved by the stockholders in June
1991. The Foreign Subsidiary Plan applies to certain employees employed by
designated foreign subsidiaries of the Company. Amendments to these plans were
approved by the Board and the stockholders in 1991, 1993, 1994 and 1995. In
January 1997, the Board amended the Purchase Plan and Foreign Subsidiary Plan to
increase the total number of shares of Common Stock reserved for issuance under
the Purchase Plan and the Foreign Subsidiary Plan by 1,300,000 shares
(approximately 1.7% of the shares of common stock outstanding on February 28,
1997) to 6,000,000 shares. At the Annual Meeting, the stockholders are being
asked to approve this amendment.
PURCHASE PLAN ACTIVITY
As of February 28, 1997 the Company had issued and sold an aggregate of
4,497,015 shares of Common Stock pursuant to the Purchase Plan and the Foreign
Subsidiary Plan. Without taking into account the proposed amendment to the
Purchase Plan, as of February 28, 1997, only 202,985 shares remained available
for future issuance under the Purchase Plan and Foreign Subsidiary Plan.
The following table sets forth certain information regarding shares
purchased on the February 28, 1996 and August 31, 1996 purchase dates under the
Purchase Plan and Foreign Subsidiary Plan by each of the named executive
officers, all current executive officers as a group and all other employees as a
group (non-employee directors are not eligible to participate in the plans:
11
<PAGE> 15
<TABLE>
<CAPTION>
Name of Individual or Identity of Group and Position Dollar Value (1) Number of Shares Purchased
- ---------------------------------------------------- ---------------- --------------------------
<S> <C> <C>
Mitchell E. Kertzman, Chief Executive Officer and $31,759 1,419
President
Mark B. Hoffman, Chairman of the Board and Former $17,997 849
President and Chief Executive Officer
Robert S. Epstein, Executive Vice President and -- --
Chief Information Officer
David A. Litwack, Executive Vice President, Products -- --
Michael Bealmear, Senior Vice President, Worldwide $24,504 781
Services
Michael Forster, Senior Vice President, Worldwide $23,030 789
Field Operations
Current executive officers as a group $175,794 7,521
All other employees as a group $23,860,799 1,075,099
</TABLE>
(1) Market value of the shares on date of purchase. The purchase price paid
by each participant in the Purchase Plan is at least 15% below the
market value. See "Summary of Purchase Plan-Purchase Price."
Participation in the Purchase Plan and Foreign Subsidiary Plan is
voluntary and is dependent on each eligible employee's election to participate
and his or her designation as to the level of payroll deductions. Accordingly,
future purchases under the Purchase Plan and Foreign Subsidiary Plan are not
determinable.
SUMMARY OF PURCHASE PLAN
The purpose of the Purchase Plan and Foreign Subsidiary Plan is to
provide employees (including officers) of the Company and subsidiaries
designated by the Board (each a "Designated Subsidiary") with an opportunity to
purchase Common Stock of the Company through payroll deductions and to assist
the Company in attracting, retaining and motivating valued employees. All
discussion regarding the terms and conditions of the Purchase Plan contained
herein shall also include, without reference thereto, the terms and conditions
of the Foreign Subsidiary Plan.
Administration. The Purchase Plan is administered by the Board of
Directors of the Company or a committee appointed by the Board (the
"Administrator"). All questions of interpretation or application of the Purchase
Plan are determined by the Board of Directors or its appointed committee, and
its decisions are final, conclusive and binding upon all participants.
Eligibility. Each employee (including officers) of the Company (or a
Designated Subsidiary), except for employees who are scheduled to work less than
20 hours per week or less than five months per calendar year and employees who
are prohibited by the laws of the nation of their residence or employment from
participating in the Purchase Plan, is eligible to participate in an offering
under the Purchase Plan, subject to certain limitations imposed by Section 423
of the Code and subject to limitations on stock ownership as set forth in the
Purchase Plan. Eligible employees become participants in the Purchase Plan by
filing with the payroll office of the Company an enrollment form authorizing
payroll deductions prior to the applicable offering date, unless a later time
for filing the enrollment form has been set by the Board. As of September 1,
1996 (the commencement date for the purchase period September 1, 1996 through
February 28, 1997), there were approximately 5,300 employees worldwide eligible
to participate in the Purchase Plan and Foreign Subsidiary Plan, of whom
approximately 2,700 were participating in the plans.
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<PAGE> 16
Participation in an Offering. Each offering of Common Stock under the
Purchase Plan ("Offering") extends for a period of two years ("Enrollment
Period") and consists of four six-month purchase periods ("Purchase Periods")
within each such Enrollment Period, unless the participant withdraws or
terminates employment earlier. The Administrator may establish shorter
Enrollment Periods and may change the length of Purchase Periods without
stockholder approval. To participate in the Purchase Plan, each eligible
employee must authorize payroll deductions pursuant to the Purchase Plan. Such
payroll deductions must be at least 1%, and may not exceed 10%, of a
participant's base salary, wages, bonuses, overtime, shift premiums and
commissions received during a Purchase Period. Every six months, eligible
employees may elect to enroll in the Purchase Plan and commence an Enrollment
Period. Once an employee becomes a participant in the Purchase Plan, the
employee will automatically participate in each successive Enrollment Period
until such time as the employee withdraws from the Purchase Plan or the
employee's employment terminates. Eligible employees may participate in only one
Offering at a time.
Grant of Option. At the beginning of each Enrollment Period, each
participant is automatically granted an option to purchase shares of the
Company's Common Stock. The option expires at the end of the Enrollment Period
or upon termination of employment, whichever is earlier, but is exercised at the
end of each Purchase Period to the extent of the payroll deductions accumulated
during such Purchase Period.
The Administrator may, in its sole discretion, grant bonus options, in
addition to those contemplated above, to each eligible employee, with terms not
to exceed 27 months and for a uniform number of shares. Any bonus options shall
be subject to such additional terms and conditions, not inconsistent with the
terms of the Purchase Plan as interpreted by the Administrator, as may be
established from time to time by the Administrator. No bonus options were
granted during 1996.
Purchase Price. Shares of Common Stock may be purchased under the
Purchase Plan at a price equal to 85% of the lesser of the Fair Market Value of
the Common Stock on (i) the first day of the Enrollment Period or (ii) the last
day of the six-month Purchase Period. The Fair Market Value of the Common Stock
on any relevant date will be equal to the closing price per share as reported on
any established stock exchange or market system or, if the stock is not so
traded on such exchange or market system, then the Fair Market Value shall be
the mean between the bid and asked prices for Common Stock on such date, as
quoted by the National Association of Securities Dealers, Inc. Automated
Quotation System.
Shares Purchased. The number of shares of Common Stock a participant
purchases in each Purchase Period is determined by dividing the total amount of
payroll deductions withheld from the participant's compensation during that
Purchase Period by the purchase price determined as described above. Any payroll
deductions not applied to the purchase of shares will generally be applied to
the purchase of shares in subsequent Purchase Periods during the same Offering.
In addition to the limitation on the maximum payroll deduction, the option
granted to the participant, together with any bonus option granted by the Board,
may not give a participant the right to purchase shares under the Purchase Plan
at a rate per calendar year in excess of $25,000 (based on the market price on
the first day of the Enrollment Period).
Termination of Employment. Termination of a participant's employment
for any reason, including retirement or death, or the failure of the participant
to remain in the continuous scheduled employ of the Company or a Designated
Subsidiary for at least 20 hours per week (or five months per year) during the
applicable Enrollment Period, cancels his or her option and participation in the
Purchase Plan immediately. In such event, the payroll deductions credited to the
participant's account will be returned to him or her or, in the case of death,
to the person or persons entitled thereto as provided in the Purchase Plan.
Withdrawal. A participant may withdraw from an Offering at any time
without affecting his or her eligibility to participate in future Enrollment
Periods. However, once a participant withdraws from a particular Offering, that
participant may not participate again in the same Offering.
Capital Changes. In the event any change is made in the Company's
capitalization during an Offering period, such as a stock split or stock
dividend, which results in an increase or decrease in the number of shares of
Common Stock outstanding without receipt of consideration by the Company,
appropriate adjustment shall be made in the purchase price and in the number of
shares subject to options under the Purchase Plan.
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<PAGE> 17
Amendment and Termination of the Plan. The Board of Directors may at
any time amend or terminate the Purchase Plan, including amendments to existing
options (subject to the consent of the participant). No amendment shall be
effective unless within 12 months after it is adopted by the Board it is
approved by the holders of a majority of the votes cast at a duly held
stockholders' meeting, if such amendment would require stockholder approval
under the Code. Such amendments would include an increase in the number of
shares reserved under the Purchase Plan.
UNITED STATES TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, are intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
until the shares purchased under the Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax, and the amount of the tax will depend upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
first day of the Enrollment Period and one year from the date the shares are
purchased, the participant will recognize ordinary income measured as the lesser
of (a) the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or (b) an amount equal to 15% of
the fair market value of the shares as of the first day of the Enrollment
Period. Any additional gain will be treated as long-term capital gain. If the
shares are sold or otherwise disposed of before the expiration of these holding
periods, the participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss on such sale or
disposition will be long-term or short-term capital gain or loss, depending on
the holding period. The Company is not entitled to a deduction for amounts taxed
as ordinary income or capital gain to a participant except to the extent of
ordinary income recognized by participants upon a sale or disposition of shares
prior to the expiration of the holding period(s) described above, subject to
limitations on the deductibility imposed under Section 162(b) of the Code.
THE FOREGOING SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL INCOME
TAXATION UPON THE PARTICIPANT AND THE COMPANY IN CONNECTION WITH THE PURCHASE
PLAN DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE
APPLICABLE PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS
THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN
COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
REQUIRED VOTE
The approval of the amendment to the Purchase Plan and Foreign
Subsidiary Plan requires the affirmative vote of a majority of the votes cast on
this subject matter at the Annual Meeting. An abstention is treated as a vote
cast but not as an affirmative vote and, therefore, will have the same effect as
a vote against the proposal. A broker non-vote will not be treated as a vote
cast on this subject matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE PURCHASE PLAN AND FOREIGN SUBSIDIARY PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP, independent auditors, to
audit the financial statements of the Company for the year ending December 31,
1997 and recommends that the stockholders ratify such selection. In the event of
a negative vote, the Board will reconsider its selection. Ernst & Young LLP (or
its predecessor) has audited the Company's annual financial statements since the
inception of the Company. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
14
<PAGE> 18
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table provides certain summary information concerning
compensation paid to or accrued for the Company's Chief Executive Officer, each
of the four other most highly compensated current executive officers of the
Company (determined as of December 31, 1996) and the former Chief Executive
Officer (hereafter collectively referred to as the named executive officers) for
the fiscal years ended December 31, 1994, 1995 and 1996:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------- --------------------
Other Number of All Other
Name and Principal Annual Shares Underlying Compen-
Position in 1996 Year Salary (1) Bonus (2) Compensation Options sation
- ---------------- ---- ---------- ---------- ------------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 1996 $420,833 $100,000 $435,319 (3) 495,000 (4) $500(5)
Chief Executive Officer and 1995 $264,657 $125,000 $236,881 (7) 45,000 ----
President (6)
Mark B. Hoffman 1996 $516,000 $0 ---- 80,000 $500(5)
Chairman of the Board and 1995 $435,667 $0 ---- 100,000 $500(5)
Former President and 1994 $375,000 $515,837 ---- ---- $1,258(8)
Chief Executive Officer (6)
Robert S. Epstein 1996 $330,000 $85,500 ---- $500(5)
Executive Vice President and 1995 $312,499 $0 ---- $500(5)
Chief Information Officer (9) 1994 $288,206 $244,208 ---- $1,258(8)
David A. Litwack 1996 $325,000 $140,556 ---- 145,000 $500(5)
Executive Vice President, 1995 $220,644 $180,000 ---- ---- ----
Products (10)
Michael W. Bealmear 1996 $371,000 $257,667 $58,959 (11) 140,000(12) ----
Senior Vice President, 1995 $350,016 $218,290 ---- 100,000(13) ----
Worldwide Services 1994 $46,444 $183,798 ---- 75,000 ----
Michael H. Forster 1996 $356,250 $401,914(14) ---- 259,200(15) $500(5)
Senior Vice President, 1995 $220,000 $187,517 ---- 150,000(16) $2,348(5)
Worldwide Field Operations 1994 $123,958 $99,309 ---- 100,000 ----
</TABLE>
- -------------------
(1) Salary includes amounts deferred pursuant to the Company's 401(k)
savings plan or pursuant to the Executive Deferred Compensation Plan.
(2) Bonuses for each year include amounts earned for such year, even if
paid in a subsequent year, and exclude bonuses paid during such year
that were earned for a prior year.
(3) Includes relocation expense of $106,660, automobile allowance of
$16,800 and aircraft transportation reimbursement of $311,859.
(4) Includes option to purchase 45,000 shares issued in exchange for an
option to purchase an equal number of shares granted prior to 1996 that
was cancelled in connection with the Company's 1996 option repricing
program. Excludes options to purchase 100,000 shares granted in 1996
but later cancelled in 1996 in exchange for options to purchase an
equal number of shares (which are reflected in the table) at a lower
price in connection with the 1996 option repricing program. See "Board
Compensation Committee Report on Executive Compensation and Repricing
of Options -- 1996 Option Repricing Program".
(5) Company contribution under 401(k) plan.
(6) Mr. Kertzman joined Sybase in February 1995 and succeeded Mr. Hoffman
as Chief Executive Officer and President in July, 1996.
15
<PAGE> 19
(7) Aircraft transportation reimbursement.
(8) Company contribution of $1,258 to 401(k) plan account made to all
employees who were employed throughout 1994 and were eligible to
participate in the Company's 401(k) plan.
(9) Dr. Epstein declined to receive stock option grants in 1994, 1995 and
1996.
(10) Mr. Litwack joined Sybase in February 1995.
(11) Relocation expense reimbursement.
(12) Includes options to purchase 100,000 shares issued in exchange for
options to purchase an equal number of shares granted prior to 1996
that were cancelled in connection with the Company's 1996 option
repricing. Excludes options to purchase 40,000 shares granted in 1996
but later cancelled in 1996 in exchange for options to purchase an
equal number of shares (which are reflected in the table) at a lower
price in connection with the 1996 option repricing program.
(13) Includes options to purchase 75,000 shares issued in exchange for
options to purchase an equal number of shares granted in 1994 that were
cancelled in connection with the Company's 1995 option repricing.
(14) Includes a one-time bonus of $173,178 paid in connection with Mr.
Forster's promotion to Senior Vice President, Worldwide Field
Operations.
(15) Includes options to purchase 159,200 shares issued in exchange for
options to purchase an equal number of shares granted prior to 1996
that were cancelled in connection with the Company's 1996 option
repricing. Excludes options to purchase 100,000 shares granted in 1996
but later cancelled in 1996 in exchange for options to purchase an
equal number of shares (which are reflected in the table) at a lower
price in connection with the 1996 option repricing program.
(16) Includes options to purchase 134,200 shares issued in exchange for
options to purchase an equal number of shares granted in 1994 that were
cancelled in connection with the Company's 1995 option repricing.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options in fiscal year 1996 to the named executive officers and the potential
realizable value of such stock options at assumed annual rates of stock
appreciation over the terms of such stock options:
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants (1) Term (2)
- --------------------------------------------------------------------------------- -----------------------------------
Number of % of Total
Shares Options Exercise
Underlying Granted to Price Expira-
Options Employees Per tion
Name Granted in 1996 (3) Share Date 5% 10%
- ---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 350,000 3.44% $17.500 08/12/06 $3,852,100 $9,761,500
45,000 * 0.44% $19.250 09/27/05 $473,355 $1,164,060
40,000 ** 0.39% $19.250 01/22/06 $439,760 $1,091,920
60,000 ** 0.59% $19.250 03/26/06 $675,039 $1,684,740
Mark B. Hoffman 80,000 0.79% $35.000 01/22/06 $1,760,880 $4,462,480
Robert S. Epstein ---- ---- ---- ---- ---- ----
David A. Litwack 45,000 0.44% $24.625 03/26/06 $696,915 $1,766,070
100,000 0.98% $16.250 09/17/06 $1,022000 $2,589,800
Michael W. Bealmear 25,000 * 0.25% $19.250 04/07/05 $246,125 $597,800
75,000 * 0.74% $19.250 11/14/04 $696,375 $1,671,450
40,000 ** 0.39% $19.250 03/26/06 $450,000 $1,123,160
Michael H. Forster 134,200 * 1.32% $19.250 04/18/04 $1,140,700 $2,697,554
25,000 * 0.25% $19.250 04/07/05 $246,125 $597,800
100,000 ** 0.98% $19.250 03/26/06 $1,125,000 $2,807,900
</TABLE>
- -------------------
* Indicates repriced options granted in exchange for an equal number of
options granted prior to 1996 that were cancelled in connection with the
Company's 1996 option repricing program. See "Board Compensation
Committee Report on Executive Compensation and Repricing of Options --
1996 Option Repricing Program".
16
<PAGE> 20
** Indicates repriced options granted in exchange for an equal number of
options granted in 1996 that were cancelled later in 1996 in connection
with the Company's 1996 option repricing program; the cancelled options
are not reflected in the table. See "Board Compensation Committee Report
on Executive Compensation and Repricing of Options -- 1996 Option
Repricing Program".
(1) All options in the table have an exercise price equal to the fair market
value on the date of grant and, except for repriced options, become
exercisable for 12.5% of the shares six months after the grant date and
for the balance in equal monthly installments over the 42-month period
thereafter, so long as employment with the Company or one of its
subsidiaries continues. Except for repriced options, all of the options
granted have a 10-year term. With respect to each repriced option, the
expiration date for purposes of the term and the deemed commencement date
for the period over which the options become exercisable is identical to
that of the related option that was exchanged and cancelled. Such
cancelled options generally vested over a 48-month period. Accordingly,
the actual term of the repriced options is less than 10 years, and such
actual term is used to compute the potential realizable values in the
table. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each outstanding option that is not fully exercisable shall
be accelerated and become fully exercisable; provided, however, that if
the successor corporation agrees to assume all outstanding options or
substitute equivalent options therefor, then the Board in its sole
discretion shall have the power to determine that options that are not
fully exercisable shall not be so accelerated but shall be so assumed or
such equivalent options shall be substituted therefor.
(2) 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
estimates or projections of future Common Stock prices. Based on the
specified 5% and 10% assumed rates of appreciation, the approximate
market price per share at the end of ten years of options (i) with an
exercise price of $16.25 would be $26.47 and $42.148, respectively; (ii)
with an exercise price of $17.50 would be $28.506 and $45.390,
respectively; (iii) with an exercise price of $19.25 would be $31.356 and
$49.93, respectively; (iv) with an exercise price of $24.625 would be
$40.112 and $63.871, respectively; and (v) with an exercise price of
$35.00 would be $57.011 and $90.781, respectively.
(3) Excludes options granted in 1996 that were cancelled later in 1996 in
exchange for options to purchase an equal number of shares (which are
reflected in the calculations) at a lower price in connection with the
1996 option repricing program.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and the number and value of unexercised options held as of the end of the
last fiscal year:
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options at Fiscal In-the-Money Options at
Year-End (2) Fiscal Year- End (3)
-------------------------------- -------------------------------
Shares Aggregate
Acquired on Value
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ------------ ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 100,000 $1,525,975 0 495,000 $0 $0
Mark B. Hoffman 211,906 $3,434,767 559,774 167,920 $1,912,341 $0
Robert S. Epstein 170,000 $3,908,500 178,500 0 $1,747,983 $0
David A. Litwack 105,000 $3,171,351 160,637 136,563 $2,504,299 $43,800
Michael W. Bealmear 0 $0 0 140,000 $0 $0
Michael H. Forster 0 $0 0 259,200 $0 $0
</TABLE>
- ------------
(1) Market value of underlying securities on the date of exercise, minus
the exercise price.
(2) Options repriced under 1996 Option Repricing Program generally are not
exercisable, in whole or in part, until July 21, 1997.
17
<PAGE> 21
(3) Market value of underlying securities on December 31, 1996 ($16.688 per
share), minus the exercise price of in-the-money options.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND REPRICING OF
OPTIONS
Compensation Committee Report. The Compensation Committee of the
Board currently consists of three outside directors. The Compensation Committee
believes that the Company's executive compensation programs should enable the
Company to attract and retain strong performers. The Company's compensation
programs motivate the senior management team to achieve or exceed key objectives
by making individual compensation directly dependent on the Company's
achievement of financial goals and by providing significant reward for exceeding
those goals. The Committee believes that strong financial performance, on a
sustained basis, is the surest way for the Company to positively affect
long-term stockholder return.
Compensation Program Considerations. The Company takes the following
factors into consideration in designing various executive compensation programs:
(a) Compensation positioning and comparative framework.
In order to attract and retain the talent that it needs to
meet corporate objectives, the Company's executive compensation programs are
designed to deliver overall cash compensation and employee benefits competitive
with comparable technology companies if corporate objectives are achieved and,
if objectives are exceeded, to deliver compensation that is in some cases above
market. Bonuses are tied closely to corporate performance, such that actual
awards vary considerably according to overall Company performance.
The Company uses market compensation information obtained
through technology company surveys, customized surveys, and consulting
arrangements to establish appropriate compensation levels at target,
exceptional, or below target performance. In particular, with respect to 1996
compensation, the Company used information obtained in a survey of 17 technology
companies, primarily publicly-held software and computer companies located in
Northern California, in determining 1996 compensation. The companies in this
survey were selected based on the similarity of technology, annual sales, and
geographic location and included Sybase's three principal competitors. A number
of such companies are included in the approximately 200 companies comprising the
Hambrecht & Quist Technology Index. This compensation information is also used
to evaluate relative market position and to assist in designing programs that
reward executives according to both their job function and their actual
performance.
(b) Mix of compensation.
The Company's executive compensation program has three
primary components. All three are intended to attract and retain outstanding
executives and focus management on achieving or exceeding Company objectives.
(i) Base Salary and Basic Benefits. The Committee
believes that executive salaries and the basic employee benefit package must be
sufficiently competitive to attract and retain key executives. Base pay and
annual increases to base pay are determined primarily through an analysis of the
individual's salary relative to salaries for similar positions within the
Company and at other companies and, to a lesser extent, through a subjective
analysis of individual contributions to the Company's success. Executive
officers are eligible for participation in the standard health plans, 401(k)
savings plan and Employee Stock Purchase Plan offered by the Company to its
employees generally. The President and all Vice Presidents are eligible to
defer, subject to certain terms and conditions, portions of their compensation
under an Executive Compensation Deferral Plan.
(ii) Annual, Quarterly and Special Bonuses. The
Committee believes that one of the key differentiators of executive compensation
should be the variable portion provided by short-term cash incentive plans. The
Company's executive bonus plans are designed such that if the Company performs
significantly above its stated objectives, bonus awards may be significantly
above the award target. If the Company performs below its stated objectives,
awards may be significantly reduced, and may be eliminated altogether if
performance is below defined thresholds. Prior to the commencement of 1996, the
Committee established a target incentive bonus amount for each executive. This
target amount varied from executive to executive and ranged between
18
<PAGE> 22
37% and 71% of the executive's base salary. The actual amount of 1996 executive
bonuses was to be based 40% on the achievement of corporate operating income
objectives, 40% on the achievement of the executive's business unit objectives,
10% on achievement of customer satisfaction objectives and 10% on employee
retention. The corporate performance measure used for 1996 annual executive
bonus awards, including the annual bonus of the Chief Executive Officer and the
former Chief Executive Officer, was actual operating income compared with the
target operating income approved by the Compensation Committee. Because the
Company did not achieve operating income objectives, executive officers did not
receive any annual bonus in 1996 based on this performance measure. Business
unit objectives were generally based on such business unit's revenues or the
revenues generated by products developed by such unit. Bonuses in 1996 were paid
on a quarterly basis. In the fall of 1996, there were several changes in the
executive management team: Jack Acosta became Senior Vice President and Chief
Financial Officer; John Capobianco joined the Company as Vice President of
Marketing; Robert Epstein became the Chief Information Officer; and Laurie
Keating, then Senior Vice President, General Counsel and Secretary, became
responsible for the Human Resources and Corporate Communications organizations.
In November 1996, the Compensation Committee reevaluated the bonus structure in
light of the change in Chief Executive Officer and other changes in the
responsibilities of senior executives, the financial performance of the Company
and the future challenges faced by the Company and determined that an
alternative bonus plan should be established. Under this alternative, each
executive officer could become eligible to receive a bonus for 1996 equal to 40%
of such executive's targeted incentive bonus (less any amounts already paid in
1996) subject to the satisfactory completion of an operating plan for 1997 and
supporting programs and initiatives that would meet the strategic and
profitability goals established by the Chief Executive Officer for 1997. Mr.
Acosta, Mr. Capobianco, Dr. Epstein and Ms. Keating received bonuses under this
alternative. As, Mr. Bealmear, Mr. Forster and Mr. Litwack already had
established bonus plans, they were given the opportunity to remain under their
existing plans or select the new plan. Mr. Bealmear and Mr. Litwack received
bonuses based on the original formula established for 1996. Under the terms of
an employment agreement with the Company, Mr. Forster received a quarterly bonus
based entirely on the achievement of specified total revenue objectives.
In addition, the Compensation Committee may approve discretionary
executive awards proposed by the President or a member of the Compensation
Committee. Such discretionary awards are based on a subjective evaluation of an
executive officer's contribution to the Company's success and are not based on
predetermined measures of corporate performance or achievement of specified
corporate objectives. None of the persons serving as executive officers in 1996
received any discretionary bonus in 1996.
(iii) Long-term Incentives. These are provided through
initial stock option grants at date of hire and periodic additional stock option
grants. Executives realize gains only if the stock price increases over the
exercise price of their options and they exercise their options. Stock options
generally vest over a four-year period and the Committee believes they are
instrumental in focusing executives on sustaining strong financial performance
over a number of years. The initial option grant is designed to be competitive
with those of comparable technology companies for the level of job the executive
holds, and to motivate the executive to make the kinds of decisions and
implement strategies and programs that will contribute to an increase in the
Company's stock price over time. Periodic additional stock options within a
competitive range for the job are granted to reflect the executive's ongoing
contributions to the Company's success, to create an incentive to remain with
the Company, and to provide a long-term incentive to achieve or exceed the
Company's financial goals. In determining the amount of such periodic additional
grants, if any, for an individual, the Committee considers the amount of options
previously granted, the amount of options outstanding, the vesting schedule of
the outstanding options and the aggregate amount of the outstanding options and
new awards. Special additional stock options are granted from time to time to
executive officers in connection with promotions or changes in responsibilities.
In 1996, the Company repriced certain outstanding options. See "--1996 Option
Repricing Program" below.
(c) Other compensation considerations.
Because the Company believes that Company-provided benefits
programs in general should be similar for all employees, perquisites are not
ordinarily used to compensate its executives. In 1996, no executive perquisites
were included in the Company's compensation programs for Named Executive
Officers, except for certain relocation and housing expenses for Mr. Bealmear,
Mr. Forster and Mr. Kertzman, an automobile allowance for Mr. Litwack and Mr.
Kertzman and certain air transportation reimbursement provided for Mr. Kertzman.
19
<PAGE> 23
1996 Compensation for the Chief Executive Officer. Mr. Kertzman
succeeded Mr. Hoffman as Chief Executive Officer in July 1996. Both Chief
Executive Officers' 1996 base salaries were established by the Compensation
Committee at a lower level than the average base pay for the chief executives of
comparable technology companies, adjusting for company size. However, the Chief
Executive Officers' target incentive pay for 1996, which was primarily tied to
corporate operating income, was higher as a percentage of base pay, in
comparison with the incentive pay of peers. The total compensation of the Chief
Executive Officer is designed to compensate him at market levels when operating
targets are met and above market levels when operating income targets are
exceeded. In the case of both Mr. Hoffman and Mr. Kertzman, the full Board of
Directors approved the recommendation of the Compensation Committee with respect
to the Chief Executive Officer's 1996 target total compensation level (base
salary plus incentive). The incentive award portion of Mr. Hoffman's
compensation was initially established to be dependent 80% on the Company's
achievement of operating income objectives specified by the Compensation
Committee and 20% on the Chief Executive Officer's performance against
individual objectives established by the Compensation Committee. In 1996, the
corporate objectives were not met and Mr. Hoffman did not receive any bonus for
the year. As a result of the succession of Mr. Kertzman as Chief Executive
Officer, the Compensation Committee in November 1996 reviewed his compensation,
established a new annual base salary for Mr. Kertzman, made an additional stock
option grant and determined that Mr. Kertzman would be eligible to receive a
bonus equal to 40% of his target incentive compensation subject to his
completion to the satisfaction of the Board of Directors of certain objectives,
including the preparation of a new going-forward strategy, a 1997 operating plan
and the programs and initiatives that would support that strategy, operating
plan and Company profitability objectives.
The Compensation Committee held six meetings in 1996. At several
of the meetings, the Chief Executive Officer made recommendations to the
Compensation Committee with respect to compensation for executive officers other
than himself. Although present at the meetings, the Chief Executive Officer did
not participate in the deliberations concerning his compensation and awards.
Compensation Limitations. Under Section 162(m) of the Internal
Revenue Code, adopted in August 1993, and regulations adopted thereunder by the
Internal Revenue Service, publicly-held companies may be precluded from
deducting certain compensation paid to an executive officer in excess of $1.0
million in a year. The regulations exclude from this limit performance-based
compensation and stock options provided certain requirements, such as
stockholder approval, are satisfied. The Company believes that its stock option
plans qualify for the exclusions. The Company does not currently anticipate
taking actions necessary to qualify the Company's executive annual cash bonus
plans for the exclusions.
1996 Option Repricing Program. Competition for skilled software
engineers and other key employees in the client/server software industry is
intense and the use of significant stock options for retention and motivation of
such personnel is widespread in the high technology industries. The Compensation
Committee and the Board believe that stock options are a critical component of
the compensation offered by the Company to promote long-term retention of key
employees, motivate high levels of performance and recognize employee
contributions to the success of the Company. Over the first three quarters of
1996, the market price of the Company's common stock decreased substantially
from a high of $37.13 in the first quarter of 1996 to a low of $14.38 in the
third quarter of 1996. The Company also experienced higher than industry average
employee turnover during the first nine months of 1996. In light of this
substantial decline in market price and high rate of employee turnover, the
Board believed that the large numbers of outstanding stock options with an
exercise price in excess of the actual market price were no longer an effective
tool to encourage employee retention or to motivate high levels of performance.
As a result, the Board approved on September 17, 1996 an option repricing
program.
Specifically excluded from the repricing program were Mark Hoffman,
Chairman of the Board, and all nonemployee directors of the Company. All other
employees and certain consultants were eligible to participate. Under the
program, the eligible optionees were permitted to exchange one or more of their
existing stock options with an exercise price above $19.25 ("Old Options") for
new stock options ("Repriced Options") covering a number of shares equal to the
number of unexercised shares covered by the applicable Old Option. Each
exchanged Old Option was cancelled. The exercise price of the Repriced Options
was equal to the closing market price per share ($19.25) on October 21, 1996,
the last day of the period during which optionholders could elect to participate
in the program. The schedule on which a Repriced Option became exercisable and
the expiration date of the Repriced Option were, subject to the exercise
black-out period described below, identical to the applicable
20
<PAGE> 24
exchanged and cancelled Old Option. Notwithstanding the foregoing and except for
the circumstances described below, each Repriced Option was prohibited from
being exercised, in whole or in part (notwithstanding any amount that may have
previously been exercisable), until July 21, 1997, at which time the same number
of shares that would have been exercisable on July 21, 1997 under the Old Option
will become exercisable under the Repriced Option. As a result of this
restriction, optionees who voluntarily leave the Company or who are
involuntarily terminated for cause or performance before July 21, 1997 will not
have an opportunity to exercise any portion of their Repriced Options. The
prohibition on exercise did not apply if an employee's employment was (a)
involuntarily terminated due to job elimination, restructuring, or reduction in
force, or (b) terminated as a result of death or disability.
Report Submitted by:
Richard C. Alberding (Chairman)
L. William Krause
David E. Liddle
OPTION REPRICINGS
The following table sets forth information regarding all of the options
repriced between the date of the Company's initial public offering and December
31, 1996 that were held by persons who were executive officers of the Company at
the time of the applicable repricing:
<TABLE>
<CAPTION>
Length of
Number of Original Term
Shares Market Price Exercise Remaining at
Underlying of Stock at Price at Time Date of
Options Time of of Repricing New Repricing
Repriced or Repricing or or Exercise or
Name and Position (1) Date Amended Amendment Amendment Price Amendment
- --------------------- ---- ------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Jack Acosta 10/21/96 15,000 $19.250 $26.875 $19.250 8.14 years
Senior Vice President 10/21/96 10,000 $19.250 $25.875 $19.250 8.46 years
and Chief Financial 10/21/96 15,000 $19.250 $22.750 $19.250 9.44 years
Officer
Michael W. Bealmear 6/19/95 75,000 $26.875 $44.875 $26.875 9.42 years
Senior Vice President 10/21/96 25,000 $19.250 $25.875 $19.250 8.45 years
Worldwide Services 10/21/96 75,000 $19.250 $26.875 $19.250 8.07 years
10/21/96 40,000 $19.250 $24.625 $19.250 9.43 years
Michael D. Engelhardt 6/19/95 14,000 $26.875 $47.250 $26.875 9.33 years
former Vice President 6/19/95 10,000 $26.875 $46.875 $26.875 9.58 years
External Affairs
Michael H. Forster 10/21/96 25,000 $19.250 $25.875 $19.250 8.46 years
Senior Vice President 10/21/96 134,200 $19.250 $26.875 $19.250 7.49 years
Worldwide Field 10/21/96 100,000 $19.250 $24.625 $19.250 9.43 years
Operations
Dominic Gattuso, Jr. 6/19/95 33,334 $26.875 $28.750 $26.875 7.75 years
former Senior Vice 6/19/95 25,000 $26.875 $45.125 $26.875 8.75 years
President and General 6/19/95 15,000 $26.875 $47.375 $26.875 8.92 years
Manager, Worldwide Sales 6/19/95 10,800 $26.875 $46.750 $26.875 9.67 years
and Field Operations Sales
Laurie B. Keating 6/19/95 24,376 $26.875 $27.375 $26.875 7.58 years
former Senior Vice 6/19/95 30,000 $26.875 $36.188 $26.875 8.42 years
President, General 10/21/96 24,376 $19.250 $26.875 $19.250 6.27 years
Counsel and Secretary 10/21/96 30,000 $19.250 $26.875 $19.250 7.07 years
10/21/96 30,000 $19.250 $31.750 $19.250 8.93 years
10/21/96 30,000 $19.250 $35.000 $19.250 9.26 years
</TABLE>
21
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 10/21/96 45,000 $19.250 $29.375 $19.250 8.93 years
Chief Executive Officer 10/21/96 40,000 $19.250 $35.000 $19.250 9.26 years
and President 10/21/96 60,000 $19.250 $24.625 $19.250 9.43 years
Juanita Lott 6/19/95 12,000 $26.875 $33.438 $26.875 7.92 years
former Vice President 6/19/95 13,000 $26.875 $47.375 $26.875 8.92 years
Worldwide Human
Resources
Dennis L. McEvoy 6/19/95 100,000 $26.875 $42.313 $26.875 9.17 years
former Senior Vice President
President Enterprise
Products Group
Kathryn C. Nyrop 6/19/95 14,000 $26.875 $36.188 $26.875 8.42 years
former Vice President and
Treasurer
Peter F. Pervere 6/19/95 20,000 $26.875 $27.375 $26.875 7.58 years
Vice President and 6/19/95 20,000 $26.875 $36.188 $26.875 8.42 years
Corporate Controller 10/21/96 2,000 $19.250 $25.750 $19.250 6.24 years
10/21/96 20,000 $19.250 $26.875 $19.250 6.27 years
10/21/96 20,000 $19.250 $26.875 $19.250 7.07 years
10/21/96 25,000 $19.250 $31.750 $19.250 8.93 years
10/21/96 30,000 $19.250 $35.000 $19.250 9.26 years
</TABLE>
- -------------
(1) Identifies most recent position as an executive officer of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Messrs. Alberding, Krause and
Liddle. Each of the current members of the Compensation Committee receives an
automatic annual stock option grant under the Company's 1992 Director Stock
Option Plan. See "Election of Directors - Director Compensation."
EMPLOYMENT AGREEMENTS AND CERTAIN TRANSACTIONS
During 1996, the Company paid $342,121 to R.B. Webber & Company for
consulting services provided to the Company. Such services were retained on a
project-by-project basis and on a fixed price or time and materials basis.
Jeffrey Webber, a director of the Company, is a founder and President of R.B.
Webber & Company.
In connection with the merger between Powersoft Corporation and the
Company, Sybase entered into an employment agreement with each of Mr. Kertzman
and Mr. Litwack that provided for employment through February 13, 1997 and
contained certain covenants not to compete or to solicit employees or customers
of the Company both during and after the term of the agreement.
In connection with Mr. Forster's joining Micro Decisionware, Inc.
("MDI") as Chief Executive Officer in 1993, MDI made certain loans to Mr.
Forster to facilitate his purchase of shares of MDI stock and his relocation in
the amounts of $675,000 (the "Stock Note") and $250,000 (the "Residence Note"),
respectively. As of December 31, 1996, approximately $536,197 was outstanding
under a note secured by 26,843 shares of Common Stock owned by Mr. Forster and
bearing interest at 6% per annum and approximately $178,849 was outstanding
under a note that is bearing interest at prime plus 2% per annum and is
guaranteed by Safeguard Scientifics, Inc., the former parent corporation of MDI.
In April 1996, the Company and Mr. Forster entered into an employment agreement
providing for Mr. Forster's employment through December 31, 1997 (unless sooner
terminated for cause) at an annual base salary of $370,000, with an initial
one-time after-tax bonus of $166,657 and annual target incentive compensation of
$200,000 dependent on the achievement of specified objectives. The agreement
also
22
<PAGE> 26
provided for stock option awards for 1996 and 1997. Under the terms of the
agreement the term of Residence Note was extended to July 31, 1996 and the term
of the Stock Note was extended until December 31, 1997.
In August 1996, Jack Acosta became Chief Financial Officer and entered
into an employment agreement with the Company that provides for the payment of
severance equal to his annual base salary and continuation of employee benefits
for twelve months if his employment is terminated prior to August 1, 1998 for
reasons other than cause or disability.
The Company has entered into statements of employment terms with the
Company's executive officers providing for severance payments equal to two times
annual base salary and one year's target incentive compensation and acceleration
of exercisability of 50% of the officer's then unvested options in the event of
a termination of employment for reasons other than cause within 18 months
following a change of control of the Company.
PERFORMANCE GRAPH
The following graph and table compare the cumulative total return on a
$100 investment in the Company with the cumulative total return on a like
investment (assuming reinvestment of dividends, if any) in the Standard & Poor's
500 Stock Index and the Hambrecht & Quist Technology Index for the period
commencing on December 31, 1991 through December 31, 1996:
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sybase $100.00 $237.35 $404.82 $501.20 $346.99 $160.85
H & Q Technology $100.00 $115.02 $125.52 $145.70 $218.76 $262.49
S & P 500 $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file an initial report of securities ownership
on Form 3 and reports of changes in securities ownership on Form 4 or 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and 10%
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that no Forms 4 or 5 were required for such persons, the
Company believes that, for the reporting period from January 1, 1996 to December
31, 1996, all required Section 16(a) filings were made on a timely basis.
23
<PAGE> 27
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the meeting. However, if any other matters properly come before the
Annual Meeting, it is the intention of the appointees named in the enclosed
proxy card to vote in accordance with their best judgment on such matters. Under
the Company's bylaws, in order for a matter to be deemed properly brought before
the Annual Meeting by a stockholder, notice must be delivered to or mailed and
received by the Secretary of the Company, not less than 90 days prior to the
Annual Meeting; provided, however, if less than 100 days' notice or prior public
disclosure of the date of the Annual Meeting has been given, notice by the
stockholder to be timely must be received by the Secretary of the Company not
later than the close of business on the tenth day following the day on which
such notice of the Annual Meeting was mailed or publicly disclosed. The
stockholder's notice must set forth, as to each proposed matter: (a) the name
and address of the stockholder and the nature of the business to be proposed,
(b) a representation that the stockholder is a holder of record of stock of the
Company and is entitled to vote at the meeting, (c) if the matter to be proposed
is a nomination, the name and address of the nominee, a statement as to whether
the stockholder intends to appear in person or by proxy to make such nomination
and a description of all arrangements and understandings between the stockholder
and each nominee pursuant to which the nomination is being made, and (d) such
other information as would be required in a proxy statement had such proposal or
nomination been made by the Board of Directors. The presiding officer of the
meeting may refuse to acknowledge any matter not made in compliance with the
foregoing procedure.
THE BOARD OF DIRECTORS
Dated: April 4, 1997
24
<PAGE> 28
[Map to the offices of the Company]
<PAGE> 29
SYBASE, INC.
1996 STOCK PLAN
(as amended January 21, 1997)
1. Purposes of the Plan. The purposes of this Stock Plan are:
o to attract and retain the best available personnel for
positions of substantial responsibility,
o to provide additional incentive to Employees and
Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to
the administration of stock option, restricted stock and incentive stock plans
under state corporate and securities laws and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Sybase, Inc.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services and who is
compensated for such services. The term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
<PAGE> 30
(i) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the one hundred
eighty-first (181st) day of such leave any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of
Common Stock determined as the closing sales price for such Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable.
(o) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(p) "Misconduct" means the Optionee or purchaser, as applicable,
(i) is convicted of a felony involving dishonesty or moral turpitude, (ii)
committed an act of dishonesty intended to result in substantial personal
enrichment, (iii) engaged in actions intended to cause significant injury to the
Company (including derogatory statements regarding the Company, but excluding
statements made in connection with any legal action filed against the Company),
or (iv) breached the non-disclosure, non-compete or non-solicit provisions of
any agreement between the Optionee and the Company.
(q) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
<PAGE> 31
(r) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Right grant.
The Notice of Grant is part of the Option Agreement.
(s) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(t) "Option" means a stock option granted pursuant to the Plan.
(u) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(v) "Optioned Stock" means the Common Stock subject to an Option
or Right.
(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option or Right.
(x) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1996 Stock Plan.
(z) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.
(aa) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(bb) "Retirement" means the termination of employment pursuant to
the Company's retirement policies for an Employee who has attained the age of
fifty-five (55) and whose Continuous Status as an Employee was not interrupted
during the previous five (5) years.
(cc) "Right" means a Stock Purchase Right granted pursuant to the
Plan.
(dd) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(ee) "Section 16(b)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.
(ff) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
<PAGE> 32
(gg) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(hh) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 5,427,000. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Right 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); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, and the original purchaser of such
Shares did not receive any benefits of ownership of such Shares, such Shares
shall become available for future grant under the Plan. For purposes of the
preceding sentence, voting rights shall not be considered a benefit of Share
ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.
(ii) Administration With Respect to Directors and
Officers Subject to Section 16(b). With respect to Options or Rights grants made
to Employees who are also Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in a manner complying with the rules under Rule 16b-3
relating to the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of equity securities
are to be made, or (B) a committee designated by the Board to administer the
Plan, which committee shall be constituted to comply with the rules under Rule
16b-3 relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.
<PAGE> 33
(iii) Administration With Respect to Other Persons.
With respect to Options or Rights grants made to Employees or Consultants who
are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted to satisfy Applicable Laws. Once appointed, such
Committee shall serve in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and
Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each Option and Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Right or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
<PAGE> 34
(ix) to modify or amend each Option or Right (subject to
Section 16(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Right
previously granted by the Administrator;
(xi) to determine the terms and restrictions applicable
to Options and Rights and any Restricted Stock;
(xii) to determine whether and under what circumstances
an Option may be settled in cash under Section 10(f) instead of Common Stock;
(xiii) to determine whether, to what extent and under
what circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if any)
of any deemed earnings on any deferred amount during any deferral period); and
(xiv) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Rights.
5. Eligibility. Nonstatutory Stock Options and Rights may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been granted
an Option or Right may be granted additional Options or Rights.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Right shall confer upon an
Optionee any right with respect to continuing the Optionee's employment or
consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
<PAGE> 35
(c) The following limitations shall apply to grants of
Options to Employees:
(i) No Employee shall be granted, in any fiscal year of
the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 500,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.
7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the stockholders of the Company as described in Section 20 of the
Plan. It shall continue in effect for a term of ten (10) years unless terminated
earlier under Section 16 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice
of Grant and shall be ten (10) years from the date of grant or such shorter term
as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator, but in no case
shall the per Share exercise price be less than 85% of the Fair Market Value per
Share on the date of grant; provided, however, that for any calendar year, the
aggregate number of Shares subject to Nonstatutory Stock Options granted during
such calendar year with a per Share exercise price less than the Fair Market
Value per Share on the date of grant shall not exceed five percent (5%) of the
number of Shares subject to Options granted in the preceding calendar year.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period or the
attainment of certain performance goals determined by the Administrator.
<PAGE> 36
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) 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 (B) 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 Administrator 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;
(v) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vi) any combination of the foregoing methods of payment;
or
(vi) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall
<PAGE> 37
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will 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 14 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter 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) Termination of Employment or Consulting Relationship. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than as provided for in Sections 10(c), 10(d) and 10(e), the Optionee may
exercise his or her Option, but only within such period of time as is specified
in the Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for three (3) months following the Optionee's termination. If, on
the date of termination, the Optionee is not entitled to exercise the Optionee's
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
(i) Notwithstanding the above, in the event an Optionee's
Continuous Status as an Employee or Consultant terminates and the Optionee
performs an act of Misconduct, all unexercised Options held by such Optionee
shall expire five (5) business days following written notice from the Company to
the Optionee.
(ii) Notwithstanding the above, in the event of an
Optionee's change in status from Consultant to Employee or Employee to
Consultant, an Optionee's Continuous Status as an Employee or Consultant shall
not automatically terminate solely as a result of such change in status.
However, in the event of an Optionee's change of status from Employee to
Consultant, an Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option three (3) months and one (1) day following such change
of status.
(c) Disability of Optionee. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
<PAGE> 38
(d) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twenty-four (24) months following
the date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Retirement. In the event that an Optionee's Continuous Status
as an Employee terminates as a result of the Optionee's Retirement, the Optionee
may exercise his or her Option at any time subject to the limitations in the
Plan and the Notice of Grant, but only to the extent that the Optionee was
entitled to exercise the Option at the time of such termination, unless
otherwise expressly provided in a written agreement between the Optionee and the
Company. However, any Incentive Stock Options not exercised within three (3)
months of the termination of the Optionee's Continuous Status as an Employee
shall be treated for tax purposes as Nonstatutory Stock Options three (3) months
and one (1) day following such Retirement.
(f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
(g) Rule 16b-3. Options granted to individuals subject to Section
16 of the Exchange Act ("Insiders") must comply with the applicable provisions
of Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer, which shall
in no event exceed six (6) months from the date upon which the Administrator
made the determination to grant the Stock Purchase Right. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator. The Administrator may grant a Stock Purchase
Right at a price equal to or in excess of the par value of the Shares; provided,
however, for any calendar year, the aggregate number of shares subject to grants
of Stock Purchase Rights granted during such calendar year with a per Share
exercise price less than the Fair Market Value per Share on the date of grant
shall not exceed ten percent (10%) of the number of Shares subject to Options
granted in the preceding calendar year.
<PAGE> 39
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment or in the event of the purchaser's Misconduct with
the Company for any reason (including death or Disability). The purchase price
for Shares repurchased pursuant to the Restricted Stock purchase agreement shall
be the original price paid by the purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The repurchase option shall
lapse at a rate determined by the Administrator.
(c) Rule 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3. An
Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(d) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
(e) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.
12. Withholding Taxes. In accordance with any applicable administrative
guidelines it establishes, the Administrator may allow a purchaser to pay the
amount of taxes required by law to be withheld as a result of a purchase of
Shares or a lapse of restrictions in connection with Shares purchased pursuant
to an Option or Right, by withholding from any payment of Common Stock due as a
result of such purchase or lapse of restrictions, or by permitting the purchaser
to deliver to the Company, Shares having a Fair Market Value, as determined by
the Administrator, equal to the amount of such required withholding taxes.
13. Non-Transferability of Options and Rights. Unless otherwise
specified by the Administrator in the Notice of Grant, an Option or Right 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.
14. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Right, and the number of shares of Common Stock
which have been authorized for issuance under the
<PAGE> 40
Plan but as to which no Options or Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Right,
as well as the price per share of Common Stock covered by each such outstanding
Option or Right, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock 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
of Common Stock 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."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. 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
of Common Stock subject to an Option or Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Right until ten (10) days prior
to such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option or Right would not otherwise be exercisable. In
addition, the Administrator may provide that any Company repurchase rights
applicable to any Shares purchased upon exercise of an Option or Right shall
lapse as to all such Shares, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Right will 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, each outstanding Option and Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation (the "Successor Corporation"), unless
the Successor Corporation refuses to assume or substitute for the Option or
Right, in which case the Optionee shall have the right to exercise the Option or
Right as to all of the Optioned Stock, including Shares as to which it would not
otherwise be exercisable. If an Option or Right is exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Right shall be fully exercisable for a period of not less than
forty-five (45) days from the date of such notice, and the Option or Right shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the Successor Corporation, the
Administrator may, with the consent of the Successor Corporation, provide for
the consideration to be received upon the exercise
<PAGE> 41
of the Option or Right, for each Share of Optioned Stock subject to the Option
or Right, to be solely common stock of the Successor Corporation equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.
15. Date of Grant. The date of grant of an Option or Right shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option or Right, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
17. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Right unless the exercise of such Option or Right and
the issuance and delivery of such Shares 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,
Applicable Laws, and the requirements of any stock exchange or quotation system
upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Right, the Company may require the person exercising such Option or
Right 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.
18. Liability of Company.
<PAGE> 42
(a) Inability to Obtain Authority. The 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.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional shareholder
approval, such Option or Right shall be void with respect to such excess
Optioned Stock, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 16(b) of the Plan.
19. 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.
20. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
<PAGE> 43
NOTICE OF GRANT OF STOCK OPTIONS SYBASE, INC. STOCK PLAN DEPT.
AND GRANT AGREEMENT ID: 94-2951005
6475 CHRISTIE AVE. , 4th Fl
EMERYVILLE, CA 94608
(510) 922-4566 FAX# 922-5502
NAME
ADDRESS
ID:
You have been granted options to buy Sybase, Inc. Common Stock as follows:
Stock Option Grant Number _________________________
Date of Grant _________________________
Stock Option Plan _________________________
Option Price per Share $________________________
Total Number of Shares Granted _________________________
Total Price of Shares Granted $________________________
This Option is granted subject to the terms of and conditions of the 1996 Stock
Plan, as amended ("Plan"), and this Option Agreement. The "Exercise Price" is
equal to the Option Price per Share set forth above. Vesting Commencement Date
is the Date of Grant [Hire]. This Option expires ten years following the Date of
Grant. The Option may be exercised only with respect to shares that have vested
in accordance with the following vesting schedule: 1/8 of the total number of
shares granted shall vest six months after the Vesting Commencement Date, and
1/48 of the total number of shares shall vest for each month which has expired
thereafter. By accepting this Option, Optionee agrees that the vesting of the
shares hereunder is earned only by continuing employment at the will of the
Company (and not through the act of being hired, being granted this Option, or
by purchasing shares hereunder) and that all decisions or interpretations of the
Administrator with respect to questions arising under the Plan or Option are
binding, conclusive and final on Optionee. A copy of the Plan and Prospectus
relating thereto are available through electronic means. DO NOT RETURN. KEEP
THIS FOR YOUR RECORDS
SYBASE, INC. Date:
By ____________________________
<PAGE> 44
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 16(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of Code
Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
This Option may not be exercised for a fraction of a
Share.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of
this Option unless such issuance and exercise complies with all relevant
provisions
<PAGE> 45
of law and the requirements of any stock exchange or quotation service upon
which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator 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
(d) surrender of other Shares which (i) 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 (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Restrictions on Exercise. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation or warranty
to the Company as may be required by any applicable law or regulation.
7. Termination of Employment or Consulting Relationship.
(a) General. Upon termination of an Optionee's Continuous
Status as an Employee or Consultant, other than as provided for in Sections
7(b), 7(c), 7(d) and 7(e) the Optionee may exercise his or her Option within
three (3)
<PAGE> 46
months after the date of such termination, but only to the extent that the
Optionee was entitled to exercise it at the date of termination (and in no event
later than the expiration of the term of such Option as set forth in the Notice
of Grant). If, after termination, the Optionee does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(b) Misconduct. In the event an Optionee's Continuous Status
as an Employee or Consultant terminates and the Optionee performs an act of
Misconduct, all unexercised Options held by such Optionee shall expire five (5)
business days following written notice from the Company to the Optionee.
(c) Disability of Optionee. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twenty-four (24) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), but the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
of inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Retirement. In the event that an Optionee's Continuous
Status as an Employee terminates as a result of the Optionee's Retirement, the
Optionee may exercise his or her Option at any time subject to the limitations
in the Plan and the Notice of Grant, but only to the extent that the Optionee
was entitled to exercise the Option at the time of such termination, unless
otherwise expressly provided in a written agreement between the Optionee and the
<PAGE> 47
Company. However, any Incentive Stock Options not exercised within three (3)
months of the termination of the Optionee's Continuous Status as an Employee
shall be treated for tax purposes as Nonstatutory Stock Options three (3) months
and one (1) day following such Retirement.
8. Tax Consequences. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax and state income tax liability upon exercise of a
NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Consultant, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option three
(3) months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
<PAGE> 48
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain or loss
realized on disposition of the Shares will be treated as long-term capital gain
or loss for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the lesser of (A)
the difference between the Fair Market Value of the Shares acquired on the date
of exercise and the aggregate Exercise Price, or (B) the difference between the
amount realized on the sale of such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
9. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
10. NO GUARANTEE OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT
CAUSE.
<PAGE> 49
This Option is granted under and governed by the terms and conditions of the
Plan and this Option Agreement. Optionee has reviewed the Plan and this Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully understands all
provisions of the Plan and Option Agreement. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Plan and Option Agreement.
Optionee further agrees to notify the Company upon any change in the residence
address indicated on the attached Notice of Grant.
<PAGE> 50
SYBASE, INC.
1991 AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(As amended on January 21, 1997)
1. Purpose
This Amended and Restated Sybase, Inc. 1991 Employee Stock
Purchase Plan (the "Plan") is designed to encourage and assist employees of
Sybase, Inc. ("Sybase") and participating subsidiaries (together, the "Company")
to acquire an equity interest in the Company through the purchase of shares of
Sybase common stock (the "Common Stock").
2. Administration
The Plan shall be administered by the Board of Directors of
Sybase (or a committee of "disinterested" directors no fewer in number than
required by Rule 16b-3 of the Securities and Exchange Commission ("Rule 16b-3")
as in effect with respect to the Company from time to time, which in either case
is referred to as the "Board") in accordance with Rule 16b-3. The Board may from
time to time select a committee or persons (the "Administrator"), to be
responsible for any matters for which a "disinterested administrator" is not
required by Rule 16-b. Subject to the express provisions of the Plan, to the
overall supervision of the Board, and to the limitations of Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Administrator may
administer and interpret the Plan in any manner it believes to be desirable, and
any such interpretation shall be conclusive and binding on the Company and all
participants.
3. Number of Shares
(a) The Company has reserved for sale under the Plan 6,000,000
shares of Common Stock (after giving effect to the November 1993 2-for-1 stock
split) less any shares sold under the Sybase 1991 Amended and Restated Foreign
Subsidiary Employee Stock Purchase Plan. Shares sold under the Plan may be newly
issued shares or shares reacquired in private transactions or open market
purchases, but all shares sold under the Plan, regardless of source, shall be
counted against the 6,000,000 share limitation.
(b) In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights, or other similar change in the capital
structure of the Company, the Board may make such adjustment, if any, as it
deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
4. Eligibility Requirements
(a) Each employee of the Company, except those described in
the next paragraph, shall become eligible to participate in the Plan in
accordance with Section 5
<PAGE> 51
on the first Enrollment Date on or following commencement of his or her
employment by the Company or following such period of employment as is
designated by the Board from time to time. Participation in the Plan is entirely
voluntary.
(b) The following employees are not eligible to participate in
the Plan:
(i) employees who would, immediately upon enrollment in
the Plan, own directly or indirectly, or hold options or rights to acquire stock
possessing, five percent or more of the total combined voting power or value of
all classes of stock of Sybase or any subsidiary of Sybase;
(ii) employees who are customarily employed by the
Company less than 20 hours per week or less than five months in any calendar
year; and
(iii) employees who are prohibited by the laws of the
nation of their residence or employment from participating in the Plan.
Employees who are also directors or officers of the Company may participate only
in accordance with Rule 16b-3 of the Securities and Exchange Commission.
(c) "Employee" shall mean any individual who is an employee of
the Company or a Participating Subsidiary within the meaning of Section 3401(c)
of the Code and the Treasury Regulations thereunder. "Subsidiary" shall mean any
corporation described in Section 425(e) or (f) of the Code. "Participating
Subsidiary" shall mean a subsidiary which has been designated by the
Administrator as covered by the Plan.
5. Enrollment
Any eligible employee may enroll or re-enroll in the Plan each
year as of the first trading day of (i) the month immediately following the
closing of the Company's initial public offering of shares of its Common Stock
on a Registration Statement on Form S-1 (except that if such closing occurs
during the last month of a fiscal quarter (e.g. September), then the first
Enrollment Date will be the first trading day of the second month of the quarter
immediately following the closing (e.g. November)), (ii) the sixth month
following such month, and (iii) each yearly anniversary of such months (e.g. any
March and September or May and November), or such other days as may be
established by the Board from time to time (the "Enrollment Dates"). In order to
enroll, an eligible employee must complete, sign, and submit to the Company an
enrollment form. Any enrollment form received by the Company by the 15th day of
the month preceding an Enrollment Date (or by the Enrollment Date in the case of
employees hired after such 15th day), or such other date established by the
Administrator from time to time, will be effective on that Enrollment Date. For
purposes of the Plan, a "trading day" is any day on which regular trading occurs
on any established stock exchange or market system on which the Common Stock is
traded.
6. Grant of Option on Enrollment
(a) Enrollment or re-enrollment by a participant in the Plan
on an Enrollment Date will constitute the grant by the Company to the
participant of an option to purchase shares of Common Stock from the Company
under the Plan. Any participant
<PAGE> 52
whose option expires and who has not withdrawn from the Plan will automatically
be re-enrolled in the Plan and granted a new option on the Enrollment Date
immediately following the date on which the option expires.
(b) Except as provided in Section 9, each option granted under
the Plan shall have the following terms:
(i) each option granted under the Plan will have a term
of not more than 24 months or such shorter option period as may be established
by the Board from time to time; notwithstanding the foregoing, however, whether
or not all shares have been purchased thereunder, the option will expire on the
earlier to occur of (A) the completion of the purchase of shares on the last
Purchase Date occurring within 24 months after the Enrollment Date for such
option, or such shorter option period as may be established by the Board before
an Enrollment Date for all options to be granted on such date or (B) the date on
which the employee's participation in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will
be made only through payroll withholding in accordance with Section 7;
(iii) purchase of shares upon exercise of the option will
be effected only on the Purchase Dates established in accordance with Section 8;
(iv) the price per share under the option will be
determined as provided in Section 8;
(v) the number of shares available for purchase under
the option will, unless otherwise established by the Board before an Enrollment
Date for all options to be granted on such date, be determined by dividing
$25,000 by the fair market value of a share of Common Stock on the Enrollment
Date and by multiplying the result by the number of calendar years included in
whole or in part in the period from grant to expiration of the option;
(vi) the option (taken together with all other options
then outstanding under this and all other similar stock purchase plans of Sybase
and any subsidiary of Sybase, collectively "Options") will in no event give the
participant the right to purchase shares at a rate per calendar year which
accrues in excess of $25,000 of fair market value of such shares, less the fair
market value of any shares accrued and already purchased during such year under
Options which have expired or terminated, determined at the applicable
Enrollment Dates; and
(vii) the option will in all respects be subject to the
terms and conditions of the Plan, as interpreted by the Administrator from time
to time.
7. Payroll and Tax Withholding; Use by Company
(a) Each participant shall elect to have amounts withheld from
his or her compensation paid by the Company during the option period, at a rate
equal to any whole percentage up to a maximum of 10 percent, or such lesser
percentage as the Board may establish from time to time before an Enrollment
Date. Compensation includes regular salary payments, annual and quarterly
performance bonuses, hire-on bonuses,
<PAGE> 53
cash recognition awards, commissions, overtime pay, shift premiums, and elective
contributions by the participant to qualified employee benefit plans, but
excludes all other payments including, without limitation, long-term disability
or workers compensation payments, car allowances, employee referral bonuses,
relocation payments, expense reimbursements (including but not limited to
travel, entertainment, and moving expenses), salary gross-up payments, and
non-cash recognition awards. The participant shall designate a rate of
withholding in his or her enrollment form and may elect to increase or decrease
the rate of contribution effective as of any Enrollment Date, by delivery to the
Company, not later than 15 days before such Enrollment Date, of a written notice
indicating the revised withholding rate.
(b) Payroll withholdings shall be credited to an account
maintained for purposes of the Plan on behalf of each participant, as soon as
administratively feasible after the withholding occurs. The Company shall be
entitled to use the withholdings for any corporate purpose, shall have no
obligation to pay interest on withholdings to any participant, and shall not be
obligated to segregate withholdings.
(c) Upon disposition of shares acquired by exercise of an
option, the participant shall pay, or make provision adequate to the Company for
payment of, all federal, state, and other tax (and similar) withholdings that
the Company determines, in its discretion, are required due to the disposition,
including any such withholding that the Company determines in its discretion is
necessary to allow the Company to claim tax deductions or other benefits in
connection with the disposition. A participant shall make such similar
provisions for payments that the Company determines, in its discretion, are
required due to the exercise of an option, including such provisions as are
necessary to allow the Company to claim tax deductions or other benefits in
connection with the exercise of the option.
8. Purchase of Shares
(a) On the last trading day of each month immediately
preceding a month containing an Enrollment Date, or on such other days as may be
established by the Board from time to time, prior to an Enrollment Date for all
options to be granted on an Enrollment Date (each a "Purchase Date"), the
Company shall apply the funds then credited to each participant's payroll
withholdings account to the purchase of whole shares of Common Stock. The cost
to the participant for the shares purchased under any option shall be not less
than 85 percent of the lower of:
(i) the fair market value of the Common Stock on the
Enrollment Date for such option; or
(ii) the fair market value of the Common Stock on that
Purchase Date.
The "fair market value" of the Common Stock on a date shall be the closing price
of the Common Stock on such date on any established stock exchange or market
system if the Common Stock is traded on such an exchange or market system (and
the largest such exchange or market system if the Common Stock is traded on more
than one), if the Common Stock is not so traded then the mean between the bid
and asked prices for Common Stock on such date as quoted on NASDAQ or reported
in The Wall Street
<PAGE> 54
Journal or similar publication if such prices are so quoted or reported, or the
fair market value on such date as determined by the Administrator if shares of
Common Stock are not so traded, quoted, or reported.
(b) Any funds in an amount less than the cost of one share of
Common Stock left in a participant's payroll withholdings account on a Purchase
Date shall be carried forward in such account for application on the next
Purchase Date, and any additional amount shall be distributed to the
participant.
(c) If at any Purchase Date, the shares available under the
Plan are less than the number all participants would otherwise be entitled to
purchase on such date, purchases shall be reduced proportionately to eliminate
the deficit. Any funds that cannot be applied to the purchase of shares due to
such a reduction shall be refunded to participants as soon as administratively
feasible.
9. Grant of Additional Options
In addition to the options which may be granted under Section 6
of this Plan, the Board, in its sole discretion, may grant, to each employee
satisfying the eligibility requirements of Section 4, additional options, for a
term not to exceed 27 months and for an identical number of shares. The options
granted hereunder shall be subject to the limitations of Section 6(b)(v) and
6(b)(vi); provided, however, that immediately before the grant of such
additional options, the limitations imposed thereby upon each recipient's
Options subject to payroll withholdings shall be adjusted to the minimum extent
necessary to permit the grant. The option price shall not be less than 85% of
the lower of (i) the fair market value of the stock on the grant date for such
option, or (ii) the fair market value on the date of exercise. The option will
be subject to such additional terms and conditions, not inconsistent with the
terms of the Plan as interpreted by the Administrator, as may be established
from time to time by the Board.
10. Withdrawal from the Plan
A participant may withdraw from the Plan in full (but not in
part) at any time, effective after written notice thereof is received by the
Company. All funds credited to a participant's payroll withholdings account
shall be distributed to him or her without interest within 60 days after notice
of withdrawal is received by the Company. Any eligible employee who has
withdrawn from the Plan may enroll in the Plan again on any subsequent
Enrollment Date in accordance with the provisions of Section 5.
11. Termination of Employment
Participation in the Plan terminates immediately when a
participant ceases to be employed by the Company for any reason whatsoever
(including death or disability) or otherwise becomes ineligible to participate
in the Plan. As soon as administratively feasible after termination, the Company
shall pay to the participant or his or her beneficiary or legal representative,
all amounts credited to the participant's payroll withholdings account;
provided, however, that if a participant ceases to be employed by the Company
because of the commencement of employment with a Subsidiary of the Company that
is not a Participating Subsidiary, funds then credited to such participant's
payroll withholdings account shall be applied to the purchase of whole
<PAGE> 55
shares of Common Stock at the next Purchase Date and any funds remaining after
such purchase shall be paid to the participant.
12. Designation of Beneficiary
(a) Each participant may designate one or more beneficiaries
in the event of death and may, in his or her sole discretion, change such
designation at any time. Any such designation shall be effective upon receipt in
written form by the Company and shall control over any disposition by will or
otherwise.
(b) As soon as administratively feasible after the death of a
participant, amounts credited to his or her account shall be paid in cash to the
designated beneficiaries or, in the absence of a designation, to the executor,
administrator, or other legal representative of the participant's estate. Such
payment shall relieve the Company of further liability with respect to the Plan
on account of the deceased participant. If more than one beneficiary is
designated, each beneficiary shall receive an equal portion of the account
unless the participant has given express contrary written instructions.
13. Assignment
(a) The rights of a participant under the Plan shall not be
assignable by such participant, by operation of law or otherwise. No participant
may create a lien on any funds, securities, rights, or other property held by
the Company for the account of the participant under the Plan, except to the
extent that there has been a designation of beneficiaries in accordance with the
Plan, and except to the extent permitted by the laws of descent and distribution
if beneficiaries have not been designated.
(b) A participant's right to purchase shares under the Plan
shall be exercisable only during the participant's lifetime and only by him or
her, except that a participant may direct the Company in the enrollment form to
issue share certificates to the participant and his or her spouse in community
property, to the participant jointly with one or more other persons with right
of survivorship, or to certain forms of trusts approved by the Administrator.
14. Administrative Assistance
If the Administrator in its discretion so elects, it may retain a
brokerage firm, bank or other financial institution to assist in the purchase of
shares, delivery of reports, or other administrative aspects of the Plan. If the
Administrator so elects, each participant shall (unless prohibited by the laws
of the nation of his or her employment or residence) be deemed upon enrollment
in the Plan to have authorized the establishment of an account on his or her
behalf at such institution. Shares purchased by a participant under the Plan
shall be held in the account in the name in which the share certificate would
otherwise be issued pursuant to Section 13(b).
15. Costs
All costs and expenses incurred in administering the Plan shall
be paid by the Company, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant by the Company. Any
<PAGE> 56
brokerage fees for the purchase of shares by a participant shall be paid by the
Company, but brokerage fees for the resale of shares by a participant shall be
borne by the participant.
16. Equal Rights and Privileges
All eligible employees shall have equal rights and privileges
with respect to the Plan so that the Plan qualifies as an "employee stock
purchase plan" within the meaning of Section 423 of the Code and the related
Treasury Regulations. Any provision of the Plan which is inconsistent with
Section 423 of the Code shall without further act or amendment by the Company or
the Board be reformed to comply with the requirements of Section 423. This
Section 16 shall take precedence over all other provisions of the Plan.
17. Applicable Law
The Plan shall be governed by the substantive laws (excluding the
conflict of laws rules) of the State of California.
18. Modification and Termination
(a) The Board may amend, alter, or terminate the Plan at any
time, including amendments to outstanding options. No amendment shall be
effective unless within 12 months after it is adopted by the Board, it is
approved by the holders of a majority of the votes cast at a duly held
shareholders' meeting at which a quorum of the voting power of the Company is
represented in person or by proxy, if such amendment would:
(i) increase the number of shares reserved for purchase
under the Plan; or
(ii) require shareholder approval in order to comply
with SEC Rule 16b-3.
(b) In the event the Plan is terminated, the Board may elect
to terminate all outstanding options either immediately or upon completion of
the purchase of shares on the next Purchase Date, or may elect to permit options
to expire in accordance with their terms (and participation to continue through
such expiration dates). If the options are terminated prior to expiration, all
funds contributed to the Plan that have not been used to purchase shares shall
be returned to the participants as soon as administratively feasible.
(c) In the event of the sale of all or substantially all of
the assets of Sybase or the Company, or the merger of Sybase or the Company with
or into another corporation, or the dissolution or liquidation of Sybase, a
Purchase Date shall occur on the trading day immediately preceding the date of
such event, unless otherwise provided by the Board in its sole discretion,
including provision for the assumption or substitution of each option under the
Plan by the successor or surviving corporation, or a parent or subsidiary
thereof.
19. Rights as an Employee
<PAGE> 57
Nothing in the Plan shall be construed to give any person the
right to remain in the employ of the Company or to affect the Company's right to
terminate the employment of any person at any time with or without cause.
20. Rights as a Shareholder; Delivery of Certificates
Unless otherwise determined by the Board, certificates evidencing
shares purchased on any Purchase Date shall be delivered to participants as soon
as administratively feasible. Participants shall be treated as the owners of
their shares effective as of the Purchase Date.
21. Board and Shareholder Approval
The Plan was approved by the Board of Directors on April 30,
1991, and by the holders of a majority of the votes cast at a duly held
shareholders' meeting on June 13, 1991, at which a quorum of the voting power of
the Company was represented in person or by proxy. As amended and restated to
adopt amendments not requiring shareholder approval, the Plan was approved by
the Board of Directors on July 30, 1991. The Plan was amended by the Board of
Directors on January 28, 1993, January 27, 1994 and January 24, 1995 and such
amendments were approved by the holders of a majority of the votes cast at a
duly held shareholders' meeting on May 18, 1993, May 24, 1994 and May 23, 1995,
respectively. The Plan also was amended by the Board of Directors on January 21,
1997.
SYBASE, INC.
By: MITCHELL L. GAYNOR
------------------
Its: Vice President, General
Counsel and Secretary
Date: March 24, 1997
<PAGE> 58
SYBASE, INC.
1991 AMENDED AND RESTATED
FOREIGN SUBSIDIARY EMPLOYEE STOCK PURCHASE PLAN
(As Amended January 21, 1997)
1. Purpose
This Amended and Restated Sybase, Inc. 1991 Foreign Subsidiary
Employee Stock Purchase Plan (the "Plan") is designed to encourage and assist
employees of designated subsidiaries of Sybase, Inc. ("Sybase" or the "Company")
to acquire an equity interest in the Company through the purchase of shares of
Sybase common stock (the "Common Stock").
2. Administration
The Plan shall be administered by the Board of Directors of
Sybase or a committee (the "Committee") selected from time to time by the Board.
Subject to the express provisions of the Plan and to the overall supervision of
the Board, the Committee may administer and interpret the Plan in any manner it
believes to be desirable, and any such interpretation shall be conclusive and
binding on the Company and all participants. If and to the extent that Rule
16b-3 of the Securities and Exchange Commission ("Rule 16b-3") becomes
applicable to the Plan, the Board and the Committee shall use their best efforts
to cause the Plan to be administered in accordance therewith.
3. Number of Shares
(a) The Company has reserved for sale under the Plan 6,000,000
shares of Common Stock (after giving effect to the November 1993 2-for-1 stock
split) less any shares sold under the Sybase 1991 Amended and Restated Employee
Stock Purchase Plan. Shares sold under the Plan may be newly issued shares or
shares reacquired in private transactions or open market purchases, but all
shares sold under the Plan, regardless of source, shall be counted against the
6,000,000 share limitation.
(b) In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights, or other similar change in the capital
structure of the Company, the Committee may make such adjustment, if any, as it
deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
4. Designation of Subsidiaries; Employee Eligibility Requirements
(a) The Board may at any time designate one or more
Subsidiaries as participating in the Plan. The names of all Participating
Subsidiaries shall be shown on Exhibit A to the Plan, which shall be amended
from time to time to reflect additions and deletions of Participating
Subsidiaries; failure to show a Participating Subsidiary on Exhibit A shall not,
however, prevent otherwise eligible employees of that Subsidiary from
participating in the Plan. No Subsidiary participating in the Company's 1991
Employee Stock Purchase Plan may be designated for participating in the Plan.
<PAGE> 59
(b) Each employee of a Participating Subsidiary, except those
described in the next paragraph, shall become eligible to participate in the
Plan in accordance with Section 5 on the first Enrollment Date on or following
commencement of his or her employment by the Participating Subsidiary or
following such period of employment as is designated by the Board from time to
time. Participating in the Plan is entirely voluntary.
(c) Except to the extent otherwise determined by the Board or
provided by the Plan, the following employees are not eligible to participate in
the Plan:
(i) employees who would, immediately upon enrollment in
the Plan, own directly or indirectly, or hold options or rights to acquire stock
possessing, five percent or more of the total combined voting power or value of
all classes of stock of Sybase or any subsidiary of Sybase;
(ii) employees who are customarily employed by the
Participating Subsidiary less than 20 hours per week or less than five months in
any calendar year; and
(iii) employees who are prohibited by the laws of the
nation of their residence or employment from participating in the Plan.
Employees who are also directors or officers of the Company may participate only
in accordance with Rule 16b-3 of the Securities and Exchange Commission.
(d) "Employee" shall mean any individual who is an employee of
a Participating Subsidiary within the meaning of Section 3401(c) of the Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
thereunder. "Subsidiary" shall mean any corporation described in Section 425(e)
or (f) of the Code. "Participating Subsidiary" shall mean a subsidiary which has
been designated by the Committee as covered by the Plan.
5. Enrollment
Any eligible employee may enroll or re-enroll in the Plan each
year as of the first trading day of (i) the month immediately following the
closing of the Company's initial public offering of shares of its Common Stock
on a Registration Statement on Form S-1 (except that if such closing occurs
during the last month of a fiscal quarter (e.g., September), then the first
Enrollment Date will be the first trading day of the second month of the quarter
immediately following the closing (e.g., November)), (ii) the sixth month
following such month, and (iii) each yearly anniversary of such months (e.g.,
any March and September or May and November), or such other days as may be
established by the Board from time to time (the "Enrollment Dates"). In
addition, for purposes of participating in the Plan by an eligible employee
following termination of such employee's participation in the Sybase 1991
Amended and Restated Employee Stock Purchase Plan (the "U.S. Plan") a deemed
Enrollment Date may be designated corresponding to the employee's most recent
Enrollment Date under the U.S. Plan. In order to enroll, an eligible employee
must complete, sign, and submit to the Company or the Participating Subsidiary
an enrollment form. Any enrollment form received by the Participating Subsidiary
or the Company by the 15th day of the month preceding an
<PAGE> 60
Enrollment Date (or by the Enrollment Date in the case of employees hired after
such 15th day), or such other date established by the Committee from time to
time, will be effective on that Enrollment Date. For purposes of the Plan, a
"trading day" is any day on which regular trading occurs on any established
stock exchange or market system on which the Common Stock is traded.
6. Grant of Option on Enrollment
(a) Enrollment or re-enrollment by a participant in the Plan
on an Enrollment Date will constitute the grant by the Company to the
participant of an option to purchase shares of Common Stock from the Company
under the Plan. Any participant whose option expires and who has not withdrawn
from the Plan will automatically be re-enrolled in the Plan and granted a new
option on the Enrollment Date immediately following the date on which the option
expires.
(b) Except as provided in Section 9 or Section 11, each option
granted under the Plan shall have the following terms unless otherwise
determined by the Board:
(i) each option granted under the Plan will have a term
of not more than 24 months or such shorter option period as may be established
by the Board from time to time; notwithstanding the foregoing, however, whether
or not all shares have been purchased thereunder, the option will expire on the
earlier to occur of (A) the completion of the purchase of shares on the last
Purchase Date occurring within 24 months after the Enrollment Date for such
option, or such shorter option period as may be established by the Board before
an Enrollment Date for all options to be granted on such date or (B) the date on
which the employee's participation in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will
be made only through payroll withholding in accordance with Section 7;
(iii) purchase of shares upon exercise of the option will
be effected only on the Purchase Dates established in accordance with Section 8;
(iv) the price per share under the option will be
determined as provided in Section 8;
(v) the number of shares available for purchase under
an option will, unless otherwise established by the Board before an enrollment
Date for all options to be granted on such date, be determined by dividing
$25,000 by the fair market value of a share of Common Stock on the Enrollment
Date and by multiplying the result by the number of calendar years included in
whole or in part in the period from grant to expiration of the option;
(vi) the option (taken together with all other options
then outstanding under this and all other similar stock purchase plans of Sybase
and any subsidiary of Sybase, collectively "Options") will in no event give the
participant the right to purchase shares at a rate per calendar year which
accrues in excess of $25,000 of
<PAGE> 61
fair market value of such shares, less the fair market value of any shares
accrued and already purchased during such year under Options which have expired
or terminated, determined at the applicable Enrollment Dates; and
(vii) the option will in all respects be subject to the
terms and conditions of the Plan, as interpreted by the Committee from time to
time.
7. Payroll and Tax Withholding; Use by Participating Subsidiary and
the Company
(a) Each participant shall elect to have amounts withheld from
his or her compensation and paid to the Company during the option period, at a
rate equal to any whole percentage up to a maximum of 10 percent, or such lesser
percentage as the Board may establish from time to time before an Enrollment
Date. Compensation includes regular salary payments, annual and quarterly
performance bonuses, hire-on bonuses, cash recognition awards, commissions,
overtime pay, shift premiums, and elective contributions by the participant to
qualified employee benefit plans, but excludes all other payments including,
without limitation, long-term disability or workers compensation payments, car
allowances, employee referral bonuses, relocation payments, expense
reimbursements (including but not limited to travel, entertainment, and moving
expenses), salary gross-up payments, and non-cash recognition awards. The
participant shall designate a rate of withholding in his or her enrollment form
and may elect to increase or decrease the rate of contribution effective as of
any Enrollment Date, by delivery to the Participating Subsidiary, not later than
15 days before such Enrollment Date, of a written notice indicating the revised
withholding rate.
(b) Payroll withholdings shall be credited to an account
maintained for purposes of the Plan on behalf of each participant in local
currency, as soon as administratively feasible after the withholding occurs. The
Participating Subsidiary and the Company shall be entitled to use the
withholdings for any corporate purpose, shall have no obligation to pay interest
on withholdings to any participant, and shall not be obligated to segregate
withholdings.
(c) Upon disposition of shares acquired by exercise of an
option, the participant shall pay, or make provision adequate to the Company and
the Participating Subsidiary for payment of, all federal, state, and other tax
(and similar) withholdings that the Company or the Participating Subsidiary
determines, in its discretion, are required due to the disposition, including
any such withholding that the Company or the Participating Subsidiary
determines, in its discretion, is necessary to allow the Company or the
Participating Subsidiary to claim tax deductions or other benefits in connection
with the disposition. A participant shall make such similar provisions for
payment that the Company or the Participating Subsidiary determines, in its
discretion, are required due to the exercise of an option, including such
provisions as are necessary to allow the Company or the Participating Subsidiary
to claim tax deductions or other benefits in connection with the exercise of the
option.
8. Purchase of Shares
<PAGE> 62
(a) On the last trading day of each month immediately
preceding a month containing an Enrollment Date, or on such other days as may be
established by the Board from time to time, prior to an Enrollment Date for all
options to be granted on an Enrollment Date (each a "Purchase Date"), the
Company shall convert each participant's account balance, including amounts
carried forward pursuant to Section 8(b) below, to U.S. Dollars determined as of
such Purchase Date (or applying such formula as may be established by the
Administrator) and shall apply the funds then credited to each participant's
payroll withholdings account to the purchase of whole shares of Common Stock.
The cost to the participant for the shares purchased under any option shall be
not less than 85 percent of the lower of:
(i) the fair market value of the Common Stock on the
Enrollment Date for such option; or
(ii) the fair market value of the Common Stock on that
Purchase Date.
The "fair market value" of the Common Stock on a date shall be the closing price
of the Common Stock on such date on any established stock exchange or market
system if the Common Stock is traded on such an exchange or market system (and
the largest such exchange or market system if the Common Stock is traded on more
than one), if the Common Stock is not so traded then the mean between the bid
and asked prices for Common Stock on such date as quoted on NASDAQ or reported
in The Wall Street Journal or similar publication if such prices are so quoted
or reported, or the fair market value on such date as determined by the
Committee if shares of Common Stock are not so traded, quoted, or reported.
(b) Any funds in an amount less than the cost of one share of
Common Stock left in a participant's payroll withholdings account on a Purchase
Date shall be carried forward in such account for application on the next
Purchase Date, and any additional amount shall be distributed to the
participant.
(c) If at any Purchase Date, the shares available under the
Plan are less than the number all participants would otherwise be entitled to
purchase on such date, purchases shall be reduced proportionately to eliminate
the deficit. Any funds that cannot be applied to the purchase of shares due to
such a reduction shall be refunded to participants as soon as administratively
feasible.
9. Grant of Additional Options
In addition to the options which may be granted under Section 6
of this Plan, the Committee, in its sole discretion, may grant, to each employee
of a Participating Subsidiary satisfying the eligibility requirements of Section
4, additional options, for a term not to exceed 27 months and for an identical
number of shares. The options granted hereunder shall be subject to the
limitations of Section 6(b)(v) and 6(b)(vi); provided, however, that immediately
before the grant of such additional options, the limitations imposed thereby
upon each recipient's Options subject to payroll withholdings shall be adjusted
to the minimum extent necessary to permit the grant. The option price shall not
be less than 85% of the lower of (i) the fair market value of the
<PAGE> 63
stock on the grant date for such option, or (ii) the fair market value on the
date of exercise. The option will be subject to such additional terms and
conditions, not inconsistent with the terms of the Plan as interpreted by the
Committee, as may be established from time to time by the Board.
10. Withdrawal from the Plan
A participant may withdraw from the Plan in full (but not in
part) at any time, effective after written notice thereof is received by the
Company. All funds credited to a participant's payroll withholdings account
shall be distributed to him or her without interest within 60 days after notice
of withdrawal is received by the Company. Any eligible employee who has
withdrawn from the Plan may enroll in the Plan again on any subsequent
Enrollment Date in accordance with the provisions of Section 5.
11. Termination of Employment
(a) Except as provided in Section 11(b) below, participation
in the Plan terminates immediately when a participant ceases to be employed by a
Participating Subsidiary for any reason whatsoever (including death or
disability) or otherwise becomes ineligible to participate in the Plan. Transfer
of a participant's employment from one Participating Subsidiary to another
without material interruption shall not be deemed a termination of employment
for purposes of this Section 11. As soon as administratively feasible after
termination, the Company shall pay to the participant or his or her beneficiary
or legal representative, all amounts credited to the participant's payroll
withholdings account.
(b) Following transfer of a participant's employment without
material interruption from a Participating Subsidiary to the Company or any
subsidiary of the Company other than a participating Subsidiary, any outstanding
option granted to such participant under the Plan shall not terminate until the
occurrence of the earliest of: (i) the last Purchase Date included in the term
of such option; (ii) enrollment of the participant in the U.S. Plan; or (iii)
any event or change of condition or status (other than the transfer described in
this Section 11(b)) that would have caused the option to terminate if the
transfer of employment described in this Section 11(b) had not occurred. While
an option remains outstanding pursuant to this Section 11(b), the Company or
other subsidiary to which the participant is transferred shall, in accordance
with Section 7, effect payroll withholdings under the option and shall remit
them to the Company or the Participating Subsidiary that employed the
participant at the time of the transfer; such withholdings shall be credited to
the Participant's payroll withholdings account at the time withheld by the
Company or other subsidiary and in the currency of the Company or subsidiary by
which the participant is employed at the time of the withholdings.
12. Designation of Beneficiary
(a) Each participant may designate one or more beneficiaries
in the event of death and may, in his or her sole discretion, change such
designation at any time. Any such designation shall be effective upon receipt in
written form by the Company or the Participating Subsidiary and shall control
over any disposition by will or otherwise.
<PAGE> 64
(b) As soon as administratively feasible after the death of a
participant, amounts credited to his or her account shall be paid in cash to the
designated beneficiaries or, in the absence of a designation, to the executor,
administrator, or other legal representative of the participant's estate. Such
payment shall relieve the Participating Subsidiary of further liability with
respect to the Plan on account of the deceased participant. If more than one
beneficiary is designated, each beneficiary shall receive an equal portion of
the account unless the participant has given express contrary written
instructions.
13. Assignment
(a) The rights of a participant under the Plan shall not be
assignable by such participant, by operation of law or otherwise. No participant
may create a lien on any funds, securities, rights, or other property held by
the Company or the Participating Subsidiary for the account of the participant
under the Plan, except to the extent that there has been a designation of
beneficiaries in accordance with the Plan, and except to the extent permitted by
the laws of descent and distribution if beneficiaries have not been designated.
(b) A participant's right to purchase shares under the Plan
shall be exercisable only during the participant's lifetime and only by him or
her, except that a participant may direct the Company in the enrollment form to
issue share certificates to the participant and his or her spouse in community
property, to the participant jointly with one or more other persons with right
of survivorship, or to certain forms of trusts approved by the Committee.
14. Administrative Assistance
If the Committee in its discretion so elects, it may retain a
brokerage firm, bank, or other financial institution to assist in the purchase
of shares, delivery of reports, or other administrative aspects of the Plan. If
the Committee so elects, each participant shall (unless prohibited by the laws
of the nation of his or her employment or residence) be deemed upon enrollment
in the Plan to have authorized the establishment of an account on his or her
behalf at such institution. Shares purchased by a participant under the Plan
shall be held in the account in the name in which the share certificate would
otherwise be issued pursuant to Section 13(b).
15. Costs
All costs and expenses incurred in administering the Plan shall
be paid by the Company, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant by the Company. Any brokerage fees for the purchase of shares by a
participant shall be paid by the Company, but brokerage fees for the resale of
shares by a participant shall be borne by the participant.
16. Equivalent Rights and Privileges
It is intended that all eligible employees shall have
substantially equivalent rights and privileges with respect to the Plan;
notwithstanding any other
<PAGE> 65
provision of the Plan, however, the Committee may make such changes in the terms
of eligibility and participation from Subsidiary to Subsidiary that it
determines, in its discretion, to be necessary or desirable to reflect or comply
with local laws or conditions.
17. Applicable Law
The Plan shall be governed by the substantive laws (excluding the
conflict of laws rules) of the State of California.
18. Modification and Termination
(a) The Board may amend, alter, or terminate the Plan at any
time, including amendments to outstanding options. To the extent required for
the Plan to comply with Rule 16b-3 or applicable tax laws or regulations, no
amendment shall be effective unless within 12 months after it is adopted by the
Board, it is approved by the holders of a majority of the votes cast at a duly
held shareholders' meeting at which a quorum of the voting power of the Company
is represented in person or by proxy, if such amendment would:
(i) increase the number of shares reserved for purchase
under the Plan;
(ii) increase the benefits accruing to participants
under the Plan; or
(iii) modify the requirements as to eligibility for
participation in the Plan.
(b) In the event the Plan is terminated, the Board may elect
to terminate all outstanding options either immediately or upon completion of
the purchase of shares on the next Purchase Date, or may elect to permit options
to expire in accordance with their terms (and participation to continue through
such expiration dates). If the options are terminated prior to expiration, all
funds contributed to the Plan that have not been used to purchase shares shall
be returned to the participants as soon as administratively feasible.
(c) In the event of the sale of all or substantially all of
the assets of Sybase or a Participating Subsidiary, or the merger of Sybase or a
Participating Subsidiary with or into another corporation, or the dissolution or
liquidation of Sybase, a Purchase Date shall occur on the trading day
immediately preceding the date of such event, unless otherwise provided by the
Board in its sole discretion, including provision for the assumption or
substitution of each option under the Plan by the successor or surviving
corporation, or a parent or subsidiary thereof.
19. Rights as an Employee
Nothing in the Plan shall be construed to give any person the
right to remain in the employ of the Participating Subsidiary or to affect the
Participating Subsidiary's right to terminate the employment of any person at
any time with or without cause.
<PAGE> 66
20. Rights as a Shareholder; Delivery of Certificates
Unless otherwise determined by the Board, certificates evidencing
shares purchased on any Purchase Date shall be delivered to participants as soon
as administratively feasible. Participants shall be treated as the owners of
their shares effective as of the Purchase Date.
21. Board and Shareholder Approval
The Plan was approved by the Board of Directors on April 30,
1991, and by the holders of a majority of the votes cast at a duly held
shareholders' meeting on June 13, 1991, at which a quorum of the voting power of
the Company was represented in person or by proxy. As amended and restated to
adopt amendments not requiring shareholder approval, the Plan was approved by
the Board of Directors on July 30, 1991. The Plan was amended by the Board of
Directors on January 28, 1993, January 27, 1994 and January 24, 1995 and such
amendments were approved by the holders of a majority of the votes cast at a
duly held shareholders' meeting on May 18, 1993, May 24, 1994 and May 23, 1995,
respectively. The Plan also was amended by the Board of Directors on January 21,
1997.
SYBASE, INC.
By: MITCHELL L. GAYNOR
------------------
Its: Vice President, General
Counsel and Secretary
Date: March 24, 1997
<PAGE> 67
DETACH HERE
SYBASE, INC.
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SYBASE, INC., a Delaware Corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
P Stockholders and Proxy Statement, each dated as of April 4, 1997, and hereby
appoints Mitchell Kertzman, Jack Acosta and Mitchell Gaynor, and each of
R 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
O the 1997 Annual Meeting of Stockholders of SYBASE, INC. to be held on May 20,
1997 at 10:00 a.m. local time, at the offices of the Company, located at 6603
X Bay Street, Emeryville, California 94608, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
Y undersigned would be entitled to vote, if then and there personally present,
on the matters set forth on the reverse side.
-----------
SEE REVERSE
SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE -----------
<PAGE> 68
DETACH HERE
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINATED DIRECTORS AND FOR THE APPROVAL
OF EACH OF PROPOSALS 2, 3 AND 4 SET FORTH BELOW, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
1. Election of Class II Directors
NOMINEES: Richard C. Alberding, Robert S. Epstein and Mitchell E. Kertzman
FOR WITHHELD
[ ] [ ]
MARK HERE
FOR ADDRESS CHANGE
[ ] _____________________________________________________ AND NOTE BELOW
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the 1996 [ ] [ ] [ ]
Stock Plan to increase the total number of
shares of Common Stock issuable thereunder by
2,450,000 shares.
FOR AGAINST ABSTAIN
3. Proposal to approve amendments to the 1991 [ ] [ ] [ ]
Employee Stock Purchase Plan and 1991 Foreign
Subsidiary Stock Purchase Plan to increase the
total number of shares of Common Stock issuable
thereunder by 1,300,000 shares.
FOR AGAINST ABSTAIN
4. Proposal to ratify the appointment of Ernst & [ ] [ ] [ ]
Young LLP as independent accountants for the
Company for fiscal year 1997.
5. In their discretion, the proxies are authorized to vote upon such other
matter or matters which may properly come before the meeting or any
adjournment or adjournments thereof.
(This proxy should be marked, dated, signed by each stockholder exactly as such
stockholder's 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.)
Signature:_________________ Date:_____ Signature:_________________ Date:_____
