<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 Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SYBASE, INC.
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1998
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 Wednesday,
May 27, 1998 at 10:00 a.m. at the offices of the Company, 6425 Christie Avenue,
Emeryville, California 94608, for the following purposes:
1. To elect three Class III directors to serve a three-year term expiring
upon the 2001 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
2,500,000 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 1,500,000 shares.
4. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the year ending December 31, 1998.
5. To consider a stockholder proposal to reorganize the Board of Directors
into a single class.
6. 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 April 3, 1998
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 15, 1998
<PAGE> 3
SYBASE, INC.
----------
PROXY STATEMENT
INFORMATION CONCERNING PROXY SOLICITATION AND VOTING
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 Wednesday, May 27, 1998 at
10:00 a.m. at the offices of the Company, 6425 Christie Avenue, 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 20,
1998.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on April 3, 1998
(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 80,823,612 shares of Common Stock. No shares of Preferred Stock are
outstanding. The closing market price of the Company's Common Stock on the
Nasdaq National Market on April 3, 1998 was $9.1875 per share.
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. Shares that are voted "For", "Against" or
"Withheld From" a matter are treated as being present at the meeting for
purposes of establishing a quorum and are also treated as shares entitled to
vote at the Annual Meeting (the "Votes Cast") with respect to such matter.
Abstentions and broker non-votes also will be counted by the Company as present
at the meeting for purposes of determining the presence of a quorum. Abstentions
will be counted by the Company in determining the total number of Votes Cast
with respect to a proposal (other than the election of directors) and,
therefore, will have the same effect as a vote against the proposal. Broker
non-votes will not be counted in determining the number of Votes Cast with
respect to a proposal and, therefore, will not affect the outcome of the voting
on a proposal that requires a majority of the Votes Cast.
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,
electronic mail or facsimile. In addition, the Company has retained the services
of Georgeson & Company, Inc. 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 owners.
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<PAGE> 4
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 21,
1998 in order that they may be considered for possible inclusion in the proxy
statement and form of proxy relating to that meeting.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock
of the Company as of March 15, 1998 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
Beneficially Class
Name of Beneficial Owner Owned(1) Owned
- ------------------------ ------------- -------------
<S> <C> <C>
Entities affiliated with The Capital Group Companies, Inc.(2) .......... 7,089,500 8.77%
333 South Hope Street
Los Angeles, CA 90071
Entities affiliated with George Soros and Purnendu Chatterjee(3) ....... 7,025,800 8.69%
888 Seventh Avenue
New York, NY 10106
Entities affiliated with Dodge & Cox(4) ................................ 4,680,687 5.79%
One Sansome Street
San Francisco, CA 94104
Entities affiliated with Strong Capital Management, Inc. and
Richard S. Strong(5) ................................................. 4,479,857 5.54%
100 Heritage Reserve
Menomonee Falls, WI 53051
Robert S. Epstein(6) ................................................... 1,524,797 1.88%
Mitchell E. Kertzman(7) ................................................ 447,206 *
John S. Chen(8) ........................................................ 135,797 *
Richard C. Alberding(9) ................................................ 40,500 *
Jack L. Acosta(10) ..................................................... 70,412 *
Michael H. Forster(11) ................................................. 277,427 *
L. William Krause(12) .................................................. 15,000 *
David E. Liddle(13) .................................................... 61,084 *
Alan B. Salisbury(14) .................................................. 62,500 *
Robert P. Wayman(15) ................................................... 23,166 *
Jeffrey T. Webber(16) .................................................. 45,965 *
All current executive officers and directors as a group (17 persons) (17) 2,584,703 3.16%
</TABLE>
- ----------
2
<PAGE> 5
* 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 investment management 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 with respect to 5,648,800 of such
shares.
(3) Includes 2,200,000 shares held by Mr. Soros over which he holds sole
voting and dispositive power; 716,200 shares beneficially owned by Quantum
Partners LDC ("Quantum"), which has sole voting and dispositive power over
such shares; 1,079,600 shares beneficially owned by Quantum Industrial
Partners LDC ("QIP") , which has shared dispositive and shared voting
power over such shares; 1,008,000 shares beneficially owned by Winston
Partners II LLC ("WLLC"), which has sole voting and dispositive power over
such shares; and 2,022,00 shares beneficially owned by Winston Partners II
LDC ("WLDC") which has sole voting and dispositive power over such shares.
Mr. Soros and Mr. Stanley F. Drukenmiller may be deemed to be the
beneficial owner of the shares beneficially owned by Quantum and QIP. Mr.
Chaterjee 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
to be the beneficial owner of the shares beneficially owned by QIP, WLLC
and WLDC.
(4) Represents shares held by investor accounts managed by Dodge & Cox, a
registered investment advisor, which has sole dispositive power over all
such shares, sole voting power with respect to 4,171,537 of such shares
and shared voting power with respect to 78,000 of such shares.
(5) Includes shares held by investor accounts managed by Strong Capital
Management, Inc., a registered investment advisor, which has sole
dispositive power over all such shares and sole voting power with respect
to 4,190,000 of such shares. Mr. Richard S. Strong is the Chairman of the
Board and principal stockholder of Strong Capital Management, Inc. and may
be deemed a beneficial owner of shares that are deemed to be beneficially
owned by that entity.
(6) Includes 99,581 shares subject to options that are exercisable within 60
days of March 15, 1998.
(7) Includes 279,269 shares subject to options that are exercisable within 60
days of March 15, 1998.
(8) Includes 125,000 shares subject to options that are exercisable within 60
days of March 15, 1998.
(9) All such shares are subject to options that are exercisable within 60 days
of March 15, 1998.
(10) Includes 65,619 shares subject to options that are exercisable within 60
days of March 15, 1998.
(11) Includes 238,470 shares subject to options that are exercisable within 60
days of March 15, 1998.
(12) All such shares are subject to options that are exercisable within 60 days
of March 15, 1998.
(13) All such shares are subject to options that are exercisable within 60 days
of March 15, 1998.
(14) Includes 61,500 shares subject to options that are exercisable within 60
days of March 15, 1998.
(15) All such shares are subject to options that are exercisable within 60 days
of March 15, 1998.
(16) Includes 45,500 shares subject to options that are exercisable within 60
days of March 15, 1998.
(17) Includes 961,424 shares subject to options that are exercisable within 60
days of March 15, 1998.
3
<PAGE> 6
ELECTION OF DIRECTORS
DIRECTORS
The Company currently has nine directors divided among three classes as
follows: Class I -- John S. Chen and Alan B. Salisbury; Class II -- Robert S.
Epstein, Mitchell E. Kertzman and Richard C. Alberding; and Class III -- L.
William Krause, Robert P. Wayman, David E. Liddle and Jeffrey T. Webber. David
E. Liddle has decided not to stand for reelection. On April 1, 1998, the Board
of Directors reduced the number of authorized directors to eight, and upon the
expiration of Dr. Liddle's term at the Annual Meeting, the number of Class III
directors will decrease to three.
Three Class III directors are to be elected at the Annual Meeting for a
three-year term ending at the annual meeting of stockholders in 2001. The Board
has nominated each of L. William Krause, Robert P. Wayman and Jeffrey T. Webber
for election as a Class III director. Unless otherwise instructed, the proxy
holders will vote the Proxies received by them for L. William Krause, Robert P.
Wayman and Jeffrey T. Webber. 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 L. William Krause,
Robert P. Wayman and Jeffrey T. Webber will be unable or will decline to serve
as a director. Under the Company's Bylaws, stockholders may nominate other
individuals for election as directors only if the proposed nomination is set
forth in a written notice to the Company's Secretary that complies with certain
requirements described below under the caption "Other Matters".
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 49 2000
John S. Chen 42 1999
Robert S. Epstein 45 2000
Richard C. Alberding 67 2000
L. William Krause 55 1998
Alan B. Salisbury 61 1999
Robert P. Wayman 52 1998
Jeffrey T. Webber 45 1998
</TABLE>
Mr. Kertzman has served as a director since February 1995, as Chief
Executive Officer since July 1996 and as Chairman of the Board since July 1997.
Between February 1995 and July 1996, he served as an Executive Vice President
and between July 1996 and July 1997 he served as President. In February 1995,
Sybase merged with Powersoft Corporation ("Powersoft"), a leading provider of
application development tools. Mr. Kertzman had 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
C-Net, Inc.
Mr. Chen has served as President and a director since August 1997. In
February 1998, the Company formed the Office of the Chief Executive, and Mr.
Chen began to share the position of Chief Executive Officer with Mr. Kertzman.
Between August 1997 and February 1998, Mr. Chen also held the position of Chief
Operating Officer. Before joining Sybase, Mr. Chen served between March 1995 and
July 1997 as the President of the Open Enterprise Computing Division of Siemens
Nixdorf, a computer and electronics company, and as Chief Executive Officer and
Chairman of the Siemens Pyramid subsidiary of Siemens Nixdorf. Before its
acquisition by Siemens Nixdorf in March 1995, Mr. Chen served in various
executive capacities with Pyramid Technology Corporation, a computer company,
where he became Chief Operating Officer in October 1992 and President in June
1993.
4
<PAGE> 7
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. He
currently is the Chairman of the Board of Colorado Microdisplay, a
privately-held company, where he has been a director since August 1996.
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, JLK Direct
Distribution, Inc., Kennametal, Inc., Storm Technology, Inc.
and Walker Interactive Systems.
Mr. Krause has served as a director since February 1995. Since October
1991, Mr. Krause has served as President and Chief Executive Officer and as a
director of Storm Technology, Inc., a provider of computer peripherals and
software for digital imaging. In addition, he served from 1981 to 1990 as Chief
Executive Officer of 3Com Corporation, a provider of data networking products,
and as its Chairman of the Board from 1987 to 1993. Mr. Krause currently serves
as a director of Aureal Semiconductor, Inc. and Infoseek Corporation.
Dr. Liddle, who has decided not to stand for reelection, 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.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held nine meetings during the fiscal year ended
December 31, 1997. The Board has an Audit Committee, a Compensation Committee
and a Stock Committee. The Board has no committee performing the functions of a
nominating committee. No incumbent director who was a director during the year
ended December 31, 1997 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 five
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
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<PAGE> 8
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 John Chen, is
authorized to make grants of stock options within certain authorized limits to
employees who are not executive officers of the Company. The Stock Committee
acted by unanimous written consents and held no meetings during the last fiscal
year.
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
In 1997 nonemployee directors received 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. 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
regular Board meeting attended in person, $750 for each regular Board meeting
attended by telephone, $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 telephone. Nonemployee directors are
also reimbursed for out-of-pocket travel expenses associated with their
attendance at meetings of the Board. Beginning in 1998, directors will also
receive $750 for each special Board meeting exceeding one hour in duration
attended in person or by telephone. For 1997, Messrs. Alberding, Krause, Liddle,
Salisbury, Wayman and Webber received aggregate fees and reimbursements of
$35,888, $33,875, $33,375, $44,649, $33,500 and $32,750, 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, Krause, Liddle, Salisbury, Wayman and Webber
each received in 1997 a stock option to purchase 12,000 shares at an exercise
price of $17.625 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 for director 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 III directors. Votes withheld from
any nominee will be counted for purposes of determining the presence or absence
of a quorum but have no other effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
ELECTION OF EACH OF L. WILLIAM KRAUSE, ROBERT P. WAYMAN AND JEFFREY T. WEBBER AS
A CLASS III DIRECTOR OF THE COMPANY.
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<PAGE> 9
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. Approximately 84% of the Company's total employees held outstanding
options as of March 15, 1998. In March 1996 and May 1996, the Board of Directors
and the stockholders, respectively, approved the 1996 Stock Plan (the "Stock
Plan"). In February 1997 and May 1997, the Board of Directors and the
stockholders, respectively, approved an increase in the shares reserved for
issuance under the Stock Plan, bringing the total to 5,427,000 shares. In
January 1998, the Board approved an amendment that would further increase the
total number of shares reserved for issuance under the Stock Plan. 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 February 1998, the Board approved an amendment that would increase
the total number of shares reserved for issuance under the Stock Plan by
2,500,000 shares, an amount that is equal to approximately 3.1% of the
outstanding shares of Common Stock on March 15, 1998. The amendment increases
the total shares authorized by the Plan to 7,927,000 shares. The stockholders
are being asked to ratify and approve the amendment to the Stock Plan at the
Annual Meeting.
1997 STOCK OPTION ACTIVITY
As of March 31, 1998, options to purchase 29,832 shares under the Option
Plan had been exercised and options to purchase 4,242,840 shares were
outstanding. Without taking into account the proposed amendment to the Option
Plan, 1,154,328 shares remained available for future grant as of March 1, 1998.
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 following table sets forth information with respect to options
granted under the Company's existing employee option plans during 1997 to the
named executive officers, to all executive officers as a group, and to
non-executive officer employees as a group (nonemployee directors are not
eligible to participate in the Option Plan). Several individuals received more
than one option grant during 1997.
<TABLE>
<CAPTION>
Weighted Average
Name of Individual or Identity of Group Exercise Price Number of Shares
and Position of Individual During 1997 Per Share Underlying Options Granted
- -------------------------------------- ---------------- --------------------------
<S> <C> <C>
Mitchell Kertzman, Chairman and Chief $13.125 160,000
Executive Officer
John Chen, President and Chief Operating $14.688 500,000
Officer
Robert Epstein, Executive Vice President $13.125 40,000
and Chief Information Officer $16.750 60,000
Jack Acosta, Senior Vice President Finance $13.125 70,000
and Chief Financial Officer $14.000 75,000
Michael Forster, Senior Vice President $18.750 40,000
All executive officers as a group $14.551 1,369,000
All non-executive officer employees as a group $14.956 2,649,200
</TABLE>
7
<PAGE> 10
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 terms of the Stock Plan
and 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 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 March 15, 1998,
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 Stock 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 options
to purchase more than 500,000 shares under the Stock Plan in any fiscal year,
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 on the date of grant. 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 relevant 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 1997, 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.
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<PAGE> 11
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 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, other 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 outstanding options and shares available
for future grant. 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 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 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
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<PAGE> 12
purchaser shall have rights equivalent to those of a shareholder of 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 applicable 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. The
Stock Plan terminates 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 sale 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 IS NOT EXHAUSTIVE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS TAX
CONSEQUENCES
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<PAGE> 13
RELATING TO DEATH OR 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 2,370 employees, representing approximately 47% of
the Company's eligible employees, participated in these plans during the
purchase period ended February 28, 1998. 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, 1995 and 1997. In February
1998, the Board further 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 1,500,000 shares
(approximately 1.7% of the shares of common stock outstanding on February 28,
1998) to 7,500,000 shares. At the Annual Meeting, the stockholders are being
asked to approve this amendment.
PURCHASE PLAN ACTIVITY
As of February 28, 1998, the Company had issued and sold an aggregate of
5,857,694 shares of Common Stock pursuant to the Purchase Plan and Foreign
Subsidiary Plan, and only 142,306 shares remained available for future purchase
under the Purchase Plan and Foreign Subsidiary Plan.
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. The following table sets forth certain information regarding
shares purchased on the February 28, 1997 and August 31, 1997 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):
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<PAGE> 14
<TABLE>
<CAPTION>
Name of Individual or Identity of
Group and Position During 1997 Dollar Value(1) Number of Shares Purchased
- --------------------------------- --------------- --------------------------
<S> <C> <C>
Mitchell E. Kertzman, Chairman of the Board $26,429 1,614
and Chief Executive Officer
John S. Chen, President and Chief Operating -- --
Officer
Robert S. Epstein, Executive Vice President -- --
and Chief Information Officer
Jack L. Acosta, Senior Vice President, $30,403 1,747
Finance and Chief Financial Officer
Michael H. Forster, Senior Vice President, $26,413 1,613
Worldwide Field Operations
All current executive officers as a group $127,412 7,493
All other employees as a group $21,377,943 1,229,203
</TABLE>
- -------------
(1) Market value of the shares on date of purchase. The purchase price paid
by each participant in the Purchase Plan was 15% below the market value.
See "Summary of Purchase Plan -- Purchase Price."
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,
1997 (the commencement date for the purchase period September 1, 1997 through
February 28, 1998), there were approximately 5,643 employees worldwide eligible
to participate in the Purchase Plan and Foreign Subsidiary Plan, of whom
approximately 2,370 were participating in the plans.
Participation in an Offering. Each offering of Common Stock under the
Purchase Plan ("Offering") currently extends for a period of six months
("Enrollment Period") and consists of a single six-month purchase period
("Purchase Period") within each such Enrollment Period, unless the participant
withdraws or terminates employment earlier. The Administrator may establish
shorter or longer Enrollment Periods and may change the length of Purchase
Periods without stockholder approval. To participate in the Purchase Plan, each
eligible
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<PAGE> 15
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.
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. Unless the option is terminated earlier, the option is
exercised at the end of the 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 1997.
Purchase Price. Shares of Common Stock generally 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. With respect only to the Purchase
Period expiring on August 31, 1998, (a) shares of Common Stock approved for
issuance by the stockholders in or before 1997 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 date of enrollment for that Enrollment Period or
(ii) the last day of the six-month Purchase Period, and (b) any shares approved
for issuance at the 1998 Annual Meeting of Stockholders 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 date of the 1998 Annual Meeting of Stockholders
or (ii) the last day of the six-month Purchase Period.
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 per share 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 are 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 outstanding options under the Purchase Plan and shares
available for future issuance thereunder.
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<PAGE> 16
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(m) 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 IS NOT EXHAUSTIVE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE
PROVISIONS OF THE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX
CONSEQUENCES OF DEATH OR 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, 1998
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, 1998.
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<PAGE> 17
STOCKHOLDER PROPOSAL
The following proposal was submitted by the California Public Employees'
Retirement System (CalPERS), a stockholder of the Company. CalPERS has informed
the Company that its address is P.O. Box 942708, Sacramento, California
94229-2708 and that it is the owner of approximately 413,000 shares of the
Company's Common Stock.
"RESOLVED, that the stockholders of Sybase, Inc. recommend that the
board of directors take the necessary steps, in compliance with
applicable law, to reorganize itself into one class. The reorganization
shall be done in a manner that does not affect the unexpired terms of
directors previously elected."
SUPPORTING STATEMENT SUBMITTED BY CALPERS
"Is accountability by the board of directors important to shareholders?
As a trust fund with more than 1 million participants, and as the owner of
approximately 400,000 shares of the Company's common stock, the California
Public Employees' Retirement System (CalPERS) thinks accountability is of
paramount importance. This is why we are sponsoring this proposal which, if
passed, would urge the board to reorganize itself so that each director stands
before the shareholders for re-election each year. We hope to eliminate the
Company's so-called "classified board", whereby the directors are divided into
three classes, each serving a three-year term. Under the current structure,
shareholders can only vote on one-third of the board at any given time.
By classifying itself, a board insulates its members from immediate
challenge. Insularity may have made sense in the past (e.g., during the takeover
frenzy of the 1980s). But now, we believe that insularity works primarily to
hamper accountability. A classified board can prevent shareholders from mounting
a successful opposition to the entire board, because only one-third of the
directors are up for election in any given year. By way of contrast, a
declassified board would stand for election in its entirety, every year.
CalPERS believes that corporate governance procedures and practices, and
the level of accountability they impose, are closely related to financial
performance. It is intuitive that, when directors are accountable for their
actions, they perform better.
We -- as one shareholder -- are dissatisfied with the Company's
long-term financial performance. We seek to improve that performance through
this structural reorganization of the board. If the board acts on our proposal,
shareholders would have the opportunity to register their views at each annual
meeting -- on performance of the board as a whole, and of each director as an
individual.
CalPERS urges you to join us in VOTING TO DE-STAGGER the terms of
election, as a powerful tool for management incentive and accountability. We
urge your support FOR this proposal."
STATEMENT OF THE BOARD OF DIRECTORS RECOMMENDING A VOTE AGAINST THIS STOCKHOLDER
PROPOSAL
The Board believes that the present system of electing directors of the
Company in three classes is in the best interests of the Company and its
stockholders and should not be changed.
The Board disagrees with CalPERS' contention that a classified board
insulates directors from accountability. Corporate accountability depends on
responsible and experienced individuals diligently fulfilling their obligations
to the stockholders, not on whether they serve terms of one year or three. A
classified board in no way diminishes or affects the fiduciary and legal
obligations owed to stockholders by directors. The classified board structure
permits stockholders to annually review corporate decision making and to change
approximately one-third of the directors and thereby substantially change the
board's composition and character. This system permits significant changes in
the board while avoiding the potential for sudden and disruptive changes in
corporate business strategy and policies that could arise if an entirely new
group of directors were elected in a single year.
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<PAGE> 18
Additionally, a classified board protects stockholders against
potentially coercive takeover tactics, whereby a party attempts to acquire
control on terms that do not offer the greatest value to all stockholders. A
classified board is intended to encourage a person seeking to obtain control of
the Company to negotiate with the Board. Because a classified board prevents the
immediate removal of all directors, at least two stockholders' meetings will
generally be required to effect a change in control of the Board. The classified
system thus ensures the Board will have sufficient time to review any takeover
proposal and develop an appropriate strategy, thereby enhancing the Board's
ability to negotiate the best result for the Company's stockholders.
Furthermore, the adoption of this stockholder proposal would not in
itself declassify the Board and institute the annual election of directors. If
approved by the stockholders, the proposal would only serve as a recommendation
to the Board to take the necessary steps to end the staggered system of electing
directors. To declassify the Board, it would be necessary to amend the relevant
provisions of the Company's Restated Certificate of Incorporation and Bylaws.
The affirmative vote of 66 2/3% of the outstanding shares of Sybase Common Stock
would be required to approve those amendments.
REQUIRED VOTE
The approval of the stockholder proposal 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 HAS CONCLUDED THAT A CLASSIFIED BOARD IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"AGAINST" THE ADOPTION OF THE FOREGOING STOCKHOLDER PROPOSAL. PROXIES SOLICITED
BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS OTHERWISE SPECIFY
IN THEIR PROXIES.
16
<PAGE> 19
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, 1997) (hereafter collectively referred
to as the "named executive officers") for the fiscal years ended December 31,
1995, 1996 and 1997:
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------- ------------
Number of All
Other Shares Other
Name and Principal Annual Underlying Compen-
Position in 1997 Year Salary(1) Bonus(2) Compensation Options sation
- ---------------- ---- ---------- ---------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 1997 $ 516,667 $ 0 $1,088,290(3) 160,000 $ 500(4)
Chairman of the Board 1996 $ 420,833 $ 100,000 $ 435,319(5) 495,000(6) $ 500(4)
and Chief Executive 1995 $ 264,657 $ 125,000 $ 236,881(8) 45,000 --
Officer(7)
John S. Chen 1997 $ 208,333 $ 104,167 -- 500,000 $ 30,816(9)
President and Chief
Operating Officer(10)
Robert S. Epstein 1997 $ 330,000 $ 0 -- 100,000 $ 500(4)
Executive Vice 1996 $ 330,000 $ 85,500 -- -- $ 500(4)
President and Chief 1995 $ 312,499 $ 0 -- -- $ 500(4)
Information Officer
Jack L. Acosta 1997 $ 305,000 $ 0 -- 145,000 $ 500(4)
Senior Vice President 1996 $ 218,453 $ 55,093 -- 80,000 $ 500(4)
and Chief Financial
Officer (11)
Michael H. Forster 1997 $ 370,000 $ 114,038 $ 134,399(12) 40,000 $ 500(4)
Senior Vice President, 1996 $ 356,250 $ 401,914(13) -- 259,200(14) $ 500(4)
Worldwide Field Operations 1995 $ 220,000 $ 187,517 -- 150,000(15) $ 2,348(4)
</TABLE>
- -------------------
(1) Salary includes amounts earned in the year indicated but 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) Relocation expense.
(4) Company contribution under 401(k) plan.
(5) Includes aircraft transportation reimbursement of $311,859.
(6) 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.
(7) Mr. Kertzman joined Sybase in February 1995 and became Chief Executive
Officer in July 1996.
(8) Aircraft transportation reimbursement.
17
<PAGE> 20
(9) Includes $7,500.00 in auto allowance and $23,316.04 in supplemental
health insurance and benefits and 401(k) contributions.
(10) Mr. Chen joined Sybase in August 1997 as President and Chief Operating
Officer. In February 1998, Mr. Chen became President and Chief Executive
Officer, sharing the Chief Executive Officer position with Mr. Kertzman.
(11) Mr. Acosta became an executive officer in August 1996.
(12) Relocation and housing expenses.
(13) Includes a one-time bonus of $173,178 paid in connection with Mr.
Forster's promotion to Senior Vice President, Worldwide Field
Operations.
(14) 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.
(15) 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 1997 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 1997 Share Date 5% 10%
- ------- ---------- --------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 160,000 3.98% $ 13.125 04/01/07 $ 1,320,679 $ 3,346,859
John S. Chen 500,000 12.44% $ 14.688 08/04/07 $ 4,618,602 $11,704,445
Robert S. Epstein 40,000 1.00% $ 13.125 04/01/07 $ 330,170 $ 836,714
60,000 1.49% $ 16.750 05/20/07 $ 632,039 $ 1,601,711
Jack L. Acosta 70,000 1.74% $ 13.125 04/01/07 $ 577,797 $ 1,464,251
75,000 1.87% $ 14.000 12/01/07 $ 660,339 $ 1,673,430
Michael H. Forster 40,000 1.00% $ 18.750 01/23/07 $ 471,671 $ 1,195,302
</TABLE>
- -----------
(1) All options in the table have an exercise price equal to the fair market
value on the date of grant and, except for the options granted to Mr.
Chen and Mr. Forster, 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. Mr. Chen's options
became exercisable for 25% of the shares on the grant date, with the
balance of the shares subject to the options becoming exercisable at the
rate of approximately 2.1% per month commencing on the 13th month
following the grant date through the 48th month thereafter. Mr.
Forster's options vest 48 months following the date of grant unless he
achieves certain specified objectives, in which case the options become
exercisable earlier. All of the options become exercisable only so long
as employment with the Company or one of its subsidiaries continues, and
all have a 10-year term. 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
18
<PAGE> 21
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 $13.125 would be $21.379 and $34.043, respectively;
(ii) with an exercise price of $14.00 would be $22.805 and $36.312,
respectively; (iii) with an exercise price of $14.688 would be $23.925
and $38.097, respectively; (iv) with an exercise price of $16.750 would
be $27.284 and $43.445, respectively; and (v) with an exercise price of
$18.750 would be $30.542 and $48.633, respectively.
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 Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End (2)
-------------------------- --------------------------
Shares Aggregate
Acquired on Value
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Mitchell E. Kertzman 0 -- 214,059 440,941 $ 5,013 $ 25,067
John S. Chen 0 -- 125,000 375,000 $ 0 $ 0
Robert S. Epstein 103,400 $1,570,206 90,515 84,585 $ 2,364 $ 6,267
Jack L. Acosta 0 -- 49,994 175,006 $ 2,193 $ 10,967
Michael H. Forster 0 -- 225,099 74,101 $ 0 $ 0
</TABLE>
- ----------
(1) Market value of underlying securities on the date of exercise, minus the
exercise price.
(2) Market value of underlying securities on December 31, 1997 ($13.313 per
share), minus the exercise price of in-the-money options.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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 rewards 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.
19
<PAGE> 22
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 1997 compensation, the
Company used information obtained in a survey of 37 technology companies,
primarily publicly-held software and computer companies located in Northern
California, in determining 1997 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. Of such companies,
26 are included in the approximately 275 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 and total target compensation 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. As a result of this analysis, the Committee increased the
base salaries of four of the nine executive officers who had been employees of
the Company during 1996. 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 Chairman of the Board,
President and all Vice Presidents are eligible to defer, subject to certain
terms and conditions, portions of their compensation under an Executive Deferred
Compensation 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 1997, the
Committee established a target incentive bonus amount for each executive. This
target amount varied from executive to executive and ranged between 35% and 65%
of the executive's base salary. The actual amount of 1997 executive bonuses was
to be based 80% on the achievement of corporate operating profit margin
objectives and 20% on the achievement of the executive's business unit and
individual objectives, provided that no amounts would be paid unless the Company
achieved specified minimum operating profit margins. The corporate performance
measure used for 1997 annual executive bonus awards, including the bonus of the
Chairman of the Board, was actual operating profit margin compared with the
target operating profit margin approved by the Compensation Committee. Business
unit objectives were generally based on such business unit's revenues or the
revenues generated by products developed by such unit. Because the Company did
not achieve operating income objectives, executive officers (other than Mr.
Forster and Mr. Chen) did not receive any bonuses in 1997. Under the terms of an
employment agreement with the Company, Mr. Forster received a quarterly bonus
based entirely on the achievement by the Company of specified earnings per share
objectives. As a result, Mr. Forster received a total of $114,048. Mr. Chen
joined the Company in August 1997 and his target incentive compensation,
prorated based on the actual number of days of service, was guaranteed for 1997.
As a result, Mr. Chen received a bonus in 1997 of $104,167.
20
<PAGE> 23
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 1997
received any discretionary bonus in 1997.
(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. Such options are generally granted once a year. 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, the aggregate amount of the outstanding options and new awards, and the
relative quantities of options offered by other companies for comparable
positions. Special additional stock options are granted from time to time to
executive officers in connection with promotions or changes in responsibilities.
(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 1997, no executive perquisites
were included in the Company's compensation programs for named executive
officers, except for certain relocation and housing expenses for Mr. Forster and
relocation expenses for Mr. Kertzman. Pursuant to his employment agreement, the
Company agreed to provide Mr. Chen with benefits comparable to the benefits he
received from his prior employer. Accordingly, Mr. Chen received an automobile
allowance and supplemental insurance and health benefits during 1997.
1997 Compensation for the Chief Executive Officer. Mr. Kertzman's
1997 base salary was 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, his target incentive pay for
1997, which was primarily tied to corporate operating profit margin, 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 profit targets are met and above market levels
when operating income targets are exceeded. In the case of Mr. Kertzman, the
full Board of Directors approved the recommendation of the Compensation
Committee with respect to his 1997 target total compensation level (base salary
plus incentive). The incentive award portion of Mr. Kertzman's compensation
comprised 50% of total target compensation and was dependent 80% on the
Company's achievement of operating profit margin objectives specified by the
Compensation Committee and 20% on the Chief Executive Officer's performance
against individual objectives established by the Compensation Committee,
provided that no amounts would be paid unless a specified minimum operating
profit margin was achieved. In 1997, the corporate objectives were not met and
Mr. Kertzman did not receive any bonus for the year.
The Compensation Committee held six meetings in 1997. 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.
21
<PAGE> 24
Compensation Limitations. Under Section 162(m) of the 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 certain executive officers 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 1996 Stock Plan qualifies 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.
Report Submitted by:
Richard C. Alberding (Chairman)
L. William Krause
David E. Liddle
22
<PAGE> 25
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
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.
In July 1997, the Company entered into an employment agreement with Mr.
Chen pursuant to which he became President and Chief Operating Officer and a
director. The agreement provided for an initial annual base salary of $500,000,
target incentive compensation equal to 50% of base salary, grant of a stock
option to purchase 500,000 shares and employee benefits comparable to those he
received from his prior employer. The agreement also provides that, if Mr.
Chen's employment is terminated for reasons other than cause prior to April 1,
1999, he is entitled to severance equal to 150% of base pay and continuation of
employee benefits for a period of one year. If his employment terminates under
certain circumstances after April 1, 1999, Mr. Chen's agreement provides for a
severance payment equal to 100% of base pay and continuation of employee
benefits for a period of one year.
In December 1997, Eric Miles joined Sybase as Senior Vice President,
Product Operations. Mr. Miles' prior employer had extended to him a loan of
$100,000 that became due in connection with his leaving that company to join
Sybase. In connection with his commencement of employment, the Company made a
loan to Mr. Miles in January 1998 of $100,000 bearing interest at a rate of 7%
per annum, and having terms comparable to those of the loan previously extended
by his prior employer. As of March 31, 1998, $101,711 in total indebtedness was
outstanding under that loan. As long as Mr. Miles remains an employee of Sybase,
$25,000 of the indebtedness will be forgiven on each anniversary of the loan.
In January 1998, the Company entered into a short term secured loan
agreement with Mr. Kertzman pursuant to which the Company agreed to extend short
term secured loans to Mr. Kertzman, which bear interest at 10% per annum. The
largest amount of principal and interest outstanding under this loan agreement
through March 31, 1998, and the amount outstanding on that date, was $509,151.
Mr. Kertzman is in the final process of obtaining a $1.0 million line of credit
from Bank of America that will be used in part to repay the outstanding loans
owing to the Company. This line of credit will be guaranteed by the Company. In
the event that the Company is required to make any payments under that
guarantee, Mr. Kertzman will be obligated to promptly reimburse the Company. Mr.
Kertzman's reimbursement obligation will be secured by real property owned by
Mr. Kertzman.
In February 1998, the Company entered into a Retirement Agreement and
General Release with Mr. Forster relating to Mr. Forster's retirement. Under
this agreement, Mr. Forster will continue to be an employee through 1998 and
will receive his salary and benefits through March 31, 1999. 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. In 1994
Sybase acquired MDI and assumed those notes. As of March 11, 1998, approximately
$566,217 was outstanding under the Stock Note and bearing interest at 6% per
annum, and approximately $195,138 was outstanding under the Residence Note
bearing interest at prime plus 2% per annum. Pursuant to the Retirement
Agreement and General Release, these loans were consolidated into a single
non-recourse loan owing to Sybase in the principal amount of $761,355 due on
March 31, 1999, bearing interest at the rate of 5.7%, and secured by 23,071
shares of Common Stock owned by Mr. Forster and by the after-tax profits, if
any, from the exercise of any of his stock options.
23
<PAGE> 26
The Company has entered into statements of employment terms with six of
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 $100
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, 1992 through December 31, 1997:
[SYBASE, H&Q TECHNOLOGY INDEX, S&P 500 INDEX GRAPH]
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sybase $100.00 $170.56 $211.17 $146.19 $67.76 $54.06
H & Q Technology Index $100.00 $117.41 $141.04 $210.89 $262.10 $307.29
S & P 500 Index $100.00 $110.08 $111.53 $153.45 $188.68 $251.63
</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, 1997 to December
31, 1997, all required Section 16(a) filings were made on a timely basis, except
for the final Form 4 report filed by Mark Hoffman, the Company's former Chairman
of the Board, which was filed 10 days late due to an administrative error.
24
<PAGE> 27
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the Annual 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 (including nominations for election)
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 15, 1998
25
<PAGE> 28
Map to the offices of the Company
26
<PAGE> 29
APPENDIX 1
SYBASE, INC.
1996 STOCK PLAN
(as amended March 13, 1998)
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees and Consultants,
and
- 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 7,927,000. 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.
<PAGE> 42
18. Liability of Company.
(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
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Alloted Shares. If the Optioned Stock
covered byan Option or Right exceeds, as of the date of the 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.
<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
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
<PAGE> 45
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)
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
<PAGE> 46
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.
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.
(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
<PAGE> 47
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.
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> 48
APPENDIX 2
SYBASE, INC.
1991 AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(As Amended on March 13, 1998)
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 7,500,000
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 7,500,000 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 on the first Enrollment Date on or following commencement of his
or her employment
<PAGE> 49
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 whose option expires and who has not withdrawn from the Plan
will automatically be re-
<PAGE> 50
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, cash recognition awards, commissions,
overtime pay, shift premiums, and elective
<PAGE> 51
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 Journal or similar publication if such prices are so quoted
or reported, or the fair market
<PAGE> 52
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> 53
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> 54
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.
<PAGE> 55
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 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, January 24, 1995 and January
21, 1997 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,
May 23, 1995, and May 20, 1997 respectively. The Plan also was amended by the
Board of Directors on March 13, 1998.
SYBASE, INC.
By: /s/ MITCHELL L. GAYNOR
-------------------------------
Its: Vice President, General
Counsel and Secretary
Date: March 13, 1998
<PAGE> 56
SYBASE, INC.
1991 AMENDED AND RESTATED
FOREIGN SUBSIDIARY EMPLOYEE STOCK PURCHASE PLAN
(As Amended March 13, 1998)
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 7,500,000
shares of Common Stock (after giving effect to the November 1993 2-for-1stock
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
7,500,000 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> 57
(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
<PAGE> 58
Participating Subsidiary or 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 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 fair market value of such shares, less the fair
market value of any shares accrued and
<PAGE> 59
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
(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
<PAGE> 60
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 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.
<PAGE> 61
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.
(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
<PAGE> 62
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 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.
<PAGE> 63
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> 64
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, January 24, 1995 and January
21, 1997 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,
May 23, 1995, and May 20, 1997 respectively. The Plan also was amended by the
Board of Directors on March 13, 1998.
SYBASE, INC.
By: /s/ MITCHELL L. GAYNOR
------------------------------------
Its: Vice President, General
Counsel and Secretary
Date: March 13, 1998
<PAGE> 65
FORM OF PROXY
PROXY
SYBASE, INC.
PROXY FOR 1998 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
Stockholders and Proxy Statement, each dated as of April 15, 1998, and hereby
appoints Mitchell Kertzman, Jack Acosta and Mitchell Gaynor, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1998 Annual Meeting of Stockholders of SYBASE, INC. to be held on May 27, 1998
at 10:00 a.m. local time, at the offices of the Company, located at 6425
Christie Avenue, Emeryville, California 94608, and at any adjournment or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote, if then and there personally present, on
the matters set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[ SEE REVERSE ]
[ SIDE ]
<PAGE> 66
THE BOARD OF DIRECTORS
RECOMMENDS VOTING
FOR PROPOSAL 1
FOR PROPOSAL 2
FOR PROPOSAL 3
FOR PROPOSAL 4
AGAINST PROPOSAL 5
[X] Please mark
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, FOR THE APPROVAL OF
EACH OF PROPOSALS 2, 3 AND 4 SET FORTH BELOW, AGAINST PROPOSAL 5, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERRS AS MAY COME BEFORE THE MEETING.
1. Election of Class III Directors
NOMINEES: L. William Krause
Robert P. Wayman and
Jeffrey T. Webber
FOR WITHHELD
[ ] [ ]
MARK HERE
FOR ADDRESS
CHANGE AND
[____] ________________________________ NOTE BELOW [ ]
For all nominees except as noted above
2. Proposal to approve an amendment to the 1996
Stock Plan to increase the total number of shares
of Common Stock issuable thereunder by
2,500,000 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 1,500,000 shares.
For Against Abstain
[ ] [ ] [ ]
4. Proposal to ratify the appointment of Ernst &
Young LLP as independent accountants for the
Company for fiscal year 1998.
For Against Abstain
[ ] [ ] [ ]
5. Stockholder proposal to reorganize the Board
of Directors into a single class.
For Against Abstain
[ ] [ ] [ ]
<PAGE> 67
6. 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:_____________.
