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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
INPRISE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[INPRISE LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 25, 2000
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TO OUR STOCKHOLDERS:
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WHAT: Our Annual Meeting of Stockholders for Calendar Year 2000
WHEN: Tuesday, July 25, 2000 at 2:00 p.m., local time
WHERE: Inprise Corporation
100 Enterprise Way
Scotts Valley, California
WHY: At this meeting, we plan to:
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(1) Elect two Class II directors to serve on the Board of Directors for a
three-year term expiring upon the election of directors at the 2003
Annual Meeting of Stockholders.
(2) Approve an amendment to Inprise's 1997 Stock Option Plan to increase the
number of shares of Common Stock authorized for issuance thereunder by
2,000,000.
(3) Approve an amendment to Inprise's 1999 Employee Stock Purchase Plan to
reserve an additional 500,000 shares of Common Stock thereunder.
(4) Ratify the selection of PricewaterhouseCoopers LLP as Inprise's
independent auditors for the fiscal year ending December 31, 2000.
(5) Transact any other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
A complete list of stockholders entitled to vote at the meeting will be open
for examination by the stockholders, during regular business hours, for a period
of ten days prior to the meeting, at the offices of Inprise Corporation,
100 Enterprise Way, Scotts Valley, California 95066. Only stockholders of record
at the close of business on June 14, 2000 will receive notice of, and be
eligible to vote at, the Annual Meeting. The foregoing items of business are
more fully described in the Proxy Statement accompanying this notice.
Your vote is important. Please read the Proxy Statement and the voting
instructions on the enclosed proxy and then, whether or not you plan to attend
the Annual Meeting in person, and no matter how many shares you own, please
sign, date and promptly return the enclosed blue proxy in the enclosed envelope,
which requires no additional postage if mailed in the United States. IF YOU ARE
A STOCKHOLDER OF RECORD, YOU MAY ALSO AUTHORIZE THE INDIVIDUALS NAMED ON THE
ENCLOSED BLUE PROXY TO VOTE YOUR SHARES BY CALLING A SPECIALLY DESIGNATED
TELEPHONE NUMBER (TOLL FREE 1-800-790-4577) OR VIA THE INTERNET AT
HTTP://PROXY.GEORGESON.COM. These telephone and Internet voting procedures are
designed to authenticate your vote and to confirm that your voting instructions
are followed. Specific instructions for stockholders of record who wish to use
telephone or Internet voting procedures are set
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forth on the enclosed blue proxy. You may revoke your proxy at any time before
the vote is taken by delivering to the Corporate Secretary of Inprise a written
revocation or a proxy with a later date (including a proxy by telephone or via
the Internet) or by voting your shares in person at the Annual Meeting.
By Order of the Board of Directors,
/s/ Keith E. Gottfried KEITH E.
GOTTFRIED
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
June 20, 2000
Scotts Valley, California
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INPRISE CORPORATION
100 ENTERPRISE WAY
SCOTTS VALLEY, CA 95066
(831) 431-1000
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PROXY STATEMENT
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FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 25, 2000
The Board of Directors (the "Board") of Inprise Corporation, a Delaware
corporation ("Inprise" or the "Company"), seeks your proxy for use in voting at
our 2000 Annual Meeting of Stockholders to be held at the Company's
headquarters, 100 Enterprise Way, Scotts Valley, California, on Tuesday,
July 25, 2000, at 2:00 p.m., local time, or any postponements or adjournments
thereof (the "Annual Meeting"). This Proxy Statement and the accompanying blue
proxy are first being mailed on or about June 20, 2000, together with Inprise's
Annual Report to Stockholders for the fiscal year ended December 31, 1999, to
all holders of our common stock, par value $.01 per share ("Common Stock"),
entitled to vote at the Annual Meeting.
PURPOSE OF THE MEETING
At the Annual Meeting, stockholders will act upon the election of two
Class II directors, approval of an amendment to Inprise's 1997 Stock Option Plan
to increase the number of shares of Common Stock authorized for issuance
thereunder by 2,000,000 shares, approval of an amendment to Inprise's 1999
Employee Stock Purchase Plan to reserve an additional 500,000 shares of Common
Stock thereunder and ratification of the selection of
PricewaterhouseCoopers LLP as Inprise's independent auditors for the fiscal year
ending December 31, 2000.
RECORD DATE AND VOTING SECURITIES
Only holders of record of Common Stock at the close of business on June 14,
2000 (the "Record Date") will receive notice of, and be entitled to vote at, the
Annual Meeting. At the close of business on the Record Date, 61,419,725 shares
of Common Stock were outstanding and entitled to vote. The Common Stock is the
only class of outstanding voting securities of Inprise.
QUORUM AND VOTING
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock issued and outstanding on the Record
Date and entitled to vote thereat is necessary to constitute a quorum to
transact business. Broker non-votes, if any, will be counted for purposes of
determining the presence of a quorum. In deciding all matters, a holder of
Common Stock on the Record Date shall be entitled to cast one vote for each
share of Common Stock then registered in such holder's name.
Election of the director nominees named in Proposal No. 1 requires the
affirmative vote of a plurality of the shares of Common Stock voted at the
Annual Meeting. Votes may be cast in favor of or withheld with respect to both
of the director nominees, or either of them. Abstentions and broker non-votes,
if any, will not be counted as having been voted and will have no effect on the
outcome of the vote on the election of directors. Stockholders may not cumulate
votes in the election of directors.
Approval of the amendments to Inprise's 1997 Stock Option Plan and Inprise's
1999 Employee Stock Purchase Plan, as specified in Proposal Nos. 2 and 3,
respectively, requires the affirmative vote of
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a majority of the shares of Common Stock present or represented at the Annual
Meeting and entitled to vote thereon. Abstentions will have the same effect as
votes against these proposals. Broker non-votes, if any, will have no effect on
the votes for these proposals.
Ratification of the selection of PricewaterhouseCoopers LLP as Inprise's
independent auditors for fiscal year 2000, as specified in Proposal No. 4,
requires the affirmative vote of a majority of the shares of Common Stock
present or represented at the Annual Meeting and entitled to vote thereon. If
this selection is not ratified by stockholders, the Audit Committee may
reconsider its recommendation. Abstentions will have the same effect as votes
against this proposal. Broker non-votes, if any, will have no effect on the vote
for this proposal.
On May 7, 1999, C. Robert Coates and Management Insights, Inc., a
privately-held company controlled by Mr. Coates (together, the "Coates Group"),
entered into a Standstill Agreement (the "Standstill Agreement") with Inprise.
In accordance with the terms of the Standstill Agreement, the Board of Directors
nominated Mr. Coates to stand for election to the Board at the 1999 Annual
Meeting of Stockholders. Mr. Coates was elected to the Inprise Board at the 1999
Annual Meeting of Stockholders in June 1999, and served on the Board until his
resignation on February 6, 2000. The Standstill Agreement, which remains in
effect until the day following the certification of the results of the votes
taken at the Annual Meeting, requires, among other things, that the members of
the Coates Group and their respective affiliates and associates publicly
support, and vote all shares of Common Stock owned by them in favor of, the
election of each of the persons nominated by the Board to stand for election as
directors at the Annual Meeting. In early March 2000, Mr. Coates publicly stated
that the Coates Group owned 3,005,440 shares of Common Stock, which constitutes
approximately 4.9% of Inprise's outstanding shares as of the Record Date.
Inprise has no information as to whether the Coates Group may have increased or
decreased its ownership of shares of Common Stock since early March 2000.
EXPENSES OF PROXY SOLICITATION
Inprise is soliciting the proxies and will bear the entire cost of this
solicitation, including the preparation, assembly, printing and mailing of this
Proxy Statement and any additional materials furnished to our stockholders.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation material to such
beneficial owners. In addition, if asked, Inprise will reimburse such persons
for their reasonable expenses in forwarding the solicitation material to such
beneficial owners. The original solicitation of proxies by mail may be
supplemented by telephone, telegram, telecopy, internet and personal
solicitation by directors, officers or other regular employees of Inprise. We
have retained Georgeson Shareholder Communications Inc. to assist us in the
solicitation of proxies for approximately $25,000, plus out-of-pocket expenses.
VOTING PROCEDURES
Stockholders of record can choose one of the following three ways to vote:
1. By mail: Sign, date and return the blue proxy in the enclosed pre-paid
envelope.
2. By telephone: Call (TOLL FREE 1-800-790-4577) and follow the
instructions.
3. Via the Internet: Access HTTP://PROXY.GEORGESON.COM and follow the
instructions.
By casting your vote in any of the three ways listed above, you are
authorizing the individuals listed on the blue proxy to vote your shares in
accordance with your instructions. If you want to vote in person at the Annual
Meeting and you hold Common Stock in street name, you must obtain a proxy from
your broker and bring that proxy to the meeting.
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PROXIES
If the enclosed blue proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified therein. If the proxy does not specify how the shares
represented thereby are to be voted, the shares represented by the proxy will be
voted FOR the election of the nominees proposed by the Board, FOR the approval
of the amendment to Inprise's 1997 Stock Option Plan, FOR the approval of the
amendment to Inprise's 1999 Employee Stock Purchase Plan and FOR the
ratification of the selection of Pricewaterhouse-Coopers LLP as Inprise's
independent auditors for the fiscal year ending December 31, 2000.
You may revoke your proxy by doing any of the following:
- File a written notice of revocation with the Corporate Secretary of
Inprise, dated later than the proxy, before the vote is taken at the
Annual Meeting.
- Execute a later dated proxy (including a proxy by telephone or via the
Internet) before the vote is taken at the Annual Meeting.
- Vote in person at the Annual Meeting (your attendance at the Annual
Meeting, in and of itself, will not revoke the earlier proxy).
Any written notice of revocation, or later dated proxy, should be delivered
to:
Inprise Corporation
100 Enterprise Way
Scotts Valley, CA 95066
Attention: Keith E. Gottfried, Corporate Secretary
If you have any questions or need assistance in voting your shares, please
call:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, 10TH FLOOR
NEW YORK, NEW YORK 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: (800) 223-2064
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PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Board of Directors of Inprise is currently divided into three classes.
The directors in each class serve terms of three years and until each of their
respective successors have been elected and have been qualified. The Board
currently consists of two Class I directors, two Class II directors and two
Class III directors.
The term of office of one class of directors expires each year in rotation
so that one class is elected at each annual meeting of stockholders for a
three-year term. The term of the two Class II directors will expire at the
Annual Meeting. The other directors will remain in office for the remainder of
their respective terms, as indicated below.
At the Annual Meeting, two Class II directors will be elected to serve for a
three-year term. The Board's nominees are Dale Fuller and William K. Hooper,
both of whom are currently serving as Class II directors. If either nominee for
any reason is unable or unwilling to serve, the proxies may be voted for such
substitute nominee as the Board of Directors may determine.
Set forth below is information regarding each nominee for Class II director
and for each director whose term will continue after the Annual Meeting.
CLASS II NOMINEES FOR ELECTION
DALE FULLER. Mr. Fuller has served as Interim President and Chief Executive
Officer and as a director of Inprise since April 1999. Prior to joining Inprise,
Mr. Fuller was a private investor from 1998 to 1999. From 1996 to 1998,
Mr. Fuller served as Chief Executive Officer at WhoWhere? Inc., a leading
Internet site. From 1995 to 1996, Mr. Fuller served as General Manager and Vice
President of the PowerBooks Division at Apple Computer, Inc., a personal
computer manufacturer. Prior to joining Apple Computer, Mr. Fuller served as
General Manager and Vice President of the Portables Division at NEC, a personal
computer manufacturer, from 1993 to 1995. Age: 41.
WILLIAM K. HOOPER. Mr. Hooper has served as a director of Inprise since
May 1999. Mr. Hooper is the President of the Woodside Hotels and Resorts Group
Services Corporation and Monterey Plaza Hotel Corporation. Mr. Hooper also
serves on the board of directors of several non-profit organizations. Age: 45.
CLASS III DIRECTORS SERVING A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL
MEETING
DAVID HELLER. Mr. Heller has served as a director of Inprise since
June 1984. Mr. Heller is a founder and has served as a director and the
President since 1982, of Pacific Technology Capital Corporation, a corporate
finance advisory firm. Mr. Heller also serves as a director of America West Golf
Manufacturing, Inc., a golf club manufacturing company, and Intelliseek, Inc., a
privately-held Internet infrastructure company. Age: 55.
WILLIAM F. MILLER. Dr. Miller has served as a director of Inprise since
January 1996. Dr. Miller has been the Herbert Hoover Professor Emeritus,
Graduate School of Business, Stanford University since 1997, and President
Emeritus of SRI International, a nonprofit organization and one of the world's
largest independent research, technology development and consulting
organizations since 1990. He has also been the Professor Emeritus of Computer
Science, School of Engineering, Stanford University since 1997. In 1990,
Dr. Miller retired after 11 years as President and Chief Executive Officer of
SRI International. Until recently he served on the boards of directors of Wells
Fargo Bank and Co., Varian Associates, Pacific Gas and Electric Company, First
Interstate Bancorp and Fireman's Fund Insurance
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Company. Dr. Miller currently serves on the board of Women.com Networks, Inc., a
publicly-held company and a leading Internet network dedicated to women, as well
as on the boards of the following private companies: Sentius Corporation, X
Peed Inc. and Data Digest Inc. Dr. Miller also serves on the board of a
non-profit company, Commerce Net. Age: 74.
CLASS I DIRECTORS SERVING A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
ROBERT H. KOHN. Mr. Kohn has served as the Vice Chairman of the Board and
as a director of Inprise since May 2000. Mr. Kohn is a co-founder of EMusic.com
Inc, a leading provider of downloadable music over the Internet, and has served
as Chairman of the Board and Secretary of Emusic since January 1998. From
October 1996 to December 1997, Mr. Kohn was Vice President, Business Development
and General Counsel of Pretty Good Privacy, Inc., a developer and marketer of
Internet encryption and security software. From March 1987 to September 1996, he
was Senior Vice President of Corporate Affairs, General Counsel and Corporate
Secretary of Inprise, which was then known as Borland International, Inc.
Mr. Kohn also served as Chief Legal Counsel for Ashton-Tate Corporation, a
developer and marketer of computer software that was acquired by Inprise in
1991. Age: 42.
ROBERT DICKERSON. Mr. Dickerson has served as a director of Inprise since
June 2000. Mr. Dickerson, who currently is an independent investor, served as
Senior Vice President and General Manager for Products for Rational Software, an
Internet software tools company, from April 1997 to March 2000. From March 1995
to April 1997, he was Vice President of Marketing and a General Manager for
several business units at Pure/Atria Software, a primarily UNIX software
company. From January 1988 to March 1995, Mr. Dickerson was Vice President of
Product Marketing and later Senior Vice President for Database and Connectivity
Products for Inprise Corporation, which was then known as Borland
International, Inc. Age: 43.
DIRECTOR COMPENSATION
Inprise paid fees to each non-employee director for his services during
1999. Fees paid include an annual retainer of $24,000 ($48,000 for the Chairman
of the Board), plus $1,000 for attendance at each meeting of the Board of
Directors and for each meeting of a committee of the Board on which they serve.
Employee directors receive no additional compensation for their service on the
Board or any committee of the Board. All directors are reimbursed for their
expenses in connection with such service.
Each non-employee director receives an option to purchase 30,000 shares of
Common Stock as of the date an individual becomes a non-employee director. Each
such option vests one year from the date of grant, provided that the
non-employee director's service has not terminated prior to such time. In
addition, at every annual meeting of stockholders, each non-employee director
who was serving as a director prior to the date of such meeting receives an
option to purchase 7,500 shares of Common Stock, provided that a non-employee
director will not receive this option if he or she is receiving an option to
purchase 30,000 shares of Common Stock at such annual meeting. Each such option
vests on the day preceding the date of the annual meeting next following the
date of grant, provided that the non-employee director's service has not
terminated prior to such day. Each non-employee director option is granted under
the 1997 Stock Option Plan, has a ten-year term and has an exercise price equal
to the fair market value of the underlying stock on the date of grant. In
addition to the non-discretionary grant of an option to purchase 30,000 shares
of Common Stock described above, Mr. Kohn was granted options to purchase
170,000 shares of Common Stock in connection with joining the Board in
May 2000.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Organization and Compensation, and Executive
Committees. Inprise does not have a standing nominating committee. During 1999,
the Board held 23 meetings, the Audit Committee held three meetings, the
Organization and Compensation Committee held nine meetings and the Executive
Committee held two meetings. During 1999, no incumbent director attended fewer
than 75% of the aggregate of (i) the total number of meetings of the Board (held
during the period that he served) and (ii) the total number of meetings held by
any committee of the Board upon which such director served (during the periods
that he served).
AUDIT COMMITTEE. The Audit Committee currently consists of David Heller
(Chairman), William F. Miller and William K. Hooper. The Audit Committee
recommends to the Board the accounting firm that will serve as Inprise's
independent auditors, meets with the independent auditors, with and without
Inprise's management, to review and discuss various matters including Inprise's
financial statements, reviews the scope and results of the annual audit of
Inprise's consolidated financial statements, and reviews the recommendations of
the independent auditors concerning Inprise's financial practices and
procedures.
ORGANIZATION AND COMPENSATION COMMITTEE. The Organization and Compensation
Committee currently consists of William F. Miller (Chairman), David Heller and
Robert H. Kohn. The Organization and Compensation Committee is responsible for
supervising Inprise's compensation policies, administering the employee
incentive plans, reviewing officers' salaries, bonuses and other compensation
arrangements, approving significant changes in employee benefits, approving
loans to or loan guarantees for officers and recommending to the Board such
forms of remuneration as it deems appropriate.
EXECUTIVE COMMITTEE. The Executive Committee currently consists of William
F. Miller and David Heller. The Executive Committee has the authority to take
all actions that the Board has the authority to take, except as specifically
limited by applicable law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NOMINEES LISTED ABOVE.
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PROPOSAL TWO
APPROVAL OF AMENDMENT TO
THE INPRISE CORPORATION
1997 STOCK OPTION PLAN
PLAN OVERVIEW
The Inprise Corporation 1997 Stock Option Plan (the "Option Plan") provides
for the grant of stock options to employees, directors and consultants of
Inprise (the "stock options"). Inprise believes that its ability to offer stock
options is an important factor in attracting, retaining and motivating employees
and other service providers in a competitive marketplace.
A stock option enables its recipient (an "optionee") to purchase a specified
number of shares of Common Stock at a price determined at the time the stock
option is granted. If Inprise's stock price increases, the optionee may benefit
by exercising the stock option to purchase shares of Common Stock at the fixed
price and selling them at the higher market price. Stock options are often said
to align the optionees' interests with those of the stockholders because they
are intended to motivate optionees to act in ways that increase the value of the
Common Stock. In addition, because stock options typically become exercisable in
periodic installments over a number of years of continued service, they provide
optionees with an incentive to continue to provide services to Inprise.
The Option Plan enables Inprise to grant stock options on a discretionary
basis to employees, directors and consultants of Inprise and also provides for a
program of periodic, automatic grants of stock options to the non-employee
directors. Stock options granted under the Option Plan may be incentive stock
options governed by Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or nonstatutory stock options. See the section titled "Federal
Income Tax Information."
PROPOSED AMENDMENT
To ensure that Inprise will continue to have a sufficient number of shares
available for future stock option grants, on June 8, 2000, the Board adopted an
amendment to the Option Plan, subject to stockholder approval, to increase the
number of shares of Common Stock authorized for issuance under the Option Plan
by 2,000,000 shares, from 7,200,000 shares to 9,200,000 shares. Inprise is
seeking stockholder approval of this amendment.
As of May 31, 2000, there were 1,190,544 shares of Common Stock available
for future grants under the Option Plan, not including the shares subject to
this proposal. The Board believes that this number will not be sufficient to
meet Inprise's anticipated needs.
DESCRIPTION OF OPTION PLAN
The following summary of the material features of the Option Plan does not
purport to be complete and is qualified by the specific language of the Option
Plan, a copy of which is available to any stockholder of Inprise upon written
request to the Corporate Secretary of Inprise at Inprise's principal executive
offices.
SHARES AUTHORIZED
Stockholders of Inprise have previously authorized the issuance of a maximum
of 7,200,000 shares of Common Stock under the Option Plan. If this proposal is
approved by the stockholders of Inprise, the maximum aggregate number of shares
of Common Stock that could be issued under the Option Plan will be increased to
9,200,000 shares, of which 6,009,456 shares have been issued upon the exercise
of or remain subject to previously granted options.
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To enable Inprise to deduct in full, for United States federal income tax
purposes, the compensation recognized by certain executive officers in
connection with stock options granted under the Option Plan, the Option Plan is
intended to qualify such compensation as "performance-based compensation" within
the meaning of Section 162(m) of the Code. To comply with Section 162(m), the
Option Plan limits the number of shares for which stock options may be granted
to any employee in any fiscal year. No employee may be granted options for more
than 1,000,000 shares in any fiscal year, except that Inprise may make an
additional, one-time stock option grant to any newly-hired employee for up to
2,000,000 shares (the "Grant Limits"). Appropriate adjustments will be made to
the shares subject to the Option Plan, the Grant Limits, the automatic,
non-employee director grants discussed below and to outstanding stock options
upon any stock split or other change in the capital structure of Inprise. If any
outstanding stock option expires or is terminated or cancelled, or if option
shares are repurchased by Inprise, the shares allocable to the unexercised
portion of such option will be returned to the Option Plan and will again become
available for grant.
PLAN ADMINISTRATION
The Option Plan is administered by the Organization and Compensation
Committee of the Board (the "Committee"). Subject to the Option Plan's
provisions, and except for automatic grants to non-employee directors, the
Committee determines the persons to whom stock options are granted and all of
their terms.
The Board may delegate to an officer the authority to grant stock options
for not more than 250,000 shares in any fiscal year to any eligible person who
is not an Inprise officer or director. Any such grant must comply with
guidelines established by the Board. The Committee or the Board interpret the
Option Plan and their determinations are final and binding. With certain
limitations, the Option Plan provides for indemnification of any director,
officer or employee of Inprise against all liabilities, judgments and reasonable
expenses, including attorneys' fees, incurred in any legal action arising from
that person's actions in administering the Option Plan.
ELIGIBILITY
Stock options may be granted to any current or prospective employees,
directors and consultants of Inprise or any parent or subsidiary corporation of
Inprise. Stock options granted to prospective employees, directors and
consultants may only be granted in connection with written offers of employment
or other service relationships. Prospective employees, directors and consultants
may not exercise their options before their employment or service starts. While
any eligible person may be granted a nonstatutory stock option, only employees
of Inprise or any parent or subsidiary corporation of Inprise may be granted
incentive stock options.
As of May 31, 2000, approximately 700 employees (including five executive
officers), four non-employee directors and approximately 50 consultants were
eligible for grants under the Option Plan. The closing price of the Common Stock
on the Nasdaq National Market on June 15, 2000, the most recent practicable date
prior to the printing of this Proxy Statement, was $5 5/8.
TERMS OF DISCRETIONARY OPTIONS
The terms of each stock option are specified in a written agreement between
Inprise and the optionee. The per share exercise price of incentive stock
options must generally be at least equal to the fair market value of a share of
Common Stock on the date of grant. The per share exercise price of nonstatutory
stock options must be at least equal to 85% of such fair market value.
Optionees generally may pay the exercise price of their stock options as
follow:
(1) in cash, by check or cash equivalent;
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(2) by assigning to Inprise the proceeds of a sale or loan with respect
to some or all of the shares being purchased;
(3) if legally permitted, by surrendering to Inprise other shares of
Common Stock having a fair market value on the date of surrender not less
than the aggregate exercise price of the options being exercised;
(4) in the case of an employee, by a combination of cash and a
promissory note; or
(5) by any combination of the foregoing.
The Option Plan authorizes the Committee to permit other lawful forms of
payment or to restrict the forms of payment permitted. Optionees must make
adequate provision for any federal, state, local or foreign tax withholding
required before they may exercise their stock options.
Stock options become exercisable at such time or times and are subject to
such conditions as the Committee may determine. However, the maximum term of an
incentive stock option is generally ten years. Unless an optionee's service is
terminated for cause, in which case his or her stock options will terminate and
cease to be exercisable, his or her options generally will remain exercisable
for a period of three months following termination of service. If an optionee
dies or becomes disabled, his or her stock option generally will remain
exercisable for a period of twelve months following termination of service. In
any event, the option must be exercised before its expiration date.
Incentive stock options are nontransferable by the optionee other than by
will or by the laws of descent and distribution, and are exercisable during the
optionee's lifetime only by the optionee. Nonstatutory stock options may be
assigned or transferred if permitted by the Committee and set forth in the
option agreement evidencing such option.
TERMS OF AUTOMATIC, NON-EMPLOYEE DIRECTOR STOCK OPTIONS
The Option Plan, in addition to providing for discretionary stock option
grants to non-employee directors, provides for the nondiscretionary, automatic
grant of stock options to directors who, at the time of grant, are not employees
of Inprise. Upon first joining the Board, non-employee directors are granted an
option to purchase 30,000 shares of Common Stock (an "Initial Option"). On the
date of each subsequent annual meeting of the stockholders, non-employee
directors remaining in office are granted options to purchase 7,500 shares of
Common Stock (an "Annual Option"). All non-employee directors' stock options
have a per share exercise price equal to the fair market value of a share of
Common Stock on the date of grant.
Initial Options become exercisable in full on their first anniversary of the
date of grant, while Annual Options become exercisable in full on the day
preceding the first annual meeting of the stockholders following the date of
grant. Non-employee director stock options generally remain exercisable for a
period of six months following the director's termination of service. However,
if a non-employee director dies or becomes disabled, his or her non-employee
director stock options remains exercisable for a period of twelve months
following such termination of service. In any event, the options must be
exercised before their expiration date. Non-employee director stock options
expire ten years after the date of grant.
CHANGE IN CONTROL
In the event of a merger of Inprise into another corporation or another
"change in control" transaction as described in the Option Plan, the surviving
corporation or its parent may assume Inprise's rights and obligations under
outstanding stock options or substitute substantially equivalent options. The
Option Plan authorizes the Committee or the Board to provide in any option
agreement for acceleration of exercisability in connection with a change in
control as the Committee or the Board
9
<PAGE>
may determine. Outstanding stock options not assumed, replaced or exercised
before a change in control will generally terminate.
TERMINATION OR AMENDMENT
The Option Plan will continue until terminated by the Board or all shares
available for issuance under the Option Plan have been issued. However, all
incentive stock options must be granted within ten years of the date on which
the Board adopted the Option Plan. The Board may terminate or amend the Option
Plan at any time, except that, without stockholder approval, the Board may not
amend the Option Plan to increase the total number of shares of Common Stock
issuable, change the class of persons eligible to receive incentive stock
options, or effect any other change that requires stockholder approval under
applicable law. No termination or amendment may adversely affect an outstanding
stock option without the consent of the optionee, unless the amendment is
required to preserve the stock option's status as an incentive stock option or
is necessary to comply with applicable law.
FEDERAL INCOME TAX INFORMATION
The following summary is intended only as a general guide as to the United
States federal income tax consequences of Option Plan participation and does not
attempt to describe all possible federal or other tax consequences.
INCENTIVE STOCK OPTIONS
An optionee recognizes no taxable income for regular income tax purposes as
the result of the grant or exercise of an incentive stock option qualifying
under Section 422 of the Code (unless the optionee is subject to the alternative
minimum tax). Optionees who neither dispose of their shares acquired upon the
exercise of an incentive stock option (the "ISO Shares") within two years after
the option grant date nor within one year after the exercise date normally will
recognize a long-term capital gain or loss equal to the difference, if any,
between the sale price and the amount paid for the ISO Shares. If an optionee
disposes of the ISO Shares within two years after the option grant date or
within one year after the exercise date (a "disqualifying disposition"), the
optionee will realize ordinary income at the time of the disposition in an
amount equal to the excess, if any, of the fair market value of the ISO Shares
at the time of exercise (or, if less, the amount realized on such disqualifying
disposition) over the exercise price of the ISO Shares being purchased. Any
additional gain will be capital gain, taxed at a rate that depends upon the
amount of time the ISO Shares were held by the optionee. Inprise will be
entitled to a deduction in connection with the disposition of the ISO Shares
only to the extent that the optionee recognizes ordinary income on a
disqualifying disposition of the ISO Shares.
NONSTATUTORY STOCK OPTIONS
An optionee generally recognizes no taxable income as the result of the
grant of a nonstatutory stock option. Upon the exercise of a nonstatutory stock
option, the optionee normally recognizes ordinary income equal to the difference
between the option exercise price and the fair market value of the shares on the
exercise date. If the optionee is an employee of Inprise, such ordinary income
generally is subject to withholding of income and employment taxes. Upon the
sale of stock acquired by the exercise of a nonstatutory stock option, any
subsequent gain or loss, generally based on the difference between the sale
price and the fair market value on the exercise date, will be taxed as capital
gain or loss. A capital gain or loss will be long-term if the optionee's holding
period is more than 12 months. Inprise generally should be entitled to a
deduction equal to the amount of ordinary income recognized by the optionee as a
result of the exercise of a nonstatutory stock option, except to the extent such
deduction is limited by applicable provisions of the Code.
10
<PAGE>
AMENDED PLAN BENEFITS AND ADDITIONAL INFORMATION
With the exception of the automatic grant of stock options to non-employee
directors, future grants under the Option Plan will be made at the discretion of
the Committee and, accordingly, are not yet determinable. In addition, benefits
under the Option Plan will depend on a number of factors, including the fair
market value of the Common Stock on future dates and the exercise decisions made
by the optionees. Consequently, it is not possible to determine the benefits
that might be received by optionees receiving discretionary grants under the
Option Plan.
For information relating to the grants under the Option Plan to "Named
Executive Officers," see "Summary Compensation Table" and "Option Grants in Last
Fiscal Year."
The following table sets forth the non-discretionary grants of stock options
that will be received under the Option Plan during the remainder of calendar
year 2000 by each of the persons and groups indicated:
AMENDED PLAN BENEFITS
<TABLE>
<CAPTION>
NO. SHARES UNDERLYING
NON-DISCRETIONARY
OPTIONS TO
NAME POSITION BE GRANTED IN 2000
---- ------------------------------------ ---------------------
<S> <C> <C>
Dale Fuller......................... Interim Chief Executive Officer and
President 0
Frederick A. Ball................... Senior Vice President and Chief
Financial Officer 0
Hobart McK. Birmingham.............. Former Chief Administrative Officer 0
JoAnne M. Butler.................... Former Vice President, General
Counsel and Corporate Secretary 0
John Walshe......................... Former Chief Operating Officer 0
John Floisand....................... Former Senior Vice President of
Worldwide Sales 0
James Weil.......................... Former President, Inprise Division 0
Delbert W. Yocam.................... Former Chairman of the Board and
Chief Executive Officer 0
Current Executive Group
(5 persons)....................... 0
Non-Executive Director Group
(5 persons)....................... 37,500
Non-Executive Officer Employee Group
(695 persons)..................... 0
</TABLE>
The number of shares of Common Stock subject to options granted to certain
persons under the Option Plan since its inception are as follows:
Messrs. Fuller, Ball, Birmingham, Walshe, Floisand, Weil and Yocam and
Ms. Butler were granted options to purchase 0 shares, 500,000 shares, 140,000
shares, 0 shares, 195,000 shares, 420,000 shares, 1,019,578 and 185,100 shares,
respectively; all current executive officers as a group were granted options to
purchase an aggregate of 1,500,000 shares; all current directors who are not
executive officers as a group were granted options to purchase an aggregate of
245,000 shares; and all employees, including all officers who are not executive
officers, as a group were granted options to purchase an aggregate of 4,253,248
shares. Since the inception of the Option Plan, no option has been granted to
any associate of any current director who is not an executive officer, of
11
<PAGE>
any nominee or of any executive officer, and no person other than those
individuals set forth above was granted five percent or more of the total amount
of options granted under the Option Plan since its inception.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE AMENDMENT TO THE 1997 STOCK OPTION PLAN.
12
<PAGE>
PROPOSAL THREE
APPROVAL OF AMENDMENT TO
THE INPRISE CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
PLAN OVERVIEW
The Inprise Corporation 1999 Employee Stock Purchase Plan (the "1999
Purchase Plan") is intended to provide employees with an opportunity to purchase
shares of Common Stock through payroll deductions. The 1999 Purchase Plan is
intended to qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Code. Inprise believes that its ability to provide its
employees with an opportunity to purchase stock through the 1999 Purchase Plan
is an important factor in attracting, retaining and motivating employees in a
competitive marketplace.
PROPOSED AMENDMENT
To ensure that Inprise will continue to have a sufficient number of shares
available to provide employees with a stock purchase opportunity, on June 8,
2000, the Board adopted an amendment to the 1999 Purchase Plan, subject to
stockholder approval, to increase the number of shares of Common Stock
authorized for issuance under the 1999 Purchase Plan by 500,000 shares, from
800,000 shares to 1,300,000 shares. Inprise is seeking stockholder approval of
this amendment.
As of May 31, 2000, there were 546,391 shares of Common Stock available for
issuance under the 1999 Purchase Plan, not including the shares subject to this
proposal. The Board believes that this number will not be sufficient to meet
Inprise's anticipated needs.
DESCRIPTION OF 1999 PURCHASE PLAN
The following summary of the material features of the 1999 Purchase Plan
does not purport to be complete and is qualified by the specific language of the
1999 Purchase Plan, a copy of which is available to any stockholder of Inprise
upon written request to the Corporate Secretary of Inprise at Inprise's
principal executive offices.
GENERAL
Each participant in the 1999 Purchase Plan is granted at the beginning of
each offering under the 1999 Purchase Plan (an "Offering") the right to purchase
through accumulated payroll deductions up to a number of shares of the Common
Stock (a "Purchase Right") determined on the first day of the Offering. The
Purchase Right is automatically exercised on each purchase date during the
Offering unless the participant has withdrawn from participation in the 1999
Purchase Plan prior to such date.
SHARES AUTHORIZED
Stockholders of Inprise have previously authorized the issuance of 800,000
shares of Common Stock under the 1999 Purchase Plan. If this proposal is
approved by the stockholders of Inprise, the maximum aggregate number of shares
of Common Stock that could be issued under the 1999 Purchase Plan will be
increased to 1,300,000 shares, of which approximately 253,609 shares have
already been issued. Appropriate adjustments will be made to the shares issuable
under the 1999 Purchase Plan and to outstanding Purchase Rights in the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of
Inprise, or in the event of any merger, sale of assets or other reorganization
of Inprise. If any Purchase Right expires or terminates, the shares subject to
the unexercised portion of such Purchase Right will again be available for
issuance under the 1999 Purchase Plan.
13
<PAGE>
PLAN ADMINISTRATION
The 1999 Purchase Plan is administered by the Organization and Compensation
Committee of the Board (the "Committee"). Subject to the 1999 Purchase Plan's
provisions, the Committee determines the terms and conditions of Purchase Rights
granted under the 1999 Purchase Plan. The Committee or the Board interpret the
1999 Purchase Plan and Purchase Rights granted thereunder, and their
determinations are final and binding. With certain limitations, the 1999
Purchase Plan provides for indemnification of any director, officer or employee
against all liabilities, judgments and reasonable expenses, including attorneys'
fees, incurred in any legal action arising from that person's actions in
administering the 1999 Purchase Plan.
ELIGIBILITY
Any employee of Inprise or of any present or future parent or subsidiary
corporation of Inprise designated by the Committee for inclusion in the 1999
Purchase Plan is eligible to participate in an Offering under the 1999 Purchase
Plan so long as the employee is customarily employed for at least 20 hours per
week and more than five months in any calendar year. However, no employee who
owns or holds options to purchase, or who, as a result of participation in the
1999 Purchase Plan, would own or hold options to purchase, five percent or more
of the total combined voting power or value of all classes of stock of Inprise
or of any parent or subsidiary corporation of Inprise is eligible to participate
in the 1999 Purchase Plan. As of May 31, 2000, approximately 700 employees,
including four executive officers, were eligible to participate in the 1999
Purchase Plan.
OFFERINGS
The 1999 Purchase Plan is implemented through two series of Offerings, the
terms of which are referred to herein as "Offering Periods." A twelve-month
"Annual Offering Period" will generally begin on or about December 1 of each
year, and a six-month "Half-Year Offering Period" will generally begin on or
about June 1 of each year. An employee may not participate simultaneously in
more than one Offering. Generally, each Annual Offering Period is comprised of
two six-month "Purchase Periods" ending on or about the last day of May and
November of each year, while each Half-Year Offering Period is comprised of a
single Purchase Period. However, the Committee may establish a different term
for one or more Offerings or different commencement or ending dates for any
Offering Period or Purchase Period.
PARTICIPATION AND PURCHASE OF SHARES
Participation in an Offering under the 1999 Purchase Plan is limited to
eligible employees who authorize payroll deductions prior to the first day of an
Offering Period (the "Offering Date"). Payroll deductions may not exceed 15% (or
such other rate as the Board determines) of an employee's compensation on any
pay day during the Offering Period. An employee who becomes a participant in the
1999 Purchase Plan will automatically participate in each subsequent Offering
Period beginning immediately after the last day of the Offering Period in which
he or she is a participant until the employee withdraws from the 1999 Purchase
Plan, becomes ineligible to participate, or terminates employment.
Subject to any uniform limitations or notice requirements imposed by
Inprise, a participant may increase or decrease his or her rate of payroll
deductions or withdraw from the 1999 Purchase Plan at any time during an
Offering. Upon withdrawal, Inprise will refund, without interest, the
participant's accumulated payroll deductions not previously applied to the
purchase of shares. Once a participant withdraws from an Offering, that
participant may not again participate in the same Offering. If the fair market
value of a share of Common Stock on the Offering Date of the current Annual
Offering Period in which employees are participating is greater than such fair
market value on the Offering Date of a
14
<PAGE>
concurrent Half-Year Offering Period, then, unless a participant elects
otherwise, each participant will be automatically withdrawn from the current
Annual Offering Period after the first six-month Purchase Period and enrolled in
the new Half-Year Offering Period.
Subject to certain limitations, each participant in an Offering is granted a
Purchase Right for a number of whole shares determined by dividing
(i) $2,083.33 multiplied by the number of months in the Offering Period by
(ii) the fair market value of a share of Common Stock on the Offering Date.
However, the maximum number of shares a participant may purchase in any Offering
Period is equal to 208.33 multiplied by the number of months in the Offering
Period. As a further limitation, no participant may purchase shares of Common
Stock under the 1999 Purchase Plan or any other employee stock purchase plan of
Inprise (or any parent or subsidiary of Inprise) having a fair market value
exceeding $25,000 in any calendar year (measured by the fair market value of
Common Stock on the first day of the Offering Period in which the shares are
purchased). Purchase Rights are nontransferable and may only be exercised by the
participant.
On the last day of each Purchase Period (a "Purchase Date"), Inprise issues
to each participant in the Offering the number of shares of Common Stock
determined by dividing the amount of payroll deductions accumulated for the
participant during the Purchase Period by the purchase price, limited in any
case by the number of shares subject to the participant's Purchase Right for
that Offering. The price at which shares are sold under the 1999 Purchase Plan
is established by the Committee but may not be less than 85% of the lesser of
the fair market value per share of Common Stock on the Offering Date or on the
Purchase Date. The fair market value of the Common Stock on any relevant date
generally will be the closing price per share as reported on the Nasdaq National
Market. The closing price of the Common Stock on the Nasdaq National Market on
June 15, 2000, the most recent practicable date prior to the printing of this
Proxy Statement, was $5 5/8. Any payroll deductions under the 1999 Purchase Plan
not applied to the purchase of shares will be returned to the participant
without interest, unless the amount remaining is less than the amount necessary
to purchase a whole share of Common Stock, in which case the remaining amount
may be applied to the next Purchase Period or Offering Period, as the case may
be.
CHANGE IN CONTROL
In the event of a merger of Inprise into another corporation or another
"change in control" transaction as described in the 1999 Purchase Plan, the
surviving corporation or its parent may assume Inprise's rights and obligations
under the 1999 Purchase Plan. However, if such corporation does not assume the
outstanding Purchase Rights, the next scheduled purchase date will be
accelerated to a date before the change in control specified by the Board. Any
Purchase Rights not assumed or exercised prior to the change in control will
generally terminate.
TERMINATION OR AMENDMENT
The 1999 Purchase Plan will continue until terminated by the Board or until
all of the shares reserved for issuance under the 1999 Purchase Plan have been
issued. The Board may at any time amend or terminate the 1999 Purchase Plan,
except that the approval of stockholders is required within twelve months of the
adoption of any amendment increasing the number of shares authorized for
issuance under the 1999 Purchase Plan, or changing the definition of the
corporations which may be designated by the Board as corporations the employees
of which may participate in the 1999 Purchase Plan.
15
<PAGE>
FEDERAL INCOME TAX INFORMATION
The following summary is intended only as a general guide as to the United
States federal income tax consequences of 1999 Purchase Plan participation and
does not attempt to describe all possible federal or other tax consequences.
Generally, there are no tax consequences to an employee of either becoming a
participant in the 1999 Purchase Plan or purchasing shares under the 1999
Purchase Plan. The tax consequences of a disposition of shares vary depending on
the period such stock is held before its disposition. If a participant disposes
of shares within two years after the Offering Date or within one year after the
Purchase Date (a "disqualifying disposition"), the participant will recognize
ordinary income in the year of disposition in an amount equal to the difference
between the fair market value of the shares on the Purchase Date and the
purchase price. Such income may be subject to withholding of tax. Any additional
gain or resulting loss recognized by the participant from the disposition of the
shares is a capital gain or loss. If the participant disposes of shares at least
two years after the Offering Date and at least one year after the Purchase Date,
the participant will recognize ordinary income in the year of disposition in an
amount equal to the lesser of (i) the difference between the fair market value
of the shares on the date of disposition and the purchase price or (ii) the
excess of the fair market value of the shares on the Offering Date over the
purchase price determined as if the Purchase Right were exercised on the
Offering Date. Any additional gain recognized by the participant on the
disposition of the shares is a capital gain. If the fair market value of the
shares on the date of disposition is less than the purchase price, there is no
ordinary income, and the loss recognized is a capital loss.
If the exercise of a Purchase Right does not constitute an exercise pursuant
to an "employee stock purchase plan" under Section 423 of the Code, the exercise
of the Purchase Right will be treated as the exercise of a nonstatutory stock
option. The participant would therefore recognize ordinary income on the
Purchase Date equal to the excess of the fair market value of the shares
acquired over the purchase price. Such income is subject to withholding of
income and employment taxes. Any gain or loss recognized on a subsequent sale of
the shares, as measured by the difference between the sale proceeds and the sum
of (i) the purchase price for such shares and (ii) the amount of ordinary income
recognized on the exercise of the Purchase Right, would be treated as a capital
gain or loss, as the case may be.
If the participant disposes of the shares in a disqualifying disposition,
Inprise should be entitled to a deduction equal to the amount of ordinary income
recognized by the participant as a result of the disposition, except to the
extent such deduction is limited by applicable provisions of the Code. In all
other cases, no deduction is allowed to Inprise.
NEW PLAN BENEFITS
Benefits obtained by employees under the 1999 Purchase Plan will depend on
their individual elections to participate and the fair market value of Common
Stock at various future dates. Accordingly, it is not possible to determine the
benefits that will be received by executive officers and other employees under
the 1999 Purchase Plan.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO
THE 1999 EMPLOYEE STOCK PURCHASE PLAN.
16
<PAGE>
PROPOSAL FOUR
RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT
AUDITORS
Subject to stockholder ratification, the Board, acting upon the
recommendation of the Audit Committee, has selected PricewaterhouseCoopers LLP
as Inprise's independent auditors to audit the consolidated financial statements
of Inprise for the fiscal year ending December 31, 2000. PricewaterhouseCoopers
LLP has audited Inprise's consolidated financial statements since the fiscal
period ended March 31, 1987. A representative of PricewaterhouseCoopers LLP will
be present at the Annual Meeting and will be available to respond to appropriate
questions from the stockholders and will be given an opportunity to make a
statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INPRISE'S INDEPENDENT AUDITORS.
17
<PAGE>
EXECUTIVE OFFICERS
Officers are appointed annually by the Board and serve at the discretion of
the Board. Set forth below is information regarding the current executive
officers of Inprise:
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------------------------------------------------------- --------
<S> <C> <C>
Dale Fuller(1).............. Interim President, Chief Executive Officer and Director 41
Frederick A. Ball........... Senior Vice President and Chief Financial Officer 38
Douglas Barre............... Senior Vice President and Chief Operating Officer 55
Keith E. Gottfried.......... Senior Vice President, General Counsel and Corporate
Secretary 33
Edward Shelton.............. Senior Vice President of Business Development 34
</TABLE>
------------------------
(1) Mr. Fuller's biographical information is provided above as a Director.
FREDERICK A. BALL. Mr. Ball joined Inprise in September 1999 as Vice
President and Chief Financial Officer. Prior to joining Inprise, Mr. Ball served
as the Vice President of Mergers and Acquisitions for KLA-Tencor Corporation,
the world's leading supplier of process control and yield management solutions
for the semiconductor industry since June 1999. Prior to his position in the M&A
department at KLA-Tencor, Mr. Ball was the Vice President of Finance for
KLA-Tencor following the merger with Tencor Instruments in 1997. Mr. Ball joined
Tencor Instruments as corporate controller in March 1995 and was promoted to
Corporate Vice President and appointed Corporate Secretary in January of 1996.
DOUGLAS BARRE. Mr. Barre joined Inprise in May 2000 as Senior Vice
President and Chief Operating Officer. Prior to joining Inprise, Mr. Barre was
Vice President of Enterprise Software at Compuware Corporation, a computer
software company, since April 1997, and from October 1995 to April 1997,
Mr. Barre served as Vice President and General Manager of Compuware's European
operations. From April 1994 to October 1995, Mr. Barre was Vice President of
Business Transformation and Chief Information Officer of BCE Mobile, a provider
of cellular, paging, PCS, satellite and other wireless services.
KEITH E. GOTTFRIED. Mr. Gottfried joined Inprise in June 2000 as Senior
Vice President, General Counsel and Corporate Secretary. Prior to joining
Inprise, Mr. Gottfried was a corporate attorney with the law firm of Skadden,
Arps, Slate, Meagher & Flom LLP in New York, New York since February 1994.
EDWARD SHELTON. Mr. Shelton joined Inprise in May 2000 as Senior Vice
President of Business Development. Prior to joining Inprise, Mr. Shelton was
Chief Executive Officer and co-founder of drspock.com, Inc., a parenting web
site, since August, 1999. Prior to drspock.com, he was Chief Executive Officer
of Neta 4, Ltd., an e-commerce technology company, since February, 1999.
Mr. Shelton has also held executive management positions at WhoWhere? Inc., a
leading Internet site which was sold to Lycos in 1998 (from December 1996 to
November 1998), CMP Media, a high-tech media company (from March 1996 to
December 1996), and IT Solutions, Inc., a systems integrator (from January 1990
to March 1996).
EXECUTIVE OFFICER COMPENSATION
The following table shows information about the compensation received by our
Chief Executive Officer and the four other most highly compensated executive
officers of Inprise who were serving in such capacities on December 31, 1999,
which is the last day of Inprise's most recently completed fiscal year. The
table also includes Delbert W. Yocam, who served as our Chief Executive Officer
until
18
<PAGE>
March 31, 1999, and John Floisand and James Weil, who served as executive
officers until October 29, 1999 and August 19, 1999, respectively. As used
herein, the term "Named Executive Officers" means all persons identified in the
Summary Compensation Table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------ ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(1)
--------------------------- ---- ------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Dale Fuller(1).................................... 1999 1 -- 849(2) 1,000,000 --
Interim Chief Executive 1998 -- -- -- -- --
Officer and President 1997* -- -- -- -- --
1996** -- -- -- -- --
Frederick A. Ball(3).............................. 1999 80,769 67,000 -- 500,000 108(4)
Senior Vice President and Chief 1998 -- -- -- -- --
Financial Officer 1997* -- -- -- -- --
1996** -- -- -- -- --
Hobart McK. Birmingham(5)......................... 1999 231,963 250,000 18,000(6) -- 6,266(7,8)
Former Chief Administrative Officer 1998 219,653 53,672 18,250(9) 140,000(10) 3,575(11)
1997* 146,154 57,000 15,506(9) 140,000 1,425(11)
1996** 21,923 -- -- 175,000 --
JoAnne M. Butler(12).............................. 1999 172,788 102,000 -- 176,500 3,250(13,14)
Former Vice President, 1998 118,442 14,850 -- 19,000(10) 3,510(15,16)
General Counsel and Secretary 1997* 81,250 20,000 -- 7,000 1,449(17,18)
1996** 70,000 10,000 960(19) -- 184(20)
John Walshe(21)................................... 1999 100,000 -- -- -- --
Former Chief Operating Officer 1998 -- -- -- -- --
1997* -- -- -- -- --
1996** -- -- -- -- --
John Floisand(12)................................. 1999 253,126 200,000 6,092(22) -- 295,557(23,24,25)
Former Senior Vice President 1998 274,711 79,372 7,199(22) 420,000(10) 4,368(11)
of Worldwide Sales 1997* 181,506 275,000(26) 5,261(22) 420,000 1,250(11)
1996** -- -- -- -- --
James Weil(12).................................... 1999 178,977 185,120 -- 420,000 2,075,804(27,28,29,30)
Former President, 1998 100,000 520,570 -- -- 5,518(31,32)
Inprise Division 1997* 326,755 121,800 -- -- 3,099(33,34)
1996** 114,840 121,800 366(35) -- 768(36)
Delbert W. Yocam(12).............................. 1999 419,692 105,000 1,191(37) -- 5,250(38,39)
Former Chairman of the Board and 1998 399,538 247,600 14,759(40) 1,100,000(10) 4,311(11)
Chief Executive Officer 1997* 276,923 240,000 55,333(41) 580,000 2,077(11)
1996** 110,769 3,864,184(42) 3,849,908(43) 1,100,000 --
</TABLE>
------------------------------
* Represents the nine-month period ended December 31, 1997.
** Represents the fiscal year ended March 31, 1997.
(1) Mr. Fuller's employment began April 9, 1999. The amounts shown were paid to
him between April 9, 1999 and December 31, 1999.
(2) Consists of medical care premiums.
(3) Mr. Ball's employment began September 28, 1999. The amounts shown were paid
to him between September 28, 1999 and December 31, 1999.
(4) Consists of group term life insurance premiums paid by Inprise.
(5) Mr. Birmingham resigned as an executive officer on March 17, 2000. See
"Employment Contracts, Termination of Employment and Change-in-Control
Arrangements."
(6) Consists of a housing allowance.
19
<PAGE>
(7) Includes group term life insurance premiums paid by Inprise in the amount
of $2,832.
(8) Includes employer matching contributions to the 401(k) Plan in the amount
of $3,434.
(9) Consists of a housing allowance and relocation expenses.
(10) Includes options amended on August 17, 1998 to reduce the exercise price
to $6.50, the market closing price on such date.
(11) Consists of employer matching contributions to the 401(k) Plan.
(12) Individual is a former executive officer of Inprise. See "Employment
Contracts, Termination of Employment and Change-in-Control Arrangements."
Ms. Butler left Inprise on May 31, 2000. Mr. Floisand left Inprise on
October 29, 1999. The amounts shown for 1999 were paid to him between
January 1, 1999 and October 29, 1999. Mr. Weil left Inprise on August 19,
1999. The amounts shown for 1999 were paid to him between January 1, 1999
and August 19, 1999. Mr. Yocam left Inprise on March 31, 1999.
(13) Includes group term life insurance premiums paid by Inprise in the amount
of $697.
(14) Includes employer matching contributions to the 401(k) Plan in the amount
of $2,553.
(15) Includes group term life insurance premiums paid by Inprise in the amount
of $384.
(16) Includes employer matching contributions to the 401(k) Plan in the amount
of $3,126.
(17) Includes group term life insurance premiums paid by Inprise in the amount
of $230.
(18) Includes employer matching contributions to the 401(k) Plan in the amount
of $1,219.
(19) Consists of insurance premiums paid by Inprise.
(20) Consists of group term life insurance premiums paid by Inprise.
(21) Mr. Walshe's employment began on October 28, 1999. The amounts shown for
1999 were paid to 54th Street Partners, LLC between October 28, 1999 and
December 31, 1999. Mr. Walshe's consulting relationship with Inprise
expired on March 31, 2000.
(22) Consists of a car allowance.
(23) Includes group term life insurance premiums paid by Inprise in the amount
of $2,316.
(24) Includes employer matching contributions to the 401(k) Plan in the amount
of $3,241.
(25) Includes a severance payment of $290,000.
(26) Includes a one time signing bonus of $200,000.
(27) Includes group term life insurance premiums paid by Inprise in the amount
of $1,004.
(28) Includes employer matching contributions to the 401(k) Plan in the amount
of $4,800.
(29) Includes a severance payment of $362,500.
(30) Includes the payment to Mr. Weil of $1,707,500 in consideration for
forfeiture of stock options for the former InterBase subsidiary. See
"Certain Relationships and Related Transactions."
(31) Includes group term life insurance premiums paid by Inprise in the amount
of $864.
(32) Includes employer matching contributions to the 401(k) Plan in the amount
of $4,654.
(33) Includes group term life insurance premiums paid by Inprise in the amount
of $1,224.
(34) Includes employer matching contributions to the 401(k) Plan in the amount
of $1,875.
(35) Consists of insurance premiums paid by Inprise.
(36) Consists of group term life insurance premiums paid by Inprise.
(37) Consists of insurance premiums paid by Inprise.
(38) Includes group term life insurance premiums paid by Inprise in the amount
of $2,832.
(39) Includes employer matching contributions to the 401(k) Plan in the amount
of $2,418.
(40) Consists of a car allowance.
(41) Consists of relocation expenses.
(42) Includes a $3,744,184 one time sign-on bonus.
(43) Includes a $3,827,364 payment for the purchase of a residence.
20
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows individual grants made during the fiscal year
ended December 31, 1999 to the Named Executive Officers, and hypothetical gains
for the options at the end of their respective ten (10) year terms. In
accordance with applicable requirements of the Securities and Exchange
Commission, we have assumed annualized growth rates of the market price of our
common stock over the exercise price of the option of five percent (5%) and ten
percent (10%), running from the date the option was granted to the end of the
option term. Actual gains, if any, on option exercises depend on the future
performance of Inprise's common stock and overall market conditions and do not
represent an estimate of future stock price growth.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------- PERCENTAGE POTENTIAL REALIZABLE VALUE AT
NUMBER OF OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED(2) FISCAL YEAR(3) PER SHARE DATE(4) 5% 10%
---- -------------------- -------------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dale Fuller............... 1,000,000(5) 21.6 $3.6250 04/09/09 $2,279,743 $5,777,316
Frederick A. Ball......... 500,000(6) 10.8 $4.0313 09/23/09 $1,267,631 $3,212,427
JoAnne M. Butler(7)....... 176,500 3.8 $4.1250 04/27/09 $ 457,875 $1,160,344
James Weil(7)............. 420,000(8) 9.1 $6.2500 01/27/09 0 0
</TABLE>
------------------------
(1) We did not grant any stock appreciation rights during the year ended
December 31, 1999.
(2) Our option plans are administered by the Board. The Board determines the
eligibility of employees, directors and consultants and the number of shares
to be granted, and the terms of such grants. All options granted during the
year ended December 31, 1999 have an exercise price equal to the fair market
value on the date of grant. Options generally vest 25% one year from the
date of grant and ratably over the remaining three years on a monthly basis.
Certain options have been granted that vest daily or monthly over a
specified vesting period from the date of grant. Options expire at the
earlier of either three months after termination of employment or ten years
after the date of grant.
(3) We granted options to purchase an aggregate of 4,623,082 shares to all
employees and consultants for the year ended December 31, 1999.
(4) Options may terminate before their expiration date upon the termination of
optionee's status as an employee or consultant or upon the optionee's death
or disability.
(5) Pursuant to Mr. Fuller's Employment Agreement dated April 9, 1999,
Mr. Fuller was granted an option to purchase 1,000,000 shares of common
stock. The option vested ratably on a monthly basis over the six-month term
of the Agreement, and became fully exercisable in October 1999. The option
remains exercisable for twenty-four (24) months following a termination of
Mr. Fuller's employment.
(6) Upon a change in control of Inprise, the vesting of all options will be
accelerated and shall be exercisable in full.
(7) Individual is a former executive officer of Inprise. See "Employment
Contracts, Termination of Employment and Change-in-Control Arrangements."
Ms. Butler left Inprise on May 31, 2000 and Mr. Weil left Inprise on
August 19, 1999.
(8) Mr. Weil exercised 183,750 of his options and the remaining 236,250 options
were cancelled on November 19, 1999 as a result of Mr. Weil's departure from
Inprise.
21
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR- END OPTION/SAR VALUES
The following table shows all stock options exercised by the Named Executive
Officers for the fiscal year ended December 31, 1999. The "Value Realized"
column reflects the difference between the market value of the underlying
securities and the exercise price of the options on the actual exercise date.
The "Value of Unexercised In-The-Money Options" column reflects the difference
between the market value at the end of the fiscal year and the exercise price of
in-the-money options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
SHARES OPTIONS AT YEAR END SARS AT FY END(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dale Fuller.................... 200,000 $2,015,000 800,000 -- $5,950,000 --
Frederick A. Ball.............. -- -- 31,250 468,750 $ 219,725 $3,295,875
Hobart McK. Birmingham(2)...... 99,055 $1,089,110 123,130 92,815 $ 576,920 $ 430,204
JoAnne M. Butler(3)............ 15,000 $ 181,653 24,408 155,921 $ 189,900 $1,060,728
John Walshe(4)................. -- -- -- -- -- --
John Floisand(3)............... 268,601 $1,763,094 -- -- -- --
James Weil(3).................. 183,750 $ 226,841 -- -- -- --
Delbert W. Yocam(3)............ 180,000 $ 30,562 -- -- -- --
</TABLE>
------------------------
(1) Market value of underlying securities at exercise date or fiscal year end is
based on the closing price of common stock on December 31, 1999 on the
Nasdaq National Market of $11.0625, minus the exercise price.
(2) Mr. Birmingham resigned as an executive officer on March 17, 2000.
(3) Individual is a former executive officer of Inprise.
(4) Mr. Walshe's consulting relationship with Inprise expired on March 31, 2000.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACTS
DALE FULLER
Inprise is a party to an employment agreement with Dale Fuller, dated
April 9, 1999, pursuant to which Mr. Fuller serves as Interim President and
Chief Executive Officer of Inprise. The employment agreement was for a six-month
term which expired on October 9, 1999. For his services during the term,
Mr. Fuller was paid the sum of one dollar and was entitled to benefits generally
provided to other Inprise executives. Pursuant to the employment agreement,
Mr. Fuller was also granted an option to purchase 1,000,000 shares of Inprise
common stock at an exercise price of $3.625 per share under the Inprise
Corporation Dale Fuller Individual Stock Option Plan. The option vested ratably
on a monthly basis over the six-month term of the agreement and became fully
vested in October 1999. The option is exercisable for a period of twenty-four
months following a termination of Mr. Fuller's employment.
The employment agreement also provides for Mr. Fuller to be paid a
"gross-up" payment if any benefit or payment to be received by Mr. Fuller under
the employment agreement is subject to the excise tax imposed under
Section 4999 of the Code. The gross-up payment will offset fully the effect of
22
<PAGE>
any excise tax imposed on any "excess parachute payment" Mr. Fuller may receive.
In general, Section 4999 of the Code imposes an excise tax on the recipient of
any excess parachute payment equal to 20% of such payment. However, the Code
provides a "safe harbor" from the excise tax if an employee does not receive
parachute payments with a value in excess of 2.99 times the employee's base
amount. An employee's base amount is the average taxable compensation received
by the employee from his employer over the five taxable years (or the entire
period of employment, if less) preceding the year in which a change in control
occurs. A parachute payment is any payment or benefit which is contingent on a
change in control.
The term of Mr. Fuller's employment agreement expired on October 9, 1999.
Subsequent to such expiration date, Inprise and Mr. Fuller entered into an
agreement which extended the term of Mr. Fuller's employment agreement and
provided for certain payments to him upon the engagement by Inprise of a
successor Chief Executive Officer or in the event of a change in control of
Inprise. Thereafter, at Mr. Fuller's request, such extension agreement was
terminated, and is no longer of any force or effect. Mr. Fuller has not
received, and will not receive, any payments thereunder.
During the period from October 9, 1999, the date upon which the term of
Mr. Fuller's employment agreement expired, through December 31, 1999,
Mr. Fuller served as Interim President and Chief Executive Officer without
receiving additional compensation. In June 2000, the Company and Mr. Fuller
agreed that Mr. Fuller will receive the sum of $600,000 for his services as
Interim President and Chief Executive Officer for the period from January 1,
2000 through June 30, 2000.
FREDERICK A. BALL
Inprise is a party to an employment agreement with Frederick A. Ball, dated
September 16, 1999, as modified by a letter agreement dated May 30, 2000.
Mr. Ball serves as the Senior Vice President and Chief Financial Officer of
Inprise and, effective as of May 22, 2000, Mr. Ball's base salary was increased
from $300,000 to $350,000 per year. Under Mr. Ball's employment agreement, as
modified, commencing with Inprise's current fiscal year, Mr. Ball is eligible to
receive an annual bonus of up to seventy percent of his base salary. Pursuant to
the employment agreement, in 1999 Mr. Ball was granted an option to purchase
500,000 shares of Inprise common stock at an exercise price of $4.0313 per share
under Inprise's 1997 Stock Option Plan. The agreement provides that all of the
options granted to Mr. Ball under the agreement, to the extent not already
vested and exercisable, shall become vested and exercisable upon a change in
control. The employment agreement also entitles Mr. Ball to a severance payment
in an amount equal to twelve months of his base salary if his employment is
terminated by Inprise without cause or upon a constructive termination of his
employment.
JOANNE M. BUTLER
Inprise is a party to an employment agreement with JoAnne M. Butler, dated
July 29, 1999, pursuant to which Ms. Butler served as Vice President and General
Counsel of Inprise at a salary of $190,000 per year until her resignation from
the Company on May 31, 2000. The employment agreement provides that Ms. Butler
is eligible for an annual bonus based on an annual target bonus of $76,000.
Pursuant to the employment agreement, during 1999 Ms. Butler was granted an
option to purchase 176,500 shares of Inprise common stock at an exercise price
of $4.125 per share under Inprise's 1997 Stock Option Plan. The agreement
provides that all of the options granted to Ms. Butler under the agreement, to
the extent not already vested and exercisable, shall become vested and
exercisable upon a change in control. The employment agreement also entitles
Ms. Butler to a severance payment in an amount equal to twelve months of her
base salary if her employment is terminated by Inprise without cause or upon a
constructive termination of her employment.
23
<PAGE>
JOHN WALSHE
Inprise is a party to a consulting agreement with 54th Street
Partners, LLC, pursuant to which Mr. Walshe provided his services to Inprise.
Mr. Walshe is a partner in 54th Street Partners. The consulting agreement also
provides for 54th Street Partners to provide the services of five other
individuals in respect of sales, customer service, professional services, human
resources and technical support. In return for providing Mr. Walshe's services,
54th Street Partners was entitled to a monthly fee of $50,000. 54th Street
Partners is entitled to receive an aggregate monthly fee of $119,000 for
services rendered by the individuals who currently provide services under the
consulting agreement. 54th Street Partners was also entitled to a performance
bonus that was dependent on the price of Inprise common stock. A performance
bonus in the amount of $500,000 was paid in January 2000. The consulting
agreement provides customary indemnity provisions for both 54th Street Partners
and the individuals placed with Inprise. Mr. Walshe's service under the
consulting agreement expired on March 31, 2000.
TERMINATION OF EMPLOYMENT
HOBART MCK. BIRMINGHAM
Inprise is a party to a resignation agreement with Hobart McK. Birmingham,
which was effective as of March 17, 2000. Pursuant to this agreement,
Mr. Birmingham resigned as an executive officer of Inprise, and his employment
will terminate on June 30, 2000.
During the period from March 17, 2000 until June 30, 2000, Mr. Birmingham
will be paid the sum of $50,000 and will continue to be provided with fringe
benefits and the use of an office. After March 17, 2000, Mr. Birmingham will
have no specific duties or responsibilities at Inprise, except as mutually
agreed to with Inprise. If Mr. Birmingham provides any services to Inprise after
March 17, 2000, other than services related to the sale of Inprise's corporate
headquarters or to the transition of his duties and responsibilities to other
Inprise employees, he will be paid $1,000 per day plus reimbursement for
reasonable out-of-pocket expenses.
In lieu of any severance pay or benefits that he would otherwise be entitled
to, on March 17, 2000, Mr. Birmingham received a lump sum payment in the amount
of $332,000. Mr. Birmingham will continue to be bound by the provisions of any
proprietary rights or confidentiality agreements with Inprise and has executed a
general release of claims in favor of Inprise and has received a similar release
from Inprise.
DELBERT W. YOCAM
Delbert W. Yocam, our former Chief Executive Officer, resigned from his
employment with Inprise on March 31, 1999, and resigned as Chairman of the Board
on April 12, 1999. Pursuant to the provisions of his employment agreement,
Mr. Yocam is entitled to receive, among other things, continued salary payments,
plus bonus payments up to 50% of his annual salary through December 31, 2000.
JOHN FLOISAND
John Floisand is the former Senior Vice President of Worldwide Sales.
Mr. Floisand's employment with Inprise terminated on October 29, 1999, and as a
result Mr. Floisand received a severance payment equal to twelve months of his
base salary.
JAMES WEIL
James Weil is the former President of the Inprise Division and the former
President of the former InterBase Software subsidiary. Mr. Weil resigned from
his employment with Inprise on August 19, 1999,
24
<PAGE>
and as a result Mr. Weil received a severance payment equal to fifteen months of
his base salary. In addition, Inprise agreed to accelerate the vesting of
certain stock options granted to Mr. Weil. As a result of the option
acceleration, all stock options granted to him by Inprise that would have vested
by November 19, 2000 became vested as of May 19, 1999.
CHANGE IN CONTROL ARRANGEMENTS
Dale Fuller, JoAnne M. Butler (who resigned from the Company on May 31,
2000), Frederick A. Ball and Hobart McK. Birmingham are each a party to a change
in control agreement with Inprise. Mr. Fuller and Ms. Butler entered into their
respective change in control agreements when they became executive officers.
Mr. Ball entered into his change in control agreement on May 31, 2000.
Mr. Birmingham entered into his change in control agreement shortly after the
Inprise Board approved the form of the agreement in April 1998.
Mr. Birmingham's agreement was subsequently amended in certain respects by his
resignation agreement. Mr. Fuller's, Mr. Ball's and Ms. Butler's agreements
provide severance benefits in the event Mr. Fuller, Mr. Ball or Ms. Butler, as
the case may be, are "involuntarily terminated" within one year following a
change in control of Inprise. An involuntary termination of employment includes
a termination of an executive officer's employment by Inprise without cause or a
constructive termination of an executive officer's employment.
Upon a qualifying involuntary termination of employment after a change in
control, each change in control agreement, other than Mr. Birmingham's
agreement, provides that the executive officer will be entitled to receive
severance pay from Inprise in a lump sum amount equal to the executive officer's
annual base salary in effect at the time of the termination. In addition, other
than in respect of Mr. Birmingham, Inprise must continue an executive officer's
existing health insurance coverage, or reimburse an executive officer for COBRA
premiums paid by the executive officer if health coverage continuation is not
permitted by law. The health coverage benefit will continue until the earlier of
(i) the expiration of twelve months from the date of the termination of the
executive officer's employment or (ii) the date on which the executive officer
commences new employment. The change in control agreements provide that, during
the two-year period following a qualifying involuntary termination of
employment, Inprise shall retain a terminated executive officer as a consultant
to provide services to Inprise at Inprise's request for up to eight hours per
week. For actually providing services, an executive officer will be entitled to
a payment of $1,000 per day and reasonable out-of-pocket expenses.
Each change in control agreement further provides that if any payment or
benefit to be received by an executive officer pursuant to the agreement or
otherwise would result in an "excess parachute payment," such payment or benefit
shall be reduced if the executive officer's after tax position is improved by
the reduction. Each change in control agreement also provides that unvested
stock options to purchase shares of Inprise stock held by an executive officer
will vest and become exercisable upon a change in control of Inprise.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following is the Report of the Organization and Compensation Committee
of the Board (the "Committee"), describing the compensation policies and
rationale applicable to the Company's executive officers with respect to
compensation paid to such executive officers for the calendar period ended
December 31, 1999. The Organization and Compensation Committee currently consist
of William F. Miller (Chairman), David Heller and Robert H. Kohn. Mr. Kohn
joined the Committee in May 2000. Accordingly, Mr. Kohn has not been involved in
setting the Company's compensation policies for the calendar period ended
December 31, 1999 and is not a signatory to the following Report. The
information contained in this Report shall not be deemed "soliciting material"
or to be "filed" with the Securities and Exchange Commission nor shall such
information be incorporated by
25
<PAGE>
reference into any future filing under the Securities Act of 1933, as amended
(the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except to the extent that the Company specifically incorporates
it by reference into such filing.
The Company's executive compensation program is administered by the
Committee. The role of the Committee, which is comprised entirely of outside,
non-employee directors, is to review and approve salaries, bonuses and stock
option grants to the directors, executive officers and employees of the Company.
The goal of the Committee is to align compensation packages with the long-term
interests of the Company's stockholders. In structuring compensation programs,
the Committee has been particularly mindful of the financial performance of the
Company in recent years, the extremely competitive environment for attracting
senior level management in the technology sector, and the continuous and
extraordinary efforts which have been made by competitors of the Company to lure
away management and other key personnel. The Committee believes it is critical
to the long-term prospects of the Company to establish compensation programs
which will allow the Company to attract management possessing the type of
experience necessary for the Company to realize upon its strategic objectives
and to retain such management.
During 1999, the Committee's approach emphasized recruiting executive
officers and key employees for the Company.
COMPENSATION PHILOSOPHY
The Committee believes that the compensation of the executive officers and
other key employees of the Company should result in the creation of long-term
stockholder value and be based on the Company's and the individual's
performance. Consistent with this philosophy, the Company's compensation
programs include a combination of salary, bonus and stock options aimed at the
retention, reward and motivation of individuals within the Company.
BASE SALARY
The base salary of the Company's executive officers is individually
negotiated at the time each officer joined the Company, or assumed his or her
position. The Committee reviews each executive officer's base salary annually,
and when doing so, the Committee considers individual and corporate performance,
levels of responsibility, prior experience, breadth of knowledge and competitive
pay practices. The Committee believes that the current executive salaries are
comparable to the salaries in effect at companies that compete with the Company
for executive talent.
BONUS
The Company's bonus plans provide for bonuses to be awarded to executive
officers and key employees based on the achievement of specific goals set by the
Company, and the level of contribution made by these individuals. In calculating
bonus awards certain Company performance objectives are considered, including
operating, strategic and financial goals necessary for the achievement of the
Company's short and long-term objectives.
OPTIONS
The purpose of the Company's stock option plans is to provide employees of
the Company with an opportunity to share, along with stockholders of the
Company, in the long-term performance of the Company. The Committee makes
periodic grants of stock options to eligible employees, generally upon
commencement of employment or following a significant change in job
responsibilities. Stock options usually vest over four years and expire ten
years from the date of grant. The exercise price of options is normally 100% of
fair market value of the underlying stock on the date of grant. In awarding
stock options, the Committee considers individual performance, overall
contribution to the Company,
26
<PAGE>
retention, the competitive climate for recruiting personnel and the total number
of stock options to be awarded.
CEO COMPENSATION
The annual base salary of Mr. Fuller, the Interim President and Chief
Executive Officer, was determined according to an employment agreement entered
into on April 9, 1999. The employment agreement was for a six-month term which
expired on October 9, 1999. For his services during the term, Mr. Fuller
received a base salary of $1.00 and the benefits generally provided to other
Inprise executives. In addition, Mr. Fuller was granted an option to purchase
1,000,000 shares of Common Stock at an exercise price of $3.625 per share under
the Inprise Corporation Dale Fuller Individual Stock Option Plan. The option,
which is now fully vested, vested ratably on a monthly basis over the term of
the employment agreement. In determining Mr. Fuller's compensation, the
Committee sought to align Mr. Fuller's compensation to the long-term performance
of the Company.
From October 9, 1999, the date upon which the term of Mr. Fuller's
employment agreement expired, through December 31, 1999, Mr. Fuller served as
Interim President and Chief Executive Officer of Inprise without receiving
additional compensation. In June 2000, the Company and Mr. Fuller agreed that
Mr. Fuller will receive a sum of $600,000 for his services as Interim President
and Chief Executive Officer for the period from January 1, 2000 through
June 30, 2000.
Section 162(m) of the Code imposes limitations on the deductibility for
federal income tax purposes of compensation over $1 million paid to certain
executive officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. Given the attention to the overall challenges faced by the Company in
recruiting and retaining key management, the Committee has not yet established a
policy for determining which forms of incentive compensation awarded to its
executive officers shall be designed to qualify as "performance-based
compensation" other than any options that may be granted under the Option Plan.
The Committee intends to continue to evaluate the effects of the statute and any
Treasury regulations and to comply with Section 162(m) of the Code in the future
to the extent consistent with the best interests of the Company.
Organization and Compensation
Committee:
William F. Miller (Chairman)
David Heller
27
<PAGE>
ORGANIZATION AND COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Except as provided below, none of our executive officers, directors or
Organization and Compensation Committee members currently serve, or have in the
past served, on the compensation committee of any other company whose directors
and executive officers have served on Inprise's Organization and Compensation
Committee. From March 1987 to September 1996, Robert H. Kohn served as Senior
Vice President of Corporate Affairs, General Counsel and Corporate Secretary of
Inprise.
STOCK PERFORMANCE GRAPH
The stock price performance graph below compares the cumulative total
stockholder return on our Common Stock with the Center for Research in Security
Prices (CRSP) Total Return Index for Nasdaq Stock Market U.S. Companies and the
CRSP Total Return Index for Nasdaq Computer and Data Processing Services Stocks
for the period commencing on March 31, 1994 and ending December 31, 1999. The
graph assumes that $100.00 was invested in the Common Stock and in each index on
March 31, 1994. The total return for the Common Stock and the indices used
assumes the reinvestment of dividends, even though dividends have not been
declared on the Common Stock.
The information contained in the performance graph shall not be deemed
"soliciting material" or to be "filed" with the Securities and Exchange
Commission nor shall such information be deemed incorporated by reference into
any future filing under the Securities Act or the Exchange Act, except to the
extent that Inprise specifically incorporates it by reference into such filing.
28
<PAGE>
The comparisons in the graph below are based upon historical data and are
not indicative of, nor intended to forecast, future performance of the Common
Stock.
COMPARISON OF 69 MONTH CUMULATIVE TOTAL RETURN*
AMONG INPRISE CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INPRISE NASDAQ STOCK NASDAQ COMPUTER &
<S> <C> <C> <C>
CORPORATION MARKET (U.S.) INDEX DATA PROCESSING INDEX
3/94 $100.00 $100.00 $100.00
3/95 $61.95 $111.20 $134.79
3/96 $127.43 $151.01 $190.90
3/97 $50.44 $167.86 $208.90
12/97 $51.77 $217.47 $276.47
12/98 $38.94 $306.65 $493.34
12/99 $78.32 $568.42 $1,087.26
</TABLE>
*$100 INVESTED ON 3/31/94 IN STOCK OR INDICES--
INCLUDING REINVESTMENT OF DIVIDENDS.
<TABLE>
<CAPTION>
BASE
PERIOD CUMULATIVE TOTAL RETURN
-------- ---------------------------------------------------------------
COMPANY/INDEX NAME 3/31/94 3/31/95 3/31/96 3/31/97 12/31/97 12/31/98 12/31/99
------------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INPRISE CORPORATION........................ 100.00 61.95 127.43 50.44 51.77 38.94 78.32
NASDAQ STOCK MARKET (U.S.) INDEX........... 100.00 111.20 151.01 167.86 217.47 306.65 568.42
NASDAQ COMPUTER & DATA PROCESSING INDEX.... 100.00 134.79 190.90 208.90 276.47 493.34 1087.26
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Inprise's directors and executive
officers, and persons who own more than ten percent of the Common Stock, to file
initial reports of ownership and changes in ownership with the Securities and
Exchange Commission and the Nasdaq National Market. Such persons are required by
Securities and Exchange Commission regulations to furnish Inprise with copies of
all Section 16(a) forms they file. To the best of Inprise's knowledge, the
reports for all officers,
29
<PAGE>
directors and holders of more than 10% of the Common Stock were timely filed
during the year ended December 31, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows, as of May 31, 2000, how many shares of Common
Stock are owned by (1) each person who, to the best knowledge of Inprise, are
beneficial owners of more than five percent (5%) of the outstanding shares of
Common Stock, the only class of Inprise's voting security, (ii) each current
director and each nominee, (iii) each of the Named Executive Officers and
(iv) all current directors and executive officers of Inprise as a group. Except
as indicated in the footnotes to this table, the percentage of ownership has
been calculated based on the number of outstanding shares of Inprise common
stock as of May 31, 2000. Except as indicated in the footnotes to this table,
the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------------
NUMBER PERCENT
--------------- --------
<S> <C> <C>
Name and Address of Beneficial Owner
5% Stockholders:
Merrill Lynch & Co., Inc. ......................... 4,621,300(2) 7.5%
World Financial Center
North Tower
250 Vesey Street
New York, NY 10281
Named Executive Officers and Directors:
Dale Fuller ....................................... 800,000(3) 1.3%
David Heller ...................................... 212,500(4) *
William K. Hooper ................................. 37,500(5) *
William F. Miller ................................. 120,000(6) *
Robert H. Kohn .................................... 682 *
Robert Dickerson .................................. 298 *
Frederick A. Ball ................................. 93,751(7) *
Hobart McK. Birmingham ............................ 167,372(8)(9) *
JoAnne M. Butler .................................. 50,351(10) *
John Walshe(9) .................................... -- *
John Floisand(9) .................................. -- *
James Weil(9) ..................................... -- *
Delbert W. Yocam(9) ............................... -- *
All current directors and executive officers as a
group (10 persons) ................................ 1,482,156 2.4%
</TABLE>
------------------------
* Less than one percent.
(1) Number of shares beneficially owned and the percentage of shares
beneficially owned are based on shares outstanding as of May 31, 2000.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes sole or shared voting and
investment power with respect to such shares. All shares of Common Stock
subject to options currently exercisable or exercisable within 60 days
after May 31, 2000 are deemed to be outstanding and to be beneficially
owned by the person holding such options for the purpose of computing the
number of shares beneficially owned and the percentage ownership of such
person,
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<PAGE>
but are not deemed to be outstanding and to be beneficially owned for the
purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to the table, based on information provided
by the persons named in the table, such persons have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Based on a Report on Schedule 13G dated February 7, 2000, which was filed
with the SEC by Merrill Lynch & Co., Inc. ("Merrill Lynch") on behalf of
Merrill Lynch Asset Management Group. Merrill Lynch reported shared voting
power and shared dispositive power with respect to all shares of Common
Stock beneficially owned. Number of shares which may be deemed beneficially
owned includes shares held by various funds related to or managed by
Merrill Lynch & Co., Inc.
(3) Represents options exercisable within 60 days of May 31, 2000 to acquire
800,000 shares.
(4) Represents options exercisable within 60 days of May 31, 2000 to acquire
212,500 shares.
(5) Represents options exercisable within 60 days of May 31, 2000 to acquire
37,500 shares.
(6) Represents options exercisable within 60 days of May 31, 2000 to acquire
120,000 shares.
(7) Represents options exercisable within 60 days of May 31, 2000 to acquire
93,751 shares.
(8) Includes options exercisable within 60 days of May 31, 2000 to acquire
166,235 shares.
(9) Individual is a former executive officer of Inprise.
(10) Includes options exercisable within 60 days of May 31, 2000 to acquire
48,209 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 17, 1999, Inprise made a minority equity investment in
TurboLinux, Inc., a company that focuses on Linux software and services. Dale
Fuller, Inprise's Interim President and Chief Executive Officer, also invested
personal funds in TurboLinux, Inc.
On March 31, 1999, James Weil, formerly the President of the Inprise
division and formerly the President of the former InterBase Software subsidiary,
agreed to forfeit options to acquire 2,500,000 shares of InterBase common stock
exercisable at $0.075 per share. In consideration for the forfeiture of such
options, Mr. Weil was paid $0.683 for each outstanding option ($1,707,500 in the
aggregate).
In connection with hiring Douglas Barre to serve as Inprise's Senior Vice
President and Chief Operating Officer, the Company has agreed to extend a loan
to him in the amount of $1,000,000 for the purpose of purchasing a residence.
The loan will be secured by the purchased residence and will bear interest at a
fixed rate of 7% per annum. The loan will be forgiven over a five year period,
provided that Mr. Barre remains employed by Inprise over this five-year period.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2001 Annual Meeting of
Stockholders pursuant to Rule 14a-8 under the Exchange Act must be received by
Inprise at its principal executive offices no later than February 20, 2001 and
must otherwise comply with the requirements of Rule 14a-8 in order to be
considered for inclusion in the 2001 proxy statement and proxy.
In order for proposals of stockholders submitted outside of Rule 14a-8 to be
considered "timely" for purposes of Rule 14a-4(c) under the Exchange Act and
Inprise's By-laws, such proposal must be received by the Corporate Secretary of
Inprise not less than thirty (30) days prior to the 2001 annual meeting;
provided, however, that in the event that less than forty (40) days' notice or
prior public disclosure of the date of such annual meeting is given or made to
stockholders, such proposal in order
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<PAGE>
to be timely must be received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of such annual
meeting was mailed or such public disclosure was made, whichever first occurs.
Under Inprise's By-laws, a stockholder's notice of such a proposal shall set
forth in writing as to each matter the stockholder proposes to bring before the
annual meeting:
- a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting;
- the name and address, as they appear on Inprise's books, of the
stockholder proposing such business;
- the class and number of shares of Inprise which are beneficially owned by
the stockholder; and
- any material interest of the stockholder in such business.
OTHER MATTERS
The Board knows of no other matters that have been submitted for
consideration at this Annual Meeting. If any other matters come before the
stockholders at this Annual Meeting, the persons named on the enclosed proxy
intend to vote the shares they represent in accordance with their best judgment.
ANNUAL REPORT
A copy of Inprise's Annual Report for the fiscal year ended December 31,
1999 is being mailed to Inprise's stockholders concurrently with this Proxy
Statement to all stockholders entitled to notice of and to vote at the Annual
Meeting. The Annual Report is not incorporated into this Proxy Statement and
shall not be deemed solicitation material.
By Order of the Board of Directors,
/s/ Keith E. Gottfried Keith E.
Gottfried
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
June 20, 2000
Scotts Valley, California
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<PAGE>
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
-------------------------------------------------------------------------------
INPRISE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JULY 25, 2000
P The undersigned hereby appoints Dale Fuller, Frederick A. Ball and Keith E.
Gottfried, and each of them, the proxy or proxies of the undersigned, with
R full power of substitution, to vote all shares of common stock of Inprise
Corporation which the undersigned would be entitled to vote if personally
O present at the Annual Meeting of Stockholders of Inprise Corporation to be
held on Tuesday, July 25, 2000, at 2:00 p.m., local time, and at any
X postponements or adjournments thereof, with all powers that the undersigned
would have if personally present thereat.
Y
IMPORTANT-TO BE SIGNED AND DATED ON REVERSE SIDE
/ SEE REVERSE SIDE /
<PAGE>
INSTRUCTIONS FOR VOTING YOUR PROXY
Inprise Corporation is now offering stockholders of record three alternative
ways of voting their proxies:
- BY TELEPHONE (using a touch-tone telephone)
- THROUGH THE INTERNET (using a browser)
- BY MAIL (traditional method)
Your telephone or Internet vote authorizes the named proxies to vote your
shares in the same manner as if you had returned your proxy card. We
encourage you to use these cost effective and convenient ways of voting, 24
hours a day, 7 days a week.
/TELEPHONE VOTING/ Available only until 5:00 p.m., Eastern time on July 24, 2000
- On a touch-tone telephone, call TOLL FREE 1-800-790-4577 24 hours a day, 7
days a week
- You will be asked to enter ONLY the CONTROL NUMBER shown below
- Have your proxy card ready, then follow the prerecorded instructions
- Your vote will be confirmed and cast as you directed
/INTERNET VOTING/ Available only until 5:00 p.m., Eastern time on July 24, 2000
- Visit the Internet voting Website at http://proxy.georgeson.com
- Enter the COMPANY NUMBER AND CONTROL NUMBER shown below and follow the
instructions on your screen
- You will incur only your usual Internet charges
/VOTING BY MAIL/
- Simply sign and date your proxy card and return it in the enclosed
postage-paid envelope
- IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR
PROXY CARD
/COMPANY NUMBER/ /CONTROL NUMBER/
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
-------------------------------------------------------------------------------
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BELOW.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND
4. THE PROXIES ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.
/ THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4. /
1. Election of Directors
Dale Fuller and William K. Hooper
(INSTRUCTION: To withhold authority to vote for any individual
nominee, check the "FOR" box and write the nominee's name in
the space provided below.)
FOR all nominees listed WITHHOLD
(except as indicated to AUTHORITY to vote
the contrary) for all nominees listed
/ / / /
--------------------------------------------
2. Approval of Amendment to the Inprise Corporation 1997 Stock
Option Plan.
For Against Abstain
/ / / / / /
3. Approval of Amendment to the Inprise Corporation 1999
Employee Stock Purchase Plan.
For Against Abstain
/ / / / / /
4. Ratification of the selection of PricewaterhouseCoopers LLP as
Inprise's independent auditors for the 2000 fiscal year.
For Against Abstain
/ / / / / /
The undersigned hereby acknowledges receipt of Inprise's Annual Report for
the fiscal year ended December 31, 1999 and the accom-panying Notice of
Meeting and Proxy Statement and hereby revokes any proxy or proxies
heretofore given.
Date: , 2000
--------------------------
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Signature(s) of Stockholders
IMPORTANT: Please sign as name(s) appear on this proxy, and date this proxy.
If a joint account, each joint owner should sign. If signing for a
corporation or partnership or as agent, attorney or fiduciary, indi-cate the
capacity in which you are signing.
