<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Confidential, for Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
OrCAD, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF OrCAD, INC.]
9300 S.W. Nimbus Avenue
Beaverton, OR 97008
(503) 671-9500
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1999
----------------
To the Stockholders of OrCAD, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of OrCAD, Inc. (the "Company") will be held on Friday, June
4, 1999, at 2:00 p.m., local time, at the Crowne Plaza, 14811 Kruse Oaks
Blvd., Lake Oswego, Oregon 97035 for the following purposes:
1. Election of Directors. To elect two directors, to hold office for a term
of three years or until their successors are duly elected and qualified;
2. Approval of Amendment to 1995 Stock Incentive Plan. To approve an
amendment to the OrCAD, Inc. 1995 Stock Incentive Plan;
3. Ratification of Appointment of Auditors. To ratify the appointment by
the Board of Directors of KPMG Peat Marwick LLP as independent auditors
of the Company for the fiscal year ending December 31, 1999; and
4. Other Business. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors of the Company has fixed the close of business on
April 7, 1999 as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting. Only stockholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board,
/s/ Michael F. Bosworth
Michael F. Bosworth
President, Chief Executive Officer
and Chairman of the Board
Beaverton, Oregon
April 19, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE, SIGN AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
OrCAD, INC.
9300 S.W. Nimbus Avenue
Beaverton, OR 97008
(503) 671-9500
----------------
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 4, 1999
----------------
INTRODUCTION
General
This Proxy Statement is being furnished to the stockholders of OrCAD, Inc.,
a Delaware corporation ("OrCAD" or the "Company"), as part of the solicitation
of proxies by the Company's Board of Directors (the "Board of Directors") from
holders of the outstanding shares of OrCAD common stock, par value $.01 per
share (the "Common Stock"), for use at the Company's Annual Meeting of
Stockholders to be held at 2:00 p.m. on Friday, June 4, 1999, and at any
adjournments or postponements thereof (the "Annual Meeting"). At the Annual
Meeting, stockholders will be asked to elect two members of the Board of
Directors, approve an amendment to the Company's Amended 1995 Stock Incentive
Plan, ratify the appointment by the Board of Directors of KPMG Peat Marwick
LLP as independent auditors of the Company for the fiscal year ending December
31, 1999, and transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof. This Proxy
Statement, together with the enclosed proxy card, is first being mailed to
stockholders of OrCAD on or about April 19, 1999.
Solicitation, Voting and Revocability of Proxies
The Board of Directors has fixed the close of business on April 7, 1999, as
the record date for the determination of the stockholders entitled to notice
of and to vote at the Annual Meeting. Accordingly, only holders of record of
shares of Common Stock at the close of business on such date will be entitled
to vote at the Annual Meeting, with each such share entitling its owner to one
vote on all matters properly presented at the Annual Meeting. On the record
date, there were approximately 1,797 beneficial holders of the 9,273,896
shares of Common Stock then outstanding. The presence, in person or by proxy,
of a majority of the total number of outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. Executed but unmarked
proxies will be voted FOR the election of the two nominees for election to the
Board of Directors, FOR approval of an amendment to the Company's 1995 Stock
Incentive Plan, and FOR the ratification of the appointment of KPMG Peat
Marwick LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999. The Board of Directors does not know of any matters other
than those described in the Notice of Annual Meeting that are to come before
the Annual Meeting. If any other matters are properly brought before the
Annual Meeting, the persons named in the proxy will vote the shares
represented by such proxy upon such matters as determined by a majority of the
Board of Directors.
A stockholder may revoke a proxy at any time prior to its exercise by filing
a written notice of revocation with, or by delivering a duly executed proxy
bearing a later date to, Corporate Secretary, OrCAD, Inc., 9300 S.W. Nimbus
Avenue, Beaverton, Oregon 97008, or by attending the Annual Meeting and voting
in person. All valid, unrevoked proxies will be voted at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, two directors will be elected, each for a three-year
term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election of the nominees named below. The Board of
Directors believes that the nominees will stand for election and will serve if
elected as directors. However, if either of the persons nominated by the Board
of Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other persons as the Board of
Directors may recommend.
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be composed of not less than three and not more
than nine directors. The Board of Directors has fixed the number of directors
at six. The Company's directors are divided into three classes composed of two
directors each. The term of office of only one class of directors expires each
year, and their successors are elected for terms of three years, and until
their successors are duly elected and qualified. There is no cumulative voting
for election of directors.
Information as to Nominees and Continuing Directors
The following table sets forth the names of the Board of Directors' nominees
for election as a director and those directors who will continue to serve
after the Annual Meeting. Also set forth is certain other information with
respect to each such person's age at March 31, 1999, principal occupation or
employment during the past five years, the periods during which he has served
as a director of OrCAD and positions currently held with OrCAD.
<TABLE>
<CAPTION>
Director Expiration
Age Since of Term Positions Held With OrCAD
--- -------- ---------- -------------------------
<C> <C> <C> <C> <S>
Nominees:
Richard P. Magnuson................... 43 1991 1999 Director
James B. Moon......................... 53 1995 1999 Director
Continuing Directors:
Wolfram H. Blume...................... 46 1998 2000 Director
John C. Savage........................ 51 1991 2000 Director
Michael F. Bosworth................... 51 1991 2001 President, Chief
Executive Officer and
Chairman of the Board
Stephen W. Director................... 55 1991 2001 Director
</TABLE>
Nominees for Director
Richard P. Magnuson. Mr. Magnuson has served as a member of the Board of
Directors of the Company since September 1991. Since 1997, Mr. Magnuson has
been a private venture capitalist. He served as General Partner of Menlo
Ventures, a private venture capital firm, from 1982 to 1996. Mr. Magnuson
serves as a director of two other public companies: Rogue Wave Software, Inc.
and California Water Service Company. He also serves as a director of several
privately-held companies.
James B. Moon. Mr. Moon has served as a member of the Board of Directors of
the Company since December 1995. Since February 1, 1999, Mr. Moon has served
as an independent consultant to Protocol Systems, Inc. ("Protocol"). Mr. Moon
served as the Chairman of the Board, President and the Chief Executive Officer
of Protocol from 1987 through February 1998, and served as the President,
Chief Technology Officer and a member of the Board of Directors of Protocol
from February 1998 through August 1998. From August 1998 through December
1998, Mr. Moon served as Senior Vice President, Chief Technology Officer and a
member of the Board of Directors of Protocol.
2
<PAGE>
Continuing Directors
Wolfram H. Blume. Mr. Blume has served as a member of the Board of Directors
of the Company since February 1998. Since January 1998, he has served as Chief
Technical Advisor to the Company. Mr. Blume served as Chairman of the Board,
President, and Chief Executive Officer of MicroSim Corporation ("MicroSim")
from July 1984 until January 1998. Prior to founding MicroSim in 1984, Mr.
Blume spent six years as a member of the technical staff in the Advanced
Development Group of Silicon Systems, Inc.
John C. Savage. Mr. Savage has served as a member of the Board of Directors
of the Company since September 1991. Since July 1998, Mr. Savage has served as
Managing Director of Alliant Partners, an investment banking firm. From June
1990 through July 1998, Mr. Savage was Managing General Partner of Glenwood
Capital Partners, L.P., and from 1995 through July 1998 was Managing Director
of Redwood Partners, LLC; both are affiliated venture capital and investment
banking firms. Mr. Savage also serves as a director of FileNet Corporation and
Mattson Technology, Inc.
Michael F. Bosworth. Mr. Bosworth was named Chairman of the Board of
Directors in February 1997 and has served as President, Chief Executive
Officer and a member of the Board of Directors of the Company since October
1991. From April 1986 through September 1991, he served as President and Chief
Executive Officer of Context Corporation, initially a subsidiary of Mentor
Graphics Corporation and later a division of Mentor Graphics Corporation.
Stephen W. Director. Dr. Director has served as a member of the Board of
Directors of the Company since January 1991. Dr. Director has served as the
Dean of Engineering at the University of Michigan since July 1996. Dr.
Director served as the Dean of the College of Engineering and U.A., and Helen
Whitaker University Professor of Electrical and Computer Engineering at
Carnegie Mellon University from July 1991 through June 1996. In 1982 he
founded the SRC-CMU Research Center for Computer-Aided Design and served as
its Director from 1982 to 1989. Dr. Director also serves on the Technical
Advisory Boards of a number of EDA companies.
Board of Directors Committees and Nominations by Stockholders
The Board of Directors acts as a nominating committee for selecting nominees
for election as directors. The Company's Bylaws also permit stockholders to
make nominations for the election of directors, if such nominations are made
pursuant to timely notice in writing to the Company's Secretary. To be timely,
notice must be delivered to, or mailed to and received at, the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to the date of the meeting, provided that at least 60 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders. If less than 60 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be received by the Company not later than the
close of business on the tenth day following the date on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
stockholder's notice of nomination must also set forth certain information
specified in Article II, Section 2.10 of the Company's Bylaws concerning each
person the stockholder proposes to nominate for election and the nominating
stockholder.
During 1998, the Company's Board of Directors held ten meetings. Each
incumbent director attended more than 75% of (i) the aggregate of the total
number of meetings held by the Board of Directors and (ii) the total number of
meetings held by all committees of the Board on which he served during the
period that he served. The Board of Directors has a standing Audit Committee
which, during the fiscal year ended December 31, 1998, conducted one meeting.
The members of the Audit Committee currently are Messrs. Savage and Magnuson.
The Audit Committee reviews the scope of the independent annual audit, the
independent public accountants' letter to the Board of Directors concerning
the effectiveness of the Company's internal financial and accounting controls
and the Board of Directors' response to that letter, if deemed necessary. The
Board of Directors also has a standing Compensation Committee which reviews
executive compensation and makes recommendations to the full Board regarding
changes in compensation, and also administers the Company's stock option
plans.
3
<PAGE>
During the fiscal year ended December 31, 1998, the Compensation Committee
held three meetings. The members of the Compensation Committee currently are
Messrs. Savage and Magnuson. There are no family relationships among any of
the directors or executive officers of the Company.
Director Compensation
The nonemployee members of the Company's Board of Directors received an
annual fee of $5,000 for their service on the Board, as well as an additional
fee of $1,000 for each Board meeting and $500 for each Board Committee meeting
attended, and were reimbursed for out-of-pocket and travel expenses incurred
in attending Board and Board Committee meetings. Effective March 1999, the
annual fee paid to each nonemployee director for his service on the Board was
increased to $10,000. Under the Company's 1995 Stock Option Plan for
Nonemployee Directors, each person who becomes a nonemployee director
automatically receives an initial option to purchase 20,000 shares of the
Company's Common Stock at the time such person is first elected to the Board
of Directors. Each nonemployee director automatically receives additional
grants of options to purchase 5,000 shares after each annual meeting of
stockholders, provided the nonemployee director continues to serve in that
capacity. Options vest and become exercisable on the date of grant.
The Board of Directors unanimously recommends that stockholders vote FOR the
election of its nominees for director. If a quorum is present, the Company's
Bylaws provide that directors are elected by a plurality of the votes cast by
the shares entitled to vote. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Annual Meeting, but are
not counted and have no effect on the determination of whether a plurality
exists with respect to a given nominee.
4
<PAGE>
MANAGEMENT
Executive Officers
The following table sets forth certain information with respect to the
executive officers of the Company. Officers of the Company are elected by the
Board of Directors and hold office until their successors are duly elected and
qualified.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Michael F. Bosworth..... 51 President, Chief Executive Officer and Chairman of the Board
P. David Bundy.......... 44 Vice President of Finance, Secretary and Chief Financial Officer
William E. Cibulsky..... 52 Senior Vice President of Worldwide Sales
Stuart A. Harrington.... 38 Vice President
Philip J. Kilcoin....... 42 Vice President of Product Operations
James M. Plymale........ 32 Vice President of Marketing
Graham K. Sheldon....... 35 Vice President of Operations
Donald G. Tannenbaum.... 50 Vice President of Integration and Development
Michael U. Wimbrow...... 46 Vice President of Product Development
</TABLE>
Information concerning the principal occupation of Mr. Bosworth is set forth
under the heading "Election of Directors." Information concerning the
principal occupation during at least the last five years of the executive
officers of the Company who are not also directors of the Company is set forth
below.
P. David Bundy. Mr. Bundy has served as the Company's Vice President of
Finance, Secretary and Chief Financial Officer since November 1991. Mr. Bundy
served as Controller upon joining the Company in October 1989. Mr. Bundy also
earlier served as Controller of Cadic, Inc., and in various financial
capacities with Burroughs Corporation.
William E. Cibulsky. Mr. Cibulsky has served as the Company's Senior Vice
President of Worldwide Sales since March 1998. Prior to joining the Company,
Mr. Cibulsky served as the Executive Vice President of Worldwide Sales for
Falcon Systems from December 1996 to March 1998. From May 1994 to December
1996, Mr. Cibulsky was the Vice President of North American Sales and Vice
President of International Sales for Quickturn Systems. From January 1990 to
January 1994, Mr. Cibulsky was Vice President of Sales for Zycad Corporation.
Stuart A. Harrington. Mr. Harrington has served as Vice President of the
Company since December 1995, and has served as President of OrCAD Japan K.K.
since December 1995. Mr. Harrington was a founder of Intelligent Systems,
Japan and served as its President from 1990 through November 1995.
Philip J. Kilcoin. Mr. Kilcoin has served as the Company's Vice President of
Product Operations since February 1998. From June 1997 through February 1998,
he served as the Company's Director of Product Marketing. Prior to joining the
Company, Mr. Kilcoin served as a Group Manager at Mentor Graphics Corporation
from 1994 through June 1997, and as a Product Marketing Manager at Mentor
Graphics Corporation from 1991 through 1994.
James M. Plymale. Mr. Plymale has served as the Company's Vice President of
Marketing since October 1995. From June 1993 through October 1995, he served
as the Company's Director of Product Marketing, and from March 1992 through
June 1993, he served as the Company's Product Marketing Manager. From 1990 to
March 1992, Mr. Plymale served in various capacities at Phase III Logic.
5
<PAGE>
Graham K. Sheldon. Mr. Sheldon has served as the Company's Vice President of
Operations since February 1998. Prior to that, he was the Company's Director
of Operations from October 1991 through February 1998, and from October 1989
through October 1991, he served as the Company's Manager of MIS and
Operations.
Donald G. Tannenbaum. Mr. Tannenbaum has served as the Company's Vice
President of Integration and Development since September 1997. Prior to
joining the Company, he served as senior consultant and one of three
Principals of LionHeart Consulting, Inc. from 1987 to 1997. In this capacity,
Mr. Tannenbaum specialized in partnering and assisting emerging businesses to
develop through transitions and growth.
Michael U. Wimbrow. Mr. Wimbrow has served as Vice President of Product
Development of the Company since January 1998. Prior to joining the Company,
Mr. Wimbrow served on the Board of Directors of MicroSim from April 1993
through January 1998, and served as MicroSim's Vice President of Planning and
Product Support from June 1994 through January 1998. From 1987 to 1994,
Mr. Wimbrow served as a software developer with MicroSim.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation of the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company (the "named
executive officers") for the fiscal years ending December 31, 1996, 1997 and
1998.
<TABLE>
<CAPTION>
Long-term
Compensation
------------
Securities
Underlying
Annual Compensation Stock
----------------------- Options All Other
Name and Principal Position Year Salary Bonus Granted Compensation
--------------------------- ---- -------- ------- ------------ ------------
<C> <S> <C> <C> <C> <C>
Michael F. Bosworth..................... 1998 $187,022 $61,817 35,000 $ 43,933(1)
President, Chief Executive Officer 1997 154,848 63,173 25,000 4,750(2)
and Chairman of the Board 1996 149,972 46,667 -- 5,806(2)
William E. Cibulsky(3).................. 1998 105,000 51,959 60,000 34,892(4)
Senior Vice President of Worldwide
Sales 1997 -- -- -- --
1996 -- -- -- --
Stuart A. Harrington.................... 1998 199,250 -- -- 22,714(5)
Vice President 1997 177,968 -- -- 27,695(5)
1996 195,430 -- -- 21,721(5)
James M. Plymale........................ 1998 136,452 25,672 25,000 33,876(6)
Vice President of Marketing 1997 112,108 24,084 15,000 4,068(7)
1996 104,972 17,065 -- 3,356(7)
Michael U. Wimbrow(8)................... 1998 144,686 15,277 40,000 195,431(9)
Vice President of Product Development 1997 -- -- -- --
1996 -- -- -- --
</TABLE>
- --------
(1) Represents matching contribution to the Company's 401(k) Plan of $4,800 on
behalf of named executive officer, together with a one-time payment of
$39,133 for accrued vacation as result of a change in the Company's
vacation policy.
(2) Represents matching contribution to the Company's 401(k) Plan on behalf of
named executive officer.
(3) Mr. Cibulsky became Senior Vice President of Worldwide Sales of the
Company in March 1998.
(4) Represents matching contribution to the Company's 401(k) Plan of $3,232 on
behalf of named executive officer, together with $27,420 paid in
connection with certain relocation expenses, and a one-time payment of
$4,240 for accrued vacation as a result of a change in the Company's
vacation policy.
(5) Represents rent allowance paid on behalf of named executive officer.
(6) Represents matching contribution to the Company's 401(k) Plan of $4,800 on
behalf of named executive officer, together with a one-time payment of
$29,076 for accrued vacation as a result of a change in the Company's
vacation policy.
(7) Represents matching contribution to the Company's 401(k) Plan on behalf of
named executive officer.
(8) Mr. Wimbrow became Vice President of Product Development of the Company in
January 1998.
(9) Represents extraordinary compensation to named executive officer of
$161,222 as a result of the conversion of MicroSim stock options into
shares of the Company's common stock in connection with the Company's
merger with MicroSim in January 1998, together with a matching
contribution to the Company's 401(k) Plan of $4,800 on behalf of named
executive officer, and a one-time payment of $29,409 for accrued vacation
comprised of (i) $11,686 as a result of a change in the Company's vacation
policy, and (ii) $17,723 as a result of vacation accrued at MicroSim and
paid in connection with the Company's merger with MicroSim.
7
<PAGE>
Stock Options
The following table sets forth information concerning options granted to the
named executive officers during the year ended December 31, 1998 under the
Company's 1995 Stock Incentive Plan.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates of
Percent of Stock
Number of Total Price
Securities Options Exercise Appreciation for
Underlying Granted to Price Option Term(2)
Options Employees Per Expiration -----------------
Name Granted(1) in 1998 Share Date 5% 10%
- ---- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bosworth..... 35,000 5.9% $9.31 02/24/08 $204,955 $519,505
William E. Cibulsky..... 60,000 10.1 9.50 03/16/08 358,440 908,460
Stuart A. Harrington.... -- -- -- -- -- --
James M. Plymale........ 25,000 4.2 9.31 02/24/08 146,425 371,075
Michael U. Wimbrow...... 40,000 6.7 8.63 01/20/08 216,960 549,840
</TABLE>
- --------
(1) Options granted in 1998 vest ratably over four years.
(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually for a ten-
year period. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all in future years.
The following table provides information, with respect to the named
executive officers, concerning the exercise of stock options during the year
ended December 31, 1998, and unexercised options held as of December 31, 1998.
Option Exercises and Holdings
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1998 December 31, 1998(2)
On Value ------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bosworth..... -- -- 138,928 59,634 $733,142 $73,003
William E. Cibulsky..... -- -- 11,250 48,750 -- --
Stuart A. Harrington.... -- -- -- -- -- --
James M. Plymale........ 2,500 $22,813 29,860 30,996 94,217 14,037
Michael U. Wimbrow...... -- -- 9,167 30,833 -- --
</TABLE>
- --------
(1) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(2) Represents the total gain which would be realized if all in-the-money
options held at December 31, 1998 were exercised, determined by
multiplying the number of shares underlying the options by the difference
between the per share option exercise price and the fair market value of
$7.563 per share at December 31, 1998. An option is in-the-money if the
fair market value of the underlying shares exceeds the exercise price of
the option.
Executive Employment Agreements
Effective September 17, 1998, the Company entered into employment agreements
(the "Employment Agreements") with certain of its executive officers,
including Michael F. Bosworth, William E. Cibulsky, Stuart A. Harrington,
James M. Plymale and Michael U. Wimbrow. The Employment Agreements provide
that if the employee resigns voluntarily or if the Company terminates such
employee's employment for "Cause" (as
8
<PAGE>
defined in the Employment Agreements and described below), then the employee's
salary and benefits will cease as of the effective date of such resignation or
termination for Cause. The Employment Agreements also contain change of
control provisions which provide that if the employee is terminated without
Cause or if the employee resigns following a "Constructive Termination" (as
defined in the Employment Agreements and described below) within a period
beginning one month before the signing of a letter of intent or other
definitive agreement which will result in a "Control Change" (as defined in
the Employment Agreements and described below) of the Company and ending
twelve months after the effective date of the Control Change, such employee
will be entitled to (i) receive all benefits earned; (ii) continuation, for a
period of three months for each year during which the employee has been
employed by the Company (including employment with companies acquired by the
Company), of employee's then current salary plus incentive compensation, up to
a maximum of twelve months; and (iii) acceleration of the vesting of 25% of
all stock options granted by the Company to such employee which are not
exercisable as of the date of such termination for each year during which the
employee has been employed by the Company (including employment with companies
acquired by the Company), so that such options are then immediately
exercisable. In addition, the Company will provide benefits for the salary
continuation period. For purposes of the Employment Agreements, "Constructive
Termination" includes (i) reassigning the employee to duties not reasonably
considered of equivalent or greater responsibility, (ii) changing the
employee's title to one not reasonably considered equivalent or greater, (iii)
reducing the employee's overall compensation, or (iv) directing the employee
to report to a level of management below the level to which the employee
previously reported, all without the employee's advance written consent. For
purposes of the Employment Agreements, "Control Change" includes (i) sale of
substantially all of the Company's assets to, or (ii) acquisition of a
majority of the Company's voting stock or entry into a voting or common
control agreement covering a majority of the Company's voting stock by, an
entity(ies) that is not controlled by or under common control with the
entity(ies) who had majority ownership of the Company's voting stock and/or
effective control of the Company prior to such sale, acquisition or voting
agreement. For purposes of the Employment Agreements, "Cause" includes the
employee's (i) conviction of a crime involving the Company's business, (ii)
misappropriation of the Company's monies or assets, (iii) fraudulent conduct,
and (iv) grossly negligent performance of, or willful failure to perform,
employment duties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, the Compensation Committee
was comprised of Messrs. Magnuson and Savage. Mr. Savage was a Principal and
is a Managing Director of entities engaged by the Company to perform financial
advisory services. See "Certain Transactions and Relationships." The
Compensation Committee is responsible for establishing the compensation of
Michael F. Bosworth, the Company's President and Chief Executive Officer, who
also serves as the Chairman of the Board of Directors. Mr. Bosworth is
responsible for reviewing the compensation levels of the Company's other
executive officers and makes recommendations to the Compensation Committee
regarding changes in compensation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information with
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and the four other most highly compensated executive
officers. In fulfillment of this requirement, the Compensation Committee has
prepared the following report for inclusion in this Proxy Statement.
Executive Compensation Philosophy
The Compensation Committee is composed entirely of nonemployee, outside
directors and is responsible for setting and monitoring policies governing
compensation of executive officers. The Compensation Committee reviews the
performance and compensation levels for executive officers, and sets salary
and bonus levels and
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<PAGE>
option grants under the Company's 1995 Stock Incentive Plan. The objectives of
the Compensation Committee are to correlate executive compensation with the
Company's business objectives and performance and to enable the Company to
attract, retain and reward executive officers who contribute to the long-term
success of the Company.
Executive Compensation Components
The key components of the Company's compensation program are base salary,
quarterly and annual incentive awards and equity participation. These
components are administered with the goal of providing total compensation that
is competitive in the marketplace, rewards successful financial performance
and aligns executive officers' interests with those of stockholders. The
Compensation Committee reviews each component of executive compensation on an
annual basis.
Base Salaries
Base salaries for executive officers are based upon a review of salaries for
similar positions requiring similar qualifications. In determining executive
officer salaries, the Compensation Committee reviews recommendations from
management which include information from salary surveys. Additionally, the
Compensation Committee establishes both financial and operational based
objectives and goals. These goals and objectives include sales and spending
forecasts, along with published executive compensation literature for
comparable sized companies. The Compensation Committee considers not only the
performance evaluations of executive officers, but also reviews the financial
condition of the Company in setting salaries. The Compensation Committee
believes that executive officer base salaries for 1998 were reasonable as
compared to amounts paid by companies of similar size in the software industry
and located in the Pacific Northwest.
The Compensation Committee annually assesses the performance and sets the
salary of the Company's Chief Executive Officer, Michael F. Bosworth. Mr.
Bosworth annually assesses the performance of all other executive officers and
recommends salary increases to the Compensation Committee for review and
approval.
Bonus Plan
The Compensation Committee believes that a significant proportion of total
cash compensation for executive officers should be subject to attainment of
specific Company operating income targets. This approach creates a direct
incentive for executive officers to achieve desired performance goals and
places a significant percentage of certain executive officers' compensation at
risk. Consequently, each year the Compensation Committee establishes potential
bonuses for executive officers based on the Company's achievement of certain
operating income targets. For 1998, annual bonuses equal to 0% to 49% of base
salaries were paid to executive officers based on the Company's achievement of
such predetermined operating income targets.
Stock Options
The Compensation Committee believes that employee equity ownership provides
significant motivation to executive officers to maximize value for the
Company's stockholders and, therefore, periodically grants stock options under
the Company's 1995 Stock Incentive Plan. Stock options are granted at the
current market price and will only have value if the Company's stock price
increases over the exercise price. The Compensation Committee determines the
size and frequency of option grants for executive officers, after
consideration of recommendations from the Chief Executive Officer.
Recommendations for option grants are based upon the relative position and
responsibilities of each executive officer, expected contributions of each
executive officer to the Company and previous option grants to such executive
officers.
Chief Executive Officer Compensation
Consistent with the executive compensation philosophy and components
described above, the Compensation Committee determined the base salary, bonus
and stock options received by Mr. Bosworth, the Chairman of the
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Board, President and Chief Executive Officer of the Company, for services
rendered in 1998. The Compensation Committee approved Mr. Bosworth's 1998
annual base salary of approximately $187,000, based on the salary survey data
referred to above and compensation levels of President/Chief Executive
Officers of comparable size companies in industries similar to the Company's
and located in the Pacific Northwest. Mr. Bosworth received a bonus of
approximately $62,000 based upon the Company's achievement of certain
operating income targets predetermined by the Compensation Committee. In
addition, options to purchase 35,000 shares of the Company's Common Stock at
$9.31 per share were granted to Mr. Bosworth in 1998.
COMPENSATION COMMITTEE
John C. Savage
Richard P. Magnuson
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STOCK PERFORMANCE GRAPH
The SEC requires that registrants include in their proxy statement a line-
graph presentation comparing cumulative five-year stockholder returns on an
indexed basis, assuming a $100 initial investment and reinvestment of
dividends, of (a) the registrant, (b) a broad-based equity market index, and
(c) an industry-specific index. The Company's Common Stock began trading on the
Nasdaq Stock Market on March 1, 1996. Accordingly, the following graph includes
the required information from March 1, 1996 through the end of the last fiscal
year (December 31, 1998). The broad-based market index used is the Nasdaq
Composite Index and the industry-specific index used is the Dow Jones Software
Index.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/1/96 12/31/96 12/31/97 12/31/98
------ -------- -------- --------
<S> <C> <C> <C> <C>
Company $100 $ 92 $ 71 $ 71
Nasdaq Composite $100 $119 $145 $202
Dow Jones Software Index $100 $127 $166 $298
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's directors and officers, and persons who own more
than ten percent (10%) of a registered class of the Company's equity
securities, to file initial reports of ownership and reports of changes in
ownership with the SEC. Such persons also are required to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that except as set forth below all filing
requirements applicable to its directors, officers and persons who own more
than 10% of a registered class of the Company's equity securities have been
complied with for fiscal 1998. Jim Moon, a member of the Company's Board of
Directors, failed to timely file his Form 4 for August 1998, in connection with
a purchase of the Company's Common Stock in the open market.
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<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The following is a description of certain transactions and relationships
entered into or existing since January 1, 1998 between the Company and certain
affiliated parties. The Company believes that the terms of such transactions
were no less favorable to the Company than could have been obtained from an
unaffiliated party.
Alliant Partners ("Alliant") acted as the Company's financial advisor with
respect to the Agreement and Plan of Reorganization dated September 20, 1998
by and among Summit Design, Inc. ("Summit"), Hood Acquisition Corp., a wholly-
owned subsidiary of Summit, and the Company, and the proposed merger with
Summit. Alliant provided the Company with a written opinion to the effect that
the equity consideration to have been paid to the Company's stockholders
pursuant to the Reorganization Agreement was fair to such stockholders from a
financial point of view. Pursuant to an engagement letter dated August 13,
1998 with the Company, Alliant received a fee of $100,000 upon delivery of
such written opinion. The Company also reimbursed Alliant for its out-of-
pocket expenses, including reasonable legal and other expenses. In addition,
the Company agreed to indemnify Alliant and any shareholders, directors,
employees or contractors of Alliant, against any claim, liabilities or
expenses relating or arising out of services provided by Alliant as financial
advisor to the Company.
John C. Savage was a Principal of Redwood Partners, LLC at the time of the
Company's acquisition of MicroSim, and a Managing Director of Alliant at the
time of Alliant's provision of financial advisory services to the Company. Mr.
Savage has served as a member of the Company's Board of Directors since
September 1991 and continues to so serve. As of April 7, 1999, Mr. Savage
owned options to acquire 15,000 shares of the Company's Common Stock, and
23,524 shares of the Company's Common Stock.
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STOCK OWNED BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Common Stock as of April 7, 1999, with respect to: (i) each person
known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each of the Company's directors, (iii) each of
the Company's nominees for election as director, (iv) each of the Company's
named executive officers, and (v) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Shares of Percent of
Common Stock Common
Beneficially Stock
Name and Business Address Owned(1) Outstanding
- ------------------------- ------------ -----------
<S> <C> <C>
Wolfram H. Blume..................................... 1,357,476 14.9%
c/o OrCAD, Inc.
16275 Laguna Canyon Drive
Irvine, CA 92618
Kern Capital Management, LLC(2)...................... 531,000 5.7
114 West 47th Street, Suite 1926
New York, NY 10036
The D3 Family Fund, L.P.(3).......................... 471,375 5.1
19605 NE 8th Street
Camas, WA 98607
Dalton, Greiner, Hartman, Maher & Co(4).............. 471,200 5.1
1100 Fifth Avenue South, Suite 301
Naples, FL 34102
FMR Corp.(5)......................................... 468,700 5.1
82 Devonshire Street
Boston, MA 02109
Michael F. Bosworth.................................. 221,583 2.4
Stephen W. Director.................................. 34,428 *
William E. Cibulsky.................................. 20,516 *
Stuart A. Harrington................................. 106,617 1.1
Richard P. Magnuson.................................. 41,566 *
James B. Moon........................................ 37,000 *
James M. Plymale..................................... 37,962 *
John C. Savage....................................... 38,524 *
Executive Officers and Directors as a group (14
persons)............................................ 2,071,056 21.3
</TABLE>
- --------
* less than one percent
(1) Beneficial ownership is determined in accordance with rules of the SEC,
and includes voting power and investment power with respect to shares.
Shares issuable upon the exercise of outstanding stock options that are
currently exercisable or become exercisable within 60 days from April 7,
1999 are considered outstanding for the purpose of calculating the
percentage of Common Stock owned by such person, but not for the purpose
of calculating the percentage of Common Stock owned by any other person.
The number of shares that are issuable upon the exercise of options that
are currently exercisable or exercisable within 60 days of April 7, 1999,
is as follows: Dr. Director -- 29,615; Mr. Savage -- 15,000;
Mr. Magnuson --31,006; Mr. Moon -- 35,000; Mr. Bosworth -- 153,166; Mr.
Cibulsky -- 19,374; Mr. Plymale -- 36,051; Mr. Harrington -- 0; Mr.
Blume -- 25,000; and all directors and officers as a group-- 427,345. The
table does not include shares subject to options that will be granted to
Messrs. Blume, Director, Magnuson, Moon
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<PAGE>
and Savage under the 1995 Stock Option Plan for Nonemployee Directors
immediately after the Annual Meeting.
(2) This information as to beneficial ownership is based on a Schedule 13G
filed by Kern Capital Management, LLC ("KCM"), Robert E. Kern Jr. and David
G. Kern with the SEC on February 12, 1999. The Messrs. Kern are Principals
and controlling members of KCM. The Schedule 13G states that, as of
December 31, 1998, KCM had sole voting and sole dispositive power with
respect to 531,000 shares of Common Stock. According to the Schedule 13 G,
the Messrs. Kern may be deemed to share voting or dispositive power with
respect to the 531,000 shares of Common Stock owned by KCM.
(3) This information as to beneficial ownership is based on a Schedule 13D
filed with the SEC on March 12, 1999 by a group comprised of The D3 Family
Fund, L.P. ("Family Fund"), Haredale, Ltd., Sharptown Limited, James Henry
Hildebrandt, Toxford Corporation, David Nierenberg, and Florence Cies.
David Nierenberg is President of Nierenberg Investment Management Company,
the General Partner of the Family Fund. The Schedule 13D states that as of
March 2, 1999, the Family Fund had sole voting and dispositive power with
respect to 406,900 shares of Common Stock, and David Nierenberg had sole
voting and dispositive power with respect to an aggregate of 64,475 shares
of Common Stock beneficially owned by Haredale, Ltd., Sharptown Limited,
James Henry Hildebrandt, Toxford Corporation, David Nierenberg and Florence
Cies.
(4) This information as to beneficial ownership is based on a Schedule 13G
filed by Dalton, Greiner, Hartman, Maher & Co with the SEC on February 1,
1999. The Schedule 13G states that, as of December 31, 1998, Dalton,
Greiner, Hartman, Maher & Co had sole voting and sole dispositive power
with respect to 471,200 shares of Common Stock.
(5) This information as to beneficial ownership is based on a Schedule 13G/A
filed by FMR Corp., Edward C. Johnson 3rd, Chairman of FMR Corp. and
Abigail P. Johnson, a director of FMR Corp. with the SEC on February 12,
1999. The Schedule 13G/A states that, as of December 31, 1998, Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR Corp., was the beneficial owner of 468,700 shares of Common Stock owned
by the Fidelity Low-Priced Stock Fund (the "Fund"), an investment company,
as to which Fidelity serves as investment adviser. According to the
Schedule 13G/A, each of Mr. Johnson and FMR Corp. (through its control of
Fidelity), has sole power to dispose of the 468,700 shares of Common Stock
owned by the Fund, however, neither Mr. Johnson nor FMR Corp. has sole
power to vote or direct the voting of the 468,700 shares of Common Stock.
Voting power resides in the Board of Trustees of Fidelity.
APPROVAL OF AMENDMENT TO THE AMENDED 1995 STOCK INCENTIVE PLAN
The Board of Directors is requesting that the Company's stockholders approve
an amendment to the Company's Amended 1995 Stock Incentive Plan (the "1995
Plan") to increase the number of shares of Common Stock that are reserved for
issuance under the 1995 Plan. A total of 2,000,000 shares of Common Stock have
been reserved for issuance under the 1995 Plan. As of March 31, 1999,
approximately 669,644 shares remained available for grant under the 1995 Plan.
The Board of Directors believes that additional shares will be needed under the
1995 Plan to provide appropriate incentives to employees and others.
Accordingly, the Board of Directors has approved an amendment to the 1995 Plan
that would increase from 2,000,000 shares to 2,460,000 shares the number of
shares of Common Stock that are reserved for issuance under the 1995 Plan.
The purposes of the 1995 Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide incentive to
employees and consultants of the Company and to promote the success of the
Company's business. In the high technology industry in which the Company
competes, stock options are an integral part of the total compensation package.
The Company's practice has been to grant stock options broadly throughout the
organization to recognize key performers and to provide a link between employee
and Company performance. To date more than 88% of employees have been issued
stock option grants, with approximately 54% of the options granted to employees
who are not officers of the Company.
15
<PAGE>
The Board considers it critical to be able to continue to offer stock
incentives in order to attract and develop the talented, vital individuals who
can contribute to the Company's growth and success in a very competitive
environment. Doing so provides significant motivational and performance
benefits by providing employees and consultants an ownership perspective,
teamed with the appreciation that comes with growing the value of the Company.
Equity participation is the most effective means for more closely aligning
their interests with the long-range goals of the Company and its stockholders.
Lack of stock incentives would put the Company at a serious disadvantage in
recruiting and retaining key people. For these reasons, stockholders are
encouraged to approve the amendment to the 1995 Plan. The following is a
summary of the basic terms and provisions of the 1995 Plan.
The 1995 Plan, which was originally approved by the Company's stockholders
on December 15, 1995, and approved as currently amended on June 19, 1997,
provides for grants of both "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
"non-qualified stock options" which are not qualified for treatment under
Section 422 of the Code, and for direct stock grants and sales to employees or
consultants of the Company. Because the officers, directors and employees of
the Company who may participate in the 1995 Plan and the amount of their
options will be determined on a discretionary basis by the Compensation
Committee or the full Board of Directors, it is not possible to state the
names or positions of, or the number of options that may be granted to, the
Company's officers, directors and employees. No employee may receive options
under the 1995 Plan for more than 100,000 shares in any one fiscal year,
except that options for up to an additional 100,000 shares may be granted in
connection with a person's initial employment with the Company.
The administration of the 1995 Plan has been delegated to the Compensation
Committee. In addition to determining who will be granted options, the
Committee has the authority and discretion to determine when options will be
granted and the number of options to be granted and whether the options will
be incentive stock options or non-qualified stock options. Only "employees" of
the Company as that term is defined in the Code will be entitled to receive
Incentive Stock Options. See "Federal Income Tax Consequences" below. The
Compensation Committee may also determine the time or times when each option
becomes exercisable, the duration of the exercise period for options and the
form or forms of the instruments evidencing options granted under the 1995
Plan. The Compensation Committee also may construe the 1995 Plan and the
provisions in the instruments evidencing options granted under the 1995 Plan
to employees and officer participants and is empowered to make all other
determinations deemed necessary or advisable for the administration of the
1995 Plan.
The term of each option granted under the 1995 Plan will generally be ten
years from the date of grant, or such shorter period as may be established at
the time of the grant. An option granted under the 1995 Plan may be exercised
at such times and under such conditions as determined by the Compensation
Committee. If a person who has been granted an option ceases to be an employee
or consultant of the Company, such person may exercise that option only during
the three month period after the date of termination, and only to the extent
that the option was exercisable on the date of termination. If a person who
has been granted an option ceases to be an employee or consultant as a result
of such person's total and permanent disability, such person may exercise that
option at any time within twelve months after the date of termination, but
only to the extent that the option was exercisable on the date of termination.
Except as otherwise provided by the Compensation Committee at the time an
option is granted, no option granted under the 1995 Plan is transferable other
than at death, and each option is exercisable during the life of the optionee
only by the optionee. In the event of the death of a person who has received
an option, the option generally may be exercised by a person who acquired the
option by bequest or inheritance during the twelve month period after the date
of death to the extent that such option was exercisable at the date of death.
The exercise price of incentive stock options granted under the 1995 Plan
may not be less than the fair market value of a share of Common Stock on the
date the option is granted. For non-qualified stock options, the exercise
price may be less than, equal to, or greater than the fair market value of the
Common Stock on the date of grant, provided that the Compensation Committee
must specifically determine that any option grant at an
16
<PAGE>
exercise price less than fair market value is in the best interests of the
Company. The consideration to be paid upon exercise of an option, including
the method of payment, will be determined by the Compensation Committee and
may consist entirely of cash, check, shares of Common Stock, such other
consideration and method of payment permitted by applicable law or any
combination of such methods of payment as permitted by the Compensation
Committee. The Compensation Committee has the authority to reset the price of
any stock option after the original grant and before exercise. In the event of
stock dividends, splits, and similar capital changes, the 1995 Plan provides
for appropriate adjustments in the number of shares available for option and
the number and option prices of shares subject to outstanding options.
In the event of a proposed sale of all or substantially all of the assets of
the Company, or a merger of the Company with and into another corporation,
outstanding options shall be assumed or equivalent options shall be
substituted by such successor corporation, unless the Committee provides all
option holders with the right to immediately exercise all of their options,
whether vested or unvested. In the event of a proposed dissolution or
liquidation of the Company, outstanding options will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided
by the Committee. In such a situation, the Committee is authorized to give
option holders the right to immediately exercise all of their options, whether
vested or unvested.
The 1995 Plan will continue in effect until December 1, 2005, unless earlier
terminated by the Board of Directors, but such termination will not affect the
terms of any options outstanding at that time. The Board of Directors may
amend, terminate or suspend the 1995 Plan at any time. Amendments to the 1995
Plan must be approved by stockholders if required by applicable tax,
securities or other law or regulation.
The issuance of shares of Common Stock upon the exercise of options is
subject to registration with the SEC of the shares reserved by the Company
under the 1995 Plan.
Federal Income Tax Consequences
The federal income tax discussion set forth below is included for general
information only. Optionees are urged to consult their tax advisors to
determine the particular tax consequences applicable to them, including the
application and effect of foreign, state and local income and other tax laws.
Incentive Stock Options. Certain options authorized to be granted under the
1995 Plan are intended to qualify as incentive stock options for federal
income tax purposes. Under federal income tax law currently in effect, the
optionee will recognize no income upon grant or upon exercise of an incentive
stock option. If an employee exercises an incentive stock option and does not
dispose of any of the option shares within two years following the date of
grant and within one year following the date of exercise, then any gain
realized upon subsequent disposition of the shares will be treated as income
from the sale or exchange of a capital asset. If an employee disposes of
shares acquired upon exercise of an incentive stock option before the
expiration of either the one-year holding period or the two-year waiting
period, any amount realized will be taxable as ordinary compensation income in
the year of such disqualifying disposition to the extent that the lesser of
the fair market value of the shares on the exercise date or the fair market
value of the shares on the date of disposition exceeds the exercise price. The
Company will not be allowed any deduction for federal income tax purposes at
either the time of the grant or exercise of an incentive stock option. Upon
any disqualifying disposition by an employee, the Company will be entitled to
a deduction to the extent the employee realized ordinary income.
Non-qualified Stock Options. Certain options authorized to be granted under
the 1995 Plan will be treated as non-qualified stock options for federal
income tax purposes. Under federal income tax law presently in effect, no
income is realized by the grantee of a non-qualified stock option pursuant to
the 1995 Plan until the option is exercised. At the time of exercise of a non-
qualified stock option, the optionee will realize ordinary compensation
income, and the Company will be entitled to a deduction, in the amount by
which the market value of the shares subject to the option at the time of
exercise exceeds the exercise price. The Company's deduction is conditioned
upon withholding on the income amount. Upon the sale of shares acquired
through the exercise of a non-qualified
17
<PAGE>
stock option, the excess of the amount realized from the sale over the market
value of the shares on the date of exercise will be taxable.
Consequences to the Company. The Company recognizes no deduction at the time
of grant or exercise of an incentive stock option. The Company will recognize
a deduction at the time of exercise of a non-qualified stock option on the
difference between the option price and the fair market value of the shares on
the date of grant. The Company also will recognize a deduction to the extent
the optionee recognizes income upon a disqualifying disposition of shares
acquired through the exercise of an incentive stock option.
For the reasons discussed above, the Board recommends a vote FOR approval of
the amendment to the Company's 1995 Stock Incentive Plan. If a quorum is
present, this proposal will be approved if a majority of the votes cast on the
proposal are voted in favor of approval. Abstentions and broker non-votes are
counted for purposes of determining whether a quorum exists at the Annual
Meeting but will not be counted and will have no effect on the determination
of the outcome of this proposal.
The Board of Directors unanimously recommends that stockholders vote FOR
this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP to act as
independent auditors for the Company for the fiscal year ending December 31,
1999, subject to ratification of such appointment by the Company's
stockholders.
Unless otherwise indicated, properly executed proxies will be voted in favor
of ratifying the appointment of KPMG Peat Marwick LLP to audit the books and
accounts of the Company for the fiscal year ending December 31, 1999. No
determination has been made as to what action the Board of Directors would
take if the stockholders do not ratify the appointment.
A representative of KPMG Peat Marwick LLP is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if he or
she desires to do so and will be available to respond to appropriate
questions. KPMG Peat Marwick LLP were the Company's independent auditors for
the fiscal year ended December 31, 1998.
The Board of Directors unanimously recommends that stockholders vote FOR
this proposal. If a quorum is present, this proposal will be approved if the
votes cast by the stockholders entitled to vote favoring the ratification
exceeds the votes cast opposing the ratification. Abstentions and broker non-
votes are counted for purposes of determining whether a quorum exists at the
Annual Meeting, but are not counted and have no effect on the determination of
the outcome of this proposal.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 2000 annual meeting of stockholders
must be received by the Company not later than December 22, 1999, pursuant to
the proxy soliciting regulations of the SEC. In addition, the Company's Bylaws
require that notice of stockholder proposals and nominations for director be
delivered to the Secretary of the Company not less than 60 days nor more than
90 days prior to the date of an annual meeting, unless notice or public
disclosure of the date of the meeting occurs less than 60 days prior to the
date of such meeting, in which event, stockholders may deliver such notice not
later than the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure thereof was made. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and form of proxy for such meeting any stockholder proposal which
does not meet the requirements of the SEC in effect at the time.
18
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any other matters to be presented for action by the stockholders at the
1999 Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote such proxy in accordance with the determination of a majority of the
Board of Directors.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of the Company, who will not be specially
compensated for such activities. Such solicitations may be made personally, or
by mail, facsimile, telephone, telegraph or messenger. The Company will also
request persons, firms and companies holding shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
materials to and obtain proxies from such beneficial owners. The Company will
reimburse such persons for their reasonable expenses incurred in that
connection. The Company has retained Allen Nelson & Co., an independent proxy
solicitation firm, to assist in soliciting proxies at an estimated fee of
$4,000 plus reimbursement of reasonable expenses.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1998 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-K for the year ended December 31,
1998 with the SEC. The Company's Annual Report on Form 10-K, and other reports
filed by the Company with the SEC may be obtained through the SEC's Web site
(http://www.sec.gov). Stockholders may obtain a copy of the Form 10-K (without
exhibits) by writing to Secretary, OrCAD, Inc., 9300 S.W. Nimbus Avenue,
Beaverton, Oregon 97008.
By Order of the Board of Directors
/s/ Michael F. Bosworth
Michael F. Bosworth
President, Chief Executive Officer
and Chairman of the Board
Beaverton, Oregon
April 19, 1999
19
<PAGE>
OrCAD, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of OrCAD, Inc., a Delaware corporation (the
"Company"), hereby appoints Michael F. Bosworth and P. David Bundy, or either of
them, with full power of substitution in each, as proxies to cast all votes
which the undersigned stockholder is entitled to cast at the 1999 Annual Meeting
of Stockholders (the "Annual Meeting") to be held at 2:00 p.m. local time, on
Friday, June 4, 1999 at the Crowne Plaza, 14811 Kruse Oaks Blvd., Lake Oswego,
Oregon 97035, and any adjournments or postponements thereof upon the matters
listed herein.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS DIRECTED IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, AND 3, AND IN ACCORDANCE WITH THE
RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS.
The undersigned hereby acknowledges receipt of the Company's Proxy Statement and
hereby revokes any proxy or proxies previously given.
(Continued, and to be signed and dated on reverse side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
Please mark [X]
your votes
as indicated
FOR the nominees WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as indicated below) listed below.
1. Election of two members to [_] [_]
the Company's Board of Directors
as nominated below:
Richard P. Magnuson
James B. Moon
Instruction: To withhold authority to vote for any nominee write
that nominee's name(s) in this space:
_________________________________________________________________
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's 1995 Stock [_] [_] [_]
Incentive Plan.
3. Ratification of appointment of auditors. [_] [_] [_]
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments or
postponements thereof.
Please sign below exactly as your name appears on this Proxy Card. If shares are
registered in more than one name, the signatures of all such persons are
required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his/her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full title
as such. If a partnership, please sign in the partnership name by authorized
person(s).
If you receive more than one Proxy Card, please sign and return all such cards
in the accompanying envelope.
_______________________________________________________________________________
Typed or Printed Name(s)
_______________________________________________________________________________
Authorized Signature
_______________________________________________________________________________
Title or Authority, If Applicable
_______________________________________________________________________________
Date
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TODAY, USING THE ENCLOSED ENVELOPE.
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FOLD AND DETACH HERE
