<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Aurum Software, Inc.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[_] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
Notes:
<PAGE>
[LOGO OF AURUM SOFTWARE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
2:00 P.M.
To the Stockholders:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Aurum
Software, Inc., a Delaware corporation ("Aurum" or the "Company"), will be
held on Friday, May 30, 1997, at 2:00 p.m., local time, at the Company's
principal executive offices at 3385 Scott Boulevard, Santa Clara, California
95054 for the following purposes:
1. To elect directors to serve until the next Annual Meeting of Stockholders
or until their successors are elected;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants for the Company for the fiscal year ending December 31, 1997;
and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close
of business on April 15, 1997 are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting in person. To
assure your representation at the meeting, however, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. YOU MAY REVOKE YOUR PROXY
IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE
IT HAS BEEN VOTED AT THE ANNUAL MEETING. ANY STOCKHOLDER ATTENDING THE ANNUAL
MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED A PROXY.
For the Board of Directors
AURUM SOFTWARE, INC.
/s/ CHRISTOPHER L. DIER
Christopher L. Dier
Secretary
Santa Clara, California
May 1, 1997
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
AURUM SOFTWARE, INC.
PROXY STATEMENT FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS
--------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of AURUM
SOFTWARE, INC., a Delaware corporation ("Aurum" or the "Company"), for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Friday, May 30, 1997, at 2:00 p.m., local time, or at any adjournment or
postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Company's principal executive offices at 3385 Scott Boulevard,
Santa Clara, California 95054. The telephone number at that location is (408)
986-8100. When proxies are properly dated, executed, and returned, the shares
they represent will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. If no specific instructions are given, the
shares will be voted for the election of the nominees for directors set forth
herein, for the ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors as set forth herein and, at the discretion of the proxy
holders, upon such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
These proxy solicitation materials and the Annual Report to Stockholders for
the year ended December 31, 1996, including financial statements, were first
mailed on or about May 1, 1997, to all stockholders entitled to vote at the
Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on April 15, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
At the Record Date, the Company had issued and outstanding and entitled to
vote 11,572,022 shares of Common Stock, $.001 par value.
REVOCABILITY OF PROXIES
Any proxy given pursuant to the solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company at or before the taking of the vote at the
Annual Meeting a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Annual Meeting, or (iii) attending the Annual Meeting and voting
in person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be delivered to Aurum Software, Inc. at 3385 Scott
Boulevard, Santa Clara, California 95054, Attention: Secretary, or hand-
delivered to the Secretary of the Company at or before the taking of the vote
at the Annual Meeting.
<PAGE>
VOTING
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. Stockholders' votes will be tabulated by persons appointed by the Board
of Directors to act as inspectors of election for the Annual Meeting.
Abstentions are considered shares present and entitled to vote and, therefore,
have the same legal effect as a vote against a matter presented at the Annual
Meeting. Any shares held in street name for which the broker or nominee
receives no instructions from the beneficial owner, and as to which such
broker or nominee does not have discretionary voting authority under
applicable New York Stock Exchange rules, will be considered as shares not
entitled to vote and will therefore not be considered in the tabulation of the
votes but will be considered for purposes of determining the presence of a
quorum.
SOLICITATION OF PROXIES
The expense of soliciting proxies in the enclosed form will be borne by the
Company. In addition, the Company may reimburse banks, brokerage firms, and
other custodians, nominees, and fiduciaries representing beneficial owners of
shares for their expenses in forwarding soliciting materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and employees, personally or by telephone, telegram,
facsimile, or other means of communication. No additional compensation will be
paid for such services.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders are entitled to present proposals for action at a forthcoming
meeting if they comply with the requirements of the proxy rules promulgated by
the Securities and Exchange Commission. Proposals of stockholders of the
Company intended to be presented for consideration at the Company's 1998
Annual Meeting of Stockholders must be received by the Company no later than
December 30, 1997 in order that they may be included in the proxy statement
and form of proxy related to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting, a Board of seven directors will be elected, each to
hold office until his or her successor is elected and qualified, or until his
or her death, resignation, or removal. Shares represented by the accompanying
proxy will be voted for the election of the seven nominees (recommended by the
Board of Directors) who are named in the following table, unless the proxy is
marked in such a manner as to withhold authority so to vote. The Company has
no reason to believe that the nominees for election will not be available to
serve their prescribed terms. If any nominee for any reason is unable to serve
or will not serve, however, the proxy may be voted for such substitute nominee
as the persons appointed in the proxy may in their discretion determine.
Oliver D. Curme, who has served as a member of the Company's Board of
Directors since 1993, has advised the Board that he will not be a candidate
for re-election and that he will retire as a director immediately after the
conclusion of the Annual Meeting. In connection with his resignation, the
Board of Directors has amended the Company's Bylaws, effective as of the date
of the Annual Meeting, to reduce the authorized number of directors from eight
to seven. Mr. Curme became a director of the Company in connection with
venture capital investments made prior to the Company's initial public
offering by an investment fund with which he is affiliated. The Company wishes
to thank Mr. Curme for his valuable service to the Company during the last
four years.
2
<PAGE>
The following table sets forth certain information concerning the nominees,
which information is based on data furnished to the Company by the nominees:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION(S) WITH THE COMPANY SINCE
- --------------- --- ---------------------------- --------
<S> <C> <C> <C>
Mary E. Coleman......... 42 President, Chief Executive Officer and Director 1994
David D. Buchanan....... 43 Executive Vice President and Director 1992
Mark Leslie (1)......... 51 Director 1996
Robert J. Loarie (2).... 54 Director 1994
Robert M. Obuch (1)..... 51 Director 1995
Jeffrey T. Webber....... 44 Director 1996
Charles C. Wu (1)....... 36 Director 1993
</TABLE>
- ----------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
There is no family relationship among any of the directors or executive
officers of the Company, except that David D. Buchanan, an Executive Vice
President and Director of the Company, is married to Susan K. Buchanan, an
Executive Vice President of the Company. The Buchanans co-founded the Company.
Mary E. Coleman has served as the Company's President and Chief Executive
Officer and as a Director since November 1994. From May 1993 to November 1994,
Ms. Coleman served as the Company's Vice President of Marketing and from
January 1994 to September 1994 as Vice President of Engineering. From March
1992 until April 1993, she served as Vice President of Marketing for Radius,
Inc., a manufacturer of peripherals for Apple Macintosh computers. From
October 1990 until March 1992, Ms. Coleman was Vice President of Marketing at
McData Corporation, a data center network switch supplier.
David D. Buchanan, a co-founder of the Company, has served as Executive Vice
President and as a Director of the Company since January 1993. From January
1992 until January 1993, Mr. Buchanan served as Chairman of the Company's
Board of Directors. From 1984 until founding the Company in 1991, Mr. Buchanan
served in various management positions at Ungerman-Bass Networks, Inc. and
Proteon, Inc., both networking companies.
Mark Leslie has served as a Director of the Company since April 1996. Mr.
Leslie has served as President and Chief Executive Officer of Veritas Software
Corporation, a storage management software company, since February 1990. Mr.
Leslie also serves as a director of Veritas Software Corporation and as
Chairman of the Board of Directors and a member of the compensation committee
of Versant Object Technology Corporation.
Robert J. Loarie has served as a Director of the Company since March 1994.
Since August 1992, Mr. Loarie has been a Principal of Morgan Stanley & Co.
Incorporated, a diversified investment firm, and a general partner of Morgan
Stanley Venture Partners, L.P. and Morgan Stanley Venture Partners II, L.P.,
venture capital investment partnerships. From 1981 until August 1992, Mr.
Loarie served as a general partner of several venture capital partnerships
affiliated with Weiss, Peck & Greer, an investment management firm. Mr. Loarie
also serves as a director of Adaptec, Inc. and TelCom Semiconductor, Inc.
Robert M. Obuch has served as a Director of the Company since August 1995.
Mr. Obuch has been a Principal of BankAmerica Ventures, a venture capital
investment affiliate of BankAmerica Corporation, since August 1994. From April
1994 to August 1994, Mr. Obuch worked as an independent management consultant.
From May 1992 to April 1994, Mr. Obuch served as President and Chief Executive
Officer of Computerized Lodging Systems, Inc., a hotel reservation and
registration software company. From August 1990 to May 1992, Mr. Obuch worked
as an independent management consultant.
3
<PAGE>
Jeffrey T. Webber has served as a Director of the Company since April 1996.
Since January 1991, Mr. Webber has served as President of R.B. Webber &
Company, Inc., a management consulting firm. Mr. Webber also serves as a
director of Sybase, Inc.
Charles C. Wu has served as a Director of the Company since January 1993.
Mr. Wu has been Vice President of Vertex Management, Inc., a venture capital
investment firm, since February 1991.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Directors will be elected by a plurality of the votes of the shares present
and entitled to vote at the Annual Meeting and entitled to vote on the
election of directors. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
FOREGOING SLATE OF NOMINEES AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES LISTED ABOVE.
BOARD AND COMMITTEE MEETINGS
The Company's Board of Directors held nine meetings during the fiscal year
ended December 31, 1996. Except for David D. Buchanan, who attended 67% of the
total number of meetings held in fiscal 1996, no incumbent director during
fiscal 1996 attended fewer than seventy-five percent (75%) of the aggregate of
(i) the total number of meetings of the Board of Directors held during the
period for which such person was a director and (ii) the total number of
meetings held by all committees of the Board of Directors on which such person
served (during the period such person served). The Board of Directors has
standing Audit and Compensation Committees. The Board of Directors does not
have a Nominating Committee.
From January 1996 through November 1996, the Audit Committee was comprised
of Robert M. Obuch and Charles C. Wu. Mark Leslie became a member of the Audit
Committee in December 1996. The Audit Committee held one meeting during fiscal
1996. The purposes of the Audit Committee are to review with the Company's
management and independent accountants such matters as internal accounting
controls and procedures, the plan and results of the annual audit, and
suggestions of the accountants for improvements in accounting procedures; to
nominate independent accountants; and to provide such additional information
as the committee may deem necessary to make the Board of Directors aware of
significant financial matters which require the Board's attention.
The members of the Compensation Committee during fiscal 1996 were Oliver D.
Curme and Robert J. Loarie. The Compensation Committee held one meeting during
fiscal 1996. The Board of Directors will elect a new member of the
Compensation Committee to replace Mr. Curme following the Annual Meeting. The
purposes of the Compensation Committee are to review and approve the
compensation to be paid or provided to the Company's executive officers, the
aggregate compensation of all employees of the Company, and the terms of
compensation plans of all types.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal 1996 were Oliver D.
Curme and Robert J. Loarie. Neither Mr. Curme nor Mr. Loarie was at any time
during the Company's 1996 fiscal year or at any other time an officer or
employee of the Company. No executive officer of the Company serves as a
member of the board of directors or compensation committee of any entity which
has one or more executive officers serving as a member of the Company's Board
of Directors or Compensation Committee.
4
<PAGE>
DIRECTOR COMPENSATION
The Company reimburses each member of the Company's Board of Directors for
out-of-pocket expenses incurred in connection with attending Board meetings.
No member of the Company's Board of Directors currently receives any
additional cash compensation. At the time Mr. Leslie and Mr. Webber became
members of the Board of Directors, the Company granted each of them an option
to acquire 18,750 shares of the Company's Common Stock under the Company's
1995 Stock Plan, subject to monthly vesting over four years. The Company's
1996 Director Option Plan (the "Director Plan") provides that options will be
granted to non-employee directors of the Company pursuant to an automatic
nondiscretionary grant mechanism. Upon joining the Board of Directors, each
new non-employee director will automatically be granted an initial option to
purchase 18,750 shares of Common Stock, provided that no non-employee director
who was a non-employee director at the time of the adoption of the Director
Option Plan will receive such an initial grant. Each non-employee director
will subsequently be granted an option to purchase 4,688 shares of Common
Stock at the first meeting of the Board of Directors following each annual
meeting of stockholders beginning with the 1997 Annual Meeting of
Stockholders. Each such option will be granted at the fair market value of the
Common Stock on the date of grant. Options granted to non-employee directors
under the Director Plan become exercisable at a rate of 1/48th of the shares
subject to such options on the monthly anniversary of the date of grant.
The Company's directors who are also officers of the Company do not receive
any additional compensation for their services as members of the Board of
Directors.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 28, 1997 by (i) each
person or entity who is known by the Company to own beneficially 5% or more of
the Company's outstanding Common Stock; (ii) each current director of the
Company; (iii) the Company's Chief Executive Officer and each of the Company's
five most highly compensated executive officers who served as officers of the
Company during the fiscal year ended December 31, 1996 (the "Named Executive
Officers"); and (iv) all directors and current executive officers of the
Company as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED (2)
-----------------
DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS (1) NUMBER PERCENT
- ------------------------------------------------------------ --------- -------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS:
Morgan Stanley Venture Partners II, L.P. (3)................. 2,275,593 19.7%
1221 Avenue of the Americas
New York, New York 10004
Vertex Management, Inc. (4) ................................. 1,323,895 11.4%
Three Lagoon Drive, Suite 220
Redwood City, California 94065
ABF Partners II, L.P. (5) ................................... 1,322,884 11.4%
20 William Street
Wellesley, Massachusetts 02181
Amerindo Investment Advisors Inc. (6) ....................... 952,000 8.2%
One Embarcadero Center, Suite 2300
San Francisco, California 94111
BankAmerica Corporation (7) ................................. 949,366 8.2%
555 California Street
San Francisco, California 94104
The Buchanan Family 1991 Trust (8)........................... 589,376 5.1%
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
David D. Buchanan (9)........................................ 763,467 6.6%
Susan K. Buchanan (10)....................................... 763,467 6.6%
Timothy E. Campbell (11)..................................... 83,125 *
Mary E. Coleman (12)......................................... 458,547 4.0%
Charles J. Donchess (13)..................................... 32,881 *
Tuoc V. Luong (14)........................................... 156,780 1.4%
James W. Thanos (15)......................................... 155,360 1.3%
Oliver D. Curme (16)......................................... 1,322,884 11.4%
Mark Leslie (17)............................................. 29,043 *
Robert J. Loarie (18)........................................ 2,275,593 19.7%
Robert M. Obuch (19)......................................... 949,366 8.2%
Jeffrey T. Webber (20)....................................... 23,627 *
Charles C. Wu (21)........................................... 1,325,770 11.6%
All current executive officers and directors as a group (13
persons) (22)............................................... 7,809,502 67.5%
</TABLE>
- --------
* Less than 1%.
(1) The persons named in the table above 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, and
to the information contained in the footnotes to this table. Unless
otherwise indicated, the address for each listed stockholder is c/o Aurum
Software, Inc., 3385 Scott Boulevard, Santa Clara, California 95054.
6
<PAGE>
(2) Applicable percentage ownership is based on 11,571,361 shares of Common
Stock outstanding as of February 28, 1997 and, in the case of officers
and directors, applicable options. Shares of Common Stock subject to
options that are exercisable within 60 days of February 28, 1997 are
deemed to be beneficially owned by the person holding such options for
the purpose of computing the percentage ownership of such person but are
not treated as outstanding for the purpose of computing any other
person's percentage ownership.
(3) Based on a filing with the Securities and Exchange Commission dated
February 14, 1997, indicating beneficial ownership as of December 31,
1996. Represents shares held by Morgan Stanley Venture Capital Fund II,
L.P., Morgan Stanley Capital Investors, L.P., and Morgan Stanley Venture
Capital Fund II, C.V. (collectively, the "Morgan Funds").
(4) Based on a filing with the Securities and Exchange Commission dated
February 19, 1997, indicating beneficial ownership as of December 31,
1996. Represents shares held by Vertex Investments (II) Ltd. ("Vertex
II") and Vertex Investments Pte. Ltd. ("Vertex Pte."), each of which are
affiliated with Vertex Management, Inc.
(5) Based on a filing with the Securities and Exchange Commission dated
February 14, 1997, indicating beneficial ownership as of December 31,
1996. Represents shares held by Battery Ventures II, L.P., of which ABF
Partners II, L.P. serves as general partner.
(6) Based on a filing with the Securities and Exchange Commission dated
February 21, 1997, indicating beneficial ownership as of February 14,
1997.
(7) Based on a filing with the Securities and Exchange Commission dated
February 11, 1997, indicating beneficial ownership as of December 31,
1996. Represents shares held by BankAmerica Ventures ("BA Ventures"), a
venture capital investment affiliate of BankAmerica Corporation, and
shares held by BA Ventures Partners I ("BA Partners"), an investment
general partnership comprised of certain employees of BA Ventures.
(8) Based on a filing with the Securities and Exchange Commission dated
February 13, 1997. David D. Buchanan, an Executive Vice President and
Director of the Company, and Susan K. Buchanan, an Executive Vice
President of the Company, are co-trustees of The Buchanan Family 1991
Trust.
(9) Includes 174,091 shares of Common Stock held by Mr. Buchanan individually
and 589,376 shares of Common Stock held by The Buchanan Family 1991
Trust, for which Mr. Buchanan serves as co-trustee. Excludes 174,091
shares held by Mr. Buchanan's wife as separate property and for which Mr.
Buchanan disclaims beneficial ownership.
(10) Includes 174,091 shares of Common Stock held by Ms. Buchanan individually
and 589,376 shares of Common Stock held by The Buchanan Family 1991
Trust, for which Ms. Buchanan serves as co-trustee. Excludes 174,091
shares held by Ms. Buchanan's husband as separate property and for which
Ms. Buchanan disclaims beneficial ownership.
(11) Includes 32,500 shares of Common Stock issuable upon exercise of
outstanding options, of which no shares were vested as of February 28,
1997. Such options may be exercised in full prior to complete vesting
subject to Mr. Campbell's entering a restricted stock purchase agreement
granting the Company an option to repurchase such shares at their
original purchase price in the event of a termination of Mr. Campbell's
employment with the Company. Also includes 32,916 unvested shares of
Common Stock subject to the Company's repurchase option as of February
28, 1997 in the event of a termination of Mr. Campbell's employment with
the Company.
(12) Includes 230,795 unvested shares of Common Stock subject to the Company's
repurchase option as of February 28, 1997 in the event of a termination
of Ms. Coleman's employment with the Company.
(13) Mr. Donchess resigned as an executive officer of the Company effective in
December 1997.
(14) Includes 114,136 unvested shares of Common Stock subject to the Company's
repurchase option as of February 28, 1997 in the event of a termination
of Mr. Luong's employment with the Company.
(15) Includes 81,880 unvested shares of Common Stock subject to the Company's
repurchase option as of February 28, 1997 in the event of a termination
of Mr. Thanos' employment with the Company.
(16) Represents shares of Common Stock held by Battery Ventures II, L.P. Mr.
Curme is a director of the Company and a general partner of ABF Partners
II, L.P., the general partner of Battery Ventures II, L.P. Mr. Curme
disclaims beneficial ownership of all such shares except to the extent of
his pecuniary interest therein.
(17) Includes 18,750 shares of Common Stock issuable upon exercise of an
outstanding option, of which 3,906 shares were vested as of February 28,
1997. Mr. Leslie's option may be exercised in full prior to complete
vesting subject to his entering a restricted stock purchase agreement
granting the Company an option to repurchase such shares at their
original purchase price in the event of a termination of Mr. Leslie's
membership on the Company's Board of Directors.
(18) Represents shares held by the Morgan Funds. Mr. Loarie is a director of
the Company, a principal of Morgan Stanley & Co. Incorporated, a general
partner of Morgan Stanley Venture Partners II, L.P., and a Vice President
and a director of its general partner. Mr. Loarie disclaims beneficial
ownership of all such shares except to the extent of his pecuniary
interest therein.
(19) Represents shares held by BA Ventures and shares held by BA Partners. Mr.
Obuch is a Principal of BA Ventures, a general partner of BA Partners,
and a director of the Company. Mr. Obuch disclaims beneficial ownership
of all shares held by BA Ventures and all shares held by BA Partners
except to the extent of his proportionate general partnership interest in
BA Partners.
(20) Includes 14,844 unvested shares of Common Stock subject to the Company's
repurchase option in the event of a termination of Mr. Webber's
membership on the Company's Board of Directors.
(21) Includes shares held by Vertex II and shares held by Vertex Pte. Vertex
II and Vertex Pte. are investment affiliates of Vertex Management, Inc.,
a venture capital investment firm. Mr. Wu is a Vice President of Vertex
Management, Inc. and a director of the Company. Mr. Wu disclaims
beneficial ownership of all such shares except to the extent of his
pecuniary interest therein.
(22) Includes 116,474 shares immediately issuable upon exercise of outstanding
options under the Company's 1995 Stock Plan, of which 112,568 shares were
not vested as of February 28, 1997. Includes 500,821 unvested shares that
were subject to repurchase options in favor of the Company as of February
28, 1997.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the total compensation awarded to, earned by,
or paid for services rendered to the Company in all capacities during each of
the fiscal years ended December 31, 1994 and 1995, respectively, by each of
the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (1) SECURITIES
FISCAL ----------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)
- --------------------------- ------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Mary E. Coleman............. 1996 $ 202,706 $ 75,000 (5) 148,578
President and Chief
Executive Officer 1995 174,996 47,665 (5) 309,469
Susan K. Buchanan........... 1996 96,000 318,384 (6) --
Executive Vice President 1995 96,000 219,379 (6) 174,091
James W. Thanos............. 1996 152,167 132,932 (7) 30,947
Vice President, Worldwide
Operations 1995 130,000 98,693 (7) 123,788
Tuoc V. Luong (2)........... 1996 161,325 45,826 (8) 156,530
Vice President, Engineering 1995 -- -- --
Charles J. Donchess (3)..... 1996 129,609 52,150 --
Former Vice President,
Marketing 1995 94,052 24,973 (9) 92,841
Timothy E. Campbell (4) .... 1996 112,496 43,102 (10) 42,500
Vice President, Client
Services 1995 25,385 -- 50,000
</TABLE>
- --------
(1) Other than salary and bonus described herein, the Company did not pay
the persons named in the Summary Compensation Table any compensation in
excess of 10% of such executive officer's salary and bonus.
(2) Mr. Luong became the Company's Vice President, Engineering in January
1996.
(3) Mr. Donchess resigned as the Company's Vice President, Marketing
effective in December 1996.
(4) Mr. Campbell became the Company's Vice President, Client Services in
September 1995.
(5) Bonus compensation for fiscal 1996 includes $28,125 earned in fiscal
1996 but paid in fiscal 1997. Bonus compensation for fiscal 1995
includes $10,625 earned in fiscal 1995 but paid in fiscal 1996.
(6) All bonus compensation consists of sales commissions. Includes for
fiscal 1996 $131,538 earned in fiscal 1996 but paid in fiscal 1997.
Includes for fiscal 1995 $32,911 earned in fiscal 1995 but paid in
fiscal 1996.
(7) Bonus compensation for fiscal 1996 includes $51,932 earned in fiscal
1996 but paid in fiscal 1997. Bonus compensation for fiscal 1995
includes $22,500 earned in fiscal 1995 but paid in fiscal 1996.
(8) Includes $37,500 of deferred compensation.
(9) Includes $15,859 earned in fiscal 1995 but paid in fiscal 1996.
(10) Includes $8,406 earned in fiscal 1996 but paid in fiscal 1997.
8
<PAGE>
STOCK OPTION GRANTS
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the fiscal year ended December
31, 1996. All such options were awarded under the Company's 1995 Stock Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
----------------------------------------------------------- PRICE
NUMBER PERCENT OF TOTAL APPRECIATION FOR
OF SECURITIES OPTIONS GRANTED OPTION TERM(1)
UNDERLYING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------
NAME OPTIONS GRANTED FISCAL 1996 PER SHARE(2)(3) DATE 5% 10%
---- --------------- ---------------- --------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mary E. Coleman......... 98,578 8.5% $ 0.32 2/02/06 $ 19,838 $ 50,275
50,000 4.3% 6.00 6/06/06 188,668 478,123
Susan K. Buchanan....... -- -- -- -- -- --
James W. Thanos......... 30,947 2.7% 0.32 2/02/06 6,228 15,783
Tuoc V. Luong........... 156,530 13.6% 0.32 2/02/06 31,501 79,830
Charles J. Donchess (4). 43,750 3.8% 0.32 2/02/06 3,302 8,367
13,410 1.2% 6.00 6/06/06 50,601 128,233
Timothy E. Campbell..... 10,000 0.9% 0.32 2/02/06 2,012 5,100
12,500 1.1% 6.00 6/06/06 47,167 119,531
20,000 1.8% 9.00 10/15/06 113,201 286,874
</TABLE>
- ----------------
(1) Potential realizable value is based on the assumption that the Common
Stock of the Company appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the ten year
option term. These rates of annual stock price appreciation are mandated
by the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future Common Stock prices.
(2) Options were granted under the Company's 1995 Stock Plan at an exercise
price per share equal to the fair market value of the Company's Common
Stock on the date of grant. Twenty five percent (25%) of the shares
issuable upon exercise of options granted under the Company's 1995 Stock
Plan become vested on the first anniversary of the date of grant and vest
at the rate of 1/48th of the shares for each month thereafter.
(3) Exercise price may be paid in cash, check, promissory note, by delivery of
already-owned shares of the Company's Common Stock subject to certain
conditions, or pursuant to a cashless exercise procedure under which the
optionee provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to the Company, out of the sale proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.
(4) Mr. Donchess resigned as the Company's Vice President, Marketing effective
in December 1996. All options granted to Mr. Donchess during fiscal 1996
were unvested and terminated on the effective date of his resignation.
9
<PAGE>
OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUES
The following table sets forth certain information regarding the exercise of
stock options by the Named Executive Officers during the fiscal year ended
December 31, 1996 and stock options held as of December 31, 1996 by the Named
Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ACQUIRED OPTIONS AT DECEMBER 31, THE-MONEY OPTIONS AT
ON VALUE 1996 (2) FISCAL YEAR-END ($)(1)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#)(2) ($)(2)(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mary E. Coleman......... 148,578 $ -- $ -- $ -- $ -- $ --
Susan K. Buchanan....... 174,091 34,818 -- -- -- --
James W. Thanos......... 154,655 24,758 -- -- -- --
Tuoc V. Luong........... 156,630 -- -- -- -- --
Charles J. Donchess (4). 32,881 867,401 -- -- -- --
Timothy E. Campbell..... 50,000 -- 32,500 -- 496,563 --
</TABLE>
- --------
(1) Amounts reflecting gains on outstanding stock options are based on the
closing price of the Company's Common Stock on December 31, 1996 of
$23.125.
(2) Options granted under the Company's 1995 Stock Plan as in effect prior to
the effectiveness of the registration statement covering the Company's
initial public offering were exercisable immediately upon grant and prior
to full vesting, subject to the optionee's entering a restricted stock
purchase agreement with the Company with respect to any unvested shares.
Under such agreement, the optionee grants the Company an option to
repurchase any unvested shares at their original purchase price in the
event the optionee's employment or consulting relationship with the
Company should terminate. The 1995 Stock Plan was amended in connection
with the initial public offering such that subsequent grants do not
include an early exercise provision.
(3) Based on the fair market value of the Company's Common Stock on the date
of exercise minus the exercise price. For options exercised prior to the
Company's initial public offering in October 1996, fair market value was
determined in good faith by the Company's Board of Directors. For options
exercised after October 1996, fair market value was determined based on
the closing price of the Company's Common Stock on the Nasdaq National
Market.
(4) Mr. Donchess resigned as the Company's Vice President, Marketing effective
in December 1996. In connection with his resignation, Mr. Donchess
exercised vested options to acquire 32,881 shares of Common Stock at an
exercise price of $0.12 per share. The fair market value of the Company's
Common Stock on the date of exercise was $26.50. All unvested options held
by Mr. Donchess terminated in connection with his resignation, and Mr.
Donchess held no outstanding options at December 31, 1996.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of the Company's
previous or future filings with the Securities and Exchange Commission, this
Report of the Compensation Committee of the Board of Directors shall not be
deemed "filed" with the Commission and shall not be incorporated by reference
into any such filings.
The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation policies of the Company and the
compensation plans and the specific compensation levels for senior executives,
including the Company's Chief Executive Officer.
General Compensation Philosophy
The primary objectives of the Company's executive compensation policies
include the following:
. To attract, motivate, and retain a highly qualified executive management
team;
. To link executive compensation to the Company's financial performance as
well as to defined individual management objectives established by the
Committee;
. To compensate competitively with the practices of similarly situated
technology companies; and
. To create management incentives designed to enhance stockholder value.
The Company competes in an aggressive and dynamic industry and, as a result,
believes that finding, motivating, and retaining quality employees,
particularly senior managers, sales personnel, and technical personnel, are
key factors to the Company's future success. The Committee's compensation
philosophy seeks to align the interests of stockholders and management by
tying compensation to the Company's financial performance, either directly in
the form of salary and bonuses paid in cash or indirectly in the form of
appreciation of stock options and stock purchase rights granted to employees
through the Company's equity incentive programs.
Cash Compensation
Cash compensation for the Company's senior executives consists of a fixed
base salary and an annual bonus. Each executive officer's target total annual
cash compensation (i.e., salary and bonus) is determined after a review of
survey data compiled by independent consulting firms regarding executives at
similarly situated companies as well as other relevant market data. In
particular, during fiscal 1996, the Company relied as a benchmark on
compensation survey data compiled by Radford Associates, a nationally
recognized firm specializing in providing human resource consulting services
and surveys to technology companies. For each executive officer, the Company
seeks to establish a total target annual compensation level that is consistent
with the average of compensation paid to executives at the companies surveyed.
For fiscal 1996, the Company's salaries for executive officers tended to be
less than the average of surveyed companies. In light of the Company's initial
public offering in October 1996, the Company has increased executive officer
compensation for fiscal 1997 to levels closer to the average compensation paid
by surveyed companies.
In connection with determining annual bonuses, the Committee establishes a
bonus target for each executive officer. In setting annual goals for executive
bonuses, the Committee considers various factors, including the anticipated
introduction of new products, general economic conditions, and the Company's
competitive position and financial performance relative to its competitors.
The target bonus for an executive is intended to relate to his or her
potential impact on corporate results, financial and otherwise, and the
percentage of the target bonus actually received is determined with reference
to enumerated objectives actually achieved. The Committee attempts to set
aggressive but realizable objectives that will result, directly or indirectly,
in increased revenues and improved net income as well as an improved
competitive position for the Company in its target markets. In order to
achieve the purposes of the plan, the Committee communicates individual
performance objectives and
11
<PAGE>
the corresponding bonus targets to executives at the beginning of each fiscal
year. Relative to fiscal 1996, the Company's bonus structure for fiscal 1997
is intended to tie earned bonuses more closely to the Company's operating
results and to place less emphasis on non-financial management objectives.
Equity Incentive Programs
Long-term equity incentives, including stock options and stock purchase
rights granted pursuant to the Company's 1996 Employee Stock Purchase Plan,
directly align the economic interests of the Company's management and
employees with those of its stockholders. Stock options are a particularly
strong incentive because they are valuable to employees only if the fair
market value of the Company's Common Stock increases above the exercise price,
which is set at the fair market value of the Company's Common Stock on the
date the option is granted. In addition, employees must remain employed with
the Company for a fixed period of time in order for the options to vest fully.
In general, twenty-five percent of the shares issuable upon exercise of
options granted under the Company's 1995 Stock Plan became vested on the first
anniversary of the date of grant and vest at the rate of 1/48th of the shares
for each month thereafter. The number of options granted to each executive is
determined by the Committee. In making its determination, the Committee
considers the executive's position at the Company, his or her individual
performance, the number of options held by the executive, with particular
attention to the executive's unvested option position, and other factors.
Compensation of Chief Executive Officer
In determining the CEO's compensation, the Committee considers comparative
financial and compensation data of selected peer companies. During fiscal
1996, Mary E. Coleman, the Company's President and CEO, received a salary of
$202,706. For fiscal 1997, the Company has increased Ms. Coleman's base annual
salary to $250,000, representing a 23% increase over her salary for fiscal
1996. The Committee based the increase in Ms. Coleman's salary on a variety of
factors, including the Company's improved financial performance in fiscal
1996, an intent to raise Ms. Coleman's salary closer to the average base
salary paid by peer companies, and Ms. Coleman's contribution toward the
Company's achieving important product development and corporate milestones,
including the successful completion of the Company's initial public offering
in October 1996.
At the time the Committee determines Ms. Coleman's salary, it also
establishes a bonus target and corresponding performance objectives. For
fiscal 1996, the Committee set Ms. Coleman's target bonus at $75,000. For
fiscal 1997, the Committee has increased Ms. Coleman's target bonus to
$125,000. The percentage of the target bonus that Ms. Coleman receives is a
function of both (i) the financial performance of the Company and (ii) Ms.
Coleman's individual performance as measured against specific "management-by-
objective" ("MBO") goals determined by the Committee. The portion of the bonus
attributable to MBO goals is paid in biannual increments based on the
attainment of such objectives. The portion of the bonus attributable to the
Company's financial performance is paid in quarterly installments. Based on
the Company's financial results in fiscal 1996 and the attainment of such MBO
goals, Ms. Coleman earned the entire $75,000 target bonus for fiscal 1996.
Relative to fiscal 1996, a larger portion of Ms. Coleman's bonus for fiscal
1997 will be earned based on the Company's financial performance and a smaller
portion will be earned based on achievement of MBO goals.
The Company grants stock options to the Chief Executive Officer based
primarily on the Company's evaluation of her ability to influence the
Company's long-term growth and profitability. The Committee determines the
size of the option grant based on its estimate of the equity incentive value
of the CEO's existing unvested option position. Accordingly, in fiscal 1996,
the Company granted Ms. Coleman options to acquire 148,578 shares of the
Company's Common Stock.
Compensation of Other Executives
The Committee has adopted compensation policies for its remaining senior
executives similar to those established for the CEO. Using salary data
supplied by outside consultants, including Radford Associates, and
12
<PAGE>
other publicly available data, such as proxy data from peer companies, the CEO
recommends to the Committee base salaries for executive officers that are
within the range of salaries for persons holding similar positions at peer
companies. The CEO and the Committee also consider factors such as the
Company's performance (financial and otherwise) relative to peer companies and
the individual officer's performance during the most recent fiscal year and
potential to contribute to the Company in the future. For fiscal 1996, the
base salaries established by the Committee for the Company's executive
officers tended to be less than the average of surveyed companies.
Accordingly, the Committee increased base salaries for most executive officers
for fiscal 1997 to bring their salaries closer to the average of peer
companies. Cash bonuses are also determined for the executive officers in a
manner consistent with the determination of the CEO's bonus, based primarily
on the Company's financial results and the executive officer's performance
relative to enumerated MBO goals. Executive officer bonuses during fiscal 1996
were generally consistent with bonuses paid to officers performing similar
functions at peer companies. For fiscal 1997, the Committee has placed greater
emphasis on financial performance relative to MBO goals in determining bonus
payments.
The Company also determines stock option grants for executive officers based
on similar criteria as those used or determining stock option grants for the
CEO, with particular attention to the incentive effect of additional option
grants for executive officers whose prior grants are substantially vested.
Tax Deductibility of Executive Compensation
The committee has studied Section 162(m) of the Internal Revenues Code and
related regulations of the Internal Revenue, which limit the federal income
tax deductibility of compensation paid to the Company's Chief Executive
Officer and to each of the five most highly compensated executive officers.
The Company generally may deduct compensation paid to such officer only if the
compensation does not exceed $1 million during any fiscal year or to the
extent compensation is "performance-based" as contemplated in Section 162(m).
The Company has qualified its 1995 Stock Plan as a performance-based plan and,
therefore, compensation realized in connection with options granted under the
1995 Stock Plan is exempt under the statute. The Committee does not believe
that the other components of the Company's compensation will be likely in the
aggregate to exceed $1 million for any executive officer in fiscal 1997 and,
therefore, has concluded that no further action with respect to qualifying
such compensation for deductibility is necessary at this time. The Committee
will continue to evaluate the advisability of qualifying the deductibility of
such compensation in the future.
The Compensation Committee
Oliver D. Curme
Robert J. Loarie
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors, and
10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required for such persons, the Company believes that, during the fiscal year
ended December 31, 1996, all Section 16(a) filing requirements applicable to
its officers, directors, and 10% stockholders were satisfied on a timely
basis. In making these statements, the Company has relied on the written
representations of its officers and directors.
13
<PAGE>
CERTAIN TRANSACTIONS
The Company's 1995 Stock Plan, as in effect prior to certain amendments
effective upon the completion of the Company's initial public offering in
October 1996, permitted holders of outstanding options to exercise such
options prior to complete vesting, subject to their entering into a restricted
stock purchase agreement granting the Company an option to repurchase any
unvested shares at their original purchase price in the event of a termination
of such optionee's employment or consulting relationship with the Company.
Effective with the initial public offering, the 1995 Stock Plan was amended
such that subsequent option grants will not contain an early exercise feature.
In September 1995, February 1996, and July 1996, the Company loaned Mary E.
Coleman, the Company's President and Chief Executive Officer, an aggregate
amount of $368,691 in connection with the purchase of Common Stock under the
1995 Stock Plan, evidenced by three promissory notes. Each of the notes bears
interest at the rate of 8% per annum. At December 31, 1996, the outstanding
principal amounts of the three notes were $37,136, $31,555, and $300,000,
respectively. Such notes become due and payable in September 2000, February
2001, and July 2001, respectively. In the event that Ms. Coleman ceases to be
employed by the Company prior to maturity of the notes, such notes shall, at
the option of the Company, become immediately due and payable.
In July 1996 and August 1996, the Company loaned to Christopher L. Dier, the
Company's Vice President, Finance and Chief Financial Officer, an aggregate
amount of $157,500 in connection with the purchase of Common Stock under the
1995 Stock Plan, evidenced by two promissory notes. Both notes bear interest
at the rate of 8% per annum. At December 31, 1996, the outstanding principal
amounts of the two notes were $120,000 and $37,500, respectively, and they
become due and payable in July 2000 and August 2000, respectively. In the
event that Mr. Dier ceases to be employed by the Company prior to maturity of
the notes, such notes shall, at the option of the Company, become immediately
due and payable.
In September 1996, the Company loaned to Jeffrey T. Webber, a member of the
Company's Board of Directors, an aggregate amount of $112,500 in connection
with the purchase of Common Stock under the 1995 Stock Plan, evidenced by a
promissory note. The note bears interest at the rate of 8% per annum. At
December 31, 1996, the outstanding principal amount of such note was $112,500,
and it becomes due and payable in September 2000. In the event that Mr. Webber
ceases to be a member of the Company's Board of Directors prior to maturity of
the note, such note shall, at the option of the Company, become immediately
due and payable.
In February 1996 and July 1996, the Company loaned to Brigitte U. Wilson,
the Company's current Director of Finance and Administration and, at the time
of such loan, the Company's Chief Financial Officer, an aggregate amount of
$81,190 in connection with the purchase of Common Stock under the 1995 Stock
Plan, evidenced by four promissory notes. Each of the notes bears interest at
the rate of 8% per annum. At December 31, 1996, the outstanding aggregate
principal amount of the three notes issued in February 1996 was $6,190, and
each such note becomes due and payable in February 2000. The principal amount
of the fourth note was $75,000 at December 31, 1996, and it becomes due and
payable in July 2000. In the event that Ms. Wilson ceases to be employed by
the Company prior to maturity of the notes, such notes shall, at the option of
the Company, become immediately due and payable.
14
<PAGE>
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total return for the
Company's Common Stock from October 28, 1996, the effective date of the
registration statement covering the Company's initial public offering, through
December 31, 1996 relative to the Standard & Poor's 500 Index and the
Hambrecht & Quist Software Sector Index. Notwithstanding any statement to the
contrary in any of the Company's previous or future filings with the
Securities and Exchange Commission, the following graph shall not be deemed
"filed" with the Commission and shall not be incorporated by reference into
any such filing. Stockholder returns over the periods indicated should not be
considered indicative of future returns.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG AURUM SOFTWARE, INC., S&P 500 INDEX AND H&Q SOFTWARE SECTOR
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
AURUM H&Q
Measurement Period SOFTWARE, S&P SOFTWARE
(Fiscal Year Covered) INC. 500 INDEX SECTOR
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-10/28/96 $100 $100 $100
FYE 11/29/96 $221.09 $108.85 $107.73
FYE 12/31/96 $144.84 $106.69 $103.42
</TABLE>
- ---------------
Assumes $100 invested on October 28, 1996 in the Company's Common Stock, the
Standard & Poor's 500 Index, and the Hambrecht & Quist Software Sector Index.
Total return assumes reinvestment of dividends for the Standard & Poor's 500
Index and the Hambrecht & Quist Software Sector Index. The Company has never
paid dividends on its Common Stock and has no present plans to do so.
15
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P., independent
accountants, to audit the financial statements of the Company for the current
fiscal year ending December 31, 1997. The Company expects that a
representative of Coopers & Lybrand L.L.P will be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to answer any appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative votes of the holders of a majority of the shares of Company
stock present or represented and voting at the Annual Meeting will be required
to approve this proposal. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS
PROPOSAL AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
SELECTION OF COOPERS & LYBRAND L.L.P.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares which you hold. You are, therefore, urged
to mark, sign, date, and return the accompanying proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose.
For the Board of Directors
AURUM SOFTWARE, INC.
/s/ CHRISTOPHER L. DIER
Christopher L. Dier
Secretary
Dated: May 1, 1997
16
<PAGE>
1593-PS-97
<PAGE>
AURUM SOFTWARE, INC.
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of AURUM SOFTWARE, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated May 1, 1997, and hereby appoints
Mary E. Coleman and Christopher L. Dier and each of them proxies and attorneys-
in-fact, with full power to each of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 1997 Annual Meeting of
Stockholders of AURUM SOFTWARE, INC., to be held on Friday, May 30, 1997 at 2:00
p.m., local time at 3385 Scott Boulevard, Santa Clara, California, and any
adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side.
1. Election of directors:
Nominees: Mary E. Coleman; David D. Buchanan; Mark Leslie; Robert J.
Loarie; Robert M. Obuch; Jeffrey T. Webber; Charles C. Wu
[_] FOR all nominees listed above [_] WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees
listed above
______________________________________
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee(s) name(s) on the line above.
2. Proposal to ratify the appointment of Coopers & Lybrand L.L.P as
independent accountants for the fiscal year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
matter(s) which may properly come before the meeting and at any
adjournment(s) thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR THE LISTED NOMINEES IN THE ELECTION OF DIRECTORS AND FOR THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTANTS FOR THE 1997 FISCAL YEAR.
<PAGE>
Both of such attorneys or substitutes (if both are present and acting at said
meeting or any adjournment(s) thereof, or, if only one shall be present and
acting, then that one) shall have and may exercise all of the powers of said
attorneys-in-fact hereunder.
Dated:___________________________________________
, 1997
________________________________________________
Signature
________________________________________________
Signature
(This Proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
