<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ANALOGY, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] 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.
<PAGE>
ANALOGY, INC.
9205 SW GEMINI DRIVE
BEAVERTON, OR 97008
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 22, 1997
To the Shareholders of Analogy, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of Analogy, Inc. (the "Company") will be held on Tuesday, July 22,
1997, at 10:00 a.m., local time, at the Company's principal executive offices at
9205 S.W. Gemini Drive, Beaverton, Oregon 97008, for the following purposes:
1. ELECTION OF DIRECTORS. To elect two directors, each to serve for a
three-year term and until their successors are duly elected and qualified
(Proposal No. 1);
2. AMENDMENT OF THE AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN. To
approve and adopt certain amendments to the Amended and Restated 1993 Stock
Incentive Plan (Proposal No. 2);
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT 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 March 31,
1998 (Proposal No. 3); and
4. OTHER BUSINESS. To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
The Board of Directors of the Company has fixed the close of business on June 6,
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. Only shareholders 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 or postponements thereof.
By Order of the Board of Directors,
/S/ Gary P. Arnold
Gary P. Arnold
President and Chief Executive Officer
Beaverton, Oregon
June 20, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE, AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
ANALOGY, INC.
9205 SW GEMINI DRIVE
BEAVERTON, OR 97008
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 22, 1997
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the shareholders of Analogy, Inc., an
Oregon corporation ("Analogy" 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 Analogy common stock, no par value per
share (the "Common Stock"), for use at the Company's Annual Meeting of
Shareholders to be held at 10:00 a.m. local time, on July 22, 1997, and at any
adjournments or postponements thereof (the "Annual Meeting"). The Annual
Meeting will be held at the Company's principal executive offices at 9205 S.W.
Gemini Drive, Beaverton, Oregon 97008. At the Annual Meeting, shareholders will
be asked to elect two members of the Board of Directors; approve certain
amendments to the Company's Amended and Restated 1993 Stock Incentive Plan (the
"1993 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
March 31, 1998; and transact such other business as may properly come before the
meeting or any adjournments or postponements thereof. This Proxy Statement,
together with the enclosed proxy card, is first being mailed to shareholders of
Analogy on or about June 20, 1997.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on June 6, 1997 as the
record date for the determination of the shareholders 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 2,215 beneficial holders of the 9,134,925 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 THE PROPOSED AMENDMENTS TO THE 1993 PLAN, AND FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK, LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 1998. 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.
Shareholders who execute proxies retain the right to revoke them at any time
prior to the exercise of the powers conferred thereby by filing a written notice
of revocation with, or by delivering a duly executed proxy bearing a later date
to, Corporate Secretary, Analogy, Inc., 9205 S.W. Gemini Drive, 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
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ELECTION OF DIRECTORS
PROPOSAL NO. 1
At the Annual Meeting, two directors will be elected, each for a three-year term
and until their successors are duly elected and qualified. 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 as directors if elected. 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
Second Restated Bylaws provide that the Board of Directors shall be comprised of
not less than three (3) nor more than twelve (12) directors. The Board of
Directors has currently set the number of directors at seven (7).
Under the Company's Third Restated Articles of Incorporation, the directors are
divided into three classes and, after transitional terms, will serve for terms
of three years, with one class being elected by the shareholders each year. The
term of office of only one class of directors expires in 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, principal occupation or employment, the periods during
which he has served as a director of Analogy and positions currently held with
the Company.
<TABLE>
<CAPTION>
Director Expiration
-------- ----------
Director Nominees Age Since of Term Positions held with the Company
- ----------------- --- ----- ------- -------------------------------
<S> <C> <C> <C> <C>
John H. Faehndrich 70 1991 1997 Director
Martin Vlach 46 1989 1997 Vice President, Chief Scientist and
Director
Continuing Directors
- --------------------
Robert L. Cattoi 71 1992 1998 Director
Frank Roehr 61 1995 1998 Director
Neil E. Goldschmidt 58 1996 1999 Director
Charles F. Sporck 69 1996 1999 Director
Gary P. Arnold 56 1993 1999 Chairman of the Board of
Directors, President and Chief
Executive Officer
</TABLE>
JOHN H. FAEHNDRICH. Mr. Faehndrich has served as a director of the Company
since January 1991. From 1981 to 1987 Mr. Faehndrich served as Director of
Finance at Lavino S.A. South Africa. From 1985 to 1991 he also served as
director for IMC Italy, IMC France and IMC UK.
MARTIN VLACH. Mr. Vlach was a founder of the Company. Mr. Vlach has been a
director of the Company since November 1989. From 1972 to 1986 Mr. Vlach was
involved in several projects in the area of circuit simulation in the Department
of Electrical Engineering at the University of Waterloo and at Bell Northern
Research, Ltd. Mr. Vlach received his bachelor's degree in Mathematics in 1975,
and degrees in Electrical Engineering of MA Science in 1980 and Ph.D. in 1984,
from the University of Waterloo, Waterloo, Ontario, Canada.
2
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ROBERT L. CATTOI. Mr. Cattoi has served as a director of the Company since
March 1992. From 1950 to 1995 Mr. Cattoi was employed by Rockwell
International. From 1984 to 1995, he was Senior Vice President, Research &
Engineering and Chief Technical Officer. Mr. Cattoi currently serves as an
independent technical consultant to Rockwell, a consultant to the DoD Defense
Manufacturing Council, and is head of the U.S. Delegation for Intelligent
Manufacturing Systems, a collaborative initiative involving the U.S., European
Union, Japan, Canada and Australia.
FRANK ROEHR. Mr. Roehr has served as a director of the Company since February
1995. Mr. Roehr is a co-founder and Chairman of the Board of Young & Roehr
Advertising. Mr. Roehr retired from Young & Roehr in 1990. Young & Roehr is an
advertising agency specializing in technology and transportation.
NEIL E. GOLDSCHMIDT. Mr. Goldschmidt has served as a director of the Company
since January 1996. Since January 1991, Mr. Goldschmidt has conducted a private
law practice focused primarily on strategic planning for national and
international business clients. From January 1987 to January 1991, Mr.
Goldschmidt served as Governor of the State of Oregon. Prior to his 1986
gubernatorial campaign, Mr. Goldschmidt was an executive of Nike, Inc., serving
as International Vice President from 1981 to 1985 and as President of Nike
Canada from 1986 to 1987. Mr. Goldschmidt served as Secretary of Transportation
in the Carter Administration from 1979 to 1981, and was known for his efforts to
revive the ailing automotive industry. Mr. Goldschmidt is also on the Board of
Directors with BDM International and Claremont Technologies, public companies.
CHARLES E. SPORCK. Mr. Sporck has served as a director of the Company since
January 1996. From 1967 to 1991, Mr. Sporck served as President and Chief
Executive Officer of National Semiconductor Corporation, a developer of
advanced, proprietary semiconductor and systems products. Mr. Sporck has
continued to serve as a director of National Semiconductor Corporation since his
retirement in 1991. Mr. Sporck was a founding member of the Semiconductor
Industry Association (SIA) and a former board member of the SIA and SEMATECH.
GARY P. ARNOLD. Mr. Arnold joined the Company as President, Chief Executive
Officer and Chairman of the Board in January 1993. From May 1990 to November
1992, Mr. Arnold was Chief Financial Officer at Tektronix, Inc. and from June
1980 to April 1990, he was Chief Financial Officer of National Semiconductor
Corp. Mr. Arnold has extensive experience in the electronics industry in the
areas of finance, strategic planning and operations, both in domestic and
international markets. Mr. Arnold is a member of the Board of Directors of
National Semiconductor. He holds a J.D. degree from the University of Tennessee
College of Law and a bachelor's degree in Accounting from East Tennessee State
University and received training in electronics while in the U.S. Navy.
BOARD OF DIRECTORS COMMITTEES AND NOMINATIONS BY SHAREHOLDERS
The Board of Directors has appointed a standing Audit Committee and a
Compensation Committee. The Audit Committee, comprised of Messrs. Faehndrich,
Goldschmidt and Sporck, met two times during fiscal year 1997. The Audit
Committee reviews the scope of the independent annual audit and the Company's
financial and accounting controls. The Compensation Committee, comprised of
Messrs. Cattoi, Braendli (until August 9, 1996), Goldschmidt (after August 9,
1996) and Roehr, met three times during fiscal year 1997. The Compensation
Committee reviews executive compensation, establishes executive compensation
levels and administers the Company's stock option and stock purchase plans.
During the year ended March 31, 1997 the Company's Board of Directors held five
meetings. Each incumbent director attended more than 75% of the aggregate of
the total number of meetings held by the Board of Directors and the total number
of meetings held by all committees of the Board on which he served during the
period that he served.
3
<PAGE>
The Company has no nominating committee. The Board of Directors acts as a
nominating committee for selecting nominees for election as directors. The
Company's Second Restated Bylaws also permit shareholders 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 shareholders. If less than 60 days'
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder 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 shareholder's notice of nomination must also set forth
certain information specified in Article III, Section 3.16 of the Company's
Second Restated Bylaws concerning each person the shareholder proposes to
nominate for election and the nominating shareholder.
See "Management - Director Compensation" for certain information regarding
compensation of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ITS NOMINEES FOR DIRECTOR. If a quorum is present, 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. Executive officers are elected by the Board of
Directors and hold office until their successors are duly elected and qualified.
NAME AGE POSITION
- ---- --- --------
Gary P. Arnold 56 Chairman of the Board of Directors,
President and Chief Executive Officer
Terrence A. Rixford 61 Vice President, Finance and
Administration and Chief Financial
Officer
R. Douglas Johnson 46 Senior Vice President, Marketing and
Sales
Martin Vlach 46 Vice President, Chief Scientist and
Director
David W. Smith 41 Vice President, Chief Scientist
Ian E. Getreu 53 Vice President, Technology Development
Douglas H. Lundin 45 Vice President, Marketing
Howard Fu-Hwa Ko 41 Vice President, Engineering
Information concerning the principal occupation of Messrs. Arnold and Vlach 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.
TERRENCE A. RIXFORD. Mr. Rixford, Vice President, Finance and Administration
and Chief Financial Officer, joined the Company in 1992. From 1987 to 1992, Mr.
Rixford was President of Interactive Training Technologies, Inc., a start-up
technology training company. Other previous positions include Chief Financial
Officer and Treasurer of FPS Computing, Inc. and senior positions in financial
management at Burroughs Corporation. Mr. Rixford received his bachelor's degree
in business administration from Mount St. Mary's College in 1957 and an MBA in
Accounting from Cornell University in 1959.
R. DOUGLAS JOHNSON. Mr. Johnson, Senior Vice President, Marketing and Sales,
was a founder of the Company. Mr. Johnson has served in his current position
since August 1995. Prior to that time Mr. Johnson served as Vice President of
Marketing and Sales. Mr. Johnson has served as Marketing Manager at
Metheus-Computervision and has held marketing and sales positions with
Tektronix, Inc. and engineering positions with Tektronix, Inc. and Rockwell
International. Mr. Johnson holds a bachelor's degree in Electrical Engineering
from California State University at Long Beach.
DAVID W. SMITH. Mr. Smith, Vice President, Chief Scientist, was a founder of
the Company. Mr. Smith has served in his current position since December 1995.
From December 1992 to December 1995, Mr. Smith served as Vice President,
Advanced Product Development. Prior to that time Mr. Smith served as Vice
President of Engineering. Prior to joining the Company Mr. Smith was the
Engineering Group Manager with Metheus-Computervision and was a Senior Engineer
at General Dynamics in Pomona, California, working in IC design and analysis.
Mr. Smith holds a bachelor's degree in Electrical Engineering from California
Polytechnic in Pomona and has taken graduate level courses in computer science
from the University of Southern California and California Polytechnic.
DR. IAN E. GETREU. Dr. Getreu, Vice President, Technology Development, was a
founder of the Company. Mr. Getreu has served in his current position since
July 1994. From February to July 1994, Dr. Getreu served as Vice President,
Engineering. Prior to that time Dr. Getreu served as Vice President, Research
and Development and Modeling. Prior to joining the Company, Dr. Getreu was
employed by Tektronix, Inc. where he held positions as Scientist for Advanced
Products, Advanced Products Marketing Manager, Manager of IC CAD Development and
Senior
5
<PAGE>
Engineer with IC design group. Dr. Getreu holds a bachelor's degree in
Electrical Engineering and a Master of Engineering Science from the University
of Melbourne, Melbourne, Australia, and a Ph.D. from the University of
California, Berkeley. Dr. Getreu is also the author of the book "Modeling the
Bipolar Transistor," as well as several papers on modeling and circuit analysis.
DOUGLAS H. LUNDIN. Mr. Lundin, Vice President, Marketing, joined the Company in
August 1995. From April 1994 to July 1995, Mr. Lundin was the Director of
Marketing for Mentor Graphics Corporations' Simulation Technology Division.
From July 1987 to April 1994, Mr. Lundin held various marketing management
responsibilities at Mentor Graphics Corporation. In prior employment, Mr.
Lundin held various sales and marketing positions at Intel Corporation. Mr.
Lundin holds a bachelor's degree in Electrical Engineering from the University
of Missouri, Rolla.
DR. HOWARD FU-HWA KO. Dr. Ko, Vice President, Engineering, has served in his
current position since December 1996. From November 1995 to November, 1996, Dr.
Ko served as the Company's Director of Software Product Engineering. From June
1995 to October 1995, Dr. Ko was the Engineering Director of Analog and Mixed
Signal Simulation and Modeling for Mentor Graphics Corporations' IC and Mixed
signal Division and from July 1993 to May 1995, he was the Engineering Director
for the Simulation Technology Division and Analog and Mixed Signal Division.
From December 1988 to June 1993, Dr. Ko held various engineering management
responsibilities at Mentor Graphics Corporation. In prior employment, Dr. Ko
held various technical and management positions at Shiva MultiSystems, Simucad,
HHB, and Cadnetix Corporation. Dr. Ko holds a bachelor's degree in Electrical
Engineering from the National Taiwan University of Taipei, Taiwan, and a Ph.D.
from the University of California, Berkeley.
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 (collectively, the "named
executive officers"), for the fiscal years ended March 31, 1997, 1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------------
STOCK
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) GRANTED(#) COMPENSATION($)
- --------------------------- ---- --------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Gary P. Arnold 1997 $170,843 $53,000 100,000(2) $4,123(3)
President and Chief 1996 162,812 -- 100,000 --
Executive Officer 1995 155,312 -- -- --
Martin Vlach 1997 113,895 20,000 10,000(4) 2,544(3)
Vice President, 1996 108,542 8,250 -- --
Chief Scientist 1995 103,542 -- 25,000 --
Ian E. Getreu 1997 118,250 21,000 7,500(4) 1,163(3)
Vice President, Technology 1996 112,600 8,475 -- --
Development 1995 107,975 -- 12,500 --
R. Douglas Johnson 1997 113,896 -- 7,500(4) 72,060(5)
Senior Vice President, 1996 108,542 -- -- 65,566(6)
Marketing and Sales 1995 103,542 -- 12,500 39,581(6)
David W. Smith 1997 117,083 30,000 10,000(4) 2,675(3)
Vice President, Chief Scientist 1996 108,542 18,250 -- --
1995 103,542 -- 25,000 --
</TABLE>
(1) Represents bonuses paid pursuant to a formula set by the Compensation
Committee.
(2) This is an incentive-based option approved by the Compensation Committee.
Vesting of this option is dependent on achieving specific revenue growth
rates and selected net income goals.
(3) Represents matching amounts contributed by the Company to the named
executive officer's 401(k) plan.
(4) Options to purchase 10,000, 7,500, 7,500, and 10,000 shares of the
Company's Common Stock originally granted on April 24, 1996, to Messrs.
Vlach, Getreu, Johnson, and Smith, respectively, at $9.00 per share, were
repriced on August 9, 1996, at $5.125 per share. The Board of Directors
believed it was in the best interest of the Company that the named
executive officers, along with all other employees who were granted options
at $9.00 per share, receive a lower option price through the cancellation
of the options issued at $9.00 per share and the reissuance of replacement
options at the $5.125 per share exercise price. (See "Ten-Year Option
Repricing" below.)
(5) Represents $68,414 received as sales commissions and $3,646 received as a
matching amount contributed by the Company to his 401(k) plan in 1997.
(6) Represents amounts received as sales commissions.
7
<PAGE>
STOCK OPTIONS
The following table sets forth certain information concerning options granted to
the named executive officers during the year ended March 31, 1997 under the
Company's 1993 Plan.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED TO ANNUAL RATES OF
EMPLOYEES STOCK PRICE
IN LAST EXERCISE APPRECIATION FOR
OPTIONS FISCAL PRICE EXPIRATION OPTION TERM(4)
NAME GRANTED(#)(1)(2) YEAR(%) ($/SH)(3) DATE ($) 5% ($) 10%
-------- ----- -- ---
<S> <C> <C> <C> <C> <C> <C>
Gary P. Arnold 100,000 22.83 $5.125 8/10/2006 $835,000 $1,329,000
Martin Vlach 10,000 2.28 9.00 4/25/2006 146,600 233,400
10,000 2.28 5.125 8/10/2006 83,500 132,900
Ian E. Getreu 7,500 1.71 9.00 4/25/2006 110,000 175,100
7,500 1.71 5.125 8/10/2006 62,600 99,700
R. Douglas 7,500 1.71 9.00 4/25/2006 110,000 175,100
Johnson 7,500 1.71 5.125 8/10/2006 62,600 99,700
David W. Smith 10,000 2.28 9.00 4/25/2006 146,600 233,400
10,000 2.28 5.125 8/10/2006 83,500 132,900
</TABLE>
(1) Options granted become exercisable starting 12 months after the date of
grant, with one-quarter of the total number of options granted becoming
exercisable at that time and with an additional one-quarter of such options
becoming exercisable on the second, third and fourth anniversary dates of
the option grant, respectively.
(2) Options to purchase 10,000, 7,500, 7,500, and 10,000 shares of the
Company's Common Stock originally granted on April 24, 1996, to Messrs.
Vlach, Getreu, Johnson, and Smith, respectively, at $9.00 per share, were
repriced on August 9, 1996, at $5.125 per share. The Board of Directors
believed it was in the best interest of the Company that the named
executive officers, along with all other employees who were granted options
at $9.00 per share, receive a lower option price through the cancellation
of the options issued at $9.00 per share and the reissuance of replacement
options at the $5.125 per share exercise price. (See "Ten-Year Option
Repricing" below.)
(3) Options were granted at an exercise price equal to fair market value of the
common stock on the date of grant.
(4) The potential realizable value is calculated based upon the term of the
option at its time of grant (10 years) and is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated price. The 5% and 10% assumed rates of appreciation are
derived from the rules of the Securities and Exchange Commission and do not
represent the Company's estimates or projection of the future Common Stock
price. There can be no assurance that the Common Stock will appreciate at
any particular rate or at all in future years.
8
<PAGE>
OPTION EXERCISES AND HOLDING
The following table sets forth certain information with respect to the named
executive officers concerning the exercise of options granted under the
Company's Amended and Restated 1993 Stock Incentive Plan during the year ended
March 31, 1997, and the number and value of unexercised options held as of March
31, 1997.
<TABLE>
<CAPTION>
SHARES
------
ACQUIRED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
-------- OPTIONS AT IN-THE-MONEY OPTIONS
ON MARCH 31, 1997(#) AT MARCH 31, 1997 (1)
-- VALUE -------------- ---------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary P. Arnold ---- ---- 325,000 175,000 $780,000 $----
Martin Vlach ---- ---- 12,500 22,500 20,000 20,000
Ian E. Getreu ---- ---- 6,250 13,750 10,000 10,000
R. Douglas 6,250 13,750 10,000 10,000
Johnson ---- ----
David W. Smith ---- ---- 12,500 22,500 20,000 20,000
</TABLE>
(1) The figures expressed in these columns exclude options with an exercise
price greater than $4.00 per share, the fair market value of the Company's
Common Stock on March 31, 1997. The value of unexercised in-the-money
options is calculated based on the closing price of the Company's Common
Stock on March 31, 1997, $4.00 per share. Amounts reflected are based on
the assumed value minus the exercise price and do not necessarily indicate
that the optionee sold such stock.
TEN YEAR OPTION REPRICINGS
The following table provides information regarding all repricings of stock
options held by any named executive officer of the Company since March 22, 1996,
the date the Company became a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
- ---- ---- -------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Martin Vlach 8/9/97 10,000 $5.125 $9.00 $5.125 9 yrs., 258 days
Ian E. Getreu 8/9/97 7,500 5.125 9.00 5.125 9 yrs., 258 days
R. Douglas
Johnson 8/9/97 7,500 5.125 9.00 5.125 9 yrs., 258 days
David W. Smith 8/9/97 10,000 5.125 9.00 5.125 9 yrs., 258 days
</TABLE>
CHANGE IN CONTROL AGREEMENT
The Company and Gary P. Arnold, the Company's President and Chief Executive
Officer, have entered into a Control Change Agreement. Under this Agreement,
upon a Control Change (defined as a sale of a majority of the voting stock in,
or substantially all of the assets of, the Company to an entity controlled by
persons other than those who have a majority ownership or effective control of
the Company prior to the sale), the vesting schedule of all stock options held
by Mr. Arnold is accelerated such that all options become fully exercisable. In
addition, if Mr. Arnold is terminated without cause during the Control Change
Window (defined as the period beginning 60 days before the date of a letter of
intent, term sheet or other similar document is first presented to the Company
and ending one year after the closing of the transaction in which the Control
Change occurs), all of Mr. Arnold's stock options will become exercisable prior
to the termination date and the Company must pay Mr. Arnold 2.99 times his
average annual salary during the period of his employment with the Company or
during the immediately preceding five years, whichever is shorter. In addition,
if Mr. Arnold's title is removed, if his duties are materially changed or if his
pay is
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reduced during a Control Change Window, or if Mr. Arnold's duties change
materially as a result of a Control Change, Mr. Arnold may treat such action as
a termination without cause.
DIRECTOR COMPENSATION
For the fiscal year ended March 31, 1997, the non-employee members of the Board
of Directors received no payment for their services as a director. The members
of the Company's Board of Directors are be reimbursed for out-of-pocket and
travel expenses incurred in attending Board meetings. In the fiscal year ended
March 31, 1997, non-employee members of the Board of Directors received stock
options under the Company's 1995 Stock Option Plan for Nonemployee Directors
(1995 Nonemployee Director Plan) based on the number of years in the term each
director is elected to serve. Under the 1995 Nonemployee Director Plan, upon
election to the Board of Directors, commencing with the 1996 Annual Meeting of
Shareholders, each nonemployee director was granted an option to purchase 5,000
shares of Common Stock for each year of such director's elected term. The first
5,000 shares vested immediately upon grant and 5,000 shares vest on each
anniversary of the grant date for the director's elected term.
COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission (the
"Commission"), the Company is required to provide certain data and information
in regard to the compensation and benefits provided to the Company's President
and Chief Executive Officer and the four other most highly compensated executive
officers. In fulfillment of this requirement, the Compensation Committee, at
the direction of the Board of Directors, has prepared the following report for
inclusion in this Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHY. The Compensation Committee of the Board of
Directors is composed entirely of nonemployee directors. The Compensation
Committee is responsible for setting and administering the policies and programs
that govern both annual compensation and stock ownership programs for the
executive officers of the Company. The Company's executive compensation policy
is based on principles designed to ensure that an appropriate relationship
exists between executive compensation and corporate performance, while at the
same time motivating and retaining executive officers.
EXECUTIVE COMPENSATION COMPONENTS. The key components of the Company's
compensation program are base salary, bonuses 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 shareholders. The
Compensation Committee reviews each component of executive compensation on an
annual basis.
BASE SALARY. Base salaries for executive officers are set at levels believed by
the Compensation Committee to be sufficient to attract and retain qualified
executive officers. Base pay increases are provided to executive officers based
on an evaluation of each executive's performance, as well as the performance of
the Company as a whole. In establishing base salaries, the Compensation
Committee not only considers the financial performance of the Company, but also
the success of the executive officers in developing and executing the Company's
strategic plans, developing managers, employees and exercising leadership. The
Compensation Committee believes that executive officer base salaries for the
year ended March 31, 1997 were reasonable as compared to amounts paid by
companies of similar size.
CASH BONUSES. The Compensation Committee believes that a proportion of total
cash compensation for executive officers should be subject to attainment of
specific company performance criteria. This approach creates a direct incentive
for executive officers to achieve desired performance goals and places a
significant percentage of each executive officer's compensation at risk.
Consequently, each year the Compensation Committee establishes cash
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bonuses for executive officers based on the Company's achievement of certain
performance criteria.
STOCK OPTIONS. The Compensation Committee believes that equity participation is
a key component of its executive compensation program. Stock options are
granted to executive officers primarily based on the officer's actual and
potential contribution to the Company's growth and profitability and competitive
marketplace practices. Option grants are designed to retain executive officers
and motivate them to enhance stockholder value by aligning the financial
interests of executive officers with those of stockholders. Stock options also
provide an effective incentive for management to create shareholder value over
the long term since the full benefit of the compensation package cannot be
realized unless an appreciation in the price of the Company's Common Stock
occurs over a number of years.
STOCK OPTION REPRICING. In August 1996, the Compensation Committee authorized a
reduction of the exercise price of all stock options which had an exercise price
of $9.00 granted to employees, including executive officers, on April 24, 1996.
The new exercise price for these options was fixed at $5.125, the market price
of the Company's Common Stock at the time of the repricing. Stock options
granted to employees under the Company's stock option plans are intended to
provide incentives to the employees to work to achieve long-term success for the
Company. The decline in the market price of the Company's Common Stock since
the date the options were granted frustrated the purpose of the options, and the
Compensation Committee deemed it to be in the best interests of the Company to
reduce the exercise price to the market price at the time of repricing. See
"Ten-Year Option Repricing" table for further information concerning the option
repricing.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Consistent with the executive
compensation policy and components described above, the Compensation Committee
determined the salary and stock options received by Gary P. Arnold, the
Company's President and Chief Executive Officer and a director of the Company,
for services rendered during the year ended March 31, 1997. Mr. Arnold received
a base salary of $170,843 for the year ended March 31, 1997. On August 9, 1996,
Mr. Arnold received options to purchase 100,000 shares of the Company's Common
Stock.
COMPENSATION COMMITTEE
Robert L. Cattoi
Neil Goldschmidt
Frank Roehr
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The member of the Compensation Committee during the fiscal year ended March 31,
1997, were Messrs. Cattoi, Braendli (until August 9, 1996), Goldschmidt (after
August 9, 1996) and Roehr, none of whom is, or has been, an officer or an
employee of the Company.
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STOCK PERFORMANCE GRAPH
The Commission requires that registrants include in their proxy statement a
line-graph presentation comparing total cumulative five-year shareholder 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 completed its initial public offering on
March 22, 1996. Accordingly, the following graph includes the required
information from March 22, 1996 through the end of the last fiscal year (March
31, 1997). The broad-based market index used is the NASDAQ Stock Market Total
Return Index and the industry-specific index used is the Hambrecht & Quist
("H&Q") Technology Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG ANALOGY, INC., THE NASDAQ STOCK MARKET (US) INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
DATE ANALOGY, NASDAQ US H&Q INDEX
---- -------- --------- ---------
INC. INDEX
---- -----
3/22/96 100 100 100
3/31/96 107 100 96
3/31/97 53 111 116
INSERT GRAPH HERE
The above graph compares the performance of the Company with that of the Nasdaq
Stock Market Index and the H&Q Technology Index with the investment weighted on
market capitalization. The past performance of the Company's Common Stock is
not an indication of future performance. There can be no assurances that the
price of the Company's Common Stock will appreciate at any particular rate or at
all in future years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's directors and executive officers and persons who
own more than ten percent of a
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registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership of shares with the Securities and
Exchange Commission. 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 1997, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than ten percent of a registered
class of the Company's equity securities have been complied with for fiscal
1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the last fiscal year, to the best of the Company's knowledge, there has
been no transaction that merits disclosure under this section.
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STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership of
the Common Stock as of May 30, 1997 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.
SHARES OF COMMON
STOCK BENEFICIALLY PERCENT OF COMMON
NAME AND BUSINESS ADDRESS OWNED (1) STOCK OUTSTANDING
- ------------------------- --------- -----------------
Rico Hasler
Rue Emer-de-Vattel 46
2000 Neuchatel
Switzerland 584,162 6.4%
State of Wisconsin Investment Board(2)
121 East Wilson Street
Madison WI 53702 731,000 8.0%
Gary P. Arnold
9205 SW Gemini
Beaverton, OR 97008 695,000 7.3%
Martin Vlach
9205 SW Gemini Drive
Beaverton, OR 97008 512,400 5.6%
David W. Smith 222,500 2.4%
Ian E. Getreu 254,650 2.8%
R. Douglas Johnson 256,250 2.8%
Robert L. Cattoi 5,000 *
John Faehndrich 132,400 1.5%
Neil E. Goldschmidt 7,000 *
Frank Roehr 53,750 *
Charles E. Sporck 5,000 *
All Directors and Executive Officers
as a Group (13 persons) 2,239,037 23.5%
(*) Represents beneficial ownership of less than 1% of the outstanding Common
Stock.
(1) Beneficial ownership is determined in accordance with rules of the
Commission, 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
May 30, 1997 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 May 30, 1997 is as
follows: Mr. Arnold - 350,000; Mr. Vlach - 12,500; Mr. Smith - 12,500;
Mr. Getreu - 6,250; Mr. Johnson - 6,250; Mr. Cattoi - 5,000; Mr.
Faehndrich - 5,000; Mr. Goldschmidt - 5,000; Mr. Roehr - 6,250; Mr. Sporck
- 5,000; all Executive Officers and Directors as a group - 428,750.
(2) This information as to beneficial ownership is based on a Schedule 13G
dated January 21, 1997, filed by the State of Wisconsin Investment Board.
The State of Wisconsin Investment Board has sole voting and dispositive
power for all 731,000 shares
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RESTATED 1993 INCENTIVE STOCK OPTION PLAN
PROPOSAL NO. 2
The Company maintains its 1993 Stock Incentive Plan (the "1993 Plan") to provide
incentives to the Company's key employees and others who provide services to the
Company. The Board of Directors believes that the availability of stock
incentives is an important factor in the Company's ability to attract and retain
the best available personnel for positions of substantial responsibility and to
provide an incentive for them to exert their best efforts on behalf of the
Company. A total of 1,427,911 shares of Common Stock have been reserved for
issuance under the 1993 Plan. As of May 1, 1997, only 38,150 shares remained
available for grant under the 1993 Plan. The Board of Directors believes that
additional shares will be needed under the 1993 Plan to provide appropriate
incentives to employees and others. Accordingly, the Board of Directors has
approved and recommends shareholder adoption of, an amendment to the 1993 Plan
that would increase from 1,427,911 shares to 1,627,911 shares the number of
shares of Common Stock that are reserved for issuance under the 1993 Plan. The
Board of Directors has also approved, and recommends shareholder adoption of,
amendments to the 1993 Plan to conform its provisions to certain requirements of
the regulations promulgated under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code") and certain other amendments that principally
relate to the elimination of certain restrictions in the 1993 Plan that are no
longer necessary or appropriate based on recent changes to the rules promulgated
by the Commission under Section 16 of the Securities Exchange Act of 1934.
Because the officers, directors, and employees of the Company who may
participate in the 1993 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.
SUMMARY OF THE 1993 PLAN
The following is a summary of the basic terms and provisions of the 1993 Plan.
Shareholders are encouraged to review the complete copy of the 1993 Plan
attached to this Proxy Statement as Appendix A, which is marked to indicate the
proposed amendments.
The 1993 Plan, which was approved by the Company's shareholders on January 22,
1993, 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
"nonqualified 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 and to promote the Company's business. The 1993 Plan
is administered by the Compensation Committee of the Board of Directors.
The term of each option granted under the 1993 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 1993 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 exercise
period established by the Compensation Committee at the time the options were
granted, which shall not exceed 90 days 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 in the agreement evidencing the
terms of an option grant, no option granted under the 1993 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 on the
date of death.
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<PAGE>
The exercise price of incentive stock options granted under the 1993 Plan may
not be less than the fair market value of a share of Common Stock on the last
market trading day prior to the date of grant of the option and incentive
options granted to greater than 10% shareholders may not be granted for less
than 110% of fair market value. Non-qualified stock options may be granted at
the price determined by the plan administrator. 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 or any combination of such methods of payment as permitted by the
Compensation Committee.
The 1993 Plan will continue in effect until November, 2002, 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 1993 Plan at any time as it may deem advisable.
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
1993 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 dispositions 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
1993 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 1993
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 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.
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<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL. For the reasons discussed above, the Board recommends a vote FOR
approval of the amendments to the Company's 1993 Plan. If a quorum is present,
this proposal will be approved if a majority of the votes cast on the proposal
are voted for approval of the proposal. 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 determination of the outcome
of this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
PROPOSAL NO. 3
The Board of Directors has appointed KPMG Peat Marwick, LLP to act as
independent auditors for the Company for the fiscal year ending March 31, 1998,
subject to ratification of such appointment by the Company's shareholders.
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 March 31, 1998. No
determination has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
KPMG Peat Marwick, LLP was the independent auditor for the Company for the
fiscal year ended March 31, 1997. 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL. If a quorum is present, this proposal will be approved if a majority
of the votes cast by the shareholders 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 determination of the
outcome of this proposal.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and form
of proxy relating to the Company's 1998 annual meeting of shareholders must be
received by the Company not later than February 20, 1998, pursuant to the proxy
soliciting regulations of the Securities and Exchange Commission (the
"Commission"). In addition, the Company's Bylaws require that notice of
shareholder 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, shareholders 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 shareholder proposal which does not meet the requirements of
the Commission in effect at the time.
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 shareholders at the 1997
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.
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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. 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.
ADDITIONAL INFORMATION
A copy of the Company's Combination Annual Report to Shareholders for the fiscal
year ended March 31, 1997/Report on Form 10-K accompanies this Proxy Statement.
The Company is required to file an Annual Report on Form 10-K for its fiscal
year ended March 31, 1997 with the Securities and Exchange Commission.
Shareholders may obtain, free of charge, a copy of the Form 10-K (without
exhibits) by writing to Mr. Terrence A. Rixford, Analogy, Inc., 9205 S.W. Gemini
Drive, Beaverton, Oregon 97008.
By Order of the Board of Directors,
/S/ Gary P. Arnold
Gary P. Arnold
President and Chief Executive Officer
Beaverton, Oregon
June 20, 1997
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APPENDIX A
AMENDED AND RESTATED
ANALOGY, INC.
1993 STOCK INCENTIVE PLAN*
* Other than section headings, the material in capital letters is new.
1. PURPOSES OF THE PLAN.
The purposes of this Stock Incentive Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to the Employees and Consultants of the Company and to
promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"nonqualified stock options," at the discretion of the Board and as reflected in
the terms of the written option agreement. In addition, shares of the Company's
Common Stock may be Sold hereunder independent of any Option grant.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
2.1 "ADMINISTRATOR" shall mean the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4.1 of the Plan.
2.2 "BOARD" shall mean the Board of Directors of the Company.
2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" shall mean a Committee appointed by the Board in
accordance with Section 4.1 of the Plan.
2.5 "COMMON STOCK" shall mean the Common Stock of the Company.
2.6 "COMPANY" shall mean Analogy, Inc., an Oregon corporation.
2.7 "CONSULTANT" shall mean any person who is engaged by the Company or
any PARENT OR Subsidiary to render consulting services and is compensated for
such consulting services AND ANY DIRECTOR OF THE COMPANY WHETHER OR not
include Directors who are only paid a director's fee or who are not
compensated by the Company for their services as Directors.
2.8 "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any sick leave, military leave, or
any other leave of absence approved by the COMPANY ; provided, however,
that for purposes of Incentive Stock Options, any such leave is for a period
of not more than ninety days or reemployment upon the expiration of such
leave is guaranteed by contract or statute, PROVIDED, FURTHER, THAT ON THE
NINETY-FIRST DAY OF SUCH LEAVE (WHERE RE-EMPLOYMENT IS NOT GUARANTEED BY
CONTRACT OR STATUTE) THE OPTIONEE'S INCENTIVE STOCK OPTION SHALL
AUTOMATICALLY CONVERT TO A NONQUALIFIED STOCK OPTION; or (ii) transfers
between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
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2.9 "DIRECTOR" shall mean a member of the Board.
2.10 "DISABILITY" shall mean total and permanent disability as defined in
Section 22(e)(3) of the Code.
2.11 "EMPLOYEE" shall mean any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither the
payment of a director's fee by the Company nor service as a Director shall be
sufficient to constitute "employment" by the Company.
2.12 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
2.13 "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
2.14 "NONQUALIFIED STOCK OPTION" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
2.15 "NOTICE OF GRANT" shall mean a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
2.16 "OFFICER" shall mean a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
2.17 "OPTION" shall mean a stock option granted pursuant to the Plan.
2.18 "OPTION AGREEMENT" shall mean a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
2.19 "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
2.20 "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
2.21 "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
2.22 "PLAN" shall mean this Amended and Restated 1993 Stock Incentive Plan.
2.23 "RULE 16b-3" shall mean Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
2.24 "SALE" or "SOLD" shall include, with respect to the sale of Shares
under the Plan, the sale of Shares for consideration in the form of cash or
notes, as well as a grant of Shares for consideration in the form of past or
future services.
2.25 "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
2.26 "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
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3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of Shares which may be optioned and/or Sold under the Plan is 1,627,911
shares of Common Stock. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
Option grants and/or Sales under the Plan; provided, however, that Shares that
have actually been issued under the Plan shall not be returned to the Plan and
shall not become available for future distribution under the Plan.
4. ADMINISTRATION OF THE PLAN.
4.1 PROCEDURE.
4.1.1 MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
4.1.2 ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS SUBJECT
TO SECTION 16(b). With respect to Option grants made to Employees who are
also Officers or Directors subject to Section 16(b) of the Exchange Act,
the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan intended
to qualify as a discretionary plan under Rule 16b-3, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted to comply with the rules, IF ANY, governing a plan intended to
qualify as a discretionary plan under Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members, remove members
(with or without cause) and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the rules governing a
plan intended to qualify as a discretionary plan under Rule 16b-3. With
respect to persons subject to Section 16 of the Exchange Act, transactions
under the Plan are intended to comply with all applicable conditions of
Rule 16b-3. To the extent any provision of the Plan or action by the
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Administrator.
4.1.3 ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect to
Option grants made to Employees or Consultants who are neither Directors
nor Officers of the Company, the Plan shall be administered by 4.1.3.1 the
Board or 4.1.3.2 a Committee designated by the Board, which Committee shall
be constituted to satisfy the legal requirements relating to the
administration of stock option plans under state corporate and securities
laws and the Code. Once appointed, such Committee shall serve in its
designated capacity until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the legal
requirements relating to the administration of stock option plans under
state corporate and securities laws and the Code.
4.2 POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
4.2.1 to grant Incentive Stock Options in accordance with Section 422
of the Code, or Nonqualified Stock Options;
4.2.2 to authorize Sales of Shares of Common Stock hereunder;
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4.2.3 to determine, upon review of relevant information and in
accordance with Section 8.2 of the Plan, the fair market value of the
Common Stock;
4.2.4 to determine the exercise/purchase price per Share of Options to
be granted or Shares to be Sold, which exercise/purchase price shall be
determined in accordance with Section 8.1 of the Plan;
4.2.5 to determine the Employees or Consultants to whom, and the time
or times at which, Options shall be granted and the number of Shares to be
represented by each Option;
4.2.6 to determine the Employees or Consultants to whom, and the time
or times at which, Shares shall be Sold and the number of Shares to be
Sold;
4.2.7 to interpret the Plan;
4.2.8 to prescribe, amend and rescind rules and regulations relating
to the Plan;
4.2.9 to determine the terms and provisions of each Option granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option;
4.2.10 to determine the terms and provisions of each Sale of Shares
(which need not be identical) and, with the consent of the purchaser
thereof, modify or amend each Sale;
4.2.11 to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option;
4.2.12 to accelerate or defer (with the consent of the Optionee or
purchaser of Shares) the vesting restrictions applicable to Shares Sold
under the Plan or pursuant to Options granted under the Plan;
4.2.13 to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option or Sale of Shares
previously granted or authorized by the Board;
4.2.14 to determine the restrictions on transfer, vesting
restrictions, repurchase rights, or other restrictions applicable to Shares
issued under the Plan;
4.2.15 to effect, at any time and from time to time, with the consent
of the affected Optionees, the cancellation of any or all outstanding
Options under the Plan and to grant in substitution therefor new Options
under the Plan covering the same or different numbers of Shares, but having
an Option price per Share consistent with the provisions of Section 8 of
this Plan as of the date of the new Option grant;
4.2.16 to establish, on a case-by-case basis, different terms and
conditions pertaining to exercise or vesting rights upon termination of
employment, whether at the time of an Option grant or Sale of Shares, or
thereafter;
4.2.17 to approve forms of agreement for use under the Plan;
4.2.18 to reduce the exercise price of any Option to the then current
fair market value if the fair market value of the Common Stock covered by
such Option shall have declined since the date the Option was granted;
4.2.19 TO DETERMINE WHETHER AND UNDER WHAT CIRCUMSTANCES AN OPTION MAY
BE SETTLED IN CASH UNDER SUBSECTION 9.6 INSTEAD OF COMMON STOCK; AND
4.2.20 to make all other determinations deemed necessary or advisable
for the administration of the Plan.
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4.3 EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan or Shares Sold under
the Plan.
5. ELIGIBILITY.
5.1 PERSONS ELIGIBLE. Options may be granted and/or Shares Sold only to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option or Sold
Shares may, if he or she is otherwise eligible, be granted an additional Option
or Options or Sold additional Shares.
5.2 ISO LIMITATION. To the extent that the aggregate fair market value:
(i) of shares subject to an Optionee's Incentive Stock Options granted by the
Company, any Parent or Subsidiary, which (ii) become exercisable for the first
time during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonqualified Stock Options. For purposes of this Section 5.2, Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the fair market value of the Shares shall be determined as of the time of grant.
5.3 SECTION 5.2 LIMITATIONS. Section 5.2 of the Plan shall apply only to
an Incentive Stock Option evidenced by an Option Agreement which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
Incentive Stock Option. Section 5.2 of the Plan shall not apply to any Option
evidenced by a Option Agreement which sets forth the intention of the Company
and the Optionee that such Option shall be a Nonqualified Stock Option.
5.4 NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his employment or consulting
relationship at any time, WITH OR WITHOUT CAUSE.
5.5 OTHER LIMITATIONS. THE FOLLOWING LIMITATIONS SHALL APPLY TO GRANTS OF
OPTION TO EMPLOYEES:
5.5.1 NO EMPLOYEE SHALL BE GRANTED, IN ANY FISCAL YEAR OF THE
COMPANY, OPTIONS TO PURCHASE MORE THAN 150,000 SHARES.
5.5.2 IN CONNECTION WITH HIS OR HER INITIAL EMPLOYMENT, AN EMPLOYEE
MAY BE GRANTED OPTION TO PURCHASE UP TO AN ADDITIONAL 150,000 SHARES WHICH
SHALL NOT COUNT AGAINST THE LIMIT SET FORTH IN SUBSECTION 5.5.1 ABOVE.
5.5.3 THE FOREGOING LIMITATIONS SHALL BE ADJUSTED PROPORTIONATELY IN
CONNECTION WITH ANY CHANGE IN THE COMPANY'S CAPITALIZATION AS DESCRIBED IN
SECTION 11.
5.5.4 IF AN OPTION IS CANCELED IN THE SAME FISCAL YEAR OF THE COMPANY
IN WHICH IT WAS GRANTED (OTHER THAN IN CONNECTION WITH A TRANSACTION
DESCRIBED IN SECTION 11), THE CANCELED OPTION SHALL BE COUNTED AGAINST THE
LIMITS SET FORTH IN SUBSECTIONS 5.5.1 AND 5.5.2 ABOVE). FOR THIS PURPOSE,
IF THE EXERCISE PRICE OF AN OPTION IS REDUCED, THE TRANSACTION WILL BE
TREATED AS A CANCELLATION OF THE OPTION AND THE GRANT OF A NEW OPTION.
6. TERM OF PLAN.
The Plan shall become effective upon the earlier to occur of its adoption
by the Board or its approval by the stockholders of the Company as described in
Section 17 of the Plan. It shall continue in effect for a term of ten (10)
years, unless sooner terminated under Section 13 of the Plan.
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7. TERM OF OPTION.
The term of each Option shall be stated in the Notice of Grant; provided,
however, that in the case of an Incentive Stock Option, the term shall be ten
(10) years from the date of grant or such shorter term as may be provided in the
Notice of Grant. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Notice of Grant.
8. EXERCISE/PURCHASE PRICE AND CONSIDERATION.
8.1 EXERCISE/PURCHASE PRICE. The per-Share exercise/purchase price for
the Shares to be issued pursuant to exercise of an Option or a Sale shall be
such price as is determined by the Administrator, but shall be subject to the
following:
8.1.1 In the case of an Incentive Stock Option
8.1.1.1 granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the fair
market value per Share on the date of the grant.
8.1.1.2 granted to any other Employee, the per Share exercise
price shall be no less than one hundred percent (100%) of the fair
market value per Share on the date of grant.
8.1.2 In the case of a Nonqualified Stock Option or Sale, THE PER
SHARE EXERCISE/PURCHASE PRICE SHALL BE DETERMINED BY THE ADMINISTRATOR.
8.1.3 ANY DETERMINATION TO ESTABLISH AN OPTION EXERCISE PRICE OR
EFFECT A SALE OF COMMON STOCK AT LESS THAN FAIR MARKET VALUE ON THE DATE OF
THE OPTION GRANT OR AUTHORIZATION OF SALE SHALL BE ACCOMPANIED BY AN
EXPRESS FINDING BY THE ADMINISTRATOR SPECIFYING THAT THE GRANT OR SALE IS
IN THE BEST INTEREST OF THE COMPANY, AND SPECIFYING BOTH THE FAIR MARKET
VALUE AND THE OPTION EXERCISE PRICE OR SALE PRICE OF THE COMMON STOCK.
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8.2 FAIR MARKET VALUE. The fair market value per Share shall be
determined by the Administrator in its discretion; provided, however, that where
there is a public market for the Common Stock, the fair market value per Share
shall be the closing price of the Common Stock (or the closing bid if no sales
were reported) for the last market trading day prior to the date of grant of the
Option or authorization of Sale or other determination, as reported in THE WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ) System) or, in
the event the Common Stock is listed on a stock exchange, the fair market value
per Share shall be the closing price on such exchange for the last market
trading day prior to the date of grant of the Option or authorization of Sale or
other determination, as reported in THE WALL STREET JOURNAL.
8.3 CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option or pursuant to a Sale, including the method of
payment, shall be determined by the Administrator. In the case of an Incentive
Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist of:
8.3.1 cash;
8.3.2 check;
8.3.3 transfer to the Company of Shares which
8.3.3.1 in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six months on
the date of surrender, and
8.3.3.2 HAVE a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares TO BE ACQUIRED;
8.3.4 delivery of instructions to the Company to withhold from the
Shares that would otherwise be issued on the exercise that number of Shares
having a fair market value at the time of such exercise equal to the Option
exercise price;
8.3.5 such other consideration and method of payment for the
issuance of Shares to the extent permitted by legal requirements relating
to the administration of stock option plans AND ISSUANCES OF CAPITAL STOCK
under state corporate and securities laws and the Code; or
8.3.6 any combination of the foregoing methods of payment.
If the fair market value of the number of whole Shares transferred or the
number of whole Shares surrendered is less than the total exercise price of the
Option, the shortfall must be made up in cash or by check. Notwithstanding the
foregoing provisions of this Section 8.3, the consideration for Shares to be
issued pursuant to a Sale may not include, in whole or in part, the
consideration set forth in subsections 8.3.3 and 8.3.4 above.
9. EXERCISE OF OPTION.
9.1 PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Administrator, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under the Option Agreement and
Section 8.3 of the Plan. Each Optionee who exercises an Option shall, upon
notification of the
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amount due (if any) and prior to or concurrent with delivery of the certificate
representing the Shares, pay to the Company amounts necessary to satisfy
applicable federal, state and local tax withholding requirements. An Optionee
must also provide a duly executed copy of any stock transfer agreement then in
effect and determined to be applicable by the Administrator. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock REPRESENTED BY SUCH
STOCK CERTIFICATE, notwithstanding the exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 11 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
9.2 TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
that an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability) the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
9.3 DISABILITY OF OPTIONEE. In the event that an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option at any time within
twelve (12) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
9.4 DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
9.5 RULE 16b-3. OPTIONS GRANTED TO PERSONS SUBJECT TO SECTION 16(b) OF
THE EXCHANGE ACT MUST COMPLY WITH RULE 16b-3 AND SHALL CONTAIN SUCH ADDITIONAL
CONDITIONS OR RESTRICTIONS AS MAY BE REQUIRED THEREUNDER TO QUALIFY FOR THE
MAXIMUM EXEMPTION FROM SECTION 16 OF THE EXCHANGE ACT WITH RESPECT TO PLAN
TRANSACTIONS.
9.6 BUYOUT PROVISIONS. THE ADMINISTRATOR MAY AT ANY TIME OFFER TO BUY OUT
FOR A PAYMENT IN CASH OR SHARES, AN OPTION PREVIOUSLY GRANTED, BASED ON SUCH
TERMS AND CONDITIONS AS THE ADMINISTRATOR SHALL ESTABLISH AND COMMUNICATE TO THE
OPTIONEE AT THE TIME THAT SUCH OFFER IS MADE.
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10. NONTRANSFERABILITY OF OPTIONS.
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE OPTION AGREEMENT, An
Option may not be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will, or by the laws of descent and distribution,
and may be exercised during the lifetime of the Optionee only by the Optionee
or, if incapacitated, by his or her legal guardian or legal representative.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
11.1 CHANGES IN CAPITALIZATION: Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or Sales made or which have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
11.2 DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, each outstanding Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Administrator. The Administrator may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
11.3 MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a Parent
or Subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Administrator makes an Option
fully exercisable in lieu of assumption or substitution in the event of a merger
or sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice or such shorter period as the Administrator may specify in the
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
Optionee, provide for the consideration to be received upon the exercise of the
Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
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12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option. Notice of
the determination shall be given to each Optionee within a reasonable time after
the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
13.1 AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable.
13.2 STOCKHOLDER APPROVAL. The Company shall obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
13.3 EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option or a Sale
unless the exercise of such Option or consummation of the Sale and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, applicable state securities laws, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
(including NASDAQ) upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
15. RESERVATION OF SHARES.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
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16. LIABILITY OF COMPANY.
16.1 INABILITY TO OBTAIN AUTHORITY. Inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
As a condition to the exercise of an Option or a Sale, the Company may
require the person exercising such Option or to whom Shares are being Sold to
represent and warrant at the time of any such exercise or Sale that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
16.2 GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 13 of the Plan.
17. STOCKHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the stockholders of
the Company within twelve months before or after the date the Plan is adopted.
Such stockholder approval shall be obtained in the manner and to the degree
required under applicable federal and state law.
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ANALOGY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 22, 1997
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement, each dated June 20, 1997 and hereby
names, constitutes and appoints Gary Arnold and Martin Vlach, or either of
them, with full power of substitution, my true and lawful attorneys and
Proxies for me and in my place and stead to attend the Annual Meeting of
Shareholders of Analogy, Inc. (the "Company") to be held at 10:00 a.m. on
Tuesday, July 22, 1997, or at any adjournments or postponements thereof, and
to vote all the shares of Common Stock entitled to be voted by the
undersigned on June 6, 1997, with all the powers that the undersigned would
possess if he were personally present.
s FOLD AND DETACH HERE s
<PAGE>
Please mark your votes as indicated in this example
/X/
1. PROPOSAL 1--Election of Directors / / FOR all nominees listed below
/ / WITHHOLD AUTHORITY
(to vote for all nominees listed below)
To withhold authority to vote for any individual nominee, strike a line through
the nominee's name in the list below.
JOHN H. FAEHNDRICH MARTIN VLACH
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
___
NAMED ABOVE.
2. PROPOSAL 2--To approve and adopt certain amendments to the Amended and
Restated 1993 Stock Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
___
PROPOSAL 2.
3. PROPOSAL 3--To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending March 31, 1998.
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 3.
4. 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. The Company is not presently aware of any such matters to be
presented for action at the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN AS TO ANY OF
THE ABOVE ITEMS, THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED IN PROPOSAL 1
___
AND FOR PROPOSALS 2 AND 3.
___
Signature(s) Date
-------------------------------------- --------------------
Please sign exactly as your name appears on the 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. Partnerships should 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.
The shareholder signed above reserves the right to revoke this Proxy at any time
prior to its exercise by written notice delivered to the Company's Secretary at
the Company's corporate offices at 9205 SW Gemini Drive, Beaverton, Oregon,
97008, prior to the Annual Meeting. The power of the Proxy holders shall also be
suspended if the shareholder signed above appears at the Annual Meeting and
elects in writing to vote in person.
s FOLD AND DETACH HERE s
