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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CENTURA SOFTWARE CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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[GUPTA LOGO]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 24, 1996
------------------------
TO THE SHAREHOLDERS OF GUPTA CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Gupta
Corporation (the "Company") will be held on Tuesday, September 24, 1996, at 3:00
p.m., local time, at Hyatt Rickey's in Palo Alto, located at 4219 El Camino
Real, Palo Alto, California 94306 for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected and qualified;
2. To approve an amendment to the Company's 1995 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 1,000,000 shares to an aggregate of 2,000,000 shares;
3. To approve an amendment to the Company's 1992 Employee Stock Purchase
Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 100,000 shares to an aggregate of 400,000 shares;
4. To approve the adoption of the 1996 Directors' Stock Option Plan and the
reservation of 500,000 shares of Common Stock for issuance thereunder;
5. To approve an amendment to the Company's Amended and Restated Articles of
Incorporation to change the name of the Company to Centura Software Corporation;
6. To ratify the appointment of Price Waterhouse LLP as the Company's
independent public accountants for the fiscal year ending December 31,
1996; and
7. To transact such other business as may properly come before the meeting
or any postponement or adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on August 21, 1996 are
entitled to notice of and to vote at the meeting and any adjournment(s) thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if such shareholder returned a proxy card.
By Order of the Board of Directors
Craig W. Johnson
SECRETARY
Menlo Park, California
August 26, 1996
<PAGE>
[GUPTA LOGO]
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 24, 1996
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of Gupta
Corporation (the "Company"), a California corporation, for use at the Annual
Meeting of Shareholders to be held on Tuesday, September 24, 1996 at 3:00 p.m.,
local time, or at any postponement or adjournment(s) thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at Hyatt Rickey's in Palo Alto,
located at 4219 El Camino Real, Palo Alto, California 94306. The telephone
number at that location is (415) 493-8000.
The Company's principal executive offices are located at 1060 Marsh Road,
Menlo Park, California 94025. The Company's telephone number at that location is
(415) 321-9500.
This Proxy contains information that was also included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
July 18, 1996, as well as immaterial corrections to certain information that was
previously filed.
SOLICITATION
These proxy solicitation materials were mailed on or about August 26, 1996
to all shareholders entitled to vote at the meeting. The costs of soliciting
these proxies will be borne by the Company. These costs will include the
expenses of preparing and mailing proxy materials for the Annual Meeting and
reimbursement paid to brokerage firms and others for their expenses incurred in
forwarding solicitation material regarding the Annual Meeting to beneficial
owners of the Company's Common Stock. The Company may conduct further
solicitation personally, telephonically or by facsimile through its officers,
directors and regular employees, none of whom will receive additional
compensation for assisting with the solicitation.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Asa Drew, Inspector of Elections) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting of shareholders
and voting in person.
VOTING
Every shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more
<PAGE>
than six candidates. However, no shareholder shall be entitled to cumulate votes
unless the candidate's name has been placed in nomination prior to the voting
and the shareholder, or any other shareholder, has given notice at the meeting
prior to the voting of the intention to cumulate the shareholder's votes. On all
other matters, each share has one vote.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present. Except with respect to the election of directors where cumulative
voting is invoked and except in certain other specific circumstances, the
affirmative vote of a majority of shares REPRESENTED AND VOTING at a duly held
meeting at which a quorum is present is required under California law for
approval of proposals presented to shareholders. In general, California law also
provides that a quorum consists of a majority of the shares ENTITLED TO VOTE,
represented either in person or by proxy. The Inspector of Elections will treat
abstentions as shares that are present and ENTITLED TO VOTE for purposes of
determining the presence of a quorum but as not VOTING for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Any proxy which is returned using the form of proxy enclosed and which is not
marked as to a particular item will be voted for the election of directors, for
approval of the amendment to the Company's 1995 Stock Option Plan to increase
the number of shares of Common Stock reserved for issuance thereunder by
1,000,000 shares to an aggregate of 2,000,000 shares, for approval of the
amendment to the Company's 1992 Employee Stock Purchase Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by 100,000
shares to an aggregate of 400,000 shares, for approval of adoption of the 1996
Directors' Stock Option Plan and the reservation of 500,000 shares of Common
Stock for issuance thereunder, for approval of the adoption of the amendment to
the Company's Amended and Restated Articles of Incorporation to change the
Company's name to Centura Software Corporation, and for ratification of the
appointment of the designated independent auditors and as the proxy holders deem
advisable on other matters that may come before the meeting, as the case may be,
with respect to the item not marked. If a broker indicates on the enclosed proxy
or its substitute that it does not have discretionary authority as to certain
shares to vote on a particular matter ("broker non-votes"), those shares will
not be considered as VOTING with respect to that matter. While there is no
definitive specific statutory or case law authority in California concerning the
proper treatment of abstentions and broker non-votes, the Company believes that
the tabulation procedures to be followed by the Inspector of Elections are
consistent with the general statutory requirements in California concerning
voting of shares and determination of a quorum.
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on August 21, 1996 are
entitled to notice of and to vote at the meeting. As of the record date,
12,622,467 shares of the Company's Common Stock, par value $0.01 per share, were
issued and outstanding.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1997 Annual Meeting of Shareholders must
be received by the Company no later than March 15, 1997 in order that they may
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's bylaws currently provide for seven directors. At the Annual
Meeting, the Board of Directors has nominated six directors to be elected to
serve until the next Annual Meeting and until their successors are elected and
qualified at the meeting. The Company's Board of Directors proposes to fill the
remaining seat (resulting from a director who has chosen not to seek reelection
for reasons unrelated to the Company) at such time as it has identified a
qualified candidate. Unless otherwise
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instructed, the proxy holders will vote the proxies received by them for the
Company's six nominees named below, five of whom are presently directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill the vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner in accordance with cumulative voting as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. Assuming a quorum is present, the six nominees for director receiving
the greatest number of votes cast at the Annual Meeting will be elected, up to
the number of directors authorized by the Company's bylaws. The term of office
of each person elected as a director will continue until the next Annual Meeting
of Shareholders or until his or her successor has been elected and qualified.
The names of the nominees and certain other information about them as of
August 21, 1996 are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------ --- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
Umang P. Gupta...................... 46 Chairman of the Board of Directors 1983
Samuel M. Inman..................... 45 President and Chief Executive Officer (Principal Executive --
Officer)
D. Bruce Scott...................... 43 Co-founder of inquiry.com inc. ............................ 1984
William O. Grabe.................... 58 General Partner of General Atlantic Partners, an investment 1992
firm
Max D. Hopper....................... 61 Principal and Chief Executive Officer of Max D. Hopper 1995
Associates, Inc.; retired Senior Vice President of AMR
Corporation and retired Chairman of The SABRE Group
Anthony Sun......................... 44 General Partner of Venrock Associates, a venture capital 1988
firm
</TABLE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation set forth next to his name above during the past five
years. There is no family relationship between any director or executive officer
of the Company.
Mr. Gupta has served as Chairman of the Board of Directors since the
inception of the Company and as Chief Executive Officer and President of the
Company since inception until April 1995. Prior to founding the Company, Mr.
Gupta served in various positions at Oracle Corporation, a relational database
software corporation, from 1981 to 1984. He served most recently at Oracle
Corporation as Vice President and General Manager of the Microcomputer Products
Division, from 1983 to 1984.
Mr. Inman served as President and Chief Operating Officer of the Company
from April 1995 until January 1996, at which time he was appointed as President
and Chief Executive Officer (Principal Executive Officer). Immediately prior to
joining the Company, Mr. Inman served as an independent consultant to a number
of high technology companies from 1994 until April 1995. Mr. Inman served as
President and Chief Operating Officer of Ingram Micro Inc., a worldwide
distributor of microcomputer products, from 1993 to 1994. Prior to assuming this
position, Mr. Inman served as President of IBM's Personal Computer Company for
the Americas from July 1992 to September 1993, President of IBM's National
Distribution Division from March 1991 to July 1992, Director for IBM's
Enterprise Systems Marketing Division from November 1988 to March 1991, and
prior to this he served in various other positions within IBM. Mr. Inman is a
graduate of Purdue University, where he earned a B.S. degree in mathematics.
Mr. Scott has served as a director since November 1984. Effective April 30,
1995, Mr. Scott resigned as Senior Vice President of Database Products, in which
position he had served since January
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1994. In May 1995, Mr. Scott co-founded inquiry.com inc., an internet company.
From July 1993 to January 1994, Mr. Scott served as Senior Vice President,
Research and Development, Database and Connectivity Products for the Company.
Prior to assuming this position, Mr. Scott was Senior Vice President and General
Manager of Database Server Products from July 1992 to June 1993, Senior Vice
President, Research and Development from January 1989 to June 1992, and Vice
President from December 1984 to January 1989. Prior to joining the Company, Mr.
Scott served as Manager of Database Development at Victor Technologies, a
computer manufacturer corporation, from 1982 to 1983. Mr. Scott served as Senior
Member of Technical Staff at Oracle Corporation from 1977 to 1982.
Mr. Grabe has served as a director since July 1992. He has been a General
Partner of General Atlantic Partners, an investment firm, since April 1992. From
February 1984 until March 1992, Mr. Grabe was a Vice President at IBM. Mr. Grabe
is a director of Compuware Corporation, a computer systems software corporation.
Mr. Grabe is also a director of Baan N.Y., an enterprise solutions planning
software company, Integrated Systems Solutions Corporation, a wholly-owned
subsidiary of IBM, CODA Plc, a financial accounting software company and Gartner
Group, an information systems consulting company. He is also a director of
several other privately held companies in the computer software and services
industry.
Mr. Hopper has served as a director since April 1995. Mr. Hopper has been
Principal and Chief Executive Officer of Max D. Hopper Associates, Inc., a
consulting firm specializing in creating benefits from the strategic use of
advanced information technologies since January 1995. Prior to forming Max D.
Hopper Associates, Inc., Mr. Hopper served at AMR Corporation, an air
transportation company and provider of information services to the travel and
transportation industry, as Senior Vice President from 1985 through January 1995
as well as Chairman of The SABRE Group from April 1993 through January 1995. Mr.
Hopper served as Executive Vice President for Bank of America from 1982 through
1985. Mr. Hopper is also a director of the Gartner Group and Computer Language
Research, Inc.
Mr. Sun has served as a director since September 1988. He has been a general
partner of Venrock Associates, a venture capital firm, since August 1979. Mr.
Sun is also a director of Komag, Inc., a manufacturer of data storage
components, Cognex Corporation, a manufacturer of vision systems for industrial
applications, Conductus Inc., a manufacturer of superconducting electronics,
Inference Inc., a client server help desk software company, Worldtalk
Communications Corporation, an applications router company and Fractal Design
Inc., a multimedia software company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held a total of six meetings during the fiscal year
ended December 31, 1995. The Board of Directors has an Audit Committee and a
Compensation Committee. It does not have a nominating committee or a committee
performing the functions of a nominating committee.
The Audit Committee of the Board of Directors currently consists of
directors Grabe and Sun, and held four meetings during 1995. The Audit Committee
recommends engagement of the Company's independent auditors, and is primarily
responsible for approving the services performed by the Company's independent
auditors and for reviewing and evaluating the Company's accounting principles
and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently consists of
directors Grabe and Sun, and held seven meetings during 1995. The Compensation
Committee establishes the compensation for the Company's executive officers,
including the Company's Chief Executive Officer.
No incumbent director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors that he was eligible to attend.
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<PAGE>
COMPENSATION OF DIRECTORS
Directors are reimbursed for out-of-pocket travel expenses associated with
their attendance at Board meetings. Directors received no cash compensation for
their services on the Board of Directors. Nonemployee directors of the Company
are automatically granted options to purchase shares of the Company's Common
Stock pursuant to the terms of the Company's 1996 Directors' Stock Option Plan
(the "Directors' Option Plan") provided that such nonemployee director agrees to
cancel all options granted to such director from the Company's 1995 Directors'
Stock Option Plan, except that each affected director will retain certain
options to purchase 20,000 shares of the Company's Common Stock granted to the
director under the Company's 1986 Incentive Stock Option Plan. Under the
Directors' Option Plan, each nonemployee director receives an option to purchase
50,000 shares of Common Stock on the date on which the later of the following
events occur: the effective date of the Directors' Option Plan or the date on
which such person first becomes a nonemployee director of the Company. Each
option granted under the Directors' Option Plan becomes exercisable in
installments of 1/48th of the shares subject to such option on each of the first
forty-eight (48) monthly anniversaries of the date of grant of the option and
each option granted under the 1986 Incentive Stock Option Plan becomes
exercisable in installments of 25% of the shares subject to such option on each
of the first, second, third and fourth anniversaries of the date of grant of the
option. Options granted under the Directors' Option Plan and the 1986 Incentive
Stock Option Plan have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant, and a term of ten years.
REQUIRED VOTE
The six nominees receiving the highest number of affirmative votes of shares
of the Company's Common Stock present at the Annual Meeting in person or by
proxy and entitled to vote shall be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE.
PROPOSAL NO. 2
APPROVAL OF THE AMENDMENT TO THE 1995 STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1995 Stock Option Plan (the "1995 Option Plan") to increase the number of
shares of Common Stock reserved for issuance thereunder by 1,000,000 shares to
an aggregate of 2,000,000 shares.
GENERAL
The Company's 1995 Option Plan was adopted by the Board of Directors in
March 1995 to replace the 1986 Incentive Stock Option Plan which had 160,970
shares available for grant thereunder as of April 19, 1995 and which expired in
accordance with its terms in July 1996. The Board of Directors initially
reserved 1,000,000 shares of Common Stock for issuance under the 1995 Option
Plan. On July 23, 1996, the Board of Directors approved an amendment to increase
the number of shares reserved for issuance under the 1995 Option Plan by
1,000,000 shares to a total of 2,000,000 shares, for which shareholder approval
is being requested. The Board of Directors believes that, in order to attract
qualified employees to the Company and to provide incentives to its current
employees, it is necessary to grant options to purchase Common Stock to such
employees pursuant to the 1995 Option Plan. Accordingly, shareholders are being
asked to approve the proposed amendment to the 1995 Option Plan.
The 1995 Option Plan provides for the granting to employees of incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and for the granting of nonstatutory options to
employees and consultants. See "United States Federal Income Tax Information"
below for information concerning the tax treatment of both incentive stock
options and nonstatutory stock options.
5
<PAGE>
As of July 31, 1996, no shares had been issued upon exercise of options
granted under the 1995 Option Plan, options to purchase 601,999 shares were
outstanding and 398,001 shares remained available for future grant (not
including the additional 1,000,000 shares reserved by the Board of Directors,
for which shareholder approval is being requested). As of July 31, 1996, the
fair market value of all shares of Common Stock subject to outstanding options
was $3,310,995 based on the closing sale price of $5 1/2 for the Company's
Common Stock as reported on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") National Market System on such date.
As of December 31, 1995, (i) options to purchase 544,999 shares of Common
Stock were outstanding under the 1995 Option Plan and held by all current
executive officers as a group (9 persons), (ii) no options were outstanding and
held by current directors who are not executive officers (5 persons) and (iii)
options to purchase 37,500 shares of Common Stock were outstanding and held by
all employees, including current officers who are not executive officers, as a
group (299 persons as of July 31, 1996). For information with respect to options
to purchase Common Stock of the Company granted in 1995 under the 1995 Option
Plan and under the Company's 1986 Incentive Stock Option Plan to the Company's
Chief Executive Officer and the four most highly compensated executive officers
of the Company whose annual salary and bonus exceeded $100,000 for 1995, and to
additional executive officers with respect to option repricings, see
"Compensation of Executive Officers -- Stock Option Grants in 1995" and "Report
of the Compensation Committee."
The 1995 Option Plan is not a qualified deferred compensation plan under
Section 401(a) of the Code, and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
AMENDMENT TO INCREASE NUMBER OF RESERVED SHARES
The Board of Directors believes that in order to attract and retain highly
qualified employees and consultants and to provide such employees and
consultants with adequate incentive through their proprietary interest in the
Company, it is necessary to amend the 1995 Option Plan to reserve an additional
1,000,000 shares of Common Stock for issuance thereunder. At the Annual Meeting
of Shareholders, the shareholders are being asked to approve the above amendment
to the 1995 Option Plan.
PURPOSE
The purposes of the 1995 Option Plan are to attract and retain the best
available personnel for the Company, to give employees, officers, directors and
consultants of the Company or its subsidiary a greater personal stake in the
success of the business, and to provide such persons with added incentive to
continue and advance in their employment or services to the Company.
ADMINISTRATION
The 1995 Option Plan may be administered by the Board of Directors or a
committee designated by the Board (the "Administrator"). The 1995 Option Plan is
currently being administered by the Board of Directors and the Compensation
Committee of the Board. The Compensation Committee has the exclusive authority
to grant stock options and otherwise administer the 1995 Option Plan with
respect to the Company's directors and officers eligible to participate in the
1995 Option Plan. Members of the Board of Directors receive no additional
compensation for their services in connection with the administration of the
1995 Option Plan. All questions of interpretation of the 1995 Option Plan are
determined by the Administrator and decisions of the Administrator are final and
binding upon all participants.
ELIGIBILITY
The 1995 Option Plan provides that options may be granted to employees
(including officers and directors who are also employees) and consultants of the
Company. Incentive stock options may be granted only to employees. The
Administrator selects the optionees and determines the number of shares and the
exercise price to be associated with each option (except in the case of an
optionee-employee who is also a director, in which case the Compensation
Committee alone determines the
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<PAGE>
number of shares and the exercise price to be associated with each option). In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contribution to the success of the Company, and
other relevant factors. As of July 31, 1996 there are approximately 240
employees eligible to participate in the 1995 Option Plan.
The 1995 Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 250,000, subject to adjustment as provided in the 1995 Option
Plan. There is also a limit on the aggregate market value of shares subject to
all incentive stock options that may be granted to an optionee during any
calendar year.
TERMS OF OPTIONS
The terms of options granted under the 1995 Option Plan are determined by
the Administrator. Each option is evidenced by a stock option agreement between
the Company and the optionee and is subject to the following additional terms
and conditions:
(a) EXERCISE OF THE OPTION The optionee must earn the right to exercise
the option by continuing to work for the Company. The Administrator
determines when options are exercisable. An option is exercised by giving
written notice of exercise to the Company specifying the number of full
shares of Common Stock to be purchased, and by tendering payment of the
purchase price to the Company. The method of payment of the exercise price
of the shares purchased upon exercise of an option is determined by the
Administrator.
(b) EXERCISE PRICE The exercise price of options granted under the 1995
Option Plan is determined by the Administrator, and must be at least
equal to the fair market value of the shares on the date of the first grant,
in the case of incentive stock options, and 85% of the fair market value of
the shares on the date of the grant, in the case of nonstatutory stock
options, as determined by the Administrator, based upon the closing price on
the NASDAQ National Market on the date of grant. Incentive stock options
granted to shareholders owning more than 10% of the Company's outstanding
stock are subject to the additional restriction that the exercise price on
such options must be at least 110% of the fair market value on the date of
the grant. Nonstatutory stock options granted to a covered employee under
Section 162(m) of the Code are subject to the additional restriction that
the exercise price on such options must be at least 100% of the fair market
value on the date of grant.
(c) TERMINATION OF EMPLOYMENT If the optionee's employment or
consulting relationship with the Company is terminated for any reason
other than death or total and permanent disability, options under the 1995
Option Plan may be exercised not later than ninety days after the date of
such termination to the extent the option was exercisable on the date of
such termination. In no event may an option be exercised by any person after
the expiration of its term.
(d) DISABILITY. If an optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of his
total and permanent disability, options may be exercised within six months
(or such other period of time not exceeding twelve months as is determined
by the Administrator) after the date of termination and may be exercised
only to the extent the option was exercisable on the date of termination,
but in no event may the option be exercised after its termination date.
(e) DEATH. If an optionee should die while employed or retained by the
Company, and such optionee has been continuously employed or retained by
the Company since the date of grant of the option, the option may be
exercised within six months after the date of death (or such other period of
time, not exceeding six months, as is determined by the Administrator) by
the optionee's estate or by a person who acquired the right to exercise the
option by bequest or inheritance to the
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<PAGE>
extent the optionee would have been entitled to exercise the option had the
optionee continued living and remained employed or retained by the Company
for three months after the date of death, but in no event may the option be
exercised after its termination date.
If an optionee should die within one month (or such other period of time
not exceeding three months as is determined by the Administrator) after the
optionee has ceased to be continuously employed or retained by the Company,
the option may be exercised within three months after the date of death by
the optionee's estate or by a person who acquired the right to exercise the
option by bequest or inheritance to the extent that the optionee was
entitled to exercise the option at the date of termination, but in no event
may the option be exercised after its termination date.
(f) TERMINATION OF OPTIONS: Incentive stock options granted under the
1995 Option Plan expire ten years from the date of grant unless a shorter
period is provided in the option agreement. Incentive stock options and
nonstatutory stock options granted to shareholders owning more than 10% of
the Company's outstanding stock may not have a term of more than five years
and five years and one day, respectively.
(g) NONTRANSFERABILITY OF OPTIONS: Options are nontransferable by the
optionee, other than by will or the laws of descent and distribution, and
are exercisable only by the optionee during his or her lifetime or, in the
event of death, by a person who acquires the right to exercise the option by
bequest or inheritance or by reason of the death of the optionee.
(h) ACCELERATION OF OPTION: In the event of a merger of the Company
with or into another corporation or sale of substantially all of the
Company's assets, the Administrator shall either accomplish a substitution
or assumption of options or give written notice of the acceleration of the
optionee's right to exercise his or her outstanding options in full at any
time within thirty days of such notice. The Administrator may, in its
discretion, make provisions for the acceleration of the optionee's right to
exercise his or her outstanding options in full.
Effective July 14, 1995, the Board adopted a resolution amending the
Option Plan such that each employee stock option issued under the Option
Plan is to accelerate by 50% of the unvested portion of such option upon an
acquisition of the Company in which the employee-optionee is not offered a
comparable position with the successor company.
(i) OTHER PROVISIONS. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the 1995 Option
Plan as may be determined by the Administrator.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any change is made in the Company's capitalization, such as a
stock split or dividend, that results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustment shall be made in the option price, the number of
shares subject to each option, the annual limitation of grants to employees, as
well as the number of shares available for issuance under the 1995 Option Plan.
In the event of the proposed dissolution or liquidation of the Company, all
outstanding options automatically terminate unless otherwise provided by the
Administrator.
AMENDMENT AND TERMINATION
The Board of Directors may amend the 1995 Option Plan at any time or from
time to time or may terminate it without approval of the shareholders; provided,
however, that shareholder approval is required for any amendment to the 1995
Option Plan that: (i) increases the number of shares that may be issued under
the 1995 Option Plan, (ii) modifies the standards of eligibility, (iii) modifies
the limitation on grants to employees described in the 1995 Option Plan or
results in other changes which would require shareholder approval to qualify
options granted under the 1995 Option Plan as performance-based compensation
under Section 162(m) of the Code, or (iv) so long as the Company has a class of
equity securities registered under Section 12 of the Securities Exchange Act of
1934, as
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amended (the "Exchange Act"), materially increases the benefits to participants
that may accrue under the 1995 Option Plan. However, no action by the Board of
Directors or shareholders may alter or impair any option previously granted
under the 1995 Option Plan. The 1995 Option Plan shall terminate in March 2005,
provided that any options then outstanding under the 1995 Option Plan shall
remain outstanding until they expire by their terms.
UNITED STATES FEDERAL INCOME TAX INFORMATION
The following is a brief summary of the U.S. federal income tax consequences
of transactions under the 1995 Option Plan based on federal income tax laws in
effect on the date of this Proxy Statement. This summary is not intended to be
exhaustive and does not address all matters which may be relevant to a
particular optionee based on his or her specific circumstances. The summary
addresses only current U.S. federal income tax law and expressly does not
discuss the income tax laws of any state, municipality, non-U.S. taxing
jurisdiction or gift, estate or other tax laws other than federal income tax
law. The Company advises all optionees to consult their own tax advisor
concerning tax implication of option grants and exercises and the disposition of
stock acquired upon such exercises, under the 1995 Stock Option Plan.
Options granted under the 1995 Option Plan may be either incentive stock
options ("ISOs"), which are intended to qualify for the special tax treatment
provided by Section 422 of the Code, or nonstatutory options ("NSOs"), which
will not so qualify. If an option granted under the 1995 Option Plan is an
incentive stock option, the optionee will recognize no income upon grant of the
incentive stock option and will incur no tax liability due to the exercise
except to the extent that such exercise causes the optionee to incur alternative
minimum tax. (See discussion below). The Company will not be allowed a deduction
for federal income tax purposes as a result of the exercise of an incentive
stock option regardless of the applicability of the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercise of the option by the optionee, any gain will
be treated as a long-term capital gain. If both of these holding periods are not
satisfied, the optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value of the Common
Stock at the date of the option exercise or the sale price of the Common Stock.
The Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on a disposition
of the shares prior to completion of both of the above holding periods in excess
of the amount treated as ordinary income will be characterized as long-term
capital gain if the sale occurs more than one year after exercise of the option
or as short-term capital gain if the sale is made earlier. For individual
taxpayers, the current U.S. federal income tax rate on long-term capital gains
is capped at 28%, whereas the maximum rate on other income is 39.6%. Capital
losses for individual taxpayers are allowed in full against capital gains plus
$3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon its
exercise, the optionee will recognize ordinary income for tax purposes measured
by the excess of the fair market value of the shares over the exercise price.
The income recognized by an optionee who is also an employee of the Company will
be subject to income and employment tax withholding by the Company by payment in
cash by the optionee or out of the optionee's current earnings. Upon the sale of
such shares by the optionee, any difference between the sale price and the fair
market value of the shares as of the date of exercise of the option will be
treated as capital gain or loss, and will qualify for long-term capital gain or
loss treatment if the shares have been held for more than one year.
ALTERNATIVE MINIMUM TAX
The exercise of an incentive stock option may subject the optionee to the
alternative minimum tax under Section 55 of the Code. The alternative minimum
tax is calculated by applying a tax rate of 26% to alternative minimum taxable
income of joint filers up to $175,000 ($87,500 for married taxpayers filing
separately) and 28% to alternative minimum taxable income above that amount.
Alternative
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minimum taxable income is equal to (i) taxable income adjusted for certain
items, plus (ii) items of tax preference less (iii) an exemption amount of
$45,000 for joint returns, $33,750 for unmarried individual returns and $22,500
in the case of married taxpayers filing separately (which exemption amounts are
phased out for upper income taxpayers). Alternative minimum tax will be due if
the tax determined under the foregoing formula exceeds the regular tax of the
taxpayer for the year.
In computing alternative minimum taxable income, shares purchased upon
exercise of an incentive stock option are treated as if they had been acquired
by the optionee pursuant to exercise of a nonstatutory stock option. As a
result, the optionee recognizes alternative minimum taxable income equal to the
excess of the fair market value of the Common Stock on the date of exercise over
the option exercise price. Because the alternative minimum tax calculation may
be complex, optionees should consult their own tax advisors prior to exercising
incentive stock options.
If an optionee pays alternative minimum tax, the amount of such tax may be
carried forward as a credit against any subsequent year's regular tax in excess
of the alternative minimum tax for such year.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present at the Annual Meeting in person or by proxy and
entitled to vote is required to approve the amendment to the 1995 Option Plan
and the reservation of an additional 1,000,000 shares of Common Stock for
issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT
TO THE 1995 OPTION PLAN AND THE RESERVATION OF AN ADDITIONAL 1,000,000 SHARES OF
COMMON STOCK FOR ISSUANCE THEREUNDER.
PROPOSAL NO. 3
APPROVAL OF THE AMENDMENT
TO THE 1992 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1992 Employee Stock Purchase Plan (the "Purchase Plan") to increase the
number of shares of Common Stock reserved for issuance thereunder by 100,000
shares to an aggregate of 400,000 shares. The Purchase Plan provides for
employee purchases of the Company's Common Stock through accumulated payroll
deductions. Employees make such purchases by participation in regular offering
periods from which they may withdraw at any time. The amendment will provide
sufficient additional stock to continue the Company's policy of equity ownership
by employees as an incentive for employees to exert maximum efforts for the
success of the Company.
GENERAL AND PURPOSE
The Purchase Plan was adopted by the Board of Directors in October 1992 and
was approved by the shareholders in January 1993. A total of 300,000 shares of
Common Stock were initially reserved for issuance thereunder. The Purchase Plan,
and the right of participants to make purchases thereunder, is intended to
qualify under the provisions of Section 423 of the Code. The Purchase Plan is
not a qualified deferred compensation plan under Section 401(a) of the Code, and
is not subject to the provisions of ERISA.
As of July 31, 1996, a total of 244,709 shares had been issued to the
Company's employees under the Purchase Plan and 55,291 shares remain available
for future issuance. The average per share issuance price for shares purchased
by employees under the Purchase Plan to date was approximately $8.2592 and the
total net value realized by employees as a group from the purchase of such
shares was $2,021,088.36. As of July 31, 1996, approximately 260 employees were
eligible to participate in the Purchase Plan, of which 45 were participating.
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PURPOSE
The purpose of the Purchase Plan is to provide employees of the Company (and
any of its subsidiaries designated by the Board of Directors) who participate in
the Purchase Plan with an opportunity to purchase Common Stock of the Company
through payroll deductions.
ADMINISTRATION
The Purchase Plan may be administered by the Board of Directors or a
committee appointed by the Board of Directors. The Purchase Plan is currently
being administered by a committee appointed by Board. All questions of
interpretation of the Purchase Plan are determined by the Board of Directors or
its committee, and its decisions are final and binding upon all participants.
Members of the Board of Directors or its committee who are eligible employees
are permitted to participate in the Purchase Plan, provided that any such
eligible member may not vote on any matter affecting the administration of the
Purchase Plan or the grant of any option pursuant to it, or serve on a committee
appointed to administer the Purchase Plan. No charges for administrative or
other costs may be made against the payroll deductions of a participant in the
Purchase Plan. Members of the Board of Directors receive no additional
compensation for their services in connection with the administration of the
Purchase Plan.
ELIGIBILITY
Any person who is customarily employed by the Company (or any of its
designated subsidiaries) for at least 20 hours per week and more than five
months in any calendar year is eligible to participate in the Purchase Plan
after being employed by the Company for at least three months, provided that the
employee was not eligible to participate during the offering period on any prior
offering date and subject to certain limitations imposed by Section 5(a) and
423(b) of the Code and limitations on stock ownership as set forth in the
Purchase Plan. See "Purchase of Stock; Exercise of Option."
OFFERING DATES
In general, the Purchase Plan is implemented by a series of six-month
offering periods commencing on or about February 1 and August 1 of each year.
The Board of Directors has the power to change the duration and/or frequency of
the offering periods with respect to future offerings without shareholder
approval if such change is announced at least fifteen (15) days prior to the
scheduled beginning of the first offering period to be affected.
PARTICIPATION IN THE PLAN
Eligible employees may participate in the Plan by completing a subscription
agreement on the form provided by the Company and filing it with the Company
prior to the applicable offering date, unless a later time for filing the
subscription agreement is set by the Board for all eligible employees with
respect to a given offering. The subscription agreement currently authorizes
payroll deductions of up to ten percent of the participant's eligible
compensation on the date of the purchase.
PURCHASE PRICE
The purchase price per share at which shares are sold under the Purchase
Plan is 85 percent of the lower of the fair market value of the Common Stock on
the offering date or on the applicable exercise date. The fair market value
shall be the closing price of the Common Stock on the NASDAQ National Market as
of such date or, if such price is not reported, the mean of the bid and asked
prices per share reported by NASDAQ, or if listed on a stock exchange, the
closing price on such exchange as reported in THE WALL STREET JOURNAL.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions during
the six-month offering period. The deductions may be up to ten percent of a
participant's eligible compensation received on each payday during the offering
period. Eligible compensation is defined in the Purchase Plan to include the
regular straight time gross earnings excluding payments for overtime, shift
premium, incentive compensation, bonuses and commissions. A participant may
discontinue his or
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her participation in the Purchase Plan at any time during the offering period
prior to an exercise date, and may decrease or increase the rate of his or her
payroll deductions once during the offering period by completing and filing a
new subscription agreement. Payroll deductions shall commence on the first
payroll following the offering date and shall continue until his or her
participation is terminated as provided in the Purchase Plan. No interest
accrues on the payroll deductions of a participant in the Purchase Plan.
PURCHASE OF STOCK; EXERCISE OF OPTION
By executing a subscription agreement to participate in the Purchase Plan,
the participant is entitled to have shares placed under option. The maximum
number of shares placed under option to a participant in an offering period is
the number determined by dividing $12,500 by the fair market value of one share
of the Company's Common Stock on the offering date. Within this limit, the
number of shares purchased by a participant will be determined by dividing the
amount of the participant's total payroll deductions accumulated during each
exercise period by the lower of (i) 85% of the fair market value of the Common
Stock on the offering date, or (ii) 85% of the fair market value of the Common
Stock on the applicable exercise date. See "Payment of Purchase Price; Payroll
Deductions" for additional limitations on payroll deductions. Unless the
participant's participation is discontinued, each participant's option for the
purchase of shares will be exercised automatically at the end of each exercise
period at the applicable price. See "Withdrawal." Notwithstanding the foregoing,
no participant shall be permitted to subscribe for shares under the Purchase
Plan if immediately after the grant of the option he or she would own 5% or more
of the voting power or value of all classes of stock of the Company or of any of
its subsidiaries (including stock which may be purchased under the Purchase Plan
or pursuant to any other options), nor shall any participant be granted an
option which would permit the participant to buy pursuant to all employee stock
purchase plans of the Company more than $25,000 worth of stock (determined at
the fair market value of the shares at the time the option is granted) in any
calendar year. Furthermore, if the number of shares which would otherwise be
placed under option at the beginning of an offering period exceeds the number of
shares then available under the Purchase Plan, a pro rata allocation of the
available shares shall be made in as equitable a manner as is practicable.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign a
subscription agreement authorizing payroll deductions, the participant's
interest may be increased or decreased once during any given offering period by
completing and filing a new subscription agreement with the Company. In
addition, a participant's interest may be terminated in whole, but not in part,
by delivering written notice of such withdrawal to the Company. Such withdrawal
may be elected at any time prior to the end of the applicable three-month period
prior to an exercise date under the Purchase Plan. Any withdrawal by the
participant of accumulated payroll deductions for a given offering period
automatically terminates the participant's interest in that offering period.
A participant's withdrawal from an offering period does not have an effect
upon such participant's eligibility to participate in subsequent offering
periods under the Purchase Plan; however, the participant may not re-enroll in
the same offering period after withdrawal.
TERMINATION OF EMPLOYMENT
Upon termination of the participant's continuous status as an employee prior
to the exercise date of an offering period for any reason, including retirement
or death, the contributions credited to his or her account will be returned to
him or her, without interest, or, in the case of his or her death, to the person
or persons entitled thereto, and his or her option will be automatically
terminated.
In the event an employee fails to remain in continuous status as an employee
of the Company for at least twenty (20) hours per week during the offering
period in which the employee is a participant, he or she will be deemed to have
elected to withdraw from the Purchase Plan and the contributions credited to his
or her account will be returned to him or her, without interest, and his or her
option terminated.
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ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or stock dividend, is made in
the Company's capitalization which results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of consideration by
the Company, appropriate adjustments will be made in the shares subject to
purchase and in the purchase price per share, as well as in the number of shares
available for issuance under the Purchase Plan. In the event of the proposed
dissolution or liquidation of the Company, the offering period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board of Directors or its committee.
NONTRANSFERABILITY
No rights or accumulated payroll deductions of a participant under the
Purchase Plan may be pledged, assigned or transferred for any reason and any
such attempt may be treated by the Company as an election to withdraw from the
Purchase Plan.
REPORTS
Individual accounts will be maintained for each participant in the Purchase
Plan. Each participant shall receive promptly after each exercise date a report
of such participant's account setting forth the total amount of the
participant's contributions, the per share purchase price and the number of
shares purchased and the remaining cash balance, if any, to be returned or
carried over to the next offering period.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may at any time amend or terminate the Purchase Plan,
except that such termination shall not affect options previously granted nor may
any amendment make any change in any option granted prior thereto which
adversely affects the rights of any participant. No amendment may be made to the
Purchase Plan without prior shareholder approval with respect to any change for
which shareholder approval is required to comply with the rules regarding
"discretionary plans" under Section 16 of the Exchange Act and Rule 16b-3 or
under Section 423 of the Code (or any successor provisions thereto).
FEDERAL INCOME TAX ASPECTS OF THE PURCHASE PLAN
The following is a brief summary of the U.S. federal income tax consequences
of transactions under the 1992 Employee Stock Purchase Plan based on federal
income tax laws in effect on the date of this Proxy Statement. This summary is
not intended to be exhaustive and does not address all matters which may be
relevant to a particular participant based on his or her specific circumstances.
The summary addresses only current U.S. federal income tax law and expressly
does not discuss the income tax laws of any state, municipality, non-U.S. taxing
jurisdiction or gift, estate or other tax laws other than federal income tax
law. The Company advises all participants to consult their own tax advisor
concerning tax implication of purchases and the disposition of stock acquired
pursuant to the 1992 Employee Stock Purchase Plan.
GENERAL TAX INFORMATION.
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify for the federal income tax treatment provided
to employee stock purchase plans and their participants under the provisions of
Sections 421 and 423 of the Code. Under these provisions, no income will be
taxable to a participant until the shares purchased under the Purchase Plan are
sold or otherwise disposed of. Upon sale or other disposition of the shares, the
participant will generally be subject to tax in an amount which depends upon the
holding period of the shares. If the shares are sold or otherwise disposed of
more than two years from the first day of the offering period and one year from
the date the shares are purchased, the participant will recognize ordinary
income measured as the lesser of (a) the excess of the fair market value of the
shares at the time of such sale or disposition over the purchase price, or (b)
an amount equal to 15 percent of the fair market value of the shares as of the
first day of the offering period. Any additional gain will be treated as
long-term capital gain. If the shares are sold or otherwise disposed of before
the expiration of either of these holding periods, the
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participant will recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on whether or not the
disposition occurs more than one year after the date the shares are purchased.
The Company is not entitled to a deduction for amounts taxed as ordinary income
or capital gain to a participant except to the extent of ordinary income
recognized by a participant upon a sale or disposition of shares prior to the
expiration of the holding periods described above. Capital losses are allowed in
full against capital gains plus $3,000 of other income.
The ordinary income reported under the rules described above, added to the
actual purchase price of the shares, determines the tax basis of the shares for
the purpose of determining capital gain or loss on a sale or exchange of the
shares.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Purchase Plan, does not purport to be complete, and does not
discuss the income tax laws of any municipality, state or foreign country in
which an optionee may reside.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present at the Annual Meeting in person or by proxy and
entitled to vote is required to approve the amendment to the 1992 Purchase Plan
and the reservation of an additional 100,000 shares of Common Stock for issuance
thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR" THE APPROVAL OF THE AMENDMENT
TO THE 1992 PURCHASE PLAN AND THE RESERVATION OF AN ADDITIONAL 100,000 SHARES OF
COMMON STOCK FOR ISSUANCE THEREUNDER.
PROPOSAL NO. 4
APPROVAL OF 1996 DIRECTORS' STOCK OPTION PLAN
At the Annual Meeting, shareholders are being asked to approve adoption of
the 1996 Directors' Stock Option Plan (the "Directors Option Plan") effective as
of January 22, 1995 and the reservation of 500,000 shares of Common Stock for
issuance thereunder.
GENERAL AND PURPOSE
The Directors Option Plan was adopted by the Board of Directors in January
1996 to replace the 1995 Directors Stock Option Plan which was terminated at
that time and the Board has reserved a total of 500,000 shares of Common Stock
for issuance thereunder.
The Directors' Option Plan provides for the grant of nonstatutory stock
options to nonemployee directors of the Company to replace those previously
issued pursuant to the 1995 Directors Stock Option Plan which are to be
canceled. The Directors' Option Plan is designed to work automatically and not
to require administration; however, to the extent administration is necessary,
it will be provided by the Board of Directors.
The purpose of the Directors' Option Plan is to provide an incentive for
directors to continue to serve the Company as directors and to assist the
Company in recruiting highly qualified individuals when vacancies occur on the
Board of Directors.
GRANT AND EXERCISE OF OPTION
The Directors' Option Plan provides that each person who is a nonemployee
director shall be automatically granted an option to purchase 50,000 shares of
Common Stock on the date on which the later of the following events occur: the
effective date of the Directors' Option Plan or the date on which such person
first becomes a nonemployee director, whether through election by the
shareholders of
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the Company or appointment by the Board of Directors to fill a vacancy, provided
that such nonemployee director agrees to cancel all options granted to such
director from the Company's 1995 Directors' Stock Option Plan, except that each
affected director will retain certain options to purchase 20,000 shares of the
Company's Common Stock granted to the director under the Company's 1986
Incentive Stock Option Plan. The Directors' Option Plan provides for neither a
maximum nor a minimum number of shares subject to options that may be granted to
any one nonemployee director, but does provide for the number of shares that may
be included in any grant and the method of making a grant. No option granted
under the Directors' Option Plan is transferable by the optionee other than by
will or the laws of descent or distribution, and each option is exercisable,
during the lifetime of the optionee, only by such optionee.
The Directors' Option Plan provides that each option granted thereunder
becomes exercisable in installments cumulatively as to 1/48th of the shares on
each of the first forty-eight (48) monthly anniversaries of the date of grant of
the option. The options will remain exercisable for up to ninety days following
the optionee's termination of service as a director of the Company, unless such
termination is a result of death, in which case the options will remain
exercisable for up to a six-month period (or such lesser period as is determined
by the Board), or disability, in which case the options will remain exercisable
for up to a six-month period (or such other period not exceeding twelve months
as is determined by the Board).
EXERCISE PRICE AND TERM OF OPTIONS
The exercise price of all stock options granted under the Directors' Option
Plan shall be equal to the fair market value of a share of the Company's Common
Stock on the date of grant of the option, which is defined to be the closing
sale price of the Company's Common Stock on the NASDAQ National Market on the
immediately preceding trading date. Options granted under the Directors' Option
Plan have a term of ten years.
MERGER OR SALE OF ASSETS
In the event of the dissolution or liquidation of the Company, a sale of all
or substantially all of the assets of the Company, the merger of the Company
with or into another corporation in which the Company is not the surviving
corporation or any other capital reorganization in which more than 50% of the
shares of the Company entitled to vote are exchanged, each nonemployee director
shall have a reasonable time within which to exercise the option, including any
part of the option that would not otherwise be exercisable, prior to the
effectiveness of such dissolution, liquidation, sale, merger or reorganization,
at the end of which time the option shall terminate, or the right to exercise
the option, including any part of the option that would not otherwise be
exercisable, or receive a substitute option with comparable terms, as to an
equivalent number of shares of stock of the corporation succeeding the Company
or acquiring its business by reason of such dissolution, liquidation, sale,
merger or reorganization.
AMENDMENT AND TERMINATION
The Board of Directors may at any time amend or terminate the Director's
Option Plan, except that such termination cannot affect options previously
granted without the agreement of any optionee so affected. Notwithstanding the
foregoing, the provisions regarding the grant of options under the Directors'
Option Plan may be amended only once in any six-month period, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.
If not terminated earlier, the Directors' Option Plan will expire in 2006.
U.S. FEDERAL INCOME TAX INFORMATION
Options granted under the Directors' Option Plan are nonstatutory stock
options. An optionee will not recognize any taxable income at the time he or she
is granted a nonstatutory option. However upon its exercise, the optionee will
recognize ordinary income for tax purposes measured by the excess of the then
fair market value of the shares over the option price. Because the optionee is a
director of
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the Company, the date of taxation (and the date of measurement of taxable
ordinary income) may be deferred unless the optionee files an election with the
Internal Revenue Service under Section 83(b) of the Code. Upon resale of such
shares by the optionee, any difference between the sale price and the exercise
price, to the extent not recognized as ordinary income as provided above will be
treated as capital gain (or loss), and will be long-term capital gain if the
optionee has held the shares more than one year. For individual taxpayers, the
current federal income tax rate on long-term capital gains is capped at 28%,
whereas the maximum rate on other income is 39.6%. Capital losses for individual
taxpayers are allowed under U.S. tax laws in full against capital gains plus
$3,000 of other income. The Company will be entitled to a tax deduction in the
amount and at the time that the optionee recognizes ordinary income with respect
to shares acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Directors' Option Plan, does not purport to be complete, and
does not discuss the income tax laws of any municipality, state or foreign
country in which an optionee may reside. The Company advises all eligible
directors to consult their own tax advisors concerning tax implications of
option grants and exercises and the disposition of stock acquired upon such
exercises under the Directors' Option Plan.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Company's Common
Stock present at the Annual Meeting in person or by proxy and entitled to vote
is required to approve adoption of the Directors' Option Plan and the
reservation of 500,000 shares of Common Stock for issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
DIRECTORS' OPTION PLAN AND THE RESERVATION OF 500,000 SHARES OF COMMON STOCK FOR
ISSUANCE THEREUNDER.
PROPOSAL NO. 5
APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO EFFECT NAME CHANGE
The Company is asking the shareholders to vote on a proposal to amend the
Company's Amended and Restated Articles of Incorporation (the "Restated
Articles") in order to change the name of the Company from Gupta Corporation to
Centura Software Corporation. The Board of Directors has unanimously approved
such an amendment to the Restated Articles. If the corporate name change is
approved by the shareholders, it is anticipated that the Company's Common Stock
will be traded under the symbol "CNTR."
The Company desires to change the name of the Company from Gupta Corporation
to Centura Software Corporation in order to take advantage of the goodwill
associated with the Company's new "Centura" line of software products and to
avoid possible confusion in the industry and the marketplace as to the origin of
Centura products.
Upon consummation of the proposed change of name it will not be necessary to
surrender stock certificates. Instead, when certificates are presented for
transfer, new stock certificates bearing the name Centura Software Corporation,
will be issued.
If any action, suit, proceeding or claim has been instituted, made or
threatened, relating to the name change, which makes effectuation of the name
change inadvisable in the opinion of the Company's Board of the Directors or
there exists any other circumstance which would make consummation of the name
change inadvisable in the opinion of the Board of Directors, the proposal to
amend the Restated Articles may be terminated by the Board of Directors either
before or after approval of the name change by the shareholders.
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REQUIRED VOTE
Approval of adoption of the Certificate of Amendment in order to change the
name of the Company requires the affirmative vote of the holders of a majority
of the shares of the Company's Common Stock present at the Annual Meeting in
person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS
PROPOSAL TO ADOPT THE CERTIFICATE OF AMENDMENT WHEREBY THE COMPANY'S NAME WILL
BE CHANGED TO CENTURA SOFTWARE CORPORATION.
PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Price Waterhouse LLP,
independent public accountants, to audit the financial statements of the Company
for the fiscal year ending December 31, 1996, and recommends that the
shareholders vote for ratification of this appointment. In the event the
shareholders do not ratify such appointment, the Board of Directors will
reconsider its selection. Price Waterhouse LLP has also audited the Company's
financial statements for the fiscal years ending December 31, 1993, 1994 and
1995. Representatives of Price Waterhouse LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
On October 4, 1995, Arthur Andersen LLP resigned as independent accountants
to audit the financial statements of the Company for the 1995 fiscal year.
Subsequent to such resignation, the Company received a letter dated January 2,
1996 from Arthur Andersen advising the Company that it had withdrawn its reports
issued with respect to its audits of the Company's December 31, 1993 and 1994
financial statements. Disagreement between the Company and Arthur Andersen
regarding restatement of the Company's financial results for its quarter ended
March 31, 1994 and the timing of revenue recognition for certain transactions
reported in that quarter are described in detail in the Company's report on Form
8-K filed with the Securities and Exchange Commission (the "Commission") on
October 11, 1995, as amended by Form 8-K/A (Amendment No. 1) filed with the
Commission on October 26, 1995 (the "Form 8-K/A").
During the two most recent fiscal years and subsequent interim periods prior
to October 4, 1995, there were no disagreements with Arthur Andersen LLP on any
matter of accounting principles or practices, financial statement disclosure,
auditing scope or procedure, or any reportable events, except the Company's
disagreement with Arthur Andersen regarding the Company's restatement of its
financial results for the quarter ended March 31, 1994, as described in the Form
8K/A. The reports of Arthur Andersen LLP on the financial statements of the
Registrant for the years ended December 31, 1993 and December 31, 1994 contained
no adverse opinion or other disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles.
Effective January 2, 1996, the Board of Directors of the Company engaged the
accounting firm of Price Waterhouse LLP ("Price Waterhouse") as independent
accountants to audit the Company's financial statements for the fiscal years
ended December 31, 1993, December 31, 1994, and December 31, 1995. The Company's
audit committee of its Board of Directors approved these actions.
The Company has not consulted with the independent accounting and audit
group at Price Waterhouse LLP responsible for performing future independent
accounting work during the preceding two years or subsequent interim periods
through September 31, 1995 on (i) either the application of accounting
principles or type of opinion Price Waterhouse might issue on the Company's
financial statements or (ii) the Company's disagreement with Arthur Andersen
regarding the Company's restatement of its financial results for its quarter
ended March 31, 1994 as described in the Form 8-K/ A. Through its outside
litigation counsel the Company previously engaged the Dispute Analysis and
Corporate Recovery Consulting Unit of Price Waterhouse as litigation consultants
to provide expert
17
<PAGE>
witness testimony in connection with the securities class action litigation
filed against the Company and various of its officers and directors in May 1994,
as described in the Company's report on the Form 8-K filed with the Commission
on January 11, 1996.
The Company has requested that Arthur Andersen furnish a letter addressed to
the SEC stating whether Arthur Andersen LLP agrees with the above statements.
REQUIRED VOTE
The ratification of the appointment of Price Waterhouse LLP as the Company's
independent public accountants requires the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock present at the Annual
Meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1996.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of June 30, 1996 as to (i) each person who is known by the
Company to beneficially own more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table beginning on page 22 and (iv)
all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
---------------------------
5% SHAREHOLDERS, DIRECTORS, NAMED EXECUTIVE OFFICERS, PERCENT OF
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP NUMBER(2) TOTAL
- -------------------------------------------------------------------------- ----------- --------------
<S> <C> <C>
Umang P. Gupta............................................................ 2,199,774 17.21%
Novell, Inc. (3).......................................................... 1,057,500 8.39%
2180 Fortune Drive
San Jose, CA 95131
D. Bruce Scott (4)........................................................ 619,401 4.91%
Anthony Sun (5)........................................................... 502,112 3.98%
Kanwal S. Rekhi (6)....................................................... 27,917 *
William O. Grabe.......................................................... 33,750 *
Max. D. Hopper............................................................ 6,250 *
Samuel M. Inman (7)....................................................... 95,000 *
Richard J. Heaps.......................................................... 58,346 *
Earl M. Stahl............................................................. 75,209 *
John G. McAughtry......................................................... 33,750 *
All directors and executive officers as a group (14 persons)
(2)(4)(5)(6)(7)(8)....................................................... 3,746,505 28.38%
</TABLE>
- ------------------------
* Less than 1%
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock.
(2) Includes with respect to each named person the following shares subject to
stock options exercisable within 60 days of June 30, 1996: Mr. Gupta --
168,332; Mr. Scott -- 6,250; Mr. Sun -- 27,917; Mr. Rekhi -- 27,917; Mr.
Grabe -- 33,750; Mr. Hopper -- 6,250; Mr. Inman -- 80,000; Mr. Heaps --
40,973; Mr. Stahl -- 70,209, Mr. McAughtry -- 33,750.
18
<PAGE>
(3) Novell, Inc. and the Company are parties to a marketing agreement to promote
the sale of the Company's products through Novell's authorized resellers.
See "Certain Relationships and Related Transactions."
(4) Includes 6,000 shares held for the benefit of Mr. Scott's children. Excludes
4,500 shares held by members of Mr. Scott's family, as to which Mr. Scott
disclaims beneficial ownership. Excludes 477,758 shares transferred to Mr.
Scott's ex-wife pursuant to a final divorce decree dated March 1, 1996, as
to which Mr. Scott disclaims beneficial ownership. Mr. Scott resigned his
position as an executive officer in April 1995 and has been on leave from
the Company since January 1995. Mr. Scott will stand for reelection to the
Company's Board of Directors.
(5) Includes 450,042 shares held by Venrock Associates. Because Mr. Sun, a
director of the Company, is a general partner of Venrock Associates, he may
be deemed to be a beneficial owner of such shares. Mr. Sun disclaims
beneficial ownership of such shares.
(6) Includes 4,000 shares held for the benefit of Mr. Rekhi's children. Mr.
Rekhi disclaims beneficial ownership of such shares. Mr. Rekhi is not
standing for reelection to the Company's Board of Directors for reasons not
related to the Company.
(7) Mr. Inman has served as President and Chief Executive Officer (Principal
Executive Officer) since January 1996 and served as President and Chief
Operating Officer from April 1995 through December 1995.
(8) Includes 598,752 shares subject to options held by directors and officers
that are exercisable within 60 days of June 30, 1996.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH ON PAGE 25 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE
GENERAL
The Company's executive compensation policies are determined by the
Compensation Committee of the Board of Directors. The Compensation Committee
(the "Committee") is composed of two nonemployee directors. The Chairman of the
Board of Directors served on the Committee during the formative years of the
Company, but resigned his membership on the Committee during 1993.
The objective of the Company's executive compensation program is to align
executive compensation with the Company's business objectives and performance,
and to enable the Company to attract, retain and reward executives who
contribute to the long-term business success of the Company. The Company's
executive compensation program is based on the same four basic principles that
guide compensation decisions for all employees of the Company:
-The Company compensates for demonstrated and sustained performance.
-The Company compensates competitively.
-The Company strives for equity and fairness in the administration of
compensation.
-The Company believes that each employee should understand how his or her
compensation is determined.
The Company believes in compensating its executives for demonstrated and
sustained levels of performance in their individual jobs. The achievement of
higher levels of performance and contribution are rewarded by higher levels of
compensation. In order to ensure that it compensates its
19
<PAGE>
executives competitively, the Company regularly compares its compensation
practices to those of other companies of comparable size within similar
industries. Through the use of independent compensation surveys and analysis,
employee compensation training, and periodic pay reviews, the Company strives to
ensure that compensation is administered equitably and fairly and that a balance
is maintained between how executives are paid relative to other employees and
relative to executives with similar responsibilities in comparable companies.
The Committee meets at lease twice annually: once late in the year to
establish the compensation program for the next fiscal year and once, mid-year,
to evaluate how effectively the program is meeting its objectives. Additionally,
the Committee may hold special meetings to approve the compensation program of a
newly hired executive or an executive whose scope of responsibility has
significantly changed. Each year, the Committee meets with the CEO and the
Director, Human Resources regarding executive compensation projections for the
next three years and proposals for executive compensation for the next operating
year. Compensation plans are based on compensation surveys and assessments as to
the demonstrated and sustained performance of the individual executives. The
Committee then independently reviews the performance of the CEO and the Company,
and develops the annual compensation plan for the CEO based on competitive
compensation data and the Committee's evaluation of the CEO's demonstrated and
sustained performance and its expectation as to his future contributions in
leading the Company. The Committee presents for adoption its findings on the
compensation of each individual executive at a subsequent meeting of the full
Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
During 1995, the Company's executive compensation program was comprised of
the following key components:
BASE SALARY. The Company sets the base salaries of its executives at the
levels of comparably sized companies engaged in similar industries.
CASH-BASED INCENTIVES. The Company's executives participate in a cash
incentive program. The program includes all of the Company's executives and is
contingent on the achievement of specific Company-wide goals in the areas of
customer satisfaction, operating profit, revenue performance, asset management
and the achievement of specific individual performance goals that are measured
objectively, as well as individual performance goals that are measured
subjectively. Participants in this program include the CEO and vice presidents.
The Company's cash incentives are structured so that the total of base salary
and cash incentives when taken together, will compensate executives at market
levels when company-wide and individual goals are achieved. The cash incentive
elements are sensitive to performance achievement versus plan, and payment of
these cash bonuses ranges from no bonus payment when performance is below
established targets, to bonus amounts somewhat above market levels when
performance targets are exceeded.
EQUITY-BASED INCENTIVES. Stock options are an important component of the
total compensation of executives, and are designed to align the interests of
each executive with those of the shareholders. Each year the Committee considers
the grant to executives of stock option awards under the Company's 1986
Incentive Stock Option Plan and 1995 Stock Option Plan. The Committee believes
that stock options provide added incentive for the executives to influence the
strategic direction of the Company, and to create and increase value for
customers, shareholders and employees. The option grants utilize four-year
vesting periods to encourage executives to continue contributing to the Company.
The number of stock option shares that are granted to individual executives is,
in part, based on independent survey data reflecting competitive stock option
practices.
The CEO's base salary for 1995 was established by the Committee at a level
somewhat comparable to the base salaries of comparably sized companies engaged
in similar industries.
20
<PAGE>
REPORT ON REPRICED OPTIONS
In June 1994 and July 1995, the Committee determined that it was in the best
interest of the Company to offer to reprice the then-existing stock option
grants of the Company with exercise prices in excess of the then-current fair
market value of the Company's Common Stock. Excluded from the repricing actions
were the CEO and two senior vice presidents.
The objectives of the Company's Stock Option Plans (the "Stock Option
Plans") are to promote the interests of the Company by providing employees and
certain consultants or independent contractors an incentive to acquire a
proprietary interest in the Company and to continue to render services to the
Company. It was the view of the Committee that stock options with exercise
prices substantially above the current market price of the Company's Common
Stock were viewed negatively by most employees of the Company, and provided
little, if any, equity incentive to the optionees. The Committee thus concluded
that such option grants seriously undermined the specific objectives of the
Stock Options Plans and should properly be repriced. In making this decision,
the Committee also considered the fairness of such a determination in relation
to other shareholders. In the opinion of the Committee, the shareholders'
long-term best interests were clearly served by the retention and motivation of
optionees.
In this context, the Committee decided that effective June 14, 1994 and July
27, 1995 (each a "Grant Date") all Company employees (except executive officers)
holding stock options with exercise prices in excess of the fair market value of
the Company's Common Stock could receive a one-for-one repricing of their
then-existing unexercised stock options with a new exercise price set at $10.75
per share, the fair market value of the Company's Common Stock on the first
Grant Date (June 14, 1994). The second repricing allowed employees to receive a
one-for-one repricing of their then-existing unexercised stock options with a
new exercise price set at $9.00 per share, the fair market value of the
Company's Common Stock on the second Grant Date (July 27, 1995). On January 5,
1996 the Company completed a subsequent repricing through a one-for-one stock
option exchange of unvested stock options for all employees.
None of the Company's non-employee members of the Board of Directors
received any repriced stock options. It is the opinion of the Committee that
this program succeeded in its objectives of building employee morale and
providing new incentives for the Company's employees and management.
COMPENSATION COMMITTEE
William Grabe
Anthony Sun
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Grabe and Sun comprised the Compensation Committee of the Board of
Directors during 1995. None of these persons has ever been an officer or
employee of the Company or any of its subsidiaries, nor were there any
compensation committee interlocks or other relationships during 1995 requiring
disclosure under item 402(j) of Regulation S-K of the Securities and Exchange
Commission.
COMPENSATION OF EXECUTIVE OFFICERS
The table on the next page shows the compensation received by (a) the
individual who served as the Company's Chief Executive Officer during 1995; (b)
the four other most highly compensated individuals who were serving as executive
officers of the Company at the fiscal year ended December 31, 1995; and (c) the
compensation received by each such individual for the Company's two preceding
fiscal years.
21
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- AWARDS
OTHER ANNUAL ------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) COMPENSATION($)(3) STOCK OPTIONS COMPENSATION($)(4)
- --------------------------------- --------- ----------- ----------- ------------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Umang P. Gupta 1995 211,250 -- -- 200,000 537
Chairman of the Board and Chief 1994 200,000 -- -- -- 522
Executive Officer 1993 178,000 75,000 -- -- 1,016
Samuel M. Inman 1995 182,693 112,500 -- 479,999 --
President and Chief Executive 1994 -- -- -- -- --
Officer (Principle Executive 1993 -- -- -- -- --
Officer)
Richard Heaps 1995 140,114 47,500 -- 85,000 189
Senior Vice President and 1994 125,908 13,000 -- 40,000 154
General Counsel 1993 107,022 6,249 17,939 -- 61
Earl M. Stahl 1995 154,167 9,000 -- 85,000 205
Senior Vice President, 1994 134,750 23,500 -- 40,000 184
Engineering and Chief Technical 1993 119,587 9,600 -- -- 48
Officer
John G. McAughtry 1995 130,000 15,000 59,067 50,000 307
Vice President, Asia/ Pacific 1994 125,000 62,100 66,780 -- 328
and Latin American Operations 1993 -- -- 22,115 -- 174
</TABLE>
- ------------------------
(1) Includes amounts deferred under the Company's 401(k) plan.
(2) Includes bonuses earned in the indicated year and paid in the subsequent
year. Excludes bonuses paid in the indicated year but earned in the
preceding year.
(3) Comprised of commissions paid to Mr. McAughtry in 1993, 1994 and 1995 and to
Mr. Heaps in 1993.
(4) Comprised of premiums paid by the Company under the Company's group term
life insurance policy.
22
<PAGE>
STOCK OPTION GRANTS IN 1995
The following table sets forth information for the executive officers named
in the Summary Compensation Table with respect to grants of options to purchase
Common Stock of the Company made in 1995 and the value of all options held by
such executive officers on December 31, 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
--------------------------------------------------- RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR OPTION
OPTIONS OPTIONS EXERCISE OR TERM (2)
GRANTED GRANTED TO BASE PRICE EXPIRATION ------------------------
NAME (SHARES)(1) FISCAL YEAR (PER SHARE) DATE 5% 10%
- ----------------------- ----------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Umang P. Gupta 200,000(3) 11% 10.75 04/03/05 1,352,123 3,426,546
Samuel M. Inman 239,999(4) 13% 10.75 04/10/05 1,622,541 4,111,838
240,000(4) 13% 6.6250 12/14/05 999,942 2,534,051
Earl M. Stahl 40,000(5) 2% 10.75 03/14/05 270,425 685,309
45,000(5) 3% 6.6250 12/14/05 187,489 475,134
Richard J. Heaps 20,000(6) 1% 9.00 07/14/05 113,201 286,874
65,000(6) 4% 6.6250 12/14/05 270,818 686,305
John G. McAughtry 10,000(7) 1% 9.00 01/16/05 56,601 143,437
53,000(7) 3% 6.6250 12/14/05 220,821 559,603
</TABLE>
- ------------------------
(1) All options were granted pursuant to either the Company's 1986 Incentive
Stock Option Plan or the 1995 Stock Option Plan. No stock appreciation
rights (SARs) were granted during 1995. The Company granted options to
employees for an aggregate of 1,778,699 shares of Common Stock during 1995.
(2) Potential realizable values are reported net of the option exercise price
but before taxes associated with exercise. These amounts represent certain
assumed rates of appreciation only. Actual realized gains, if any, on stock
option exercises are dependent on future performance of the Company's Common
Stock, as well as the optionee's continued employment through the vesting
period.
(3) Granted April 3, 1995. Exercisable at the rate of 25% of the shares subject
to the option on each yearly anniversary of the date of grant.
(4) Granted April 3, 1995 and December 14, 1995, respectively. The April 3, 1995
option is exercisable at the rate of 12,000 shares per quarter commencing
July 1, 1995, and of which 48,000 shares will be considered by the Board for
certain accelerated vesting on the basis of Mr. Inman's job performance. The
December 14, 1995 option is exercisable at the rate of 25% of the shares
subject to the option on the first yearly anniversary of the date of grant
and thereafter at the rate of 1/48th of such shares on each monthly
anniversary of the date of grant.
(5) Granted March 14, 1995 and December 14, 1995, respectively. The March 14,
1995 option is exercisable at the rate of 25% of the shares subject to the
option on each yearly anniversary of the date of grant. The December 14,
1995 option is exercisable at the rate of 25% of the shares subject to the
option on the first yearly anniversary of the date of grant and thereafter
at the rate of 1/48th of such shares on each monthly anniversary of the date
of grant.
(6) Granted July 14, 1995 and December 14, 1995, respectively. Each option is
exercisable at the rate of 25% of the shares subject to such option on the
first yearly anniversary of the date of grant and thereafter at the rate of
1/48th of such shares on each monthly anniversary of the date of grant.
(7) Granted January 16, 1995 and December 14, 1995, respectively. Each option is
exercisable at the rate of 25% of the shares subject to such option on the
first yearly anniversary of the date of grant and thereafter at the rate of
1/48th of such shares on each monthly anniversary of the date of grant.
23
<PAGE>
OPTION REPRICINGS
The following table provides information regarding the repricing of certain
options held by any of the Company's executive officers during the last ten
completed fiscal years.
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
SHARES MARKET PRICE AT NEW DATE OF
DATE OF UNDER PRICE AT TIME OF EXERCISE ORIGINAL
EMPLOYEE TITLE REPRICING REPRICING REPRICING REPRICING PRICE OPTION
- ------------------------- ------------------------- ----------- ----------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Bramley Vice President 6/14/94 10,000 $ 10.75 $ 16.88 $ 10.75 12/17/03
Technical Services 7/27/95 10,000 $ 9.00 $ 10.75 $ 9.00 12/17/03
Richard J. Heaps Senior Vice President and 7/27/95 40,000 $ 9.00 $ 10.75 $ 9.00 6/14/04
General Counsel
Michael Keddington Vice President, North 7/27/95 80,000 $ 9.00 $ 9.75 $ 9.00 7/14/05
American Sales
John G. McAughtry Vice President, Asia 6/14/94 30,000 $ 10.75 $ 20.00 $ 10.75 7/21/03
Pacific and Latin America 6/14/94 10,000 $ 10.75 $ 16.88 $ 10.75 12/17/03
7/27/95 30,000 $ 9.00 $ 10.75 $ 9.00 7/21/03
7/27/95 10,000 $ 9.00 $ 10.75 $ 9.00 12/17/03
Helmut Wilke Vice President, European 6/14/94 10,000 $ 10.75 $ 16.88 $ 10.75 12/17/03
Operations 7/27/95 10,000 $ 9.00 $ 10.75 $ 9.00 12/17/03
7/27/95 40,000 $ 9.00 $ 10.75 $ 9.00 6/14/04
</TABLE>
AGGREGATED OPTION EXERCISES IN 1995
AND YEAR-END OPTION VALUES
The following table sets forth information for the executive officers named
in the Summary Compensation Table with respect to exercises in 1995 of options
to purchase Common Stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES 12/31/95 OPTIONS AT 12/31/95
ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE REALIZED(1) UNEXERCISABLE)(2) UNEXERCISABLE)(3)
- ----------------------------- ----------- ----------- ------------------ -------------------
<S> <C> <C> <C> <C>
Umang P. Gupta -- -- -- --
Samuel M. Inman -- -- -- --
Richard J. Heaps -- -- -- --
Earl M. Stahl 5,000 $ 42,500 43,542/116,458 $ 81,069/$15,181
John G. McAughtry -- -- -- --
</TABLE>
- ------------------------
(1) Value realized is calculated based on the closing price of the Company's
Common Stock as reported in the NASDAQ National Market on the date of
exercise minus the exercise price of the option, and does not necessarily
indicate that the optionee sold such stock.
(2) No stock appreciation rights (SARs) were outstanding during 1995.
(3) Based on the closing price of the Company's Common Stock as reported on the
NASDAQ National Market on December 29, 1995 of $5 1/8 per share minus the
exercise price of the options.
24
<PAGE>
PERFORMANCE GRAPH
The following graph summarizes cumulative total shareholder return data
(assuming reinvestment of dividends) for the period since the Company's stock
was first registered under Section 12 of the Securities Exchange Act of 1934
(February 4, 1993). The graph assumes that $100 was invested (i) on February 4,
1993 in the Common Stock of Gupta Corporation at a price per share of $18.00,
the price at which such stock was first offered to the public on that date, (ii)
on January 31, 1993 in the Standard & Poor's 500 Stock Index and (iii) on
January 31, 1993 in the S&P High Technology Composite Index. The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.
COMPARISON OF 34 MONTH CUMULATIVE TOTAL RETURN*
AMONG GUPTA CORPORATION, THE S & P INDEX
AND THE S & P HIGH TECH COMPOSITE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GUPTA CORPORATION S & P 500 S & P HIGH TECH COMPOSITE
<S> <C> <C> <C>
2/4/93 100 100 100
6/30/93 97 104 107
12/31/93 109 109 117
6/30/94 51 105 116
12/31/94 63 111 137
6/30/95 54 133 189
12/31/95 28 152 197
</TABLE>
- ------------------------
* $100 invested on 2/4/93 in stock or on 1/31/93 in Indices including
reinvestment of dividends. Fiscal year ending December 31.
<TABLE>
<CAPTION>
2/4/93 6/30/93 12/31/93 6/30/94 12/31/94 6/30/95
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gupta Corporation........................... 100 97 109 51 63 54
Standard & Poor's 500 Index................. 100 104 109 105 111 133
S & P High Technology Composite Index....... 100 107 117 116 137 189
<CAPTION>
12/31/95
-----------
<S> <C>
Gupta Corporation........................... 28
Standard & Poor's 500 Index................. 152
S & P High Technology Composite Index....... 197
</TABLE>
25
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a reseller agreement with Novell, Inc., a
beneficial owner of more than five percent of the Company's Common Stock, under
which the Company agreed to pay Novell certain quarterly sales commissions and
trademark license fees. During the fiscal year ended December 31, 1995, the
amount of such commissions and fees paid or accruing to Novell was approximately
$666,000. The reseller agreement with Novell terminates in September 1996.
The Company has entered into indemnification agreements with each of its
directors and executive officers, which may require the Company, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers, to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' liability insurance if
available on reasonable terms.
The Company has entered into an employment agreement with Sam Inman dated
April 10, 1995 with respect to Mr. Inman's employment as President and Chief
Operating Officer of the Company. Pursuant to this agreement, Mr. Inman received
a base salary of not less than $210,000 per year and is entitled to earn a
target bonus of $150,000 per year, based upon achievement of financial and other
goals, provided, however, that Mr. Inman is guaranteed a minimum bonus of
$150,000 during the initial year of this agreement. In addition, pursuant to the
agreement, Mr. Inman was granted an option to acquire up to 240,000 shares of
the Company's Common Stock at an exercise price of $10.25 per share which shares
vest at the rate of 12,000 shares per quarter commencing July 1, 1995, and of
which 48,000 shares will be considered by the Board for certain accelerated
vesting on the basis of Mr. Inman's job performance. All shares subject to the
option will vest on acquisition or change of control of the Company. Pursuant to
the agreement, upon termination of Mr. Inman's employment without cause, Mr.
Inman is entitled to severance in the amount of his base salary and any
additional benefits provided under the agreement for a period of one year.
The Company and Earl Stahl entered into a loan agreement dated August 31,
1995 pursuant to which Mr. Stahl borrowed $300,000 in connection with his
purchase of a new home. This loan will be forgiven at the rate of $40,000 of
principal on each yearly anniversary of the loan, provided that Mr. Stahl is
employed by the Company on such date. As of July 31, 1996, principal and
interest totaling $316,610 is outstanding under this loan and the largest
aggregate amount outstanding under this loan during 1995 was $306,040. Interest
accrues at the rate of 6.04% per year compounded annually. The loan is due in
August 1999, or earlier, within six months after termination of Mr. Stahl's
employment with the Company for cause.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and holders of more than
ten percent of the Company's Common Stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1995 all
Section 16(a) filing requirements applicable to the Company's officers,
directors and holders of more than ten percent of the Company's Common Stock
were complied with.
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OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, then the persons
named in the enclosed form of proxy will vote the shares they represent in such
manner as the Board may recommend.
By Order of the Board of Directors
Craig W. Johnson
SECRETARY
Dated: August 26, 1996
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APPENDIX A
GUPTA CORPORATION
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option 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 or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Applicable Laws" shall have the meaning set forth in Section 4(a)
below.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is
appointed.
(f) "Common Stock" shall mean the Common Stock of the Company.
(g) "Company" shall mean Gupta Corporation, a California corporation.
(h) "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.
(i) "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 sick leave, military leave, or any
other leave of absence approved by the Administrator; provided that such
leave is for a period of not more than 90 days or reemployment upon the
expiration of such leave is guaranteed by contract or statute. For purposes
of this Plan, a change in status from an Employee to a Consultant or from a
Consultant to an Employee will not constitute a termination of employment.
(j) "Director" shall mean a member of the Board.
(k) "Employee" shall mean any person, including Officers, Named
Executives and those Directors who are also employees of the Company,
who are employed by the Company or any Parent or Subsidiary of the Company.
The payment by the Company of a director's fee to the Director shall not be
sufficient to constitute "employment" of such Director by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i)
If the Common Stock is listed on any established stock exchange
or a national market system including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sales price for such stock as quoted on such system on the
date of determination (if for a given day no sales were reported, the
closing bid on that day shall be used), as such price is reported in THE
WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
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(ii)
If the Common Stock is quoted on the NASDAQ System (but not on
the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the bid and asked prices for the Common
Stock or;
(iii)
In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "Incentive Stock Option" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable option agreement.
(o) "Named Executive" shall mean any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the
Company (or is acting in such capacity) or among the four highest
compensated officers of the Company (other than the chief executive
officer). Such officer status shall be determined pursuant to the executive
compensation disclosure rules under the Exchange Act.
(p) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable
option agreement.
(q) "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.
(r) "Option" shall mean a stock option granted pursuant to the Plan.
(s) "Optioned Stock" shall mean the Common Stock subject to an Option.
(t) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(u) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(v) "Plan" shall mean this 1995 Stock Option Plan.
(w) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act
as the same may be amended from time to time, or any successor
provision.
(x) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(y) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 1,000,000 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 that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF ADMINISTRATOR.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3,
and by the legal requirements relating to the administration of
incentive stock option plans, if any, of
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applicable securities laws and the Code (collectively, the
"Applicable Laws"), the Plan may (but need not) be administered by
different administrative bodies with respect to Directors, Officers
and Employees who are neither Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Options to Employees or
Consultants who are also Officers or Directors of the Company, the
Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with Rule 16b-3 as it applies to a
plan intended to qualify thereunder as a discretionary plan and
Section 162(m) of the Code as it applies so as to qualify grants of
Options to Named Executives as performance-based compensation, or (B)
a Committee designated by the Board to administer the Plan, which
Committee shall be constituted in such a manner as to permit the Plan
to comply with Rule 16b-3 as it applies to a plan intended to qualify
thereunder as a discretionary plan, to qualify grants of Options to
Named Executives as performance-based compensation under Section
162(m) of the Code and to satisfy the Applicable Laws.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to grants of Options to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to
satisfy the Applicable Laws.
(iv) GENERAL. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), 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 any Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in
substitution therefor, fill vacancies (however caused) and remove all
members of a Committee and thereafter directly administer the Plan,
all to the extent permitted by the Applicable Laws and, in the case
of a Committee appointed under subsection (ii), to the extent
permitted by Rule 16b-3 as it applies to a plan intended to qualify
thereunder as a discretionary plan, and to the extent required under
Section 162(m) of the Code to qualify grants of Options to Named
Executives as performance-based compensation.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, the Administrator shall
have the authority, in its discretion:
(i)
to determine the Fair Market Value of the Common Stock, in accordance
with Section 2(m) of the Plan;
(ii)
to select the Employees and Consultants to whom Options may from time
to time be granted hereunder;
(iii)
to determine whether and to what extent Options are granted
hereunder;
(iv)
to determine the number of shares of Common Stock to be covered by
each such award granted hereunder;
(v)
to approve forms of agreement for use under the Plan;
(vi)
to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any
Option and/or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator shall determine, in its sole
discretion);
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(vii)
to determine whether, to what extent and under what circumstances
Common Stock and other amounts payable with respect to an award under
this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of
any deemed earnings on any deferred amount during any deferral period); and
(viii)
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;
(c) EFFECT OF ADMINISTRATOR'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.
5. ELIGIBILITY.
(a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options may be granted
only to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option
may, if he or she is otherwise eligible, be granted an additional Option or
Options.
(b) TYPE OF OPTIONS. Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designations, to the extent that
the aggregate Fair Market Value of shares with respect to which Incentive
Stock Options are exercisable for the first time by an Optionee 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 Nonstatutory Stock
Options. For purposes of this Section 5(b), 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 the Option
with respect to such Shares is granted.
(c) NO EMPLOYMENT RIGHTS. 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 or her employment or
consulting relationship at any time, with or without cause.
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 shareholders of the Company
as described in Section 20 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 16 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
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 Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided in
this Plan, the maximum number of Shares which may be subject to Options granted
to any one Employee under this Plan for any fiscal year of the Company shall be
250,000.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:
(i)
In the case of an Incentive Stock Option
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(A)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 110% of the Fair Market Value per Share on the
date of grant;
(B)granted to any Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii)
In the case of a Nonstatutory Stock Option
(A)granted to a person who, at the time of the grant of such
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 110% of the Fair Market Value per Share on the date of the
grant;
(B)granted to a person who, at the time of the grant of such
Option, is a Named Executive of the Company, the per share
Exercise Price shall be no less than 100% of the Fair Market Value on
the date of grant;
(C)granted to any person other than a Named Executive, the per
Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant.
(b) PERMISSIBLE CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (1) cash, (2) check, (3) promissory note, (4) other
Shares that (x) in the case of Shares acquired upon exercise of an Option
either have been owned by the Optionee for more than six months on the date
of surrender or were not acquired, directly or indirectly, from the Company,
and (y) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised, (5) authorization from the Company to retain from the total
number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise
price for the total number of Shares as to which the Option is exercised,
(6) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the exercise price, (7)
delivery of an irrevocable subscription agreement for the Shares that
irrevocably obligates the option holder to take and pay for the Shares not
more than twelve months after the date of delivery of the subscription
agreement, (8) any combination of the foregoing methods of payment, or (9)
such other consideration and method of payment for the issuance of Shares to
the extent permitted under Applicable Laws. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. 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 Section
9(b) of the Plan. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly
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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 shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon 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 14 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.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the event of
termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such
other period of time, not exceeding three (3) months in the case of an
Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Administrator, with such determination in
the case of an Incentive Stock Option being made at the time of grant of the
Option) after the date of such termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. To the extent that
the Optionee was not entitled to exercise the Option at the date of such
termination, or if the optionee does not exercise such Option (which he or
she was entitled to exercise) within the time specified herein, the Option
shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not
exceeding twelve (12) months as is determined by the Administrator, with
such determination in the case of an Incentive Stock Option being made at
the time of grant of the Option) from the date of such termination (but in
no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), exercise his or her Option to the extent he
or she was entitled to exercise it at the date of such termination. To the
extent that he or she was not entitled to exercise the Option at the date of
termination, or if he does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i)
during the term of the Option who is at the time of his death an
Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of
the Option, the Option may be exercised, at any time within six (6)
months (or such other period of time, not exceeding six (6) months, as is
determined by the Administrator, with such determination in the case of
an Incentive Stock Option being made at the time of grant of the Option)
following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option
Agreement), 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 of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or
Consultant three (3) months (or such other period of time as is
determined by the Administrator as provided above) after the date of
death, subject to the limitation set forth in Section 5(b); or
(ii)
within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator,
with such determination in the case of an Incentive Stock Option being
made at the time of grant of the Option) after the termination of
Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death
(but in no event later than the date of
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expiration of the term of such Option as set forth in the Option
Agreement), 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 of the right to exercise that had accrued at the date of
termination.
(e) 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.
11. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3 and shall be subject to 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.
All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a)
the election must be made on or prior to the applicable Tax Date;
(b)
once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c)
all elections shall be subject to the consent or disapproval of the
Administrator;
(d)
if the Optionee is an Officer or Director, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to
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.
In the event the election to have Shares withheld is made by an Optionee and
the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the
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Optionee shall receive the full number of Shares with respect to which the
Option is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. NON-TRANSFERABILITY OF OPTIONS. The 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 or distribution. The designation of a beneficiary
by an Optionee will not constitute a transfer. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee or a transferee
permitted by this Section 13.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) ADJUSTMENTS. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each
outstanding Option, the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, the maximum number of shares of Common Stock for
which Options may be granted to any employee under Section 8 of the Plan,
and 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.
(b) CORPORATE TRANSACTIONS. In the event of the proposed dissolution or
liquidation of the Company, the 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 Administrator 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.
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,
the 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 some or all of
the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable. If the Administrator makes an Option 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
exercisable for a period of thirty (30) days from the date of such notice,
and the Option will terminate upon the expiration of such period.
15. 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 or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
16. AMENDMENT AND TERMINATION OF THE PLAN.
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(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval
of the shareholders of the Company in the manner described in Section 20 of
the Plan:
(i)
any increase in the number of Shares subject to the Plan, other
than in connection with an adjustment under Section 14 of the
Plan;
(ii)
any change in the designation of the class of persons eligible to
be granted Options;
(iii)
any change in the limitation on grants to employees as described
in Section 8 of the Plan or other changes which would require
shareholder approval to qualify options granted hereunder as
performance-based compensation under Section 162(m) of the Code; or
(iv)
if the Company has a class of equity securities registered under
Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to participants
under the Plan.
(b) 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 Board, which agreement must be in writing and signed by the Optionee
and the Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option 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, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange 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. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
18. 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. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and 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.
19. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such forms as the Board shall approve.
20. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law
and the rules of any stock exchange and, in particular, shall be solicited
substantially in accordance with Section 14(a) of the Exchange Act and the rules
and regulations promulgated thereunder.
21. INFORMATION TO OPTIONEES. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company.
9
<PAGE>
GUPTA CORPORATION
1995 STOCK PLAN
NOTICE OF STOCK OPTION GRANT
Optionee's Name and Address:
- ---------------------------------
- ---------------------------------
- ---------------------------------
You have been granted an option to purchase Common Stock of Gupta
Corporation, (the "Company") as follows:
<TABLE>
<S> <C>
Date of Grant:
Option Price Per Share: $
Total Number of Shares Granted:
Total Price of Shares Granted: $
Type of Option: Shares Incentive Stock Option
Shares Nonstatutory Stock Option
Term/Expiration Date:
Vesting Commencement Date:
Vesting Schedule:
Termination Period: This Option may be exercised for a period of
30 days after termination of employment or
consulting relationship except as set out in
Sections 6 and 7 of the Stock Option
Agreement (but in no event later than the
normal Expiration Date).
</TABLE>
By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the 1995 Stock Plan and the Stock Option Agreement, both
of which are attached to and made a part of this document.
OPTIONEE: GUPTA CORPORATION
<TABLE>
<S> <C>
By:
- ------------------------------------------- ---------------------------------------
Signature
Title:
- ------------------------------------------- --------------------------------------
Print Name
</TABLE>
1
<PAGE>
GUPTA CORPORATION
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Gupta Corporation, a California corporation (the
"Company"), hereby grants to the Optionee named in the attached Notice of Stock
Option Grant (the "Optionee"), an option (the "Option") to purchase the total
number of shares of Common Stock (the "Shares") set forth in the Notice of Stock
Option Grant, at the exercise price per share set forth in the Notice of Stock
Option Grant (the "Exercise Price") subject to the terms, definitions and
provisions of the 1995 Stock Option Plan (the "Plan") adopted by the Company,
which is incorporated in this Agreement by reference. In the event of a conflict
between the terms of the Plan and the terms of this Agreement, the terms of the
Plan shall govern. Unless otherwise defined in this Agreement, the terms used in
this Agreement shall have the meanings defined in the Plan.
If designated an Incentive Stock Option in the Notice of Stock Option Grant,
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code and, if not so designated, this Option is intended to be
a Nonstatutory Option.
2. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the Exercise Schedule set out in the Notice of Stock Option
Grant and with the provisions of Sections 9 and 10 of the Plan as follows:
(a)
Right to Exercise.
(i)
This Option may not be exercised for a fraction of a share.
(ii)
In the event of Optionee's death, disability or other termination
of employment, the exercisability of the Option is governed by
Sections 5, 6 and 7 below, subject to the limitations contained in
paragraphs (iii) and (iv) below.
(iii)
In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice
of Stock Option Grant.
(iv)
If designated an Incentive Stock Option in the Notice of Stock
Option Grant, in the event that the Shares subject to this Option
(and all other Incentive Stock Options granted to Optionee by the Company
or any Parent or Subsidiary) that are exercisable for the first time by
the Optionee in any calendar year have an aggregate fair market value
(determined for each Share as of the Date of Grant of the option covering
such Share) that exceeds $100,000, the Shares in excess of $100,000 shall
be treated as subject to a Nonstatutory Stock Option, in accordance with
Section 5 of the Plan.
(b)
Method of Exercise.
(i)
This Option shall be exercisable by delivering to the Company a
written notice of exercise (in the form attached as Exhibit A),
which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed
to be exercised upon receipt by the Company of such written notice
accompanied by the Exercise Price.
(ii)
As a condition to the exercise of this Option, the Optionee
agrees to make adequate provision for federal, state or other tax
withholding obligations, if any, which arise upon the exercise of the
Option or disposition of Shares, whether by withholding, direct payment
to the Company, or otherwise as the Company may direct.
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<PAGE>
(iii)
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all
relevant provisions of law and the requirements of any stock exchange
upon which the Shares may then be listed. Assuming such compliance, for
income tax purposes the Shares shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to
such Shares.
3. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of the
following, or a combination of the following, at the election of the Optionee
and as specified on the notice of exercise form: (a) cash; (b) check; (c)
surrender of other shares of Common Stock of the Company which either have been
owned by the Optionee for more than six (6) months on the date of surrender or
were not acquired, directly or indirectly, from the Company, and which have a
Fair Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised; [or (d) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price,] [wish to add any of the other alternatives
mentioned in Plan?]
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
5. TERMINATION OF RELATIONSHIP. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant (as the case may be), Optionee
may, to the extent otherwise so entitled at the date of such termination (the
"Termination Date"), exercise this Option during the Termination Period set out
in the Notice of Stock Option Grant. To the extent that Optionee was not
entitled to exercise this Option at the date of such termination, or if Optionee
does not exercise this Option within the time specified in the Notice of Stock
Option Grant, the Option shall terminate.
6. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 5
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant (as the case may be) as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within six (6) months from the date of termination of employment (but in no
event later than the date of expiration of the term of this Option as set forth
in the Notice of Stock Option Grant), exercise the Option to the extent
otherwise so entitled at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified in this Agreement, the Option shall terminate.
7. DEATH OF OPTIONEE. In the event of the death of Optionee while an
Employee or Consultant of the Company and having been in Continuous Status as an
Employee or Consultant (as the case may be) since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months following
the date of death (but in no event later than the date of expiration of the term
of this Option as set forth in the Notice of Stock Option Grant), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance to the extent the Optionee was entitled to exercise such Option
on the date of death.
8. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution. The
designation of a beneficiary does not constitute a transfer. An Option may be
exercised during the lifetime of Optionee only by the Optionee or a transferee
permitted by this section. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
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<PAGE>
9. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option.
10. NO ADDITIONAL EMPLOYMENT RIGHTS. Optionee understands and agrees that
the vesting of Shares pursuant to the Exercise Schedule is earned only by
continuing as an Employee or Consultant at the will of the Company (not through
the act of being hired, being granted this Option or acquiring Shares under this
Agreement). Optionee further acknowledges and agrees that nothing in this
Agreement, nor in the Plan which is incorporated in this Agreement by reference,
shall confer upon Optionee any right with respect to continuation as an Employee
or Consultant with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.
11. TAX CONSEQUENCES. Optionee acknowledges that he or she has read the
brief summary set forth below of certain of the federal tax consequences of
exercise of this Option and disposition of the Shares under the law in effect as
of the date of grant. OPTIONEE UNDERSTANDS THAT THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISE OF INCENTIVE STOCK OPTION. If this Option is an Incentive
Stock Option, there will be no regular federal income tax liability upon
the exercise of the Option, although the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price will be
treated as an item of alternative minimum taxable income and may subject the
Optionee to the alternative minimum tax in the year of exercise.
(b) EXERCISE OF NONSTATUTORY STOCK OPTION. If this Option is a
Nonstatutory Stock Option, Optionee may incur regular federal income tax
liability upon the exercise of the Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the
date of exercise over the Exercise Price. In addition, the Company will be
required to withhold from Optionee's compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage
of this compensation income at the time of exercise.
(c) DISPOSITION OF SHARES. If this Option is an Incentive Stock Option
and if Shares transferred pursuant to the Option are held for more than
one year after exercise and more than two years after the Date of Grant, any
gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an
Incentive Stock Option are disposed of before the end of either of such two
holding periods, then any gain realized on such disposition will be treated
as compensation income (taxable at ordinary income rates) to the extent of
the excess, if any, of the lesser of (i) the fair market value of the Shares
on the date of exercise, or (ii) the sales proceeds, over the Exercise
Price. If this Option is a Nonstatutory Stock Option, then gain realized on
the disposition of Shares will be treated as long-term or short-term capital
gain depending on whether or not the disposition occurs more than one year
after the exercise date.
(d) NOTICE OF DISQUALIFYING DISPOSITION. If this Option is an Incentive
Stock Option, and if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive Stock Option on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date
one year after transfer of such Shares to the Optionee upon exercise of the
Incentive Stock Option, the Optionee shall notify the Company in writing
within thirty (30) days after the date of any such disposition. Optionee
agrees that Optionee may be subject to income tax withholding by the Company
on the compensation income recognized by the Optionee from the early
disposition by payment in cash or out of the current earnings paid to the
Optionee.
4
<PAGE>
12. SIGNATURE. This Stock Option Agreement shall be deemed executed by the
Company and the Optionee upon execution by such parties of the Notice of Stock
Option Grant attached to this Stock Option Agreement.
5
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
<TABLE>
<S> <C>
To: Gupta Corporation
Attn: Stock Plan Administrator
Subject: NOTICE OF INTENTION TO EXERCISE STOCK OPTION
</TABLE>
This is official notice that the undersigned ("Optionee") intends to
exercise Optionee's option to purchase shares of Gupta Corporation Common
Stock under the Company's 1995 Stock Option Plan, as amended, and the Stock
Option Agreement dated , as follows:
<TABLE>
<S> <C>
Number of Shares:
Purchase Price:
Method of Payment of Purchase Price:
Cash or check (enclosed)
Delivery of shares with
fair market value equal
to Purchase Price
[ Other permitted method]
</TABLE>
Social Security No.: ___________________
The shares should be issued as follows:
Name: ____________________________________________________
Address: _________________________________________________
__________________________________________________________
__________________________________________________________
Signed: __________________________________________________
Date: ____________________________________________________
6
<PAGE>
APPENDIX B
GUPTA CORPORATION
1992 EMPLOYEE STOCK PURCHASE PLAN
AMENDED DECEMBER 16, 1994
The following constitute the provisions of the 1992 Employee Stock Purchase
Plan of Gupta Corporation.
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of
1986, as amended. The provisions of the Plan shall, accordingly, be construed so
as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. DEFINITIONS.
(a)"BOARD" shall mean the Board of Directors of the Company.
(b)"CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c)"COMMON STOCK" shall mean the Common Stock of the Company.
(d)"COMPANY" shall mean Gupta Corporation, a California corporation.
(e)"COMPENSATION" shall mean all regular straight time gross earnings,
excluding payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation.
(f)"CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(g)"CONTRIBUTIONS" shall mean all amounts credited to the account of a
participant pursuant to the Plan.
(h)"DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(i)"EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least twenty (20) hours per week and more
than five months in a calendar year by the Company or one of its Designated
Subsidiaries.
(j)"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(k)"EXERCISE DATE" shall mean the last day of each Offering Period of the
Plan.
(l)"OFFERING DATE" shall mean the first business day of each Offering Period
of the Plan, except that in the case of an individual who becomes an
eligible Employee after the first business day of an Offering Period but prior
to the first business day of the last calendar quarter of such Offering Period,
the term "Offering Date" shall mean the first business day of the calendar
quarter coinciding with or next succeeding the day on which that individual
becomes an eligible Employee.
Options granted after the first business day of an Offering Period will be
subject to the same terms as the options granted on the first business day of
such Offering Period except that they will have a different grant date (thus,
potentially, a different exercise price) and, because they expire at the same
time as the options granted on the first business day of such Offering Period, a
shorter term.
(m)"OFFERING PERIOD" shall mean a period of three (3) months.
<PAGE>
(n)"PLAN" shall mean this Employee Stock Purchase Plan.
(o)"REPORTING PERSON" shall mean an officer, director or other employee who
is subject to Section 16 of the Exchange Act.
(p)"SUBSIDIARY" shall mean a corporation, domestic or foreign, of which not
less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a)Any person who is an Employee as of the Offering Date of a given Offering
Period shall be eligible to participate in such Offering Period under the
Plan, provided that such person was not eligible to participate in such Offering
Period as of any prior Offering Date, and further, subject to the requirements
of Section 5(a) and the limitations imposed by Section 423(b) of the Code.
(b)Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) if such option would permit
his or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by a series of Offering
Periods, with new Offering Periods commencing on or about January 1, April 1,
July 1, and October 1 of each year (or at such other time or times as may be
determined by the Board of Directors). The first Offering Period shall commence
on the effective date of the Registration Statement on Form S-1 for the initial
public offering of the Company's Common Stock and continue until June 30, 1993.
The Plan shall continue until terminated in accordance with Section 19 hereof.
The Board of Directors of the Company shall have the power to change the
duration and/or the frequency of Offering Periods with respect to future
offerings without shareholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering Period
to be affected.
5. PARTICIPATION.
(a)An eligible Employee may become a participant in the Plan by completing a
subscription agreement on the form provided by the Company and filing it
with the Company's payroll office prior to the applicable Offering Date, unless
a later time for filing the subscription agreement is set by the Board for all
eligible Employees with respect to a given offering. The subscription agreement
shall set forth the percentage of the participant's Compensation (which shall be
not less than 1% and not more than 10%) to be paid as Contributions pursuant to
the Plan.
(b)Payroll deductions shall commence on the first payroll following the
Offering Date and shall end on the last payroll paid on or prior to the
Exercise Date of the offering to which the subscription agreement is applicable,
unless sooner terminated by the participant as provided in Section 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a)The participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent
(1%) and not more than ten percent (10%) of such participant's Compensation on
each such payday; provided that the aggregate of such payroll
2
<PAGE>
deductions during the Offering Period shall not exceed ten percent (10%) of the
participant's aggregate Compensation during said Offering Period. All payroll
deductions made by a participant shall be credited to his or her account under
the Plan. A participant may not make any additional payments into such account.
(b)A participant may discontinue his or her participation in the Plan as
provided in Section 10. If a participant desires to change the rate of
his or her contributions, he or she may do so effective as of the beginning of
the next Offering Period following the date of filing of a new subscription
agreement.
(c)Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period which is scheduled to end during the current calendar year that the
aggregate of all payroll deductions accumulated with respect to such Offering
Period and any other Offering Period ending within the same calendar year equal
$25,000. Payroll deductions shall re-commence at the rate provided in such
participant's subscription Agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.
7. GRANT OF OPTION.
(a)On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date a number of shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Exercise Date and retained in the participant's account as of the Exercise Date
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Offering Date, or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Exercise Date; provided however, that the maximum number of shares an
Employee may purchase during each Offering Period shall be determined at the
Offering Date by dividing $6,250 by the fair market value of a share of the
Company's Common Stock on the Offering Date, and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 12.
The fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b).
(b)The option price per share of the shares offered in a given Offering
Period shall be the lower of: (i) 85% of the fair market value of a share
of the Common Stock of the Company on the Offering Date; or (ii) 85% of the fair
market value of a share of the Common Stock of the Company on the Exercise Date.
The fair market value of the Company's Common Stock on a given date shall be
determined by the Board in its discretion based on the closing price of the
Common Stock for such date (or, in the event that the Common Stock is not traded
on such date, on the immediately preceding trading date), as reported by the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System or, if such price is not reported, the mean of the bid and asked
prices per share of the Common Stock as reported by NASDAQ 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 on such date (or, in the event that
the Common Stock is not traded on such date, on the immediately preceding
trading date), as reported in THE WALL STREET JOURNAL. For purposes of the
Offering Date under the first Offering Period under the Plan, the fair market
value of a share of the Common Stock of the Company shall be the Price to Public
as set forth in the final prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act of 1933, as amended.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period, and the
maximum number of full shares subject to option will be purchased at the
applicable option price with the accumulated Contributions in his or her
account. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Exercise Date. If the
participant is a Reporting Person, the shares purchased upon
3
<PAGE>
exercise of an option shall not be sold or otherwise transferred by the
participant within six (6) months after the Exercise Date. During his or her
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. DELIVERY. As promptly as practicable after the Exercise Date of each
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his or her option. Any cash remaining to the credit of a participant's account
under the Plan after a purchase by him or her of shares at the termination of
each Offering Period, or which is insufficient to purchase a full share of
Common Stock of the Company, shall be returned to said participant.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a)A participant may withdraw all but not less than all the Contributions
credited to his or her account under the Plan at any time prior to the
Exercise Date of the Offering Period by giving written notice to the Company.
All of the participant's Contributions credited to his or her account will be
paid to him or her promptly after receipt of his or her notice of withdrawal and
his or her option for the current period will be automatically terminated, and
no further Contributions for the purchase of shares will be made during the
Offering Period.
(b)Upon termination of the participant's Continuous Status as an Employee
prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c)In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least twenty (20) hours per week during
the Offering Period in which the employee is a participant, he or she will be
deemed to have elected to withdraw from the Plan and the Contributions credited
to his or her account will be returned to him or her and his or her option
terminated.
(d)A participant's withdrawal from an offering will not have any effect upon
his or her eligibility to participate in a succeeding offering or in any
similar plan which may hereafter be adopted by the Company.
11. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.
12. STOCK.
(a)The maximum number of shares of the Company's Common Stock which shall be
made available for sale under the Plan shall be 300,000 shares, subject
to adjustment upon changes in capitalization of the Company as provided in
Section 18. If the total number of shares which would otherwise be subject to
options granted pursuant to Section 7(a) on the Offering Date of an Offering
Period exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of Contributions, if necessary.
(b)The participant will have no interest or voting right in shares covered
by his or her option until such option has been exercised.
(c)Shares to be delivered to a participant under the Plan will be registered
in the name of the participant or in the name of the participant and his
or her spouse.
13. ADMINISTRATION. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and
4
<PAGE>
interpret the Plan, and to make all other determinations necessary or advisable
for the administration of the Plan. The composition of the committee shall be in
accordance with the requirements to obtain or retain any available exemption
from the operation of Section 16(b) of the Exchange Act pursuant to Rule 16b-3
promulgated thereunder.
14. DESIGNATION OF BENEFICIARY.
(a)A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of the
Offering Period but prior to delivery to him or her of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Exercise Date of the Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b)Such designation of beneficiary may be changed by the participant (and
his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
15. TRANSFERABILITY. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
16. USE OF FUNDS. All Contributions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
17. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised, 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 shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue 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.
5
<PAGE>
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. 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 option under the
Plan 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 Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, to shorten the Offering Period then in
progress by setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each participant in writing, at least ten (10) days prior to the New Exercise
Date, that the Exercise Date for his or her option has been changed to the New
Exercise Date and that his or her option will be exercised automatically on the
New Exercise Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of 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 and the
sale of assets or merger.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. AMENDMENT OR TERMINATION.
(a)The Board of Directors of the Company may at any time terminate or amend
the Plan. Except as provided in Section 18, no such termination may
affect options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3
under the Exchange Act, or under Section 423 of the Code (or any successor rule
or provision or any applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as so required.
(b)Without shareholder consent and without regard to whether any participant
rights may be considered to have been adversely affected, the Board (or
its committee) shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
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<PAGE>
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange 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.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company. It shall continue in effect for a term of
twenty (20) years unless sooner terminated under Section 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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<PAGE>
New Election ____
Change of Election ____
GUPTA CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
1. I, _____________, hereby elect to participate in the Gupta Corporation
Employee Stock Purchase Plan (the "Plan") for the Offering Period
_________, 19__ to _________, 19__, and subscribe to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement and the
Plan.
2. I elect to have Contributions in the amount of __% of my Compensation, as
those terms are defined in the Plan, applied to this purchase. I
understand that this amount must not be less than 1% and not more than 10% of my
Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription
Agreement. I understand that all payroll deductions made by me shall be credited
to my account under the Plan and that I may not make any additional payments
into such account. I understand that all payments made by me shall be
accumulated for the purchase of shares of Common Stock at the applicable
purchase price determined in accordance with the Plan. I further understand
that, except as otherwise set forth in the Plan, shares will be purchased for me
automatically on the Exercise Date of the Offering Period unless I otherwise
withdraw from the Plan by giving written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the Exercise
Date my participation in the Plan as provided in Section 10 of the Plan.
I also understand that if I desire to change the rate of my contributions, I can
do so EFFECTIVE FOR THE NEXT OFFERING PERIOD by completing and filing with the
Company a new Subscription Agreement.
5. I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "Gupta Corporation 1992 Employee Stock
Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in the name(s) of
(name of employee or employee and spouse only):
________________________________________________
________________________________________________
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the
Plan:
<TABLE>
<S> <C>
NAME: (Please print)
(First) (Middle) (Last)
(Relationship) (Address)
</TABLE>
8. FOR EMPLOYEES WHO ARE NOT SEC REPORTING PERSONS. I understand that I
may dispose of any shares received by me pursuant to the Plan at any time.
Furthermore, I understand that if I dispose of any shares received by me
pursuant to the Plan within 2 years after the Offering Date (the first day of
the Offering Period during which I purchased such shares) or within 1 year after
the date of the end of the Offering Period, I will be treated for federal income
tax purposes as having received ordinary compensation income at the time of such
disposition in an amount equal to the excess of the fair market value of the
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<PAGE>
shares at the time such shares were transferred to me over the price which I
paid for the shares, regardless of whether I disposed of the shares at a price
less than their fair market value at transfer. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE
DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL,
STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE
DISPOSITION OF THE COMMON STOCK. I understand that if applicable tax laws
change, the Company may be obligated to withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common Stock by me.
9. FOR EMPLOYEES WHO ARE SEC REPORTING PERSONS. I understand that I may
not dispose of any shares received by me pursuant to the Plan within 6 months
after the date of the end of the Offering Period. Furthermore, I understand that
if I dispose of any shares received by me pursuant to the Plan within 2 years
after the Offering Date (the first day of the Offering Period during which I
purchased such shares) or within 1 year after the date of the end of the
Offering Period, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the time
such shares were transferred to me over the price which I paid for the shares,
regardless of whether I disposed of the shares at a price less than their fair
market value at transfer. The remainder of the gain or loss, if any, recognized
on such disposition will be treated as capital gain or loss.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE
DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL,
STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE
DISPOSITION OF THE COMMON STOCK. I understand that if applicable tax laws
change, the Company may be obligated to withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common Stock by me.
10.If I dispose of such shares at any time after expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to the
extent of an amount equal to the LESSER of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares under the option, or (2) 15% of the fair market
value of the shares on the Offering Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss.
I UNDERSTAND THAT THIS TAX SUMMARY IS ONLY A SUMMARY AND IS SUBJECT TO
CHANGE.
11.I hereby agree to be bound by the terms of the Plan. The effectiveness of
this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE: ___________________________
SOCIAL SECURITY #: ___________________
DATE: ________________________________
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
______________________________________
(Signature)
______________________________________
(Print name)
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<PAGE>
GUPTA CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, ____________, hereby elect to withdraw my participation in the Gupta
Corporation Employee Stock Purchase Plan (the "Stock Purchase Plan") for the
Offering Period ____________. This withdrawal covers all Contributions credited
to my account and is effective on the date designated below.
I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
If the undersigned is an officer, director of Gupta Corporation or other
person subject to Section 16 of the Securities Exchange Act of 1934, the
undersigned further understands that under rules promulgated by the U.S.
Securities and Exchange Commission he or she may not re-enroll in the Stock
Purchase Plan for a period of six (6) months after withdrawal.
Dated: ____________________________ ______________________________________
Signature of Employee
______________________________________
Social Security Number
3
<PAGE>
APPENDIX C
GUPTA CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Directors' Stock Option Plan
are to attract and retain the best available personnel for service as Directors
of the Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.
All options granted hereunder shall be nonstatutory stock options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Gupta Corporation, a California corporation.
(e) "CONTINUOUS STATUS AS A DIRECTOR" shall mean the absence of any
interruption or termination of service as a Director.
(f) "DIRECTOR" shall mean a member of the Board.
(g) "EMPLOYEE" shall mean any person, including any officer or director,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in
and of itself to constitute "employment" by the Company.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "OPTION" shall mean a stock option granted pursuant to the Plan. All
options shall be nonstatutory stock options (i.e., options that are
not intended to qualify as incentive stock options under Section 422 of the
Code).
(j) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
(k) "OPTIONEE" shall mean an Outside Director who receives an Option.
(l) "OUTSIDE DIRECTOR" shall mean a Director who is not an Employee.
(m) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(n) "PLAN" shall mean this 1996 Directors' Stock Option Plan.
(o) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(p) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 500,000 Shares (the "POOL") 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
grant under the Plan. If Shares which were acquired upon exercise of an Option
are subsequently repurchased by the Company, such Shares shall not in any event
be returned to the Plan and shall not become available for future grant under
the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
<PAGE>
(a) ADMINISTRATOR. Except as otherwise required herein, the Plan shall
be administered by the Board.
(b) PROCEDURE FOR GRANTS. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance
with the following provisions:
(i)
No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii)
Each Outside Director shall be automatically granted an Option to
purchase Shares (the "OPTION") as follows: (A) with respect to
persons who are Outside Directors on the effective date of this Plan, as
determined in accordance with Section 6 hereof, 50,000 shares on such
effective date, and (B) with respect to any other person, 50,000 shares
on the date on which such person first becomes an Outside Director,
whether through election by the shareholders of the Company or
appointment by the Board of Directors to fill a vacancy.
(iii)
Notwithstanding the provisions of subsection (ii) hereof, in the
event that a grant would cause the number of Shares subject to
outstanding Options plus the number of Shares previously purchased upon
exercise of Options to exceed the Pool, then each such automatic grant
shall be for that number of Shares determined by dividing the total
number of Shares remaining available for grant by the number of Outside
Directors receiving an Option on such date on the automatic grant date.
Any further grants shall then be deferred until such time, if any, as
additional Shares become available for grant under the Plan through
action of the shareholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
(iv)
Notwithstanding the provisions of subsection (ii) hereof, any
grant of an Option made before the Company has obtained
shareholder approval of the Plan in accordance with Section 17 hereof
shall be conditioned upon obtaining such shareholder approval of the Plan
in accordance with Section 17 hereof.
(v)
The terms of each Option granted hereunder shall be as follows:
(1) the Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set
forth in Section 9 hereof;
(2) the exercise price per Share shall be 100% of the fair market
value per Share on the date of grant of the Option,
determined in accordance with Section 8 hereof; and
(3) the Option shall become exercisable in installments
cumulatively as to 1/48th of the Shares subject to the Option
on each of the first forty-eight monthly anniversaries of the date of
grant of the Option.
(c) POWERS OF THE BOARD. Subject to the provisions and restrictions of
the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (ii) to
determine the exercise price per share of Options to be granted, which
exercise price shall be determined in accordance with Section 8(a) of the
Plan; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan; (v) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted hereunder; and (vi) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
(d) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.
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<PAGE>
(e) SUSPENSION OR TERMINATION OF OPTION. If the President or his or her
designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the
Outside Director accused of such misconduct). If the Board of Directors
(excluding the Outside Director accused of such misconduct) determines an
Optionee has committed an act of embezzlement, fraud, dishonesty, nonpayment
of an obligation owed to the Company, breach of fiduciary duty or deliberate
disregard of the Company rules resulting in loss, damage or injury to the
Company, or if an Optionee makes an unauthorized disclosure of any Company
trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Company customer to breach a
contract with the Company or induces any principal for whom the Company acts
as agent to terminate such agency relationship, neither the Optionee nor his
or her estate shall be entitled to exercise any option whatsoever. In making
such determination, the Board of Directors (excluding the Outside Director
accused of such misconduct) shall act fairly and shall give the Optionee an
opportunity to appear and present evidence on Optionee's behalf at a hearing
before the Board or a committee of the Board.
5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective on the
date on which it is adopted by resolution of the Company's Board of Directors.
It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 13 of the Plan.
7. TERM OF OPTIONS. The term of each Option shall be ten (10) years from
the date of grant thereof.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.
(b) FAIR MARKET VALUE. The fair market value shall be determined by the
Board; PROVIDED, HOWEVER, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid
and asked prices of the Common Stock in the over-the-counter market on the
day immediately preceding the date of grant, 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 traded on the Nasdaq National Market or
listed on a stock exchange, the fair market value per Share shall be the
closing price on such system or exchange on the day immediately preceding
the date of grant of the Option (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as
reported in THE WALL STREET JOURNAL.
(c) FORM OF CONSIDERATION. The consideration to be paid for the Shares
to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date
of surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised (which, if acquired from the Company, shall
have been held for at least six months), or any combination of such methods
of payment and/or any other consideration or method of payment as shall be
permitted under applicable corporate law.
9. EXERCISE OF OPTION.
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<PAGE>
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable prior
to shareholder approval of the Plan in accordance with Section 17 hereof has
been obtained.
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 consist of any consideration and method of
payment allowable under Section 8(c) of the Plan. 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 shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after 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.
(b) TERMINATION OF STATUS AS A DIRECTOR. If an Outside Director ceases
to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise
his or her Option to the extent that he or she was entitled to exercise it
at the date of such termination. Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has
expired. To the extent that such Outside Director was not entitled to
exercise an Option at the date of such termination, or does not exercise
such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding Section 9(b) above, in the
event a Director is unable to continue his or her service as a Director
with the Company as a result of his or her total and permanent disability
(as defined in Section 22(e)(3) of the Code), he or she may, but only within
six (6) months (or such other period of time not exceeding twelve (12)
months as is determined by the Board) from the date of such termination,
exercise his or her Option to the extent he or she was entitled to exercise
it at the date of such termination. Notwithstanding the foregoing, in no
event may the Option be exercised after its term set forth in Section 7 has
expired. To the extent that he or she was not entitled to exercise the
Option at the date of termination, or if he or she does not exercise such
Option (which he or she was entitled to exercise) within the time specified
herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i)
During the term of the Option who is, at the time of his or her
death, a Director of the Company and who shall have been in
Continuous Status as a Director since the date of grant of the Option, the
Option may be exercised, at any time within six (6) months following the
date of death, 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 of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as Director for six (6)
months (or such lesser period of time as is determined by the Board) after
the date of death. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired.
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(ii)
Three (3) months after the termination of Continuous Status as a
Director, the Option may be exercised, at any time within six (6)
months following the date of death, 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 of the right to exercise that had accrued at the date of
termination. Notwithstanding the foregoing, in no event may the option be
exercised after its term set forth in Section 7 has expired.
10. NONTRANSFERABILITY OF OPTIONS. The 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 or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) ADJUSTMENT. Subject to any required action by the shareholders 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 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 Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option.
(b) CORPORATE TRANSACTIONS. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of
the Company's assets, (iii) a merger or consolidation in which the Company
is not the surviving corporation, or (iv) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled
to vote are exchanged, the Company shall give to the Eligible Director, at
the time of adoption of the plan for liquidation, dissolution, sale, merger,
consolidation or reorganization, either a reasonable time thereafter within
which to exercise the Option, including Shares as to which the Option would
not be otherwise exercisable, prior to the effectiveness of such
liquidation, dissolution, sale, merger, consolidation or reorganization, at
the end of which time the Option shall terminate, or the right to exercise
the Option, including Shares as to which the Option would not be otherwise
exercisable (or receive a substitute option with comparable terms), as to an
equivalent number of shares of stock of the corporation succeeding the
Company or acquiring its business by reason of such liquidation,
dissolution, sale, merger, consolidation or reorganization.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
PROVIDED THAT, to the extent necessary
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and desirable to comply with Rule 16b-3 under the Exchange Act (or any other
applicable law or regulation), the Company shall obtain approval of the
shareholders of the Company to Plan amendments to the extent and in the
manner required by such law or regulation. Notwithstanding the foregoing,
the provisions set forth in Section 4 of this Plan (and any other Sections
of this Plan that affect the formula award terms required to be specified in
this Plan by Rule 16b-3) shall not be amended more than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan that would impair the rights of any Optionee
shall not affect Options already granted to such Optionee 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
Board, 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 unless the exercise of such Option 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, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
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. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
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. 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.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
If such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such shareholder approval is obtained by written consent, it may be
obtained by the written consent of the holders of a majority of the outstanding
shares of the Company. Options may be granted, but not exercised, before such
shareholder approval.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GUPTA CORPORATION FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 24, 1996
The undersigned shareholder of Gupta Corporation, a California corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated August 26, 1996, and hereby appoints Sam Inman and
Richard Heaps or either of them, proxies and attorneys-in-fact, with full power
to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Shareholders of Gupta
Corporation to be held on Tuesday, September 24, 1996 at 3:00 p.m., local time,
at Hyatt Rickey's in Palo Alto, located at 4219 El Camino Real, Palo Alto,
California 94306 and at any adjournment or postponement thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on the matters set forth below:
1.ELECTION OF DIRECTORS:
/ / FOR all nominees listed below (except as indicated).
/ / WITHHOLD authority to vote for all nominees listed below.
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Umang P. Gupta, Samuel M. Inman, D. Bruce Scott, William O. Grabe, Max D.
Hopper, Anthony Sun.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER
BY 1,000,000 SHARES TO AN AGGREGATE OF 2,000,000 SHARES:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S 1992 EMPLOYEE STOCK
PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK FOR
ISSUANCE THEREUNDER BY 100,000 SHARES TO AN AGGREGATE OF 400,000 SHARES.
4. PROPOSAL TO APPROVE THE ADOPTION OF THE 1996 DIRECTORS' STOCK OPTION PLAN
AND THE RESERVATION OF 500,000 SHARES OF COMMON STOCK FOR ISSUANCE
THEREUNDER:
/ / FOR / / AGAINST / / ABSTAIN
5. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO CENTURA
SOFTWARE CORPORATION:
/ / FOR / / AGAINST / / ABSTAIN
6. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1996:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters that may properly
come before the meeting and any postponement(s) or adjournment(s) thereof.
PLEASE SIGN ON REVERSE SIDE AND RETURN IMMEDIATELY
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS; (2) FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY
1,000,000 SHARES TO AN AGGREGATE OF 2,000,000 SHARES; (3) FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S 1992 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY 100,000
SHARES TO AN AGGREGATE OF 400,000 SHARES; (4) FOR APPROVAL OF THE ADOPTION OF
THE 1996 DIRECTORS' STOCK OPTION PLAN AND THE RESERVATION OF 500,000 SHARES OF
COMMON STOCK FOR ISSUANCE THEREUNDER; (5) FOR APPROVAL OF THE COMPANY'S CHANGE
OF NAME TO CENTURA SOFTWARE CORPORATION; (6) FOR RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
__________________________________________
Signature
Date: ____________________________________
__________________________________________
Signature
Date: ____________________________________
(This Proxy should be marked, dated,
signed by the shareholder(s) exactly as
his or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a fiduciary
capacity should so indicate. If shares are
held by joint tenants or as community
property, both should sign.)
