SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(AMENDMENT NO. )
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[ ] 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 Rule 14a-11(c) or Rule 14a-12
Applix, Inc.
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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<PAGE>
APPLIX, INC.
112 Turnpike Road
Westboro, Massachusetts 01581-2831
Notice of Annual Meeting of Stockholders to be Held
on Thursday, May 8, 1997
The Annual Meeting of Stockholders of Applix, Inc. (the "Company") will be
held at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
on Thursday, May 8, 1997 at 10:00 a.m., local time, to consider and act upon the
following matters:
1. To elect one Class III Director for a term of three years.
2. To approve an amendment to the Company's 1994 Equity Incentive Plan,
providing for an increase from 2,040,157 to 2,490,157 in the number of shares of
Common Stock reserved for issuance thereunder.
3. To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on March 19, 1997 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
Patrick J. Rondeau, Clerk
Westboro, Massachusetts
April 9, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
<PAGE>
APPLIX, INC.
112 Turnpike Road
Westboro, Massachusetts 01581-2831
PROXY STATEMENT
for the Annual Meeting of Stockholders on May 8, 1997
INTRODUCTION
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Applix, Inc. (the "Company") for use at the
Annual Meeting of Stockholders to be held on May 8, 1997, and at any adjournment
of that meeting. All proxies will be voted in accordance with the stockholders'
instructions, and if no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of written
revocation or a subsequently dated proxy to the Clerk of the Company or by
voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended December 31, 1996 is
being mailed to stockholders, along with these proxy materials, on or about
April 11, 1997.
The share numbers presented in this Proxy Statement have been adjusted to
give effect to the two-for-one split of the Common Stock effected in the form of
a stock dividend on December 26, 1995.
Quorum Requirement
At the close of business on March 19, 1997, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 9,948,538
shares of Common Stock of the Company, constituting all of the outstanding
voting stock of the Company. Holders of Common Stock are entitled to one vote
per share.
The holders of a majority of the number of shares of Common Stock issued,
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares which abstain or otherwise
do not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
Votes Required
The affirmative vote of the holders of a plurality of the votes cast by the
holders of Common Stock is required for the election of directors. The
affirmative vote of the holders of a majority of the votes represented by the
shares of Common Stock present and voting on the matter is required for the
approval of the amendment to the 1994 Equity Incentive Plan and the ratification
of the selection of Coopers & Lybrand L.L.P. as the Company's independent
auditors for the current fiscal year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by a broker or nominee who indicates on a proxy that it does
not have discretionary authority to vote as to a particular matter, will not be
voted in favor of such matter, and also will not be counted as shares voting on
such matter. Accordingly, abstentions and "broker non-votes" will have no effect
on the voting on a matter that requires the affirmative vote of a certain
percentage of the
<PAGE>
votes cast on that matter (such as the election of the Class III Director, the
approval of the amendment to the 1994 Equity Incentive Plan and the ratification
of the selection of independent auditors).
Beneficial Ownership of Voting Stock
The following table sets forth the beneficial ownership of the Company's
Common Stock as of December 31, 1996 (i) by each person who is known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) by each director, (iii) by each of the executive officers named in
the Summary Compensation Table set forth below (the "Named Executive Officers"),
and (iv) by all directors and executive officers as of December 31, 1996 as a
group:
Number of Share Percentage of
Beneficially Outstanding
Owned (1) Common Stock (2)
--------------- ----------------
5% Stockholders
Pilgrim, Baxter & Associates(3) 1,072,200 10.8%
1255 Drummers Lane
Wayne, PA 19087
Equitable Companies
Incorporated(4) 871,000 8.8%
787 Seventh Avenue
New York, NY 10019
Dawson-Samberg Capital
Management, Inc.(5) 671,949 6.8%
354 Pequot Ave.
Southport, CT 06490
Directors
Jitendra S. Saxena(6) 287,948 2.9%
Richard J. Davis(7) 89,068 *
Paul J. Ferri(8) 17,672 *
Alain J. Hanover(9) 6,000 *
David C. Mahoney(10) 7,666 *
Other Executive Officers
Barry Zane(11) 52,394 *
Patrick J. Scannell, Jr.(12) 49,066 *
Craig Cervo(13) 30,866 *
All directors and executive
officers as a group
(8 persons)(14) 540,680 5.3%
- --------------------
* Less than 1%
(1) Each person has sole investment and voting power with respect to the shares
indicated as beneficially owned, except as otherwise noted. The inclusion
herein of any shares as beneficially owned does not constitute an admission
of beneficial ownership. In accordance with Securities and Exchange
Commission ("SEC") rules, each person listed is deemed to beneficially own
any shares issuable upon the exercise of stock options held by him or her
that are currently exercisable or exercisable within 60 days after December
31, 1996; and any reference in these footnotes to options refers only to
such options.
(2) Number of shares deemed outstanding includes 9,904,294 shares outstanding
as of December 31, 1996, plus any shares subject to outstanding stock
options held by the person in question.
(3) Based on information supplied to the Company by Pilgrim, Baxter &
Associates.
2
<PAGE>
(4) Based on a Schedule 13G filed with the SEC by Equitable Companies
Incorporated. Comprised of 4,200 shares held by The Equitable Life
Assurance Society of the United States and 866,800 shares held by Alliance
Capital Management L.P., both of which are subsidiaries of the Equitable
Companies Incorporated.
(5) Based on a Schedule 13G filed with the SEC by Dawson-Samberg Capital.
(6) Includes 59,934 shares subject to stock options.
(7) Includes of 41,400 shares subject to stock options.
(8) Includes 10,666 shares subject to stock options.
(9) Includes 4,000 shares subject to stock options.
(10) Comprised of 7,666 shares subject to stock options.
(11) Includes 46,394 shares subject to stock options.
(12) Comprised of 49,066 shares subject to stock options.
(13) Comprised of 30,866 shares subject to stock options.
(14) Includes a total of 249,992 shares subject to stock options.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently two Class I Directors, whose terms expire at the 1998 Annual Meeting
of Stockholders, two Class II Directors, whose terms expire at the 1999 Annual
Meeting of Stockholders, and one Class III Director, whose term expires at this
Annual Meeting of Stockholders (in all cases subject to the election and
qualification of their successors or to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect David C. Mahoney
as a Class III Director, unless authority to vote for the election of the
nominee is withheld by marking the proxy to that effect. Mr. Mahoney is
currently a Class III Director of the Company. The nominee has indicated his
willingness to serve, if elected, but if he should be unable or unwilling to
stand for election, proxies may be voted for a substitute nominee designated by
the Board of Directors.
Set forth below are the names and certain information with respect to each
director of the Company, including the nominee for Class III Director.
Nominee for Class III Director (holding office for a term expiring at this
Annual Meeting; nominated for a term expiring at the 2000 Annual Meeting):
Mr. Mahoney, age 51, has been a director of the Company since October 1992.
He has been Chairman of the Board and Chief Executive Officer of Banyan Systems,
Inc., a networking software company, since 1983.
Class I Directors (holding office for a term expiring at the 1998 Annual
Meeting):
Mr. Ferri, age 58, has been a director of the Company since its inception
in 1983. He has been the managing general partner of Matrix Partners, a venture
capital firm, since 1980. Mr. Ferri also serves as a director of Stratus
Computer Inc., BancTec, Inc., Cascade Communications Corp., TechForce Corp. and
VideoServer, Inc.
Mr. Saxena, age 51, is a founder of the Company and has been President,
Chief Executive Officer and a director of the Company since its inception in
1983. Mr. Saxena also served as Treasurer of the Company from April 1991 to
April 1993.
3
<PAGE>
Class II Directors (holding office for a term expiring at the 1999 Annual
Meeting):
Mr. Davis, age 53, has been a director of the Company since March 1989. He
is currently President and Chief Executive Officer of Nabnasset Corporation, a
developer of computer telephony integration solution. Mr. Davis joined the
Company as Executive Vice President, Customer Operations in January 1989 and
served as Executive Vice President, Sales and Marketing from October 1994 until
March 1997.
Mr. Hanover, age 48, has been a director of the Company since July 1992. He
has been Chairman of the Board of Directors of Viewlogic Systems, Inc., an
engineering software company, since 1984, serving as that company's Chief
Executive Officer from 1984 until 1997.
Board and Committee Meetings
The Company has a standing Audit Committee of the Board of Directors, which
is responsible for reviewing financial reports, accounting procedures and the
scope and results of the annual audit of the Company's financial statements. The
Audit Committee did not meet during 1996. The current members of the Audit
Committee are Messrs. Saxena, Ferri and Hanover.
The Company has a standing Compensation Committee of the Board of
Directors, which is responsible for reviewing compensation issues and making
decisions concerning the compensation (including stock option grants) of the
Company's executive officers. The Compensation Committee did not meet during
1996. The current members of the Compensation Committee are Messrs. Ferri and
Mahoney.
The Board of Directors met eight times during 1996. Each director, with the
exception of Mr. Mahoney, attended at least 75% of the aggregate of the number
of Board meetings and the number of meetings held by all committees on which he
then served.
Compensation of Directors
Directors of the Company do not receive compensation for their services as
directors, but outside directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors meetings. The Company may in
the future adopt a compensation policy for outside directors.
Each director of the Company who is not an employee of the Company is
eligible to receive options pursuant to the 1996 Director Stock Option Plan (the
"1996 Director Plan"). Pursuant to the 1996 Director Plan, (i) each outside
director received an option to purchase 2,500 shares of Common Stock on May 10,
1996 the date of approval of the 1996 Director Plan by the stockholders of the
Company, (ii) each non-employee director initially elected to the Board in the
future will receive an option to purchase 5,000 shares of Common Stock upon such
director's initial election to the Board and (iii) each outside director
received an option to purchase 2,500 shares of Common Stock on February 15, 1997
and will receive an option to purchase 2,500 shares of Common Stock on February
15 of each subsequent year. Such options shall have an exercise price equal to
the fair market value of the Common Stock on the date of grant, shall become
exercisable on the first anniversary of the date of grant, provided the optionee
continues to serve as a director of the Company, and shall expire seven years
from the date of grant (or upon an earlier change in control of the Company).
4
<PAGE>
Executive Compensation
Summary Compensation
The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of the Named
Executive Officers as of December 31, 1996.
Long-Term
Compensation
Awards(2)
---------
Number
of Shares
Annual Compensation(1) Underlying
Name and Fiscal ---------------------- Stock
Principal Position Year Salary Bonus Options(3)
- ------------------ ----- --------- --------- -----------
Jitendra S. Saxena 1996 $195,000 $202,832 0
President and Chief 1995 $182,000 $158,687 242,000
Executive Officer 1994 $173,250 $ 90,585 40,000
Richard J. Davis 1996 $190,000 $148,744 0
Executive Vice President, 1995 $177,000 $111,081 148,000
Sales and Marketing 1994 $168,000 $ 67,939 10,000
Craig Cervo 1996 $136,000 $ 67,611 0
Vice President, Product 1995 $127,000 $ 63,475 76,000
Development 1994 $120,750 $ 28,308 10,000
Patrick J. Scannell, Jr. 1996 $136,000 $ 67,611 0
Executive Vice President, 1995 $127,000 $ 63,475 76,000
Finance and Administration, 1994 $120,750 $ 28,308 10,000
Chief Financial Officer
and Treasurer
Barry M. Zane 1996 $136,000 $ 67,611 0
Vice President, 1995 $127,000 $ 31,737 76,000
Technology 1994 $120,750 $ 16,985 30,000
- -----------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the SEC, as the aggregate
amount of such perquisites and other personal benefits constituted less
than the lesser of $50,000 or 10% of the total annual salary and bonus for
each executive officer in each fiscal year covered.
(2) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during any
fiscal year covered.
(3) The option grants to executive officers for 1995 include grants in January
1995, intended to comprise part of the executive officers' overall
compensation package for 1995, and grants in December 1995, intended to
comprise part of the executive officers' overall compensation package for
1996.
5
<PAGE>
Option Exercises and Holdings
The following table sets forth certain information concerning each exercise
of a stock option during 1996 by the Company's executive officers and the number
and value of unexercised options held by each of the Named Executive Officers on
December 31, 1996.
<TABLE>
<CAPTION>
Number of
Shares Value
Underlying of Unexercised
Unexercised In-the-Money
Number of Options at Fiscal Options at Fiscal
Shares Year-End Year-End(2)
Acquired ------------- --------------
on Value Exercisable/ Exercisable/
Name Exercise Realized(1) Unexercisable Unexercisable
- ------- -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Jitendra S. Saxena 45,064 $1,487,807 25,068/234,533 $176,600/$2,242,660
Richard J. Davis 127,668 $3,623,167 23,600/130,400 $189,216/$1,208,129
Craig Cervo 27,200 $860,909 15,934/88,200 $236,534/$1,055,612
Patrick J. Scannell, Jr. 15,000 $535,050 40,466/81,868 $672,941/$924,160
Barry M. Zane 30,000 $990,066 32,462/87,404 $500,224/$850,335
- ----------------------
</TABLE>
(1) Represents the difference between the exercise price and the fair
market value of the Common Stock on the date of exercise.
(2) Represents the fair market value of the Common Stock on December 31,
1996 ($21.875), less the option exercise price. Based on the fair
market value of the Common Stock on March 10, 1997 ($10.375), the
value of unexercised in-the-money options at fiscal year-end
(exercisable/unexercisable) were as follows: for Mr. Saxena,
$23,278/$568,200; for Mr. Davis, $0/$152,220; for Mr. Cervo,
$84,476/$313,948; for Mr. Scannell, $246,929/$255,345; and for
Mr. Zane, $171,271/$261,629.
Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), which
throughout 1996 was comprised of two non-employee directors (Messrs. Ferri and
Mahoney). The Committee is responsible for determining the salaries of,
establishing bonus programs for, and granting stock options to, the Company's
executive officers. In making decisions regarding executive compensation, the
Committee receives and considers input from the Company's Chief Executive
Officer.
The Committee has three general goals in determining executive
compensation. First, the Committee seeks to provide incentive for, and reward,
the attainment of objectives that inure to the benefit of the Company and its
stockholders. Second, the Committee seeks to compensate executives in a manner
that enables the Company to attract and retain talented executives who can
contribute to the success of the Company. Third, the Committee seeks to set the
compensation of each executive at a level that it believes is fair, based on
both the executive's relative contribution to the Company and the compensation
levels of similarly situated executives in comparable companies.
The Company's executive compensation consists of three principal elements:
salary, bonuses and stock option grants.
In establishing base salaries for executive officers, the Committee
considers numerous factors such as the executive's responsibilities, the
executive's importance to the Company, the executive's performance in the prior
year, historical salary levels of the executive, and the salaries of executives
at certain other companies whose business and/or financial situation is similar
to that of the Company. To the extent it deems it appropriate, the Committee
also considers general economic conditions within the area and within the
industry. The base salaries of each of the Company's five executive officers for
1996 represented an approximately 7% increase over their base salaries for 1995.
The Committee believes that it is important to tie a significant portion of
the compensation of executive officers to the attainment of corporate success,
thus aligning the objectives and rewards of Company executives with those of
6
<PAGE>
the stockholders of the Company. For 1996, the Committee established a
bonus program for executive officers that was based entirely on the Company's
operating income (except that 50% of Mr. Zane's target bonus was tied to the
achievement of certain technological milestones. Under this program, each
executive officer was assigned a target bonus, which ranged from $50,000 to
$150,000 (in the case of Mr. Saxena). If the Company's operating income for 1996
was 75% or less than the net income in the Company's 1996 operating plan, no
bonus would be paid to any executive. If the Company's operating income for 1996
was more than 75% of its targeted operating income, each executive officer would
receive such percentage of his target bonus as was equal to the Company's
operating income as a percentage of target operating income (e.g., if the
Company's operating income was 105% of target operating income, each executive
would receive 105% of his target bonus). Based on the Company's reported net
income for 1996 (and in the case of Mr. Zane, based in part upon the achievement
of certain technological milestones), the executive officers received
approximately 135% of their target bonuses.
The Committee also uses stock options as a significant element of the
compensation package of executive officers, because it believes options provide
an incentive to executives to maximize stockholder value and because they
compensate executives only to the extent that the Company's stockholders receive
a return on their investment. Moreover, because options granted to executive
officers generally become exercisable over a five-year period and terminate upon
or shortly after the termination of the executive's employment with the Company,
stock options serve as a means of retaining these executives. In determining the
total number of shares of Common Stock to be covered by option grants to
executive officers in a given year, the Committee takes into account the number
of outstanding shares of Common Stock, the number of shares reserved for
issuance under the Company's option plan, recommendations of management
concerning option grants to employees below executive level, the Company's
projected hiring needs for the coming year and the recent performance of the
Company. In making individual stock option grants to executives, the Committee
considers the same factors considered in the determination of base salary
levels, as well as the stock and option holdings of each executive and the
remaining vesting schedule of such executive's options.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), certain executive compensation in excess of $1 million paid to the five
most highly-paid executives of the Company will not be deductible by the Company
for federal income tax purposes unless the compensation is awarded under a
performance-based plan approved by the stockholders of the Company. In general,
the Company's stock option plans are structured and administered in a manner
intended to comply with the performance-based exception to Section 162(m), thus
excluding from the Section 162(m) compensation limitation that income recognized
by executives pursuant to stock options. The Committee intends to periodically
review the potential effect of Section 162(m) and may in the future decide to
structure certain other executive compensation programs so that they comply with
the performance-based requirements of Section 162(m).
Compensation Committee
Paul J. Ferri
David C. Mahoney
7
<PAGE>
Stock Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company between December 9, 1994 (the date the Company's
Common Stock commenced public trading) and December 31, 1996 with the cumulative
total return of (i) the CRSP Total Return Index for the Nasdaq Stock Market
(U.S.) (the "Nasdaq Composite Index") and (ii) the Standard and Poor's Computer
(Software & Services) Index (the "S&P Computer Index"), over the same period.
This graph assumes the investment of $100.00 on December 9, 1994 in the
Company's Common Stock, the Nasdaq Composite Index and the S&P Computer Index,
and assumes any dividends are reinvested.
[Stock Performance Graph]
<TABLE>
<CAPTION>
December 9, December 30, December 29, December 31,
1994 1994 1995 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
APPLIX, INC. $100.00 $130.00 $545.00 $438.00
NASDAQ COMPOSITE $100.00 $100.00 $142.00 $174.00
INDEX
S&P COMPUTER $100.00 $100.00 $140.00 $218.00
INDEX
</TABLE>
PROPOSAL TO APPROVE AN AMENDMENT TO THE
1994 EQUITY INCENTIVE PLAN OF THE COMPANY
The Company's 1994 Equity Incentive Plan (the "Plan") currently authorizes
awards of restricted stock and grants of incentive and non-statutory options to
employees, officers and employee directors of, and consultants and advisors to,
the Company and its subsidiaries to purchase up to 2,040,157 shares of the
Company's Common Stock. On March 13, 1997, the Board of Directors of the Company
adopted, subject to stockholder approval, an amendment (the "Amendment") to the
Plan, providing for an increase from 2,040,157 to 2,490,157 in the number of
shares of the Company's Common Stock available for issuance under the Plan. The
Board of Directors believes that awards under the Plan, including stock options,
have been and will continue to be an important compensation element in
attracting and retaining key employees who are expected to contribute to the
Company's growth and success. The Board of Directors of the Company believes
that the Amendment is in the best interest of the Company and its stockholders,
and recommends a vote in favor of this proposal.
8
<PAGE>
Summary of the Plan
The Plan was adopted by the Company's Board of Directors on April 11, 1994
and approved by its stockholders on May 20, 1994 and will terminate on April 10,
2004, unless earlier terminated according to the terms of the Plan.
Stock options entitle the optionee to purchase Common Stock from the
Company for a specified exercise price during a period specified in the
applicable option agreement. Restricted stock awards under the Plan entitle the
recipient to purchase Common Stock from the Company under terms which provide
for vesting over a period of time and a right of repurchase in favor of the
Company of the unvested portion of the Common Stock subject to the award upon
the termination of the recipient's employment or other relationship with the
Company. As option grants and stock awards under the Plan are discretionary, the
Company cannot now determine the number of options to be granted or awards to be
made to any particular executive officer, executive officers as a group, or
non-executive officers and employees as a group. The maximum number of shares
with respect to which options or restricted stock awards may be granted to any
employee under the Plan in one calendar year shall not exceed 250,000 shares of
Common Stock.
The Plan is administered by the Compensation Committee of the Board of
Directors, which selects the persons to whom restricted stock awards and stock
options are granted and determines the number of shares of Common Stock covered
by the award or option, its purchase price or exercise price, its vesting
schedule and (in the case of stock options) its expiration date.
As of March 1, 1997, 1,774,597 shares of Common Stock were issuable
pursuant to stock options outstanding under the Plan and 152,597 additional
shares remained available for future option grants or restricted stock awards
under the Plan. The outstanding stock options generally become exercisable over
a five-year period, are nontransferable, and expire either seven or ten years
after the date of grant (subject to earlier termination in the event of the
termination of the optionee's employment with the Company). To date, no
restricted stock awards have been made under the Plan. As of March 1, 1997, 353
employees of the Company were eligible to receive options or restricted stock
awards under the Plan.
Federal Income Tax Consequences
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to awards granted under the
Plan and with respect to the sale of Common Stock acquired under the Plan.
Incentive Stock Options
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option may, however, subject the participant to
the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
9
<PAGE>
Nonstatutory Stock Options
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises of a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO stock for more than
one year prior to the date of the sale.
Restricted Stock Awards
A participant will not recognize taxable income upon the grant of a
restricted stock award, unless the participant makes an election under Section
83(b) of the Code (a "Section 83(b) Election"). If the participant makes a
Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary income, for the year in which the award is
granted, in an amount equal to the difference between the fair market value of
the Common Stock at the time the award is granted and the purchase price paid
for the Common Stock. If a Section 83(b) Election is not made, the participant
will recognize ordinary income, at the time that the forfeiture provisions or
restrictions on transfer lapse, in an amount equal to the difference between the
fair market value of the Common Stock at the time of such lapse and the original
purchase price paid for the Common Stock. The participant will have a basis in
the Common Stock acquired equal to the sum of the price paid and the amount of
ordinary compensation income recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's
basis in the Common Stock. The gain or loss will be a long-term gain or loss if
the shares are held for more than one year. For this purpose, the holding period
shall begin just after the date on which the forfeiture provisions or
restrictions lapse if a Section 83(b) Election is not made, or just after the
award is granted if a Section 83(b) Election is made.
Other Stock-Based Awards
The tax consequences associated with any other stock-based award granted
under the Plan will vary depending on the specific terms of such award,
including, whether or not the award has a readily ascertainable fair market
value, whether or not the award is subject to forfeiture provisions or
restrictions on transfer, the nature of the property to be received by the
participant under the award, the applicable holding period and the participant's
tax basis.
Tax Consequences to the Company
The grant of an award under the Plan will have no tax consequences to the
Company. Moreover, in general, neither the exercise of an incentive stock option
nor the sale of any Common Stock acquired under the Plan will have any tax
consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the Plan, including as a result of the
exercise of a nonstatutory stock option, a Disqualifying Disposition or a
Section 83(b) Election. Any such deduction will be subject to the limitations of
Section 162(m) of the Code. The Company will have a withholding obligation with
respect to any ordinary compensation income recognized by participants under the
Plan who are employees or otherwise subject to withholding.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the current fiscal year. Although
stockholder approval of the Board of Directors' selection of Coopers & Lybrand
10
<PAGE>
L.L.P. is not required by law, the Board of Directors believes that it
is advisable to give stockholders an opportunity to ratify this selection. If
this proposal is not approved at the Annual Meeting, the Board of Directors may
reconsider its selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
OTHER MATTERS
Matters to be Considered at the Meeting
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
Solicitation of Proxies
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. The Company has retained
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
for this year's Annual Meeting, at a cost to the Company of approximately $4,000
plus reimbursement of reasonable expenses. Brokers, custodians and fiduciaries
will be requested to forward proxy soliciting material to the owners of stock
held in their names, and, as required by law, the Company will reimburse them
for their out-of-pocket expenses in this regard.
Stockholder Proposals
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal office
not later than December 12, 1997 for inclusion in the proxy statement for that
meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on its review of copies of reports filed by the directors and
executive officers of the Company pursuant to Section 16(a) of the Exchange Act
or written representations from certain persons required to file reports under
Section 16(a) of the Exchange Act that no Form 5 filing was required for such
person, the Company believes that during 1996 all filings required to be made by
its Reporting Persons were timely made in accordance with the requirements of
the Exchange Act.
By Order of the Board of Directors,
/s/ Patrick J. Rondeau
-----------------------------
Patrick J. Rondeau, Clerk
April 9, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
11
PROXY PROXY
APPLIX, INC.
ANNUAL MEETING OF STOCKHOLDERS -- May 8, 1997
This proxy is solicited on behalf of the Board of Directors of the Company.
The undersigned, having received notice of the meeting and management's
Proxy Statement therefor, and revoking all prior proxies, hereby appoint(s)
Patrick J. Scannell, Jr. and Patrick J. Rondeau, and each of them (with full
power of substitution), as proxies of the undersigned to attend the Annual
Meeting of Stockholders of Applix, Inc. (the "Company") to be held on Friday,
May 8, 1997 and any adjourned sessions thereof, and there to vote and act upon
the following matters in respect of all shares of Common Stock of the Company
which the undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned
session thereof will not be deemed to revoke this proxy unless the undersigned
shall affirmatively indicate thereat the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in a fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.
In their discretion, the named Proxies are authorized to vote upon such
other matters as may properly come before the meeting, or any adjournment
thereof.
(Continued and to be signed on reverse side)
<PAGE>
1. To elect the following individual as Class III Director:
David C. Mahoney FOR [ ] WITHHOLD AUTHORITY [ ]
2. To approve an amendment to the Company's 1994 Equity
Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the current fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any election to office or
proposal specified above, this proxy will be voted for such election to office
or proposal.
--------------------------------
--------------------------------
Signature(s)
Dated:
---------------------------
Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator or other fiduciary, please give your full title as such.
Joint owners should each sign personally. If a corporation, sign in full
corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
