<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
APPLIX, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement 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:
- --------------------------------------------------------------------------------
<PAGE> 2
APPLIX, INC.
112 TURNPIKE ROAD
WESTBORO, MASSACHUSETTS 01581-2831
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON FRIDAY, MAY 7, 1999
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 Friday, May 7, 1999 at 10:00 a.m., local time, to consider and act upon the
following matters:
1. To elect one Class II 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 2,990,157 to 3,490,157 in the number
of shares of Common Stock issuable thereunder.
3. To approve an amendment to the Company's Amended and Restated 1995
Employee Stock Purchase Plan, providing for an increase from 400,000 to
700,000 in the number of shares of Common Stock reserved for issuance
thereunder.
4. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year.
5. 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 18, 1999 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
March 31, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL 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> 3
APPLIX, INC.
112 TURNPIKE ROAD
WESTBORO, MASSACHUSETTS 01581-2831
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 7, 1999
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 7, 1999, 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, 1998 is
being mailed to stockholders, along with these proxy materials, on or about
March 31, 1999.
QUORUM REQUIREMENT
At the close of business on March 18, 1999, 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 10,508,910
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 that 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 amendments to the 1994 Equity Incentive Plan and the 1995
Employee Stock Purchase Plan, and the ratification of the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the current
fiscal year.
Shares that abstain from voting as to a particular matter, and shares held
in "street name" by a broker or nominee that 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
<PAGE> 4
affirmative vote of a certain percentage of the votes cast or the shares voting
on that matter (such as the election of a Class II Director, the approval of the
amendments to the 1994 Equity Incentive Plan and the 1995 Employee Stock
Purchase 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, 1998 (1) by each director, (2) by each of the
executive officers named in the Summary Compensation Table set forth below (the
"Named Executive Officers"), and (3) by all current directors and executive
officers as a group. The Company is not aware of any person or entity that
beneficially owns more than 5% of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED(1) COMMON STOCK(2)
---------------- ---------------
<S> <C> <C>
Directors
Jitendra S. Saxena(3)....................................... 412,216 3.95%
Paul J. Ferri(4)............................................ 30,340 *
Alain J. Hanover(5)......................................... 43,668 *
David C. Mahoney(6)......................................... 20,334 *
Jay Waldron(7).............................................. 49,342
Other Named Executive Officers
Barry Zane(8)............................................... 65,666 *
Patrick J. Scannell, Jr.(9)................................. 77,134 *
Craig Cervo(10)............................................. 63,174 *
All current directors and executive officers as a group (8
persons)(11).............................................. 697,219 6.54%
</TABLE>
- ---------------
* 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 were exercisable on December 31, 1998 or within 60 days after December
31, 1998; any reference in these footnotes to options refers only to such
options.
(2) Number of shares deemed outstanding includes 10,272,640 shares outstanding
as of December 31, 1998, plus any shares subject to outstanding stock
options held by the person or group in question.
(3) Includes 159,202 shares subject to stock options held by Mr. Saxena.
(4) Includes 23,334 shares subject to stock options held by Mr. Ferri.
(5) Includes 5,000 shares subject to stock options held by Mr. Hanover.
(6) Comprised of 20,334 shares subject to stock options held by Mr. Mahoney.
(7) Includes 48,800 shares subject to stock options held by Mr. Waldron.
(8) Comprised of 64,666 shares subject to stock options held by Mr. Zane.
(9) Comprised of 77,134 shares subject to stock options held by Mr. Scannell.
(10) Comprised of 63,174 shares subject to stock options held by Mr. Cervo.
(11) Includes a total of 396,989 shares subject to stock options held by the
current directors and executive officers as a group.
2
<PAGE> 5
ELECTION OF DIRECTOR
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 2001 Annual Meeting
of Stockholders; one Class II Director, whose term expires at this Annual
Meeting of Stockholders; and two Class III Directors, whose terms expire at the
2000 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 Alain J. Hanover
as Class II Director, unless authority to vote for the election of the nominee
is withheld by marking the proxy to that effect. Mr. Hanover is currently Class
II Director of the Company. Mr. Hanover 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. Proxies may not be voted for a greater number of persons than the
number of nominees named herein.
Set forth below are the names and certain information with respect to each
director of the Company, including the nominee for Class II Director.
Class I Directors (holding office for a term expiring at the 2001 Annual
Meeting):
Mr. Ferri, age 60, 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 1982. Mr. Ferri also serves as a director of BancTec, Inc.,
TechForce Corp. and VideoServer, Inc.
Mr. Saxena, age 53, is a founder of the Company and has been a director and
Chief Executive Officer of the Company since its inception in 1983. Mr. Saxena
has served as Chairman of the Company since April 1997, and served as its
President from its inception until April 1997.
Class II Director (holding office for a term expiring at this Annual Meeting;
nominated for a term expiring at the 2002 Annual Meeting):
Mr. Hanover, age 50, has been a director of the Company since July 1992. He
has been the President and Chief Executive Officer of InCert Software Corp., a
computer software development and distribution company, since October 1997. Mr.
Hanover served as Chairman of the Board of Directors and Chief Executive of
Viewlogic Systems, Inc., an engineering software company, from 1984 until May
1997.
Class III Directors (holding office for a term expiring at the 2000 Annual
Meeting):
Mr. Mahoney, age 54, has been a director of the Company since October 1992.
Mr. Mahoney has been Chief Executive Officer of Dataware Technologies,
Incorporated since January 1999. Mr. Mahoney served as President and Chief
Executive Officer of Sovereign Hill Software, Inc. from January 1998 to December
1998, when it merged with Dataware Technologies. He served as president of
Falcon Group Consulting from May 1997 to January 1998. He has been a director of
Banyan Systems, Inc., a networking software company, since 1983. Mr. Mahoney
served as Banyan's Chairman of the Board and Chief Executive Officer from 1983
until May 1997.
Mr. Waldron, age 41, has been a director of the Company since 1997. He has
served as President and Chief Operating Officer of the Company since April 1997.
Mr. Waldron served as Executive Vice President, Product and Market Development
from January 1997 to April 1997, and as Vice President of International Sales
from November 1995 to January 1997. Mr. Waldron was employed from November 1993
to
3
<PAGE> 6
September 1995 by MicroTouch Systems, Inc., a touchscreen devices and software
development company, most recently as Vice President of New Business
Development.
BOARD AND COMMITTEE MEETINGS
The standing Audit Committee of the Board of Directors 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 met
once during 1998. The current members of the Audit Committee are Messrs. Saxena,
Ferri and Hanover.
The standing Compensation Committee of the Board of Directors 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 met once during 1998. The current members
of the Compensation Committee are Messrs. Ferri and Mahoney.
The Board of Directors met five times during 1998, and acted twice by
written consent in lieu of a meeting. Each director attended at least 75% of the
aggregate number of Board meetings and the number of meetings held by all
committees on which he then served.
COMPENSATION OF DIRECTORS
Except as described below, 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
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, (1) 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, (2) each outside director initially elected to the Board after the
adoption of the plan receives an option to purchase 5,000 shares of Common Stock
upon such director's initial election to the Board and (3) each outside director
receives an option to purchase 2,500 shares of Common Stock on January 1st of
each year so long as he or she continues to serve as a director. Such options
have an exercise price equal to the fair market value of the Common Stock on the
date of grant; become exercisable on the first anniversary of the date of grant
(or upon an earlier change in control of the Company), provided the optionee
continues to serve as a director of the Company on such date; and expire seven
years from the date of grant or 90 days after the optionee ceases to serve as a
director.
4
<PAGE> 7
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 (1) the
CEO of the Company, (2) the three most highly compensated executive officers
other than the CEO whose total annual salary and bonus exceeded $100,000 and who
were serving as executive officers at the end of 1998, and (3) one executive
officer who would have been among the four most highly compensated executive
officers other than the CEO had he been serving at the end of 1998.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(2)
ANNUAL COMPENSATION(1) ----------------
-------------------------------- NUMBER OF SHARES
FISCAL UNDERLYING STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(3)
--------------------------- ------ -------- -------- ----------------
<S> <C> <C> <C> <C>
Jitendra S. Saxena.......................... 1998 $220,000 $ 0 80,000
Chairman and Chief Executive Officer 1997 205,000 0 254,000(4)
1996 195,000 202,832 0
Jay Waldron................................. 1998 $175,000 $ 0 60,000
President and Chief Operating Officer 1997 150,000 0 196,000(5)
1996 N/A N/A N/A
Craig Cervo................................. 1998 $155,000 $ 0 30,000
Vice President, Product Development 1997 143,000 0 97,800(6)
1996 136,000 67,611 0
Barry M. Zane............................... 1998 $150,000 $ 0 30,000
Vice President, Technology 1997 143,000 0 91,000(7)
1996 136,000 67,611 0
Patrick J. Scannell, Jr..................... 1998 $138,214 $ 0 30,000
Executive Vice President, Finance and 1997 143,000 0 126,000(9)
Administration, Chief Financial 1996 136,000 67,611 0
Officer and Treasurer(8)
</TABLE>
- ---------------
(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 for 1997 include options originally granted in February
1997, intended to comprise part of the executive officers' overall
compensation package for 1997, and grants in December 1997, intended to
comprise part of the executive officers' overall compensation package for
1998.
(4) Includes options to purchase an aggregate of 204,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 50,000
shares granted in February 1997 and options for a total of 154,000 shares
granted in prior years.
(5) Includes options to purchase an aggregate of 96,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 70,000
shares granted in February 1997 and options for a total of 26,000 shares
granted in prior years.
5
<PAGE> 8
(6) Includes options to purchase an aggregate of 72,800 shares of Common Stock
that were granted in April 1997 in replacement of an option for 5,000 shares
granted in February 1997 and options for a total of 67,800 shares granted in
prior years.
(7) Includes options to purchase an aggregate of 66,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 10,000
shares granted in February 1997 and options for a total of 56,000 shares
granted in prior years.
(8) Mr. Scannell was employed by the Company through October 1998.
(9) Includes options to purchase an aggregate of 96,000 shares of Common Stock
that were granted in April 1997 in replacement of an option for 20,000
shares granted in February 1997 and options for a total of 76,000 shares
granted in prior years.
OPTION GRANTS
The following table sets forth information regarding the granting of
options during 1998 to the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION -------------------
EXECUTIVE OFFICER GRANTED IN FY SHARE(1) DATE 5% 10%
- ----------------- ---------- ---------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Jitendra S. Saxena......... 80,000 10.0% $3.875 01/01/06 126,201 294,102
Jay Waldron................ 60,000 7.5% $3.875 01/01/06 94,651 220,577
Craig Cervo................ 30,000 3.8% $3.875 01/01/06 47,325 110,288
Barry M. Zane.............. 30,000 3.8% $3.875 01/01/06 47,325 110,288
</TABLE>
- ---------------
(1) Options are incentive stock options, become exercisable over a five-year
period and generally terminate three months following termination of the
executive officer's employment with the Company or on the expiration date,
whichever occurs earlier. The exercise price of each option is equal to the
fair market value per share of the Common Stock on the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The grants shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise of the option or the sale of the underlying shares. The
actual gains, if any, on the exercises of stock options will depend on the
future performance of the Common Stock, the optionholder's continued
employment through the option period, and the date on which the options are
exercised.
6
<PAGE> 9
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning each exercise
of stock options during 1998 by the Named Executive Officers and the number and
value of unexercised options held by each of the Named Executive Officers on
December 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END: FISCAL YEAR-END(2):
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ----------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Jitendra S. Saxena..... 0 $ 0 159,202 280,400 $135,821 $89,248
Jay Waldron............ 0 0 48,800 207,200 18,000 42,000
Craig Cervo............ 0 0 63,174 100,960 105,700 31,850
Barry Zane............. 10,000 61,450 64,666 100,200 57,264 28,875
Patrick J. Scannell.... 0 0 77,134 0 129,495 0
</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, 1998
($3.875 per share), less the option exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), which
throughout 1998 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 to
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
1998 represented an approximately 9.1% increase over their base salaries for
1997.
7
<PAGE> 10
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 the
stockholders of the Company. For 1998, the Committee established a bonus program
for executive officers that was based 50% on operating income goals and 50% on
revenues goals. 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 1998 was less than 80% of the operating income in
the Company's 1998 operating plan, none of the target bonus would be paid to any
executive. If the Company's operating income for 1998 was at least 80% of its
targeted operating income, each executive officer would receive such percentage
of each portion of his target bonus as was equal to the Company's operating
income or revenues as a percentage of target operating income or revenues, as
the case may be (e.g., if the Company's operating income was 105% of target
operating income, each executive would receive 105% of the portion of his target
bonus that was tied to operating income). Based on 1998 performance, no bonuses
were paid to any executive officer.
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.
SECTION 162(M)
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Tax Code"), certain executive compensation in excess of $1.0 million paid to
the CEO and the four most highly-paid executives of the Company other than the
CEO 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 review periodically 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
8
<PAGE> 11
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, 1998 with the cumulative
total return of (1) the CRSP Total Return Index for the Nasdaq Stock Market
(U.S.) (the "Nasdaq Composite Index") and (2) 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 and on November 30, 1994 in the Nasdaq Composite Index
and the S&P Computer Index, and assumes any dividends are reinvested.
[PERFORMANCE GRAPH OMITTED]
<TABLE>
<CAPTION>
NASDAQ COMPOSITE
APPLIX, INC. INDEX S&P COMPUTER INDEX
------------ ---------------- ------------------
<S> <C> <C> <C>
December 9, 1994 100.00 100.00 100.00
December 30, 1994 130.00 100.00 100.00
December 29, 1995 545.00 142.00 140.00
December 31, 1996 438.00 174.00 218.00
December 31, 1997 105.00 214.00 304.00
December 31, 1998 78.00 301.00 551.00
</TABLE>
9
<PAGE> 12
PROPOSAL TO APPROVE AN AMENDMENT TO THE
1994 EQUITY INCENTIVE PLAN
The Company's 1994 Equity Incentive Plan (the "Incentive Plan") currently
authorizes awards of restricted stock and grants of incentive and nonstatutory
stock options to employees, officers and employee directors of, and consultants
and advisors to, the Company and its subsidiaries to purchase up to 2,990,157
shares of the Company's Common Stock. In February 1999, the Board of Directors
of the Company adopted, subject to stockholder approval, an amendment (the
"Amendment") to the Incentive Plan, providing for an increase from 2,990,157 to
3,490,157 in the number of shares of the Company's Common Stock available for
issuance under the Incentive Plan.
The Board of Directors believes that awards under the Incentive 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 THIS AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS, AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
SUMMARY OF THE INCENTIVE PLAN
The Incentive Plan was adopted by the Company's Board of Directors in April
1994, approved by its stockholders in May 1994 and amended in April 1997 and in
May 1998. The Incentive Plan will terminate in April 2004, unless earlier
terminated according to the terms of the Incentive 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 Incentive 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 Incentive 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 Incentive Plan in one calendar
year may not exceed 65,000 shares of Common Stock.
The Incentive Plan is administered by both the Board of Directors and its
Compensation Committee, which select the persons to whom restricted stock awards
and stock options are granted and determine the number of shares of Common Stock
covered by each award or option, its purchase price or exercise price, its
vesting schedule and (in the case of stock options) its expiration date.
As of February 28, 1999, 2,551,831 shares of Common Stock were issuable
pursuant to stock options outstanding under the Incentive Plan and 264,602
additional shares remained available for future option grants or restricted
stock awards under the Incentive Plan. The outstanding stock options generally
become exercisable over a five-year period, are nontransferable, and expire
either seven or 10 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 Incentive Plan. As
of February 28, 1999, 283 employees of the Company were eligible to receive
options or restricted stock awards under the Incentive Plan.
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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
Incentive Plan and with respect to the sale of Common Stock acquired under the
Incentive 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 in an amount 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.
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 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 difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
NSO stock for more than one year prior to the date of the sale.
TAX CONSEQUENCES TO THE COMPANY
The grant of an award under the Incentive 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
Incentive 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 Incentive Plan, including as a result of the exercise of a nonstatutory
stock option or a Disqualifying Disposition. Any such deduction will be subject
to the limitations of Section 162(m) of the Tax Code.
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PROPOSAL TO APPROVE AN AMENDMENT TO THE
1995 STOCK PURCHASE PLAN
The Company's Amended and Restated 1995 Stock Purchase Plan (the "Purchase
Plan") provides eligible employees of the Company and certain of its
subsidiaries with opportunities to purchase shares of the Company's Common
Stock. The Purchase Plan currently authorizes the issuance of up to a total of
400,000 shares of Common Stock to participating employees. In February 1999, the
Board adopted, subject to stockholder approval, an amendment to the plan,
providing for an increase from 400,000 to 700,000 in the number of shares of the
Company's Common Stock available for issuance under the plan.
The Board believes that the Purchase Plan provides employees of the Company
with an opportunity to acquire a proprietary interest in the Company through the
purchase of Common Stock, which the Board believes will help the Company attract
and retain employees. ACCORDINGLY, THE BOARD BELIEVES THAT THIS AMENDMENT IS IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS A VOTE IN
FAVOR OF THIS PROPOSAL.
SUMMARY OF THE PLAN
The Purchase Plan took effect in January 1995 and was approved by the
stockholders of the Company in May 1995; it was amended by the Board in October
1996, and amended and restated in February 1999. The Purchase Plan is intended
to qualify as an "employee stock purchase plan" as defined in Section 423 of the
Tax Code.
The Purchase Plan is implemented through a series of semiannual offerings.
The maximum number of shares available in each offering is 75,000 shares.
Offering periods commence on each February 1 and August 1 and terminate on the
following July 31 and January 31, respectively. The Purchase Plan will terminate
when the maximum number of shares issuable under the Purchase Plan have been
purchased by participating employees.
Any employee, including a director who is an employee, is eligible to
participate in an offering if he or she is regularly employed by the Company or
a designated subsidiary for more than 20 hours a week and for more than five
months in the calendar year, and is employed by the Company or a designated
subsidiary prior to enrolling in the Purchase Plan and on the first day of the
applicable offering. As of February 28, 1999, a total of 288 of the Company's
employees were eligible to participate in the Purchase Plan.
The price at which employees may purchase Common Stock in an offering is
85% of the closing price of the Common Stock on the Nasdaq National Market on
the day the offering commences or on the day the offering terminates, whichever
is lower. An employee may elect to have up to 10% of his or her qualifying
compensation withheld for the purpose of purchasing stock under the Purchase
Plan. On the date an offering commences, each participating employee is deemed
to be granted an option to purchase up to the number of shares determined by
dividing 12% of such employee's compensation for the immediately prior six-month
period by 85% of the fair market value of the Common Stock on the date the
offering commences. Unless the participant elects to withdraw from the offering,
each participant who continues to be employed by the Company on the date such
offering terminates is deemed to have exercised the option and purchased on such
date such number of shares (subject to the maximum number covered by his or her
option) as may be purchased at the offering price with the amount of his or her
payroll deductions. If the total number of shares of Common Stock that would
otherwise be purchased in the offering with accumulated payroll deductions
exceeds the number of shares available during the offering, the available shares
will be allocated on a pro rata basis to participating employees.
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<PAGE> 15
The Board of Directors of the Company may at any time terminate or amend
the Purchase Plan, except that no such amendment shall be made without prior
approval of the stockholders of the Company if (a) such approval is required by
Section 423 of the Tax Code or (b) such amendment would cause the Purchase Plan
to fail to comply with Section 423 of the Tax Code. Upon termination of the
Purchase Plan all amounts in the accounts of participating employees shall be
promptly refunded.
Because participation in the Purchase Plan is voluntary, the Company cannot
determine the number of shares of Common Stock to be purchased by any Named
Executive Officer, by all current executive officers as a group, or by
employees, including officers who are not executive officers, as a group. During
fiscal 1998, 1,355 shares of Common Stock were acquired under the Purchase Plan
by all executive officers as a group; no shares were purchased by any of the
Named Executive Officers, by the non-officer directors as a group, or by any
associate of any of the directors or executive officers. No one person received
5% or more of the total number of shares acquired under the Purchase Plan in
1998.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to purchases made under the
Purchase Plan and with respect to the sale of Common Stock acquired under the
Purchase Plan.
TAX CONSEQUENCES TO PARTICIPANTS
In general, a participant will not recognize taxable income upon enrolling
in the Purchase Plan or upon purchasing shares of Common Stock at the end of an
offering. Instead, if a participant sells Common Stock acquired under the
Purchase Plan at a sale price that exceeds the price at which the participant
purchased the Common Stock, then the participant will recognize taxable income
in an amount equal to the excess of the sale price of the Common Stock over the
price at which the participant purchased the Common Stock. A portion of that
taxable income will be ordinary income, and a portion may be capital gain.
If the participant sells the Common Stock more than one year after
acquiring it and more than two years after the date on which the offering
commenced (the "Grant Date"), then the participant will be taxed as follows. If
the sale price of the Common Stock is higher than the price at which the
participant purchased the Common Stock, then the participant will recognize
ordinary compensation income in an amount equal to the lesser of:
(a) 15% of the fair market value of the Common Stock on the Grant Date;
and
(b) the excess of the sale price of the Common Stock over the price at
which the participant purchased the Common Stock.
Any further income will be long-term capital gain. If the sale price of the
Common Stock is less than the price at which the participant purchased the
Common Stock, then the participant will recognize long-term capital loss in an
amount equal to the excess of the price at which the participant purchased the
Common Stock over the sale price of the Common Stock.
If the participant sells the Common Stock within one year after acquiring
it or within two years after the Grant Date (a "Disqualifying Disposition"),
then the participant will recognize ordinary compensation income in an amount
equal to the excess of the fair market value of the Common Stock on the date
that it was purchased over the price at which the participant purchased the
Common Stock. The participant will also recognize capital gain in an amount
equal to the excess of the sale price of the Common Stock over the fair market
value of the Common Stock on the date that it was purchased, or capital loss in
an amount equal to the excess of the fair market value of the Common Stock on
the date that it was purchased over the sale price of
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<PAGE> 16
the Common Stock. This capital gain or loss will be a long-term capital gain or
loss if the participant has held the Common Stock for more than one year prior
to the date of the sale and will be a short-term capital gain or loss if the
participant has held the Common Stock for a shorter period.
TAX CONSEQUENCES TO THE COMPANY
The offering of Common Stock under the Purchase Plan will have no tax
consequences to the Company. Moreover, in general, neither the purchase nor the
sale of Common Stock acquired under the Purchase Plan will have any tax
consequences to the Company except that the Company will be entitled to a
business-expense deduction with respect to any ordinary compensation income
recognized by a participant upon making a Disqualifying Disposition. Any such
deduction will be subject to the limitations of Section 162(m) of the Tax Code.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as the Company's independent auditors for the current fiscal year.
PricewaterhouseCoopers has served as the Company's independent auditors since
1993. Although stockholder approval of the Board of Directors' selection of
PricewaterhouseCoopers 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 PricewaterhouseCoopers 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. 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 included in the Company's proxy
statement for the 2000 Annual Meeting of Stockholders must be received by the
Company at its principal office not later than December 1, 1999.
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<PAGE> 17
Stockholders who wish to make a proposal at the 2000 Annual Meeting --
other than one that will be included in the Company's proxy materials -- must
notify the Company no later than February 15, 2000. If a stockholder who wishes
to present a proposal fails to notify the Company by this date, the proxies that
management solicits for the meeting will have discretionary authority to vote on
the stockholder's proposal if it is properly brought before the 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 1998 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,
Patrick J. Rondeau, Clerk
March 31, 1999
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.
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APPLIX, INC.
ANNUAL MEETING OF STOCKHOLDERS -- MAY 7, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned, having received notice of the Annual Meeting and
management's Proxy Statement therefor, and revoking all prior proxies, hereby
appoint(s) Gary Bouchard 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 7, 1999 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.
1. To elect the following individual as Class II Director:
Alain J. Hanover FOR [ ] WITHHOLD AUTHORITY [ ]
2. To approve an amendment to the Company's 1994 Equity Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve an amendment to the Company's Amended and Restated 1995
Stock Purchase Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE> 19
PROXY PROXY
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)
---------------------------------------------
Printed Name(s)
---------------------------------------------
Date
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.
