<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Visio Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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
VISIO CORPORATION 520 Pike Street, Suite 1800, Seattle, WA 98101 [VISIO LOGO]
TEL 206 521-4500, FAX 206 521-4501
[LOGO] January 13, 1997
Dear Shareholder:
On behalf of Visio Corporation, I cordially invite
you to attend our Annual Meeting of Shareholders to be
held on Wednesday, February 26, 1997, at 10:00 a.m., at
the Four Seasons Olympic Hotel, 411 University Street,
Seattle, Washington.
This year you are asked to (1) elect seven
directors to the Company's Board, (2) vote on a proposal
to approve the Visio Corporation 1995 Long-Term
Incentive Compensation Plan, as amended and restated,
and (3) ratify the appointment of Ernst & Young LLP as
the Company's independent public auditors for fiscal
year 1997. Additional details regarding these issues are
provided in the attached Notice of Annual Meeting of
Shareholders and Proxy Statement.
As the Company's Chairman, I urge you to vote "For"
all three proposals. In particular, I would like to draw
your attention to Proposal 2. Stock options are an
important component of compensation for every employee
at the Company and we would like to continue to offer
this benefit to our employees. We believe equity
compensation contributes to high levels of performance
and recognizes contributions to the Company's success.
It is important that your shares be represented,
whether or not you plan to attend the meeting.
Therefore, please complete, sign, date, and promptly
return the enclosed proxy in the enclosed postage-paid
envelope. This will not limit your right to attend the
meeting and vote in person, but will assist us in our
preparations for the meeting.
On behalf of the Board of Directors, I would like
to express our appreciation for your support of the
Company. We look forward to seeing you at the meeting.
Sincerely,
/s/ Jeremy Jaech
JEREMY JAECH
President, Chief Executive Officer and
Chairman of the Board
<PAGE> 3
VISIO CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 26, 1997
To The Shareholders of Visio Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Visio
Corporation, a Washington corporation (the "Company"), will be held at the Four
Seasons Olympic Hotel, 411 University Street, Seattle, Washington, on Wednesday,
February 26, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect seven directors of the Company to serve for the ensuing year
until the Company's 1998 annual meeting of shareholders and until
their successors are elected and qualified.
2. To approve the Company's 1995 Long-Term Incentive Compensation Plan,
as amended and restated.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent public auditors for the fiscal year ending September 30,
1997.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on December 27, 1996
are entitled to notice of, and to vote at, the meeting or any adjournment or
postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Wm. Kenneth McGraw
WM. KENNETH MCGRAW
Corporate Counsel and Secretary
Seattle, Washington
January 13, 1997
IMPORTANT
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO
ENSURE YOUR REPRESENTATION AT THE MEETING. PROMPTLY COMPLETING, SIGNING, DATING
AND RETURNING THE PROXY WILL SAVE THE COMPANY THE EXPENSES AND EXTRA WORK OF
ADDITIONAL SOLICITATION. AN ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE. SENDING IN YOUR
PROXY WILL NOT PREVENT YOU FROM VOTING YOUR SHARES AT THE MEETING IF YOU DESIRE
TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR OPTION. PLEASE NOTE, HOWEVER, THAT
IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU
WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY
ISSUED IN YOUR NAME.
<PAGE> 4
VISIO CORPORATION
520 PIKE STREET, SUITE 1800
SEATTLE, WASHINGTON 98101
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD FEBRUARY 26, 1997
This Proxy Statement, which was first mailed to shareholders on January 13,
1997, is furnished in connection with the solicitation of proxies by the Board
of Directors of Visio Corporation (the "Company") to be voted at the annual
meeting of the shareholders of the Company, which will be held at 10:00 a.m. on
Wednesday, February 26, 1997, at the Four Seasons Olympic Hotel in Seattle,
Washington, or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Shareholders.
The principal executive offices of the Company are at 520 Pike Street,
Suite 1800, Seattle, Washington 98101 and its telephone number at that location
is (206) 521-4500.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on December 27, 1996, are
entitled to notice of and to vote at the annual meeting. On December 27, 1996,
there were 13,804,018 shares of Common Stock outstanding, held of record by 140
shareholders. All share numbers in this Proxy Statement reflect a three-for-two
split effective October 17, 1995.
VOTING TABULATION
Voting; Quorum. Every shareholder voting for the election of directors is
entitled to one vote for each share of Common Stock held. Shareholders do not
have the right to cumulate their votes in the election of directors. On all
other matters, each share is likewise entitled to one vote on each proposal or
item that comes before the annual meeting. The Company's Bylaws provide that a
majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum for the transaction of business.
Vote Required. Under the Washington Business Corporation Act, the election
of the Company's Directors requires a plurality of the votes represented in
person or by proxy at the meeting, and the other proposals described in the
accompanying Notice of Annual Meeting of Shareholders, including the approval of
the 1995 Long-Term Incentive Compensation Plan, as amended and restated, require
that the votes in favor exceed the votes against the proposal. Votes cast by
proxy or in person at the meeting will be tabulated by ChaseMellon Shareholder
Services.
Effect of an Abstention and Broker Nonvotes. A shareholder who abstains
from voting on any or all proposals will be included in the number of
shareholders present at the meeting for the purpose of determining the presence
of a quorum. Abstentions will not be counted either in favor of or against the
election of the nominees for director or other proposals. Under the rules of the
National Association of Securities Dealers, brokers holding Common Stock for the
accounts of their clients who have not been given specific voting instructions
as to a matter by their clients may vote their clients' proxies in their own
discretion, except as to Proposal 2, relating to the amendment to the 1995
Long-Term Incentive Compensation Plan.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. The cost of solicitation of proxies is to be borne by
the Company. Proxies may be solicited by officers, directors, and regular
supervisory and executive employees of the Company, none of whom will receive
any
<PAGE> 5
additional compensation for their services. Also, W.F. Doring & Co., Inc. may
solicit proxies at an approximate cost of $2,500 plus reasonable expenses. Such
solicitations may be made personally or by mail, facsimile, telephone,
telegraph, or messenger. The Company will pay persons holding shares of Common
Stock in their names or in the names of nominees, but not owning such shares
beneficially, such as brokerage houses, banks, and other fiduciaries, for
reasonable out-of-pocket and clerical expenses of forwarding solicitation
materials to their principals. All the costs of solicitation of proxies will be
paid by the Company.
REVOCABILITY OF PROXIES
Shareholders who execute proxies retain the right to revoke them at any
time prior to the exercise of the powers conferred thereby, by delivering a
signed statement to the Secretary of the Company at or prior to the annual
meeting or by executing another proxy dated as of a later date.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1998 annual
meeting of shareholders must be received by the Company no later than September
15, 1997, to be included in the Company's Proxy Statement and form of proxy
related to that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
Seven directors are to be elected at the annual meeting, to hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified. It is intended that the accompanying proxy will be voted
in favor of the following persons to serve as directors, unless the shareholder
indicates to the contrary on the proxy. Management expects that each of the
nominees will be available for election, but if any of them is not a candidate
at the time the election occurs, it is intended that such proxy will be voted
for the election of another nominee to be designated by the Board of Directors
to fill any such vacancy.
NOMINEES
Jeremy A. Jaech, age 42, is a founder of the Company and has been its
President, Chief Executive Officer and Chairman of the Board since 1990. Before
founding the Company, Mr. Jaech co-founded Aldus Corporation ("Aldus"), a
software development company, where he was the technical leader for the original
development of PageMaker from April 1984 to July 1985. Mr. Jaech managed Aldus'
product development as Vice President of Engineering from July 1985 to March
1989. Mr. Jaech is also a director of Global Village Communications, Inc.
Theodore C. Johnson, age 40, is a founder of the Company and has been its
Executive Vice President since September 1996 and a Director since September
1990. From September 1990 to September 1996, he served as the Company's Vice
President, Product Development. Mr. Johnson also served as the Company's
Treasurer from September 1990 to August 1995 and as the Company's Secretary from
September 1990 to September 1996. From May 1985 to September 1990, Mr. Johnson
was employed at Aldus in various development roles.
Tom A. Alberg, age 56, has been a Director of the Company since June 1995.
Since January 1996, Mr. Alberg has been a principal of Madrona Investment Group
LLC, a private merchant banking firm. Mr. Alberg was the President, Chief
Operating Officer and a Director of LIN Broadcasting Corporation, a cellular
telephone company, from April 1991 to October 1995, and the Executive Vice
President of AT&T Wireless Services, formerly McCaw Cellular Communications,
Inc., from July 1990 to October 1995. Prior to July 1990, Mr. Alberg was
Chairman of the Executive Committee and a partner in the law firm of Perkins
Coie, Seattle, Washington. Mr. Alberg is also a director of Active Voice
Corporation, Mosaix, Inc. and Emeritus Corporation.
2
<PAGE> 6
Thomas H. Byers, Ph.D., age 43, has been a Director of the Company since
May 1995. Since July 1995, Dr. Byers has been a consulting professor at Stanford
University and director of its engineering entrepreneurship program. Dr. Byers
is also the faculty director of several executive education programs at Stanford
University for technology companies. From January 1994 to June 1995, Dr. Byers
was a lecturer in technology entrepreneurship and marketing at both the
University of California, Berkeley and Stanford University. Dr. Byers was the
co-founder of Slate Corporation, a software development company, its President
from February 1990 to May 1993 and a consultant from June 1993 to December 1993.
John R. Johnston, age 44, has been a Director of the Company since June
1991. Since September 1988, Mr. Johnston has been a general partner of various
Technology Venture Investors entities, which are private venture capital limited
partnerships. Such partnerships include TVI Management 4, LP and Technology
Venture Investors 4, LP. Mr. Johnston is also a director of Insignia Solutions,
Inc. Mr. Johnston was initially elected to the Board of Directors pursuant to
the provisions of a stock purchase agreement.
Douglas J. Mackenzie, age 37, has been a Director of the Company since
March 1992. Mr. Mackenzie has served with certain venture capital partnerships
organized under the Kleiner Perkins Caufield & Byers name since June 1989, most
recently as a general partner of Kleiner Perkins Caufield & Byers VIII, LP. Mr.
Mackenzie was initially elected to the Board of Directors pursuant to the
provisions of a stock purchase agreement.
Scott H. Oki, age 48, has been a Director of the Company since February
1992. Mr. Oki retired from Microsoft Corporation in 1992, where he was head of
its International Operations from March 1982 to September 1986 and Senior Vice
President of Sales, Marketing and Services from September 1986 until his
retirement. Mr. Oki has been the Chairman and Chief Executive Officer of Oki
Developments, Inc. since 1992 and is the Chief Volunteer of The Oki Foundation,
a nonprofit organization. Mr. Oki is the immediate past President of the Board
of Regents of the University of Washington.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THESE NOMINEES.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. There is no standing nominating committee. Messrs. Alberg, Johnston
and Oki serve on the Audit Committee, which meets with financial management and
the Company's independent public auditors to review internal accounting controls
and accounting, auditing, and financial reporting matters. Messrs. Byers,
Johnston and Mackenzie serve on the Compensation Committee, which reviews the
compensation of the Chief Executive Officer and other officers of the Company,
reviews executive bonus plan allocations, and grants stock options to officers
and employees of the Company under the Company's long-term incentive
compensation plan.
The Audit Committee met three times during fiscal year 1996. The
Compensation Committee met seven times. The entire Board of Directors met six
times. Each director attended 75% or more of the aggregate number of Board
meetings and committee meetings.
COMPENSATION OF DIRECTORS
None of the Directors received any compensation during fiscal year 1996 for
serving on the Board or on any committees of the Board, except for reimbursement
of reasonable expenses incurred in attending meetings.
The 1995 Nonemployee Director Stock Option Plan (the "Director Plan")
became effective on November 9, 1995 and permits the grant of options to
purchase an aggregate of 120,000 shares of Common Stock to nonemployee directors
of the Company at an exercise price equal to the fair market value per share on
the date of the grant, which is based on the lowest price at which the Common
Stock is traded during the 30 consecutive trading days following or preceding
the grant date. Each nonemployee director who is initially
3
<PAGE> 7
elected or appointed to the Board of Directors after the effective date of the
Director Plan will be, upon such election or appointment, automatically granted
an option to purchase 18,000 shares of Common Stock. In addition to this initial
grant, each nonemployee director, commencing with the first annual meeting after
the effective date of the Director Plan, will automatically receive an option to
purchase 4,500 shares of Common Stock immediately following each year's annual
meeting of shareholders. The options under the initial grant vest in four equal
annual installments, beginning one year after the date of grant. The options
under the annual grant vest fully on the next annual meeting of shareholders
after the date of grant. To date, no options have been granted under the
Director Plan.
ADDITIONAL INFORMATION
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS,
AND MANAGEMENT
Except as noted, the following table sets forth information regarding the
beneficial ownership of the Company's Common Stock as of November 22, 1996 by
(a) each person known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (b) the Chief Executive Officer of the
Company and each of the four other most highly compensated executive officers of
the Company (the "Named Executive Officers"); (c) each director of the Company;
and (d) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF COMMON STOCK
BENEFICIAL OWNERSHIP(1) OUTSTANDING
----------------------- ------------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
Pilgrim Baxter & Associates(2).............................. 1,491,100 10.8%
Technology Venture Investors(3)............................. 1,310,718 9.5%
DIRECTORS
Tom A. Alberg(4)............................................ 15,062 *
Thomas H. Byers(5).......................................... 15,743 *
Jeremy A. Jaech(6)(7)....................................... 1,195,250 8.7%
Theodore C. Johnson(7)(8)................................... 1,217,000 8.8%
John R. Johnston(3)(9)...................................... 1,363,466 9.9%
Douglas J. Mackenzie(10).................................... 73,694 *
Scott H. Oki(11)............................................ 125,567 *
OFFICERS
Timothy J. Buckley(12)...................................... 156,918 1.1%
Marty Chilberg(13).......................................... 151,940 1.1%
Gary E. Gigot(14)........................................... 431,686 3.1%
All Directors and Executive Officers as a group (10
persons).................................................. 4,746,326 34.1%
</TABLE>
- ---------------
* Less than 1.0%
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to the table. As to any shares issuable upon
exercise of outstanding options identified in the footnotes to the table,
those shares exercisable on November 22, 1996 or within 60 days thereafter
are included.
(2) The business address for Pilgrim Baxter & Associates is: 1255 Drummers
Lane, Suite 300, Wayne, Pennsylvania 19087.
(3) The business address for Technology Venture Investors and Mr. Johnston is:
Technology Venture Investors, 2580 Sand Hill Road, Suite 101, Menlo Park,
California 94026.
(4) Includes 14,062 shares issuable pursuant to stock options.
(5) Includes 14,062 shares issuable pursuant to stock options.
4
<PAGE> 8
(6) Includes an aggregate of 60,000 shares over which Mr. Jaech has voting
control with respect to the Ryan Philip Johnson Trust of 1995 (30,000
shares) and the Matthew Tyler Johnson Trust of 1995 (30,000 shares), trusts
created for the benefit of Mr. Johnson's children. Mr. Johnson has not
retained any control over the trusts. Mr. Johnson's father, Vernon D.
Johnson, as trustee, has investment power with respect to such shares. Does
not include an aggregate of 355,000 shares held by three trusts established
for the benefit of Mr. Jaech's children and other relatives. Mr. Jaech is
neither a trustee nor a beneficiary of these trusts and disclaims any
beneficial ownership of the Common Stock held directly.
(7) The business address for Messrs. Jaech and Johnson is: Visio Corporation,
520 Pike Street, Suite 1800, Seattle, Washington 98101.
(8) Includes an aggregate of 355,000 shares over which Mr. Johnson has voting
control with respect to the Christopher Leo Jaech Trust of 1993 (145,000
shares), the Elisabeth Anna Jaech Trust of 1991 (145,000 shares) and the
Jeremy and Linda Jaech Educational Trust (65,000 shares), trusts created
for the benefit of Mr. Jaech's children and other relatives. Mr. Jaech has
not retained any control over the trusts. Seattle-First National Bank, NA,
as trustee, has investment power with respect to such shares. Also includes
30,000 shares held by Mr. Johnson's spouse. Does not include an aggregate
of 60,000 shares held by two trusts established for the benefit of Mr.
Johnson's children. Mr. Johnson is neither a trustee nor a beneficiary of
these trusts and disclaims any beneficial ownership of the Common Stock
held directly.
(9) Represents 1,310,718 shares held by Technology Venture Investors 4, LP, of
which TVI Management 4, LP is the general partner, TVI Partners-4, LP, TVI
Affiliates-4 1988, LP and TVI Affiliates-4, LP. Mr. Johnston is general
partner of TVI Management 4, LP. Also includes 5,625 shares issuable
pursuant to stock options.
(10) Although Mr. Mackenzie is not a general partner of Kleiner Perkins Caufield
& Byers VI, LP, he shares voting or dispositive power over the 34,881
shares owned by Kleiner Perkins Caufield & Byers VI, LP. However, Mr.
Mackenzie disclaims beneficial ownership of such shares. KPCB VI Associates
is the general partner of both Kleiner Perkins Caufield & Byers VI, LP and
KPCB VI Founders' Fund, LP. The general partners of KPCB Associates are
Messrs. Brook Byers, James Lally, John Doerr, Bernard Lacroute, Joseph
Lacob, Vinod Khosla and Floyd Kvamme, which general partners have voting
and dispositive power over the shares owned by Kleiner Perkins Caufield &
Byers VI, LP. Includes 5,625 shares issuable pursuant to stock options.
(11) Includes 35,625 shares issuable pursuant to stock options.
(12) Includes 60,938 shares subject to repurchase by the Company, which number
declines over time.
(13) Includes 11,250 shares issuable pursuant to stock options and 14,063 shares
subject to repurchase by the Company, which number declines over time.
(14) Includes 42,187 shares issuable pursuant to warrants exercisable on
November 22, 1996 or within 60 days thereafter and 84,375 shares subject to
repurchase by the Company, which number declines over time.
MANAGEMENT
Executive officers are elected by the Board of Directors and serve at the
discretion of the Board. Set forth below is information regarding executive
officers of the Company who are not also Directors of the Company.
Marty Chilberg, age 42, joined the Company in June 1992 as Chief Financial
Officer, Vice President, Finance and Operations, and Assistant Secretary. Mr.
Chilberg was elected as the Company's Treasurer in August 1995. From May 1988 to
June 1992, Mr. Chilberg was Corporate Controller of Symantec Corporation, a
software development company. Mr. Chilberg has announced his resignation from
the Company effective during the second quarter of fiscal year 1997.
Timothy J. Buckley, age 45, joined the Company in November 1993 as Vice
President, Sales and in September 1996 became Vice President, Worldwide Sales.
From February 1992 to November 1993, Mr. Buckley was Vice President, Sales at
Approach Software, a software development company that was
5
<PAGE> 9
acquired by Lotus Development Corporation. From January 1987 to January 1992,
Mr. Buckley was Director of Sales of Aldus.
Gary E. Gigot, age 47, joined the Company in February 1994 as Vice
President, Marketing and in September 1996 became Vice President, Worldwide
Products. Mr. Gigot was employed at Microsoft from July 1990 to February 1994,
where he was in Advanced Consumer Technology from July 1993 to February 1994,
served as Vice President, Marketing from January 1991 to July 1993 and served as
Director, US Marketing from July 1990 to January 1991.
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Named Executive
Officers for the fiscal years ended September 27, 1996 and September 29, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) COMPENSATION($)(2)
- ----------------------------- ---- --------- ----------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Jeremy A. Jaech.............. 1996 $ 126,667 $97,500 0 $ 4,682
President and Chief 1995 115,417 0 0 5,364
Executive Officer
Theodore C. Johnson.......... 1996 126,667 58,500 0 5,079
Executive Vice President 1995 115,417 0 0 4,340
Timothy J. Buckley........... 1996 126,667 48,750 15,000 5,217
Vice President, Worldwide 1995 120,000 39,500 0 12,162
Sales
Marty Chilberg............... 1996 126,667 58,500 30,000 5,113
Chief Financial Officer and 1995 120,000 34,000 30,000 5,038
Vice President, Finance
and Operations
Gary E. Gigot................ 1996 126,667 48,750 0 5,308
Vice President, Worldwide 1995 120,000 37,500 0 12,048
Products
</TABLE>
- ---------------
(1) Amounts in 1996 were awarded under the Company's Management Incentive Bonus
Plan. Amounts in 1995 represent bonuses awarded to Messrs. Buckley and Gigot
for meeting marketing and sales milestones. With respect to Mr. Chilberg,
the amount represents a performance bonus and a bonus for meeting marketing
and sales milestones.
(2) Amounts in 1996 represent matching contributions under the Company's 401(k)
savings plan in the amount of $3,831, $4,515, $4,564, $4,687 and $4,581 for
Messrs. Jaech, Johnson, Buckley, Chilberg and Gigot, respectively, and life
insurance premiums paid by the Company for the benefit of Messrs. Jaech,
Johnson, Buckley, Chilberg and Gigot in the amount of $851, $564, $653, $426
and $727, respectively. Amounts in 1995 represent matching contributions
under the Company's 401(k) savings plan in the amount of $3,386, $3,355,
$4,677, $4,725 and $4,215 for Messrs. Jaech, Johnson, Buckley, Chilberg and
Gigot, respectively, life insurance premiums paid by the Company for the
benefit of Messrs. Jaech, Johnson, Buckley, Chilberg and Gigot in the amount
of $1,978, $985, $313, $313 and $534, respectively, and $7,172 paid to Mr.
Buckley as reimbursement for moving and relocation expenses. With respect to
Mr. Gigot, this amount also includes $7,299 of imputed interest with respect
to an interest-free loan to Mr. Gigot from the Company, which loan has been
repaid in full.
6
<PAGE> 10
STOCK OPTIONS
The following table sets forth certain information on option grants in
fiscal year 1996 to the Named Executive Officers. In addition, in accordance
with the Securities and Exchange Commission ("SEC") rules, the hypothetical
gains or "option spreads" that would exist for the respective options are shown.
The gains are based on assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the options were granted over the full option term.
The actual value, if any, a Named Executive Officer may realize will depend on
the spread between the market price and the exercise price on the date the
option is exercised. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent upon the future performance of the Company and
overall stock market conditions. There can be no assurance that the amounts
reflected in this table will be achieved.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL RATES
-------------------------------------------------------- OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5%($) 10%($)
- ------------------------- ------------- ------------ ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jeremy A. Jaech.......... 0 0 0
Theodore C. Johnson...... 0 0 0
Timothy J. Buckley....... 15,000 3.14 $ 27.875 2/28/06 $262,957 $ 666,384
Marty Chilberg........... 30,000 6.28 $ 27.875 2/28/06 $525,913 $1,332,767
Gary E. Gigot............ 0 0 0
</TABLE>
- ---------------
(1) The options were granted on February 28, 1996. One-quarter of the options
vest on the first anniversary of the grant date and the remainder vest in
equal three-month increments thereafter over the succeeding three years. The
options expire 10 years from the date of grant, subject to certain
exceptions.
(2) The exercise price is equal to the average of the high and low trading
prices as reported on the Nasdaq National Market on the date of grant. The
exercise price may be paid in cash, by delivery of already-owned shares
subject to certain conditions, or pursuant to a cashless exercise procedure
under which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to the Company, out of the
sale proceeds, an amount equal to the exercise price plus all applicable
withholding taxes.
7
<PAGE> 11
STOCK OPTION EXERCISES AND HOLDINGS
The following table provides information on option exercises in fiscal year
1996, including the aggregate value of gains on the date of exercise, by the
Named Executive Officers. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of fiscal-year
end. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
# OF SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTION/SARS AT OPTIONS/SARS AT
SHARES VALUE FISCAL YEAR END(#) FISCAL YEAR END($)(1)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeremy A. Jaech......... 0 $ 0.00 0 0 $ 0 $ 0
Theodore C. Johnson..... 0 $ 0.00 0 0 $ 0 $ 0
Timothy J. Buckley...... 0 $ 0.00 0 15,000 $ 0 $ 230,625
Marty Chilberg.......... 0 $ 0.00 9,375 50,625 $ 367,969 $ 1,270,781
Gary E. Gigot........... 112,500 $3,398,062.50 28,125 84,375 $ 1,028,813 $ 3,086,438
</TABLE>
- ---------------
(1) For the fiscal year ended September 27, 1996. The closing sales price on
that date for the Company's Common Stock was $43.25 per share.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Philosophy
The Compensation Committee of the Board of Directors (the "Committee")
consists of three non-employee directors. The Committee acts on behalf of the
Board to establish the general compensation policies and programs for the
Company's executive officers, including the determination of salaries, the
establishment of bonus programs and the granting of stock options. When creating
policies and programs, the Committee's goals are to (i) ensure that each
executive officer has clear goals and accountability with regard to corporate
performance; (ii) establish pay opportunities that are competitive based on
prevailing practices for the industry, the stage of growth and the markets in
which the Company operates; (iii) independently assess operating results on a
regular basis in light of expected Company performance; and (iv) align pay
incentives with the long-term interests of the Company's shareholders.
The Committee believes that the compensation of the Chief Executive Officer
and the Company's other executive officers should be based to a substantial
extent on the Company's performance. Consistent with this philosophy, a
designated portion of the compensation of each executive officer is contingent
upon corporate performance and is adjusted, where appropriate, based on actual
performance measured against performance objectives. Each executive officer's
performance for the past fiscal year and objectives for the current year are
reviewed, together with the executive officer's responsibility level and the
Company's fiscal performance versus objectives and potential performance targets
for the current year. When establishing salaries, bonus levels and stock option
awards for executive officers, the Committee considers (i) the Company's
financial performance during the past year and recent quarters; (ii) the
individual's performance during the past year and recent quarters; and (iii) the
salaries of executive officers in similar positions of companies of comparable
size and other companies within the computer software industry. With respect to
executive officers other than the Chief Executive Officer, the Committee takes
into consideration the recommendations of the Chief Executive Officer. The
method for determining compensation varies from case to case based on a
discretionary and subjective determination of what is appropriate at the time.
The Company's Human Resources department obtains executive compensation
data from salary surveys that reflect a peer group of other high technology
companies, including high technology companies of different sizes, and provides
this data to the Committee for its consideration in connection with the
determination of
8
<PAGE> 12
levels of compensation and stock option awards. To the extent it deems
appropriate, the Committee also considers general economic conditions within the
area and within the industry. The companies in the sample from which this data
was derived include some but not all of the companies in the industry comparison
group in the performance graph found in "Company Stock Price Performance," since
this group includes additional companies that the Company competes with for
people and talent, in addition to industry-product competitors.
Components of Compensation
The key elements of the Company's executive compensation program are base
salary, short-term (annual) incentive compensation and long-term incentive
compensation. These elements are addressed separately.
The Committee does not exclusively use quantitative methods or mathematical
formulas in setting any element of compensation. In determining each component
of compensation, the Committee considers all elements of an executive officer's
total compensation package, including insurance and other benefits.
Base Salaries. Base salaries are targeted at levels slightly below the
median for the peer group of companies and are adjusted by the Committee to
recognize various levels of responsibility, individual performance and internal
equity issues, as well as external pay practices. The Committee reviews each
executive's base salary annually.
Overall, executive salaries were increased in fiscal 1996 at rates
comparable to the increases provided in the peer group of high technology
companies, and the salaries are near median levels for that peer group.
Short-Term Incentives. The Management Incentive Bonus Plan promotes the
Company's pay-for-performance philosophy by providing executives with direct
financial incentives in the form of annual cash bonuses to achieve corporate and
individual performance goals.
Each year, the Committee establishes specific corporate and individual
performance goals relating to each executive's bonus opportunity. For fiscal
1996, performance was based on the Company's revenue and pre-bonus operating
income and on a subjective evaluation of individual performance.
Fiscal 1996 target bonus awards for each of the executives were set
slightly above market levels, but required above-average performance from each
of the executives to be achievable. For the Company's executive officers, the
target was 25% of base salary. The actual percentage to be paid was subject to
adjustment above or below the target, based on both Company and individual
performance. The Company's performance in fiscal 1996 exceeded the performance
levels as specified in the Management Incentive Bonus Plan, and bonuses were
paid to the Named Executive Officers as shown in the Summary Compensation Table.
The payouts ranged from 38% to 45% of the base salaries for each of such
executive officers, other than the Chief Executive Officer.
Long-Term Incentives. In keeping with the Company's philosophy of
providing a total compensation package that includes at-risk components of pay,
long-term incentives consisting of stock option grants comprise a component of
an executive's total compensation package. These incentives are designed to
motivate and reward executives for maximizing shareholder value and encourage
the long-term employment of key employees.
When granting stock options, the Committee considers executives' levels of
responsibility, prior experience, individual performance criteria, previous
stock option grants and compensation practices at the peer group of companies
used to evaluate total compensation. The size of stock option grants is based
primarily on current industry practice and on individual factors. As a result,
the number of shares underlying stock option awards varies.
Because all of the above grants were made at option prices equal to the
fair market value of the Common Stock on the dates of grant, the stock options
have value only if the stock price appreciates from the value on the date the
options were granted. The use of stock options is intended to focus executives
on the enhancement of shareholder value over the long-term and to encourage
equity ownership in the Company.
9
<PAGE> 13
Other Executive Compensation
Subject to certain restrictions, the Company provides programs to executive
officers that are also available to other Company employees, including a 401(k)
plan with certain Company matching, an employee stock purchase program
permitting employees to purchase Company stock at a discount, certain health
club and transportation subsidies, medical, dental and vision benefits, and a
Section 125 plan.
Compensation of the Chief Executive Officer
In fiscal 1996 and consistent with the general procedures described above,
Mr. Jaech's annualized base salary was increased to $130,000 to reflect the
Company's outstanding performance, resulting in a base pay closer to median base
salary earnings for chief executive officers of peer group companies.
For the Company's Chief Executive Officer, the target bonus award was 30%
of base salary. The actual percentage to be paid was subject to adjustment above
or below the target, based on both Company and individual performance.
Consistent with the Company's philosophy of providing incentives for and
rewarding exceptional performance, Mr. Jaech also received a bonus payment under
the Management Incentive Bonus Plan equal to 75% of his base salary because the
Company's performance in fiscal 1996 exceeded the target performance levels
specified in the plan and Mr. Jaech's performance exceeded expectations.
The Committee recognizes that Mr. Jaech is one of the Company's founders
and also one of its largest shareholders. Because of his large share ownership,
to date Mr. Jaech has declined any stock option grants, although he may receive
stock option grants in the future.
Policy With Respect to the $1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits the federal corporate income tax deduction for
compensation paid to executive officers named in the summary
compensation table in the proxy statement of a public company to $1 million,
unless the compensation is "performance-based compensation" or qualifies under
certain other exceptions. The Committee intends to qualify executive
compensation for deductibility under Section 162(m) to the extent consistent
with the best interests of the Company. Since corporate objectives may not
always be consistent with the requirements for full deductibility, it is
conceivable that the Company may enter into compensation arrangements in the
future under which payments are not deductible under Section 162(m);
deductibility will not be the sole factor used by the Committee in ascertaining
appropriate levels or modes of compensation.
Conclusion
The Committee believes these executive compensation policies and programs
serve the interests of shareholders and the Company effectively. The various pay
vehicles offered are appropriately balanced to provide increased motivation for
executives to contribute to the Company's overall future success, thereby
enhancing the value of the Company for the shareholders' benefit.
The Compensation Committee of the
Board of Directors
Thomas H. Byers, Ph.D.
John R. Johnston
Douglas J. Mackenzie
10
<PAGE> 14
COMPANY STOCK PRICE PERFORMANCE
In accordance with SEC rules, the following performance graph compares the
cumulative total shareholder return on the Company's Common Stock between
November 10, 1995 (the date the Company's Common Stock commenced public trading)
and September 27, 1996 (the end of the Company's 1996 fiscal year) with the
cumulative total return of a broad equity market index and either a nationally
recognized industry standard or an index of peer companies selected by the
Company over the same period. The Company has selected the Nasdaq Stock Market
(US) Index for the broad equity index and the H&Q Computer Software Index as an
industry standard. The stock price information shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG VISIO CORPORATION, NASDAQ STOCK
MARKET (US) INDEX, AND H&Q COMPUTER SOFTWARE INDEX
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
NOVEMBER 10, 1995 SEPTEMBER 27, 1996
----------------- ------------------
<S> <C> <C>
Visio Corporation.......................................... $ 100 $284
Nasdaq Stock Market (US) Index............................. 100 116
H&Q Computer Software Index................................ 100 116
</TABLE>
Notes:
(1) The performance graph assumes that $100 was invested in the Company's Common
Stock and in each Index on November 10, 1995.
(2) The total return for each of the Company's Common Stock, the Nasdaq Stock
Market (US) Index and the H&Q Computer Software Index assumes the
reinvestment of dividends, although dividends have not been declared on the
Company's Common Stock. Historical returns are not necessarily indicative of
future performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was or is an officer or employee of
the Company or of any of its subsidiaries.
11
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or 5 with the SEC and the National Association of Securities Dealers.
Such officers, directors and 10% shareholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such reports received or written
representations from certain reporting persons, the Company believes that all
Section 16(a) filing requirements applicable to its officers, directors and 10%
shareholders during the 1996 fiscal year were timely made, except that, due to a
clerical error, the Form 3s for certain Kleiner Perkins Caufield & Byers
entities and their respective general partners, as 10% shareholders, were filed
late.
PROPOSAL 2
APPROVAL OF 1995 LONG-TERM INCENTIVE COMPENSATION PLAN,
AS AMENDED AND RESTATED
In 1995, the shareholders approved the 1995 Long-Term Incentive
Compensation Plan (the "1995 Plan"). The Company is presently authorized to
issue 450,000 shares of Common Stock upon the exercise of options granted under
the 1995 Plan. The shareholders will be requested at the annual meeting to
approve the 1995 Plan, as amended and restated, which will increase by 820,000
the number of shares that may be issued under the 1995 Plan and will set certain
limits relating to stock grants and to Section 162(m) of the Code. The purpose
of the 1995 Plan is to promote the Company's success by aligning employee
financial interests with long-term shareholder value. The Board believes that
the number of shares remaining available for issuance will be insufficient to
achieve the purpose of the 1995 Plan over the term of such plan unless the
additional shares are authorized. A copy of the proposed 1995 Plan, as amended
and restated, is attached to this Proxy Statement as Exhibit A.
DESCRIPTION OF THE AMENDED AND RESTATED 1995 PLAN
The following is a summary of the principal provisions of the proposed 1995
Plan, as amended and restated, and is subject to and qualified by reference to
such plan.
Purpose. The purpose of the 1995 Plan is to enhance the long-term
profitability and shareholder value of the Company by offering stock-based
incentives and rewards (the "Awards") to those employees, officers, consultants
and agents of the Company and its subsidiaries who are key to the growth and
success of the Company, to encourage them to continue to provide services to the
Company and its subsidiaries and to encourage them to acquire and maintain stock
ownership in the Company.
Administration. The 1995 Plan is administered by a committee or committees
of the Board of Directors (the "Plan Administrator") that have been authorized
by the Board of Directors to do so. All members of the Plan Administrator serve
for such terms as the Board of Directors determines and are appointed and may be
removed by the Board of Directors. In addition to the power with respect to the
grant of Awards described elsewhere hereunder, the Plan Administrator is
authorized to administer and interpret the 1995 Plan, subject to its express
provisions, and to make all determinations necessary or advisable for the
administration of the 1995 Plan.
Shares Subject to the 1995 Plan. The number of shares of Common Stock
subject to the 1995 Plan as of December 31, 1996 (assuming the increase of
820,000 shares and including the number of shares which became available for
issuance under the 1990 Stock Option Plan (the "1990 Plan")) was 1,526,306,
except that any shares of Common Stock that, subsequent to December 31, 1996,
become available for issuance under the 1990 Plan in accordance with its terms
as in effect on such date and that are not issued under the 1990 Plan shall be
added to the aggregate number of shares available for issuance under the 1995
Plan. Any
12
<PAGE> 16
unpurchased shares of Common Stock subject to Awards granted under the 1995 Plan
that expire or terminate without shares of Common Stock having been issued in
connection therewith may be used for subsequent grants under the 1995 Plan. As
of December 31, 1996, 499,905 shares of Common Stock were issuable pursuant to
stock options outstanding under the 1995 Plan and 206,401 shares of Common Stock
were available for grant. To date, no stock appreciation rights, stock awards or
performance awards have been granted under the 1995 Plan.
Limitations. Subject to adjustment from time to time, not more than an
aggregate of 420,000 shares of Common Stock shall be available for issuance
pursuant to grants of stock awards, performance awards or other stock-based
awards under the 1995 Plan. Subject to adjustment from time to time, not more
than 150,000 shares of Common Stock may be made subject to Awards under the 1995
Plan to any individual participant in the aggregate in any one fiscal year of
the Company, except that the Company may make additional one-time grants of up
to 400,000 shares to newly hired participants, such limitation to be applied in
a manner consistent with the requirements of, and only to the extent required
for compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code. No performance awards having an
aggregate maximum dollar value in excess of $300,000 shall be granted to any
individual participant in any one fiscal year of the Company, such limitations
to be applied in a manner consistent with the requirements of, and to the extent
required for compliance with, the exclusion from the limitation on deductibility
of compensation under Section 162(m).
Persons Who May Participate. Awards may be granted under the 1995 Plan to
those officers, directors and key employees of the Company and its subsidiaries
as the Plan Administrator from time to time selects; provided, however, that
directors who are not also employees may not be awarded incentive stock options.
Awards may also be made to consultants and agents who provide services to the
Company and its subsidiaries.
Types of Awards. Awards granted under the 1995 Plan may include, but are
not limited to, incentive stock options ("ISOs") intended to meet all of the
requirements of an "Incentive Stock Option" as defined in Section 422 of the
Code, nonqualified stock options ("NSOs"), stock appreciation rights ("SARs"),
stock awards (including restricted stock), performance awards, and other
stock-based awards. Awards may be made singly, in combination or in tandem so
that the settlement or payment of one automatically reduces or cancels the
other. Awards may also be made in combination or in tandem with, in replacement
of, as alternatives to, or as the payment form for, grants or rights under any
other employee or compensation plan of the Company or in substitution for, or by
the assumption of, awards issued under plans of an acquired entity. Each Award
granted under the 1995 Plan must be evidenced by an agreement (an "Agreement")
duly executed on behalf of the Company. Each Agreement will comply with and be
subject to the terms and conditions of the 1995 Plan. Any Agreement may contain
such other terms, provisions and conditions not inconsistent with the 1995 Plan
as may be determined by the Plan Administrator.
Terms and Conditions of Awards.
Stock Option Grants. The option price for each option granted under the
1995 Plan will be determined by the Plan Administrator, but will not be less
than 100% of the Common Stock's fair market value on the date of grant with
respect to ISOs and not less than 85% of fair market value with respect to NSOs.
For purposes of the 1995 Plan, "fair market value" means the average of the high
and low per share trading prices for the Common Stock as reported by the Nasdaq
National Market for a single trading day. As of December 31, 1996, the closing
sales price for the Company's Common Stock as reported by the Nasdaq National
Market was $49.50 per share. The exercise price for shares purchased under
options must be paid in cash, except that the Plan Administrator may authorize
payment in cash and/or already owned Common Stock, a promissory note, delivery
of a properly executed exercise notice, together with irrevocable instructions
to a broker, or such other consideration as the Plan Administrator may specify.
The optionee must pay to the Company applicable withholding taxes upon exercise
of the option as a condition to receiving the stock certificates. The option
term will be fixed by the Plan Administrator. Each option will be exercisable
pursuant to a vesting schedule determined by the Plan Administrator. The Plan
Administrator will also determine the circumstances under which an option will
be exercisable in the event the optionee ceases to provide services to
13
<PAGE> 17
the Company or one of its subsidiaries. If not so established, options generally
will be exercisable for three years after termination of services as a result of
retirement, early retirement at the Company's request, disability or death and
for three months after all other terminations. An option will not be exercisable
if the optionee's services are terminated for cause, as defined in the 1995
Plan.
SARs. A SAR gives its holder the right to receive an appreciation
distribution from the Company equal to the difference between the value of the
Common Stock subject to the right at the time of exercise and the exercise price
of the right. For SARs granted in tandem with options, the exercise price will
be the same as the option exercise price. For other SARs, the exercise price
will be as determined by the Plan Administrator, but will not be less than 85%
of the fair market value of the Common Stock on the date the SAR was granted.
The appreciation distribution will be paid in shares of Common Stock or cash or
any combination of shares and cash, as the Plan Administrator may determine.
Unless otherwise provided by the Plan Administrator, the provisions of the 1995
Plan regarding exercisability of options after the termination of services shall
apply equally, to the extent applicable, to SARs.
Stock Awards. The Plan Administrator is authorized to make awards of
Common Stock on such terms and conditions and subject to such restrictions, if
any (whether based on performance standards, periods of service or otherwise),
as the Plan Administrator may determine. Restrictions may include repurchase or
forfeiture rights in favor of the Company.
Performance Awards. Performance awards may be denominated in cash, shares
of Common Stock or any combination thereof. The Plan Administrator is authorized
to determine the nature, length and starting date of the performance period for
each performance award and the performance objectives to be used in valuing
performance awards and determining the extent to which such performance awards
have been earned. Performance objectives and other terms may vary from person to
person and between groups of persons. Performance objectives will be based on
profits, profit growth, profit-related return ratios, cash flow or total
shareholder return, whether applicable to the Company or any relevant subsidiary
or business unit, comparisons with competitor companies or groups and with stock
market indices, or any combination thereof, as the Plan Administrator may deem
appropriate. Additional performance measures may be used to the extent their use
would comply with the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code. The Plan Administrator will
determine for each performance award the range of dollar values or number of
shares of Common Stock, or a combination thereof, to be received at the end of
the performance period if and to the extent the relevant measures of performance
for the performance awards are met. The earned portion of a performance award
may be paid currently or on a deferred basis with such interest or earnings
equivalent as may be determined by the Plan Administrator. The Plan
Administrator may adjust the performance goals and measurements applicable to
performance awards to take into account changes in law and accounting and tax
rules and to make such adjustments as the Plan Administrator deems necessary or
appropriate to reflect the inclusion or exclusion of the impact of extraordinary
or unusual items, events or circumstances, except that, to the extent required
for compliance with the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code, no adjustment may be made that
would result in an increase in the compensation of any person whose compensation
is subject to such limitation for the applicable year. The Plan Administrator
also may adjust the performance goals and measurements applicable to performance
awards and thereby reduce the amount to be received by any holder pursuant to
such awards if and to the extent the Plan Administrator deems it appropriate.
The Plan Administrator will determine the circumstances under which a
performance award will be payable if a person ceases to provide services to the
Company. If not so established, a pro rata payment will be made at the end of
the performance period if the termination of services is a result of retirement,
early retirement at the Company's request, disability or death. A termination of
services for any other reason will result in forfeiture of the performance award
unless otherwise determined by the Plan Administrator.
Other Stock-Based Awards. The Plan Administrator may grant other
stock-based awards under the 1995 Plan pursuant to which shares of Common Stock
are or may in the future be acquired, or Awards denominated in stock units,
including Awards valued using measures other than market value. Such other
stock-based awards may be granted alone or in addition to or in tandem with any
Award of any type granted under the 1995 Plan and must be consistent with the
1995 Plan's purpose.
14
<PAGE> 18
Loans, Loan Guarantees and Installment Payments. To assist a person
(including a person who is an officer or director of the Company) in acquiring
shares of Common Stock pursuant to an Award granted under the 1995 Plan, the
Plan Administrator may authorize (a) the extension of a loan to the person by
the Company, (b) the payment by the person of the purchase price, if any, of the
Common Stock in installments, or (c) the guarantee by the Company of a loan
obtained by the person from a third party. The terms of any loans, installment
payments or guarantees, including the interest rate and terms of repayment, will
be subject to the Plan Administrator's discretion, and may be granted with or
without security.
Transferability. No option, SAR, performance award, or other stock-based
award will be assignable or otherwise transferable other than by will or the
laws of descent and distribution and, during the person's lifetime, may be
exercised only by the person, except, in the Plan Administrator's sole
discretion, to the extent permitted by Section 422 of the Code.
Amendment and Termination of the 1995 Plan. The 1995 Plan may be
terminated, modified or amended by the shareholders of the Company. The
Company's Board of Directors may also terminate the 1995 Plan, or modify or
amend it, subject to shareholder approval in certain instances, as set forth in
the 1995 Plan. No ISOs may be granted under the 1995 Plan 10 years after the
date the 1995 Plan is adopted by the Board of Directors.
Capital Adjustments.
Adjustment of Shares. In the event of any changes in the outstanding stock
of the Company by reason of stock dividends, stock splits, spin-offs,
combinations or exchanges of shares, recapitalizations, mergers, consolidations,
distributions to shareholders other than a normal cash dividend, or other
changes in the Company's corporate or capital structure, the Plan Administrator,
in its sole discretion, shall make any equitable adjustments as it deems
appropriate in (a) the maximum number and class of securities subject to the
1995 Plan, and (b) the number and class of securities subject to any outstanding
Award and the per share price of such securities, without any change in the
aggregate price to be paid therefor.
Corporate Transaction. In the event of certain mergers or consolidations
or a sale of substantially all the assets or a liquidation of the Company, each
option, SAR or stock award that is at the time outstanding will automatically
accelerate so that each such Award shall, immediately prior to such corporate
transaction, become 100% vested, except that such Award will not so accelerate
if and to the extent: (a) such Award is, in connection with the corporate
transaction, either to be assumed by the successor corporation or parent thereof
or to be replaced with a comparable Award for the purchase of shares of the
capital stock of the successor corporation or its parent corporation, (b) such
Award is to be replaced with a cash incentive program of the successor
corporation that preserves the spread existing at the time of the corporate
transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award, or (c) the acceleration of such Award
is subject to other limitations imposed by the instrument evidencing the Award.
Any such Awards that are assumed or replaced in the corporate transaction and do
not otherwise accelerate at that time shall be accelerated in the event the
participant's employment or services should subsequently terminate within two
years following such corporate transaction, unless such employment or services
are terminated by the Company for cause or by the participant voluntarily
without good reason.
Further Adjustment of Awards. The Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to participants, with respect to
Awards. Such authorized action may include (but is not limited to) establishing,
amending or waiving the type, terms, conditions or duration of, or restrictions
on, Awards so as to provide for earlier, later, extended or additional time for
exercise, payment or settlement or lifting restrictions, differing methods for
calculating payments or settlements, alternate forms and amounts of payments and
settlements and other modifications, and the Plan Administrator may take such
actions with respect to all participants, to certain categories of participants
or only to individual participants. The Plan Administrator may take such actions
before or after granting Awards to which the action relates and before or
15
<PAGE> 19
after any public announcement with respect to such sale, merger, consolidation,
reorganization, liquidation or change in control that is the reason for such
action.
Federal Income Tax Consequences. The federal income tax consequences to
the Company and to any person granted an Award under the 1995 Plan under the
existing applicable provisions of the Code and the regulations thereunder are
substantially as follows.
NSOs. No income will be recognized by a participant upon the grant of an
NSO. On the exercise of an NSO, the optionee will recognize taxable ordinary
income in an amount equal to the excess of the fair market value of the shares
acquired over the option price. Upon a later sale of those shares, the optionee
will have short-term or long-term capital gain or loss, as the case may be, in
an amount equal to the difference between the amount realized on such sale and
the tax basis of the shares sold. If payment of the option price is made
entirely in cash, the tax basis of the shares will be equal to their fair market
value on the exercise date (but not less than the option price), and the shares'
holding period will begin on the day after the exercise date. If the optionee
uses already-owned shares to exercise an option in whole or in part, the
transaction will not be considered to be a taxable disposition of the
already-owned shares. The optionee's tax basis and holding period of the
already-owned shares will be carried over to the equivalent number of shares
received upon exercise. The tax basis of the additional shares received upon
exercise will be the fair market value of the shares on the exercise date (but
not less than the amount of cash, if any, used in payment), and the holding
period for such additional shares will begin on the day after the exercise date.
ISOs. The same rules apply to an ISO that is exercised more than three
months after the optionee's termination of employment (or more than 12 months
thereafter in the case of permanent and total disability, as defined in the
Code). Upon the exercise of an ISO during employment or within three months
after the optionee's termination of employment (or within 12 months thereafter
in the case of permanent and total disability, as defined in the Code), for
regular tax purposes the optionee will recognize no income at the time of
exercise (although the optionee will have income for alternative minimum income
tax purposes at that time as if the option were an NSO) and no deduction will be
allowed to the Company for federal income tax purposes in connection with the
grant or exercise of the option. If the acquired shares are sold or exchanged
after the later of (a) one year from the date of exercise of the option and (b)
two years from the date of grant of the option, the difference between the
amount realized by the optionee on that sale or exchange and the option price
will be taxed to the optionee as a long-term capital gain or loss. If the shares
are disposed of before such holding period requirements are satisfied, then the
optionee will recognize taxable ordinary income in the year of disposition in an
amount equal to the excess, on the date of exercise of the option, of the fair
market value of the shares received over the option price paid (or generally, if
less, the excess of the amount realized on the sale of the shares over the
option price), and the optionee will have capital gain or loss, long-term or
short-term, as the case may be, in an amount equal to the difference between (i)
the amount realized by the optionee upon that disposition of the shares and (ii)
the option price paid by the optionee increased by the amount of ordinary
income, if any, so recognized by the optionee.
SARs. A participant will not be deemed to receive any income at the time a
SAR is granted. When any part of a SAR is exercised, the participant will be
deemed to have received ordinary income at the time of exercise in an amount
equal to the then fair market value of the shares and any cash received for the
surrender of the SAR.
Stock Awards. Upon the receipt of shares under stock awards subject to
vesting and similar restrictions, a participant will generally recognize taxable
ordinary income when the shares cease to be subject to such restrictions under
the 1995 Plan in an amount equal to the excess of the fair market value of the
shares at that time over the amount, if any, paid for such shares. However,
within 30 days after the date the shares are received, a participant may elect
under Section 83(b) of the Code to recognize taxable ordinary income at the time
of transfer in an amount equal to the excess of the fair market value of the
shares at such time over the amount, if any, paid for such shares. In that case
no additional income will be recognized by a participant upon the lapse of
restrictions on the shares, but, if the shares are subsequently forfeited, a
participant may not deduct the income recognized at the time of receipt of the
shares, and the participant will have a capital loss equal to the amount, if
any, paid for such shares. Upon the receipt of shares under stock awards that
are not
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subject to restrictions, other than restrictions on transfer, a participant will
generally recognize taxable ordinary income at the time of such receipt. The
participant's holding period for the shares will begin at the time taxable
income is recognized under these rules, and the tax basis in the shares will be
the amount of ordinary income so recognized plus the amount, if any, paid for
the shares. Any dividends received on the restricted shares prior to the date
the participant recognizes income as described above will be taxable ordinary
income when received.
Performance Share Awards. Upon payment to a participant in settlement
pursuant to a performance share award, the participant will be deemed to have
received ordinary income in an amount equal to the cash and/or the fair market
value of Common Stock received. Special rules apply to a director or officer
subject to liability under Section 16(b) of the Exchange Act. In all the
foregoing cases the Company will be entitled to a deduction at the same time and
in the same amount as the participant recognizes ordinary income, subject to the
following limitations. Under Section 162(m) of the Code, certain compensation
payments in excess of $1 million are subject to a limitation on deductibility
for the Company. The limitation on deductibility applies with respect to that
portion of a compensation payment for a taxable year in excess of $1 million to
either the Company's Chief Executive Officer or any one of the four other most
highly compensated executive officers. Certain performance-based compensation is
not subject to the limitation on deductibility. Options and SARs can qualify for
this performance-based exception, but only if they are granted at fair market
value, the total number of shares that can be granted to an executive for any
period is stated, and shareholder and Board approval is obtained. Restricted
stock does not satisfy the definition of performance-based compensation unless
the lapse of the restriction period is based on the attainment of specified
performance goals approved by a company's shareholders. Restricted stock grants
under the 1995 Plan will not satisfy the performance-based criteria. The option,
SAR and performance award portions of the 1995 Plan have been drafted to allow
compliance with those performance-based criteria.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the independent
public auditors for the Company for fiscal year 1997, and recommends that the
shareholders vote for ratification of such appointment. Ernst & Young LLP has
audited the Company's financial statements since fiscal year 1993.
Shareholder ratification of the appointment of Ernst & Young LLP as the
Company's independent public auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the appointment of Ernst & Young LLP
for shareholder ratification as a matter of good corporate practice. If the
shareholders fail to ratify the appointment, the Board will reconsider whether
or not to retain that firm. Even if the appointment is ratified, the Board, in
its discretion, may direct the appointment of a new independent accounting firm
at any time during the year if the Board feels that such a change would be in
the best interests of the Company and its shareholders.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3.
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OTHER BUSINESS
The Board of Directors does not intend to bring any other business before
the meeting, and so far as is known to the Board, no matters are to be brought
before the meeting except as specified in the Notice of Annual Meeting of
Shareholders. However, as to any other business which may properly come before
the meeting, it is intended that proxies, in the form enclosed, will be voted in
respect thereof in accordance with the judgment of the persons voting such
proxies.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Wm. Kenneth McGraw
WM. KENNETH MCGRAW
Corporate Counsel and Secretary
Seattle, Washington
January 13, 1997
A COPY OF THE COMPANY'S FORM 10-K REPORT FOR FISCAL YEAR 1996, CONTAINING
INFORMATION ON OPERATIONS, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, IS AVAILABLE UPON REQUEST. PLEASE WRITE TO:
INVESTOR RELATIONS DEPARTMENT
VISIO CORPORATION
520 PIKE STREET
SUITE 1800
SEATTLE, WASHINGTON 98101
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EXHIBIT A
VISIO CORPORATION
1995 LONG-TERM INCENTIVE COMPENSATION PLAN
AS AMENDED AND RESTATED ON , 1997
SECTION 1. PURPOSE
The purpose of the Visio Corporation 1995 Long-Term Incentive Compensation
Plan (the "Plan") is to enhance the long-term profitability and shareholder
value of Visio Corporation, a Washington corporation (the "Company"), by
offering incentives and rewards to those employees, consultants and agents of
the Company and its Subsidiaries (as defined in Section 2.26) who are key to the
Company's growth and success, and to encourage them to remain in the service of
the Company and its Subsidiaries and to acquire and maintain stock ownership in
the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below. All references to "sections" shall be to the sections of the Plan.
2.1 "AWARD" means an award or grant made to a Participant pursuant to the
Plan, including, without limitation, awards or grants of Options, Stock
Appreciation Rights, Stock Awards, Performance Awards, Other Stock-Based Awards
or any combination of the foregoing.
2.2 "BOARD" means the Board of Directors of the Company.
2.3 "CAUSE" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 "COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
2.6 "CORPORATE TRANSACTION" means any of the following events:
(a) Approval by the holders of the Common Stock of any merger or
consolidation of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Common Stock are
converted into cash, securities or other property, other than a merger of
the Company in which the holders of the Common Stock immediately prior to
the merger have substantially the same proportionate ownership of common
stock of the surviving corporation immediately after the merger;
(b) Approval by the holders of the Common Stock of any sale, lease,
exchange or other transfer in one transaction or a series of related
transactions of all or substantially all of the Company's assets other than
a transfer of the Company's assets to a majority-owned subsidiary (as the
term "subsidiary" is defined in Section 8.3) of the Company; or
(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company.
2.7 "DISABILITY" means a mental or physical impairment of the Holder that
is expected to result in death or that has lasted or is expected to last for a
continuous period of 12 months or more and that causes the Holder to be unable,
in the opinion of the Company and two independent physicians, to perform his or
her duties for the Company and to be engaged in any substantial gainful
activity. Disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of
disability to the Plan Administrator.
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2.8 "EARLY RETIREMENT" means retirement as that term is defined by the Plan
Administrator from time to time for purposes of the Plan.
2.9 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2.10 "FAIR MARKET VALUE" means the average of the high and low per share
trading prices for the Common Stock as reported by the Nasdaq National Market
for a single trading day.
2.11 "GOOD REASON" means the occurrence of any of the following events or
conditions:
(a) a change in the Holder's status, title, position or
responsibilities (including reporting responsibilities) that, in the
Holder's reasonable judgment, represents a substantial reduction of the
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Holder of any duties or responsibilities
that, in the Holder's reasonable judgment, are inconsistent with such
status, title, position or responsibilities; or any removal of the Holder
from or failure to reappoint or reelect the Holder to any of such
positions, except in connection with the termination of the Holder's
employment for Cause, for Disability or as a result of his or her death, or
by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Successor Corporation's requiring the Holder (without the
Holder's consent) to be based at any place outside a 35-mile radius of his
or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on Successor Corporation business that is not
materially greater than such travel requirements prior to the Corporate
Transaction;
(d) the Successor Corporation's failure to (i) continue in effect any
material compensation or benefit plan (or the substantial equivalent
thereof) in which the Holder was participating at the time of a Corporate
Transaction, including, but not limited to, the Plan, or (ii) provide the
Holder with compensation and benefits at least equal (in terms of benefit
levels and/or reward opportunities) to those provided for under each
employee benefit plan, program and practice as in effect immediately prior
to the Corporate Transaction (or as in effect following the Corporate
Transaction, if greater);
(e) any material breach by the Successor Corporation of any provision
of the Plan; or
(f) any purported termination of the Holder's employment or service
for Cause by the Successor Corporation that does not comply with the terms
of the Plan.
2.12 "GRANT DATE" means (i) the date on which the Plan Administrator
adopted the resolution granting an Award; (ii) a date following the date on
which the Plan Administrator adopted the resolution, which is designated as the
date an Award is granted; or (iii) if a Pricing Period is used, the last day of
the Pricing Period."
2.13 "HOLDER" means the Participant to whom an Award is granted, or, for a
Holder who has died, the personal representative of the Holder's estate, the
person(s) to whom the Holder's rights under the Award have passed by will or the
applicable laws of descent and distribution or the beneficiary designated
pursuant to Section 14.
2.14 "INCENTIVE STOCK OPTION" means an option to purchase Common Stock
granted under Section 7 of the Plan with the intention that it qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
2.15 "NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock
granted under Section 7 of the Plan other than an Incentive Stock Option.
2.16 "OPTION" means the right to purchase Common Stock granted under
Section 7 of the Plan.
2.17 "OTHER STOCK-BASED AWARD" means an Award granted under Section 12 of
the Plan.
2.18 "PARTICIPANT" means an individual who is a Holder of an Award or, as
the context may require, any employee, consultant or agent of the Company or a
Subsidiary who has been designated by the Plan Administrator as eligible to
participate in the Plan.
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2.19 "PERFORMANCE AWARD" means an Award granted under Section 11 of the
Plan the payout of which is subject to achievement through a performance period
of performance goals prescribed by the Plan Administrator.
2.20 "PLAN ADMINISTRATOR" means any committee of the Board designated to
administer the Plan under Section 3.1 of the Plan.
2.21 "PRICING PERIOD" means the period beginning 15 consecutive trading
days preceding and ending 15 consecutive trading days following the date
designated in a resolution of the Plan Administrator as the date an Award is
granted or, if the Plan Administrator does not designate such a date in the
resolution, the date on which the Plan Administrator adopted the resolution."
2.22 "RESTRICTED STOCK" means shares of Common Stock granted under Section
10 of the Plan the rights of ownership of which are subject to restrictions
prescribed by the Plan Administrator.
2.23 "RETIREMENT" means retirement as of the individual's normal retirement
date under the Company's Profit Sharing and Savings Plan or other similar
successor plan applicable to salaried employees.
2.24 "STOCK APPRECIATION RIGHT" means an Award granted under Section 9 of
the Plan.
2.25 "STOCK AWARD" means an Award granted under Section 10 of the Plan.
2.26 "SUBSIDIARY," except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company or in which the Company has a significant ownership
interest, as determined by the Plan Administrator, and any entity that may
become a direct or indirect parent of the Company.
2.27 "SUCCESSOR CORPORATION" has the meaning set forth in Section 15.2 of
the Plan.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by a committee or committees (which term
includes subcommittees) appointed by, and consisting of one or more members of,
the Board. If and so long as the Company's Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, the Board shall consider, in
selecting the Plan Administrator and the membership of any committee acting as
Plan Administrator of this Plan with respect to any persons subject or likely to
become subject to Section 16 under the Exchange Act, the provisions regarding
(a) "outside directors," as contemplated by Section 162(m) of the Code, and (b)
"nonemployee directors," as contemplated by Rule 16b-3 under the Exchange Act.
The Board may delegate the responsibility for administering the Plan with
respect to designated classes of eligible Participants to different committees,
subject to such limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to removal by the
Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan, the
Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
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SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 15.1 of the
Plan, a maximum of 1,270,000(1) shares of Common Stock shall be available for
issuance under the Plan, except that any shares of Common Stock that, as of the
date the Company becomes subject to the reporting requirements of the Exchange
Act, are available for issuance under the Company's 1990 Stock Option Plan
adopted by the Company's shareholders on November 26, 1990 (or that thereafter
become available for issuance under that plan in accordance with its terms as in
effect on such date) and that are not issued under that plan shall be added to
the aggregate number of shares available for issuance under the Plan. Shares
issued under the Plan shall be drawn from authorized and unissued shares or
shares now held or subsequently acquired by the Company as treasury shares.
4.2 LIMITATIONS
(a) Subject to adjustment from time to time as provided in Section 15.1,
not more than an aggregate of 420,000 shares shall be available for issuance
pursuant to grants of Stock Awards, Performance Awards or Other Stock-Based
Awards under the Plan.
(b) Subject to adjustment from time to time as provided in Section 15.1,
not more than 150,000 shares of Common Stock may be made subject to Awards under
the Plan to any individual Participant in the aggregate in any one fiscal year
of the Company, except that the Company may make additional one-time grants of
up to 400,000 shares to newly hired Participants, such limitation to be applied
in a manner consistent with the requirements of, and only to the extent required
for compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for or settled in shares), including,
without limitation, in connection with the cancellation of an Award and the
grant of a replacement Award, shall again be available for issuance in
connection with future grants of Awards under the Plan; provided, however, that
for purposes of Section 4.2, any such shares shall be counted in accordance with
the requirements of Section 162(m) of the Code. Shares that are subject to
tandem Awards shall be counted only once.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and key
employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects; provided that directors who are not also employees may not
be awarded Incentive Stock Options. Awards may also be made to consultants and
agents who provide services to the Company and its Subsidiaries.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole discretion, to
determine the type or types of Awards to be made under the Plan. Such Awards may
include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Stock Awards, Performance Awards and Other
Stock-Based Awards. Awards may be granted singly, in combination or in tandem so
that the
- ---------------
(1) After giving effect to a three-for-two stock split effective October 17,
1995.
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settlement or payment of one automatically reduces or cancels the other. Awards
may also be made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for, grants or rights under any other
employee or compensation plan of the Company.
6.2 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other entities ("Acquired Entities") (or
the parent of the Acquired Entity) and the new Award is substituted, or the old
award is assumed, by reason of a merger, consolidation, acquisition of property
or of stock, reorganization or liquidation (the "Acquisition Transaction"). In
the event that a written agreement pursuant to which the Acquisition Transaction
is completed is approved by the Board and said agreement sets forth the terms
and conditions of the substitution for or assumption of outstanding awards of
the Acquired Entity, said terms and conditions shall be deemed to be the action
of the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act,
and the persons holding such Awards shall be deemed to be Participants and
Holders.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
Subject to Section 6.2, the exercise price for shares purchased under an
Option shall be as determined by the Plan Administrator, but shall not be less
than 100% of the Fair Market Value of the Common Stock on the Grant Date with
respect to Incentive Stock Options. With respect to Nonqualified Stock Options,
the exercise price may be based on the lowest price at which shares of Common
Stock are traded (as reported by the Nasdaq National Market) during the Pricing
Period. However, the exercise price for Nonqualified Stock Options shall not in
any event be less than 85% of the Fair Market Value of the Common Stock on the
date on which the Plan Administrator adopted the resolution granting the Option.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan Administrator
or, if not so established, shall be 10 years from the Grant Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time.
To the extent that the right to purchase shares has accrued thereunder, an
Option may be exercised from time to time by written notice to the Company, in
accordance with procedures established by the Plan Administrator, setting forth
the number of shares with respect to which the Option is being exercised and
accompanied by payment in full as described in Section 7.5 of the Plan. In no
case may an Option be exercised as to less than 100 shares at any one time (or
the lesser number of remaining shares covered by the Option).
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such
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<PAGE> 27
consideration must be paid in cash, bank certified or cashier's check or
personal check (unless at the time of exercise the Plan Administrator in a
particular case determines not to accept a personal check) for the Common Stock
being purchased.
The Plan Administrator can determine either at the time the Option is
granted or at any time before exercise that additional forms of payment will be
permitted. To the extent permitted by applicable laws and regulations
(including, but not limited to, federal tax and securities laws and regulations
and state corporate law), and unless the Plan Administrator determines
otherwise, an Option may also be exercised, either singly or in combination with
one or more of the alternative forms of payment authorized by this Section 7.5,
by:
(a) tendering (either actually or by attestation) shares of Common
Stock already owned by the Holder for at least six months (or any shorter
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price; or (b) delivery
of a properly executed exercise notice, together with irrevocable
instructions, to (i) a brokerage firm designated by the Company to deliver
promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may
arise in connection with the exercise and (ii) the Company to deliver the
certificates for such purchased shares directly to such brokerage firm, all
in accordance with the regulations of the Federal Reserve Board. To the
extent permitted by the Plan Administrator, the exercise price for shares
purchased under an option may also be paid, either singly or in combination
with one or more of the alternative forms of payment authorized by this
Section 7.5, by (y) a promissory note authorized pursuant to Section 13 of
the Plan; or (z) such other consideration as the Plan Administrator may
permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time. If the Holder's relationship
with the Company or its Subsidiaries ceases for any reason, then the portion of
the Holder's option which is not exercisable at the time of such cessation shall
terminate immediately upon such cessation, unless the Plan Administrator
determines otherwise. In case of termination of the Holder's employment or
services other than by reason of death or Cause, the Option shall be
exercisable, to the extent of the number of shares purchasable by the Holder at
the date of such termination, only: (a) within three years if the termination of
the Holder's employment or services are coincident with Retirement, Early
Retirement at the Company's request or Disability or (b) within three months
after the date the Holder ceases to be an employee, consultant or agent of the
Company or a Subsidiary if termination of the Holder's employment or services is
for any reason other than Retirement, Early Retirement at the Company's request
or Disability, but in no event later than the remaining term of the Option. Any
Option exercisable at the time of the Holder's death may be exercised, to the
extent of the number of shares purchasable by the Holder at the date of the
Holder's death, by the personal representative of the Holder's estate entitled
thereto at any time or from time to time within three years after the date of
death, but in no event later than the remaining term of the Option. In case of
termination of the Holder's employment or services for Cause, the Option shall
automatically terminate upon first notification to the Holder of such
termination, unless the Plan Administrator determines otherwise.
If a Holder's employment or services with the Company are suspended pending
an investigation of whether the Holder shall be terminated for Cause, all of the
Holder's rights under any Option likewise shall be suspended during the period
of investigation. A transfer of employment or services between or among the
Company and its Subsidiaries shall not be considered a termination of employment
or services. Unless the Plan Administrator determines otherwise, a leave of
absence approved in accordance with Company procedures shall not be considered a
termination of employment or services, except that with respect to
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Incentive Stock Options such leave of absence shall be subject to any
requirements of Section 422 of the Code.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock Options
shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time during any calendar year (under the Plan
and all other stock option plans of the Company) exceeds $100,000, such
portion in excess of $100,000 shall be treated as a Nonqualified Stock
Option. In the event the Participant holds two or more such Options that
become exercisable for the first time in the same calendar year, such
limitation shall be applied on the basis of the order in which such Options
are granted.
8.2 10% SHAREHOLDERS
If a Participant owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value
of the Common Stock on the Grant Date and the Option term shall not exceed
five years.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms
for purposes of Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option must be exercised
within three months after termination of employment for reasons other than
death to qualify for Incentive Stock Option tax treatment, except that in
the case of termination of employment due to Disability, such Option must
be exercised within one year after such termination.
SECTION 9. STOCK APPRECIATION RIGHTS
9.1 GRANT OF STOCK APPRECIATION RIGHTS
The Plan Administrator may grant a Stock Appreciation Right separately or
in tandem with a related Option.
9.2 TANDEM STOCK APPRECIATION RIGHTS
A Stock Appreciation Right granted in tandem with a related Option will
give the Holder the right to surrender to the Company all or a portion of the
related Option and to receive an appreciation distribution (in shares of Common
Stock or cash or any combination of shares and cash, as the Plan Administrator
shall determine at any time) in an amount equal to the excess of the Fair Market
Value on the date the Stock Appreciation Right is exercised over the exercise
price per share of the right, which shall be the same as the exercise price of
the related Option. A tandem Stock Appreciation Right will have the same other
terms and
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<PAGE> 29
provisions as the related Option. Upon and to the extent a tandem Stock
Appreciation Right is exercised, the related Option will terminate.
9.3 STAND-ALONE STOCK APPRECIATION RIGHTS
A Stock Appreciation Right granted separately and not in tandem with an
Option will give the Holder the right to receive an appreciation distribution in
an amount equal to the excess of the Fair Market Value for the date the Stock
Appreciation Right is exercised over the exercise price per share of the right.
A stand-alone Stock Appreciation Right will have such terms as the Plan
Administrator may determine, except that the exercise price per share of the
right must be at least equal to 85% of the Fair Market Value on the date on
which the Plan Administrator adopted the resolution granting the Stock
Appreciation Right and the term of the right, if not otherwise established by
the Plan Administrator, shall be 10 years from the Grant Date.
9.4 EXERCISE OF STOCK APPRECIATION RIGHTS
Unless otherwise provided by the Plan Administrator in the instrument that
evidences the Stock Appreciation Right, the provisions of Section 7.6 of the
Plan relating to the termination of a Holder's employment or services shall
apply equally, to the extent applicable, to the Holder of a Stock Appreciation
Right.
SECTION 10. STOCK AWARDS
10.1 GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make Awards of Common Stock to
Participants on such terms and conditions and subject to such restrictions, if
any (whether based on performance standards, periods of service or otherwise),
as the Plan Administrator shall determine, which terms, conditions and
restrictions shall be set forth in the instrument evidencing the Award. The
terms, conditions and restrictions that the Plan Administrator shall have the
power to determine shall include, without limitation, the manner in which shares
subject to Stock Awards are held during the periods they are subject to
restrictions and the circumstances under which forfeiture of Restricted Stock
shall occur by reason of termination of the Holder's services.
10.2 ISSUANCE OF SHARES
Upon the satisfaction of any terms, conditions and restrictions prescribed
in respect to a Stock Award, or upon the Holder's release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall deliver, as soon as practicable, to the Holder
or, in the case of the Holder's death, to the personal representative of the
Holder's estate or as the appropriate court directs, a stock certificate for the
appropriate number of shares of Common Stock.
10.3 WAIVER OF RESTRICTIONS
Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the forfeiture period and any other terms,
conditions or restrictions on any Restricted Stock under such circumstances and
subject to such terms and conditions as the Plan Administrator shall deem
appropriate.
SECTION 11. PERFORMANCE AWARDS
11.1 PLAN ADMINISTRATOR AUTHORITY
Performance Awards may be denominated in cash, shares of Common Stock or
any combination thereof. The Plan Administrator is authorized to grant
Performance Awards and shall determine the nature, length and starting date of
the performance period for each Performance Award and the performance objectives
to be used in valuing Performance Awards and determining the extent to which
such Performance Awards have been earned. Performance objectives and other terms
may vary from Participant to Participant and between
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<PAGE> 30
groups of Participants. Performance objectives shall be based on profits, profit
growth, profit-related return ratios, cash flow or total return to shareholders,
whether applicable to the Company or any relevant Subsidiary or business unit,
comparisons with competitor companies or groups and with stock market indices,
or any combination thereof, as the Plan Administrator shall determine, in its
sole discretion. Additional performance measures may be used to the extent their
use would comply with the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.
Performance periods may overlap and Participants may participate
simultaneously with respect to Performance Awards that are subject to different
performance periods and different performance factors and criteria. The Plan
Administrator shall determine for each Performance Award the range of dollar
values or number of shares of Common Stock (which may, but need not, be shares
of Restricted Stock pursuant to Section 10 of the Plan), or a combination
thereof, to be received by the Participant at the end of the performance period
if and to the extent that the relevant measures of performance for such
Performance Awards are met. No Performance Awards having an aggregate maximum
dollar value in excess of $300,000 shall be granted to any individual
Participant in any one fiscal year of the Company, such limitations to be
applied in a manner consistent with the requirements of, and to the extent
required for compliance with, the exclusion from the limitation on deductibility
of compensation under Section 162(m) of the Code.
The earned portion of a Performance Award may be paid currently or on a
deferred basis with such interest or earnings equivalent as may be determined by
the Plan Administrator. Payment shall be made in the form of cash, whole shares
of Common Stock (which may, but need not, be shares of Restricted Stock pursuant
to Section 10 of the Plan), Options or any combination thereof, either in a
single payment or in annual installments, all as the Plan Administrator shall
determine.
11.2 ADJUSTMENT OF AWARDS
The Plan Administrator may adjust the performance goals and measurements
applicable to Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the Plan Administrator
deems necessary or appropriate to reflect the inclusion or exclusion of the
impact of extraordinary or unusual items, events or circumstances, except that,
to the extent required for compliance with the exclusion from the limitation on
deductibility of compensation under Section 162(m) of the Code, no adjustment
shall be made that would result in an increase in the compensation of any
Participant whose compensation is subject to the limitation on deductibility
under Section 162(m) of the Code for the applicable year. The Plan Administrator
also may adjust the performance goals and measurements applicable to Performance
Awards and thereby reduce the amount to be received by any Participant pursuant
to such Awards if and to the extent that the Plan Administrator deems it
appropriate.
11.3 PAYOUT UPON TERMINATION
The Plan Administrator shall establish and set forth in each instrument
that evidences a Performance Award whether the Award will be payable, and the
terms and conditions of such payment, if a Holder ceases to be employed by, or
to provide services to, the Company or its Subsidiaries, which provisions may be
waived or modified by the Plan Administrator at any time. If not so established
in the instrument evidencing the Performance Award, the Award will be payable
according to the following terms and conditions, which may be waived or modified
by the Plan Administrator at any time. If during a performance period a
Participant's employment or services with the Company terminate by reason of the
Participant's Retirement, Early Retirement at the Company's request, Disability
or death, such Participant shall be entitled to a payment with respect to each
outstanding Performance Award at the end of the applicable performance period
(a) based, to the extent relevant under the terms of the Award, on the
Participant's performance for the portion of such performance period ending on
the date of termination and (b) prorated for the portion of the performance
period during which the Participant was employed by the Company, all as
determined by the Plan Administrator. The Plan Administrator may provide for an
earlier payment in settlement of such Performance Award discounted at a
reasonable interest rate and otherwise in such amount and under such terms and
conditions as the Plan Administrator deems appropriate.
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<PAGE> 31
Except as otherwise provided in Section 15 of the Plan or in the instrument
evidencing the Performance Award, if during a performance period a Participant's
employment or services with the Company terminate other than by reason of the
Participant's Retirement, Early Retirement at the Company's request, Disability
or death, then such Participant shall not be entitled to any payment with
respect to the Performance Awards relating to such performance period, unless
the Plan Administrator shall otherwise determine. The provisions of Section 7.6
of the Plan regarding leaves of absence and termination for Cause shall apply to
Performance Awards.
SECTION 12. OTHER STOCK-BASED AWARDS
The Plan Administrator may grant other Awards under the Plan pursuant to
which shares of Common Stock (which may, but need not, be shares of Restricted
Stock pursuant to Section 10 of the Plan) are or may in the future be acquired,
or Awards denominated in stock units, including ones valued using measures other
than market value. Such Other Stock-Based Awards may be granted alone or in
addition to or in tandem with any Award of any type granted under the Plan and
must be consistent with the Plan's purpose.
SECTION 13. LOANS, LOAN GUARANTEES AND INSTALLMENT PAYMENTS
To assist a Holder (including a Holder who is an officer or director of the
Company) in acquiring shares of Common Stock pursuant to an Award granted under
the Plan, the Plan Administrator may authorize, either at the Grant Date or at
any time before the acquisition of Common Stock pursuant to the Award, (a) the
extension of a loan to the Holder by the Company, (b) the payment by the Holder
of the purchase price, if any, of the Common Stock in installments, or (c) the
guarantee by the Company of a loan obtained by the grantee from a third party.
The terms of any loans, installment payments or guarantees, including the
interest rate and terms of repayment, will be subject to the Plan
Administrator's discretion. Loans, installment payments and guarantees may be
granted with or without security. The maximum credit available is the purchase
price, if any, of the Common Stock acquired plus the maximum federal and state
income and employment tax liability that may be incurred in connection with the
acquisition.
SECTION 14. ASSIGNABILITY
No Option, Stock Appreciation Right, Performance Award or Other Stock-Based
Award granted under the Plan may be assigned, pledged or transferred by the
Holder other than by will or by the laws of descent and distribution and, during
the Holder's lifetime, such Awards may be exercised only by the Holder or a
permitted assignee or transferee of the Holder (as provided below).
Notwithstanding the foregoing, and to the extent permitted by Section 422 of the
Code, the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Holder of such Awards
to designate a beneficiary who may exercise the Award or receive compensation
under the Award after the Holder's death; provided, however, that any such Award
so assigned, pledged or transferred shall be subject to all the same terms and
conditions contained in the instrument evidencing the award.
SECTION 15. ADJUSTMENTS
15.1 ADJUSTMENT OF SHARES
In the event that at any time or from time to time a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock of the Company, then the Plan Administrator,
in its sole discretion, shall make such equitable adjustments as it shall deem
appropriate in the circumstances in (i) the maximum number of and class of
securities subject to the
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<PAGE> 32
Plan as set forth in Section 4.1 of the Plan, (ii) the maximum number and class
of securities that may be made subject to Awards to any individual Participant
as set forth in Section 4.2 of the Plan, and (iii) the number and class of
securities that are subject to any outstanding Award and the per share price of
such securities, without any change in the aggregate price to be paid therefor.
The determination by the Plan Administrator as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
15.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the Award, in
the event of any Corporate Transaction, each Option, Stock Appreciation Right or
Stock Award that is at the time outstanding shall automatically accelerate so
that each such Award shall, immediately prior to the specified effective date
for the Corporate Transaction, become 100% vested, except that such acceleration
will not occur if, in the opinion of the Company's accountants, it would render
unavailable "pooling of interest" accounting for a Corporate Transaction that
would otherwise qualify for such accounting treatment.
Such Award shall not so accelerate, however, if and to the extent: (a) such
Award is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof (the "Successor Corporation") or to
be replaced with a comparable award for the purchase of shares of the capital
stock of the Successor Corporation or (b) such Award is to be replaced with a
cash incentive program of the Successor Corporation that preserves the spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such Award.
The determination of Award comparability under clause (a) above shall be made by
the Plan Administrator, and its determination shall be conclusive and binding.
All such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
assumed by the Successor Corporation. Any such Awards that are assumed or
replaced in the Corporate Transaction pursuant to items (a) and (b) of the
preceding paragraph and do not otherwise accelerate at that time shall be
accelerated in the event the Holder's employment or services should subsequently
terminate within two years following such Corporate Transaction, unless such
employment or services are terminated by the Successor Corporation for Cause or
by the Holder voluntarily without Good Reason. Notwithstanding the foregoing, no
Incentive Stock Option shall become exercisable pursuant to this Section 15.2
without the Holder's consent, if the result would be to cause such Option not to
be treated as an Incentive Stock Option (whether by reason of the annual
limitation described in Section 8.1 of the Plan or otherwise).
15.3 FURTHER ADJUSTMENT OF AWARDS
Without limiting the preceding Section 15.2 of the Plan, and subject to the
limitations set forth in Section 11 of the Plan, the Plan Administrator shall
have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change in control of the Company,
as defined by the Plan Administrator, to take such further action as it
determines to be necessary or advisable, and fair and equitable to Participants,
with respect to Awards. Such authorized action may include (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise, payment or settlement or lifting
restrictions, differing methods for calculating payments or settlements,
alternate forms and amounts of payments and settlements and other modifications,
and the Plan Administrator may take such actions with respect to all
Participants, to certain categories of Participants or only to individual
Participants. The Plan Administrator may take such actions before or after
granting Awards to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation, reorganization,
liquidation or change in control that is the reason for such action.
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<PAGE> 33
15.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 16. WITHHOLDING OF TAXES
The Company may require the Holder to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant, exercise, payment or settlement of any Award and may withhold and retain
shares of Common Stock in such amounts as are equivalent in Fair Market Value to
the withholding obligation. Subject to the Plan and applicable law and unless
the Plan Administrator determines otherwise, the Holder may satisfy withholding
obligations, in whole or in part, by paying cash, by electing to have the
Company withhold and retain shares of Common Stock or by transferring shares of
Common Stock to the Company, in such amounts as are equivalent to the Fair
Market Value of the withholding obligation.
SECTION 17. AMENDMENT AND TERMINATION OF PLAN
17.1 AMENDMENT OF PLAN
The Plan may be amended by the shareholders of the Company. The Board may
also amend the Plan in such respects as it shall deem advisable; however, to the
extent required for compliance with Section 422 of the Code or any applicable
law or regulation, shareholder approval will be required for any amendment that
will (a) increase the total number of shares as to which Options may be granted
or which may be used in payment of Stock Appreciation Rights, Performance Awards
or Other Stock-Based Awards under the Plan or that may be issued as Restricted
Stock, (b) modify the class of persons eligible to receive Options, or (c)
otherwise require shareholder approval under any applicable law or regulation.
17.2 TERMINATION OF PLAN
The Company's shareholders or the Board may suspend or terminate the Plan
at any time. The Plan will have no fixed expiration date; provided, however,
that no Incentive Stock Options may be granted more than 10 years after the
Plan's effective date.
17.3 CONSENT OF HOLDER
The amendment or termination of the Plan shall not, without the consent of
the Holder of any Award under the Plan, impair or diminish any rights or
obligations under any Award theretofore granted under the Plan.
SECTION 18. GENERAL
18.1 NOTIFICATION
The Plan Administrator shall promptly notify a Participant of an Award, and
a written grant shall promptly be executed and delivered by or on behalf of the
Company.
18.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
Neither the Plan, participation in the Plan as a Participant nor any action
of the Plan Administrator taken under the Plan shall be construed as giving any
Participant or employee of the Company any right to be retained in the employ of
the Company or limit the Company's right to terminate the employment or services
of the Participant.
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<PAGE> 34
18.3 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any shares of Common Stock, security or
interest in a security paid or issued under, or created by, the Plan. The
Company may issue certificates for shares with such legends and subject to such
restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
18.4 NO RIGHTS AS A SHAREHOLDER
No Option, Stock Appreciation Right, Performance Award or Other Stock-Based
Award shall entitle the Holder to any dividend, voting or other right of a
shareholder unless and until the date of issuance under the Plan of the shares
that are the subject of such Awards, free of all applicable restrictions.
18.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
18.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
18.7 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
SECTION 19. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the Board,
so long as it is approved by the Company's shareholders at any time within 12
months of such adoption or, if earlier, and to the extent required for
compliance with Rule 16b-3 under the Exchange Act, at the next annual meeting of
the Company's shareholders after adoption of the Plan by the Board.
Adopted by the Board on May 17, 1995 and approved by the Company's
shareholders on June 20, 1995.
Amended and Restated by the Board on October 22, 1996.
Amended and Restated by the Board on January , 1996 and approved by the
Company's shareholders on , 1997.
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PROXY
VISIO CORPORATION
520 PIKE STREET, SUITE 1800, SEATTLE, WASHINGTON 98101
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeremy A. Jaech and Theodore C. Johnson as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Visio Corporation held of record by the undersigned at the close of
business on December 27, 1996 at the Annual Meeting of Shareholders to be held
on February 26, 1997, or any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 36
Please mark your votes /X/
as indicated in this
example.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD 2. PROPOSAL TO APPROVE FOR AGAINST ABSTAIN
all nominees listed AUTHORITY THE 1995 LONG-TERM / / / / / /
1. ELECTION OF DIRECTORS: below (except as marked to vote for all INCENTIVE COMPENSATION
to the contrary below) nominees listed below PLAN, AS AMENDED AND
/ / / / RESTATED:
(INSTRUCTION: To withhold
authority to vote for any 3. PROPOSAL TO RATIFY FOR AGAINST ABSTAIN
individual nominee, strike THE APPOINTMENT OF / / / / / /
a line through the nominee's ERNST & YOUNG LLP
name in the list below) as the Company's
J. Jaech T. Johnson independent public
T. Alberg T. Byers auditors for fiscal
J. Johnston D. Mackenzie year 1997:
S. Oki
4. In their discretion,
the Proxies are
authorized to vote upon
such other business as
may properly come before
the meeting.
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature____________________Signature if held jointly ______________________
Date: _____________, 1997 Please sign exactly as your name appears below. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
