EMPLOYEES
As of December 31, 1998, the Company had a total of 152 employees, of whom
147 were based in the United States and 4 were based internationally. Of the
total, 60 were engaged in sales and marketing, 43 in research and development,
32 in professional services and customer support, and 17 in finance,
administration and corporate operations. The Company's future performance
depends in significant part on its continuing ability to attract, train and
retain highly qualified technical, sales, service, marketing and managerial
personnel. None of the Company's employees is represented by a labor union. The
Company has not experienced any work stoppages and considers its relations with
its employees to be good. See "Risk Factors--We Need to Recruit Additional
Personnel and We Depend on Our Key Personnel."
FACILITIES
The Company's principal offices currently occupy approximately 34,000
square feet in Mountain View, California pursuant to a lease which expires in
October 2003. In addition, the Company also leases executive suites on a
short-term basis for North American offices in Englewood, Colorado; Atlanta,
Georgia; Orlando, Florida; Plantation, Florida; Chicago, Illinois; Wellesley,
Massachusetts; New York, New York; Bala Cynwyd, Pennsylvania; Houston, Texas;
Alexandria, Virginia and Toronto, Ontario. The Company believes that its
facilities are adequate for the next 12 months and that, if required, suitable
additional space will be available on commercially reasonable terms to
accommodate expansion of the Company's operations.
LEGAL PROCEEDINGS
In May 1998, Acta filed suit against the Company alleging copyright
infringement of certain of its software code. In addition, Acta alleged that the
Company committed conversion, fraud and unfair competition. Acta sought a
declaration that it did not misappropriate any of the Company's trade secrets.
Acta also sought injunctive relief, monetary damages, costs and attorneys' fees.
In May 1998, the Company filed suit against Acta and its founders alleging
misappropriation of the Company's trade secrets, breach of contract, violation
of the covenant of good faith and fair dealing, breach of confidence, fraud and
unfair competition. The Company and Acta have agreed to mediate the dispute;
however, this mediation may not be successful. If the dispute is not resolved in
mediation and the parties do not otherwise settle the dispute, the Company could
incur substantial expenses and the attention of the Company's development and
management personnel may
42
44
be diverted. Litigation of this type is inherently uncertain, especially because
it involves complex technical issues. The Company can give no assurance that it
will prevail in the litigation against Acta or that it will successfully defend
Acta's claim. See "Risk Factors--Risks Associated with Intellectual Property."
43
45
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company as of January 29, 1999
are as follows:
NAME AGE POSITION
---- --- --------
Kenneth C. Gardner........................ 48 President, Chief Executive Officer and
Director
John E. Zicker............................ 42 Executive Vice President, Technology,
Chief Technology Officer and Director
W. Virginia Walker........................ 53 Executive Vice President, Finance and
Administration, and Chief Financial
Officer
Thomas M. Lounibos........................ 42 Executive Vice President, Sales and
Marketing
Kenneth C. Holcomb........................ 49 Vice President, Operations
Michael P. Venerable...................... 36 Vice President, Professional Services
Shanda Bahles (a)(b)...................... 43 Director
Richard W. Shapero(a)(b).................. 51 Director
Jeffrey T. Webber......................... 46 Director
Klaus S. Luft(c).......................... 57 Director designee
(a) Member of the Audit Committee.
(b) Member of the Compensation Committee.
(c) The Board of Directors has appointed Mr. Luft to the Board of Directors, and
Mr. Luft has agreed to join, effective as of the first meeting of the Board
of Directors following completion of the offering.
Kenneth C. Gardner. Mr. Gardner has been President, Chief Executive Officer
and a director since commencement of operations in June 1995. From March 1994
until March 1995, Mr. Gardner was Vice President of Products at Borland
International, Inc. ("Borland"), which has since changed its name to Inprise
Corporation, an enterprise applications company. From February 1992 until March
1994, Mr. Gardner was President, Chief Executive Officer and a co-founder of
ReportSmith, Inc. ("ReportSmith"), a database report applications company, which
was purchased by Borland in 1994. Mr. Gardner is a director of ObjectSwitch
Corp., Data Sage, Inc. and CommerceOne Inc., which are privately held companies.
Mr. Gardner received his B.S.C. degree in Finance from the University of
Louisville.
John E. Zicker. Mr. Zicker has been Executive Vice President, Technology,
Chief Technology Officer and a director since the Company's commencement of
operations in June 1995. From March 1994 until May 1995, Mr. Zicker was Director
of Client/Server Development at Borland. From February 1992 until March 1994,
Mr. Zicker was Vice President of Technology and a co-founder of ReportSmith. Mr.
Zicker has 13 years experience in software development and image processing at
NASA Ames Research Center, Lawrence Livermore Laboratories and the Stanford
Linear Accelerator Center. Mr. Zicker received his B.S. degree in Electrical
Engineering at the University of California at Davis and his M.S. degree in
Electrical Engineering from the University of Wisconsin at Madison.
W. Virginia Walker. Ms. Walker has been Executive Vice President, Finance
and Administration, and Chief Financial Officer since January 1998. From June
1996 to January 1998, Ms. Walker pursued personal interests. From November 1995
until June 1996, Ms. Walker was Executive Vice President of Finance and
Administration, Chief
44
46
Financial Officer and Secretary of JTS Corporation, a publicly traded disk drive
manufacturer. From May 1985 until September 1995, Ms. Walker worked at Scios
Nova, Inc., a publicly traded biopharmaceutical company, where she held the
positions of Vice President of Finance and Administration and Chief Financial
Officer. Ms. Walker received her B.S. degree in Business Administration,
Accounting from San Jose State University.
Thomas M. Lounibos. Mr. Lounibos has been Executive Vice President, Sales
and Marketing since January 1999. Mr. Lounibos was the Company's Executive Vice
President, Worldwide Sales, from October 1998 until January 1999 and was the
Company's Vice President, Sales from March 1996 until October 1998. From October
1995 until March 1996, Mr. Lounibos was Vice President of Sales for
ParcPlace-DigiTalk Incorporated ("ParcPlace-DigiTalk"), an object-oriented
programming tools company, and from November 1993 until October 1995 Mr.
Lounibos was Vice President of Sales for DigiTalk, Incorporated, which was
acquired by ParcPlace Incorporated. Prior to joining DigiTalk, Mr. Lounibos
worked for Knowledgeware, Incorporated, a software company, where he served as
Vice President of Sales--Western United States and Vice President of Marketing.
Mr. Lounibos received his B.S. degree in Business Economics from the University
of San Francisco.
Kenneth C. Holcomb. Mr. Holcomb has been Vice President, Operations since
March 1998. From March 1997 until February 1998, Mr. Holcomb was Vice President,
Operations of Pilot Network Services, Inc., a publicly-traded network security
company. From May 1996 until February 1997, Mr. Holcomb was Vice President,
Systems Integration of WorldCom, Inc., a publicly traded telecommunications
company. From January 1996 until May 1996, Mr. Holcomb was Vice President,
Internet Development of MFS Communications Company, Inc., a telecommunications
company. From January 1992 until December 1996, Mr. Holcomb was Senior Vice
President, Customer Service and Operations of MFS Datanet, Inc., and subsidiary
of MFS Communications, Inc. a data communications company. Mr. Holcomb received
his B.A. degree in Business Administration, Finance, from the University of
Notre Dame.
Michael P. Venerable. Mr. Venerable has been Vice President, Sagent
Professional Services since March 1998. In March 1992, Mr. Venerable founded
Talus, a data warehousing consulting firm, and served as its President until
February 1998, when the Company acquired Talus. Mr. Venerable received his B.S.
degree in Criminal Justice from the University of Dayton.
Shanda Bahles. Ms. Bahles has been a director of the Company since May
1995. Since May 1991, Ms. Bahles has been a General Partner of El Dorado
Ventures, a venture capital firm. Ms. Bahles joined El Dorado Ventures as an
associate in June 1987. From 1979 to 1985, Ms Bahles held various engineering,
marketing and management positions with Millennium Systems, Inc., a systems
integration company, and Fortune Systems Corporation, a workstation
manufacturer. Ms. Bahles is a director of Pilot Network Services, Inc., a
publicly traded company, and Women.com Networks, Inc., Poet Holdings, Inc. and
MS2, Inc., which are privately held companies. Ms. Bahles received her B.S.E.E.
and M.B.A. degrees from Stanford University.
Richard W. Shapero. Mr. Shapero has been a director of the Company since
May 1995. Since April 1993, Mr. Shapero has been a General Partner of Crosspoint
Venture Partners, a venture capital firm. From January until June 1992, Mr.
Shapero was Chief Operating Officer of Shiva Corporation, a networking company.
Previously, he was a Vice President of Sun Microsystems, Inc., Senior Director
of Marketing of AST Research, Inc. and held marketing and sales positions at
Informatics General Corporation and UNIVAC's
45
47
Communications Division. Mr. Shapero is a director of Covad Communications
Group, Inc., a publicly traded company, and Digital Island, Inc., Diamond Lane
Communications Corporation, NetBoost Corporation, Fabrik Communications, Inc.,
ObjectSwitch Corp., Jetstream Communications, Inc., AristaSoft Corporation and
iBeam Broadcasting Corporation, which are privately held companies. Mr. Shapero
received his B.A. degree in English from the University of California at
Berkeley.
Jeffrey T. Webber. Mr. Webber has been a director of the Company since
September 1995. Mr. Webber founded, and since January 1991 has served as
President of, R.B. Webber & Company, Inc., a management consulting firm. From
1987 to January 1991, he was a partner of Edgar, Dunn & Company, a management
consulting firm. Mr. Webber serves as a director of Sybase, Inc., a publicly
traded company, and CommerceOne, Inc., enCommerce, Inc., Persistence Software,
Inc., Spear Technologies, Inc. and Workwise Software, Inc., which are privately
held companies. Mr. Webber received his B.A. degree in American Studies from
Yale University.
Klaus S. Luft. Mr. Luft is the founder and President of MATCH -- Market
Access for Technology Services GmbH, a provider of sales and marketing services
to high technology companies, since February 1994. Mr. Luft is also the founder,
owner and President of ISAR-Vermogensverwaltung GbR mbH ("ISAR"). Since August
1990, Mr. Luft has served as an International Advisor and Vice-Chairman of
Goldman Sachs Europe Limited, an investment bank. From March 1986 to November
1989, Mr. Luft was Chief Executive Officer of Nixdorf Computer AG, a
manufacturer of computer systems in Paderborn, Germany, where he also held
various other executive positions in marketing, manufacturing and finance for
more than 17 years. Mr. Luft is a director of Dell Computer Corporation, a
publicly traded company. Mr. Luft received his German Arbitur in Bruchsal,
Germany.
BOARD OF DIRECTORS AND COMMITTEES
Following the offering, the Company's Board of Directors (the "Board") will
consist of six directors divided into three classes with each class serving for
a term of three years. At each annual meeting of stockholders, directors will be
elected by the holders of the Common Stock to succeed those directors whose
terms are expiring. Mr. Shapero and Ms. Bahles are Class I directors whose terms
will expire in 2000; Mr. Webber is a Class II directors whose terms will expire
in 2001; and Messrs. Gardner and Zicker are Class III directors whose terms will
expire in 2002.
The Board has a Compensation Committee and an Audit Committee. The
Compensation Committee, which is comprised of Ms. Bahles and Mr. Shapero,
administers the Amended 1995 Plan, the 1998 Plan and the 1999 Purchase Plan and
all matters concerning executive compensation. The Audit Committee, which is
comprised of Ms. Bahles and Mr. Shapero, approves the Company's independent
auditors, reviews the results and scope of annual audits and other accounting
related services, and evaluates the Company's internal audit and control
functions. Each of these committees was established in February 1997.
DIRECTOR COMPENSATION
The Company does not pay any compensation to directors for serving in that
capacity, nor does it reimburse directors for expenses incurred in attending
board meetings. The Board has the discretion to grant options to non-employee
directors pursuant to the Director Plan. See "Management--Employee Benefit
Plans--Director Plan."
46
48
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Ms. Bahles and Mr.
Shapero. Neither of these individuals has at any time been an officer or
employee of the Company. Prior to formation of the Compensation Committee, all
decisions regarding executive compensation were made by the full Board. No
interlocking relationship exists between the Board or Compensation Committee and
the board of directors or compensation committee of any other Company, nor has
any such interlocking relationship existed in the past.
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation (the
"Amended Certificate of Incorporation") limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation shall not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except for liability (1) for any breach
of their duty of loyalty to the corporation or its stockholders, (2) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (3) for unlawful payments of dividends or unlawful Stock
repurchases or redemptions as provided in Section 174 of the Delaware General
Corporation Law or (4) for any transaction from which the director derived an
improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its other officers and employees and
agents and other agents to the fullest extent permitted by law. The Company
believes that indemnification under its Bylaws covers at least negligence and
gross negligence on the part of indemnified parties. The Company's Bylaws also
permit the Company to secure insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions in
such capacity, regardless of whether the Bylaws would permit indemnification.
The Company has entered into agreements to indemnify its directors and
officers, in addition to indemnification provided for in the Company's Bylaws.
These agreements, among other things, indemnify the Company's directors and
officers for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of the Company, arising out of such
person's services as a director or officer of the Company, any subsidiary of the
Company or any other Company or enterprise to which the person provides services
at the request of the Company. In addition, the Company intends to obtain
directors' and officers' insurance providing indemnification for certain of the
Company's directors, officers and employees for certain liabilities The Company
believes that these provisions, agreements and insurance are necessary to
attract and retain qualified directors and officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation that
the Company paid during the year ended December 31, 1998 to the Company's Chief
Executive Officer and each of the Company's other four most highly compensated
47
49
executive officers whose salary and bonus exceeded $100,000 during such fiscal
year (collectively, the "Named Officers").
|