SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SUPPORT.COM, INC
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(Name of Registrant as Specified In Its Charter)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] 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.
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[LOGO OF SUPPORT.COM, INC.]
SUPPORT.COM, INC.
575 Broadway
Redwood City, California 94063
(650) 556-9440
April 30, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Support.com, Inc. that will be held on Wednesday, June 13, 2001, at 10:00 a.m.,
local time, at the Hotel Sofitel at 223 Twin Dolphin Drive, Redwood City,
California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at an
early date, the enclosed proxy form in the enclosed prepaid envelope, to ensure
that your shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU
SUBMIT YOUR VOTE BY PHONE, BY INTERNET, BY COMPLETING, SIGNING, DATING AND
RETURNING THE ENCLOSED PROXY FORM OR BY ATTENDING THE ANNUAL MEETING IN PERSON.
A copy of the Company's 2000 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ Radha R. Basu
Radha R. Basu
President, Chief Executive Officer
and Chairman of the Board
1
SUPPORT.COM, INC.
----------------
Notice of Annual Meeting of Stockholders
to be held June 13, 2001
----------------
To the Stockholders of Support.com, Inc.:
The Annual Meeting of Stockholders of Support.com, Inc., a Delaware
corporation (the "Company"), will be held at the Hotel Sofitel at 223 Twin
Dolphin Drive, Redwood City, California, 94065, on Wednesday, June 13, 2001, at
10:00 a.m., local time, for the following purposes:
1. To elect directors to serve until the 2002 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2001; and
3. To transact such other business as may properly be brought before the
Annual Meeting and any adjournment(s) of the Annual Meeting.
Stockholders of record as of the close of business on April 25, 2001 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. A complete list of stockholders entitled to vote at the Annual Meeting
will be available at the Secretary's office, 575 Broadway, Redwood City,
California, for ten days before the meeting.
It is important that your shares are represented at this meeting. Even if
you plan to attend the meeting, we hope that you will promptly submit your vote
by phone, by Internet or by completing, signing, dating and returning the
enclosed proxy form. This will not limit your right to attend or vote at the
meeting.
By Order of the Board of Directors
/s/ Brian M. Beattie
Brian M. Beattie
Senior Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
Redwood City, California
April 30, 2001
SUPPORT.COM, INC.
575 Broadway
Redwood City, California 94063
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PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Support.com, Inc. (which we will refer to as the "Company" or "Support.com"
throughout this Proxy Statement) for use at the Annual Meeting of Stockholders
to be held at the Hotel Sofitel located at 223 Twin Dolphin Drive, Redwood
City, California, 94065, on Wednesday, June 13, 2001, at 10:00 a.m., local
time, and at any adjournment(s) thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Company's
principal executive offices are located at the address listed at the top of the
page and the telephone number is (650) 556-9440.
The Company's Annual Report, containing financial statements for the fiscal
year ended December 31, 2000, is being mailed together with these proxy
solicitation materials to all stockholders entitled to vote. This Proxy
Statement, the accompanying Proxy Form and the Company's Annual Report will
first be mailed on or about May 11, 2001 to all stockholders entitled to vote
at the meeting.
THE COMPANY SHALL PROVIDE WITHOUT CHARGE TO EACH STOCKHOLDER SOLICITED BY
THESE PROXY SOLICITATION MATERIALS A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K, TOGETHER WITH THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES REQUIRED TO BE FILED WITH THE ANNUAL REPORT, UPON REQUEST OF THE
STOCKHOLDER MADE IN WRITING TO SUPPORT.COM, INC., 575 BROADWAY, REDWOOD CITY,
CALIFORNIA, 94063, ATTN: DIRECTOR, INVESTOR RELATIONS.
Record Date and Share Ownership
Stockholders of record at the close of business on April 25, 2001 (which we
will refer to as the "Record Date" throughout this Proxy Statement) are
entitled to notice of and to vote at the meeting and at any adjournment(s)
thereof. The Company has one series of Common Stock issued and outstanding,
designated as Common Stock, $0.0001 par value per share. As of the Record Date,
approximately 33,365,389 shares of the Company's Common Stock were issued and
outstanding and entitled to vote.
How You Can Vote
Stockholders of record may vote their shares at the Annual Meeting either in
person or by proxy. To vote by proxy, stockholders should mark, date, sign and
mail the enclosed proxy form in the prepaid envelope. Returning a proxy form
will not affect a stockholder's right to vote if the stockholder attends the
Annual Meeting and wants to vote in person. Registered stockholders can
simplify their voting by calling (800) 676-5925 or by voting via the Internet
at http://www.proxyvoting.com/support. Telephone and Internet voting
information is provided on the proxy form if these options are available to
you. Votes submitted via the Internet or by telephone must be received by 12:00
midnight, Eastern Daylight Time, on June 11, 2001. Voting by telephone or via
the Internet will not affect a stockholder's right to vote in person should the
stockholder decide to attend the Annual Meeting.
Stockholders holding shares through a bank or broker should follow the
voting instructions on the proxy form received. The availability of telephone
and Internet voting will depend on bank or broker voting processes.
1
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use at the meeting by (a) delivering to the
Company at its principal offices (Attention: Director, Investor Relations) (i)
a written notice of revocation or (ii) a duly executed proxy form bearing a
later date or (b) attending the meeting and voting in person.
Voting
On all matters, each share has one vote. Directors are elected by a
plurality vote. The nominees for the seven director seats who receive the most
affirmative votes of shares present in person or represented by proxy and
entitled to vote on this proposal at the meeting will be elected to serve as
directors. Each of the other proposals submitted for stockholder approval at
the Annual Meeting will be decided by the affirmative vote of the majority of
the shares present in person or represented by proxy at the meeting entitled to
vote on such proposal.
Solicitation of Proxies
The cost of soliciting proxies will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or facsimile.
Quorum; Abstentions; Broker Non-Votes
Votes cast by proxy or in person at the Annual Meeting ("Votes Cast") will
be tabulated by the Inspector of Elections (the "Inspector"), with the
assistance of the Company's transfer agent. The Inspector will also determine
whether or not a quorum is present. Except in certain specific circumstances,
the affirmative vote of a majority of shares present in person or represented
by proxy at a duly held meeting at which a quorum is present is required under
Delaware law for approval of proposals presented to stockholders. In general,
Delaware law provides that a quorum consists of a majority of shares entitled
to vote and present or represented by proxy at the meeting.
The Inspector will treat shares that are voted WITHHELD or ABSTAIN as being
present and entitled to vote for purposes of determining the presence of a
quorum but will not be treated as votes in favor of approving any matter
submitted to the stockholders for a vote. When proxies are properly dated,
executed and returned, the shares represented by such proxies will be voted at
the Annual Meeting in accordance with the instructions of the stockholder. If
no specific instructions are given, the shares will be voted (i) for the
election of the nominees for directors set forth herein; (ii) for the
ratification of Ernst &Young LLP, as independent public accountants of the
Company for the fiscal year ending December 31, 2001; and (iii) upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof in accordance with the discretion of the proxyholder but will not be
voted in the election of directors. Proxies that are not returned will not be
counted in determining the presence of a quorum and will not be counted toward
any vote.
If a broker indicates on the enclosed proxy form or its substitute that such
broker does not have discretionary authority as to certain shares to vote on a
particular matter (broker non-votes), those shares will not be considered as
present with respect to that matter. The Company believes that the tabulation
procedures to be followed by the Inspector are consistent with the general
statutory requirements in Delaware concerning voting of shares and
determination of a quorum.
In a 1988 Delaware case, Berlin v. Emerald Partners, the Delaware Supreme
Court held that while broker non-votes may be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of votes cast with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to
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proposals set forth in this Proxy Statement will therefore not be considered
"Votes Cast" and, accordingly, will not affect the determination as to whether
the requisite majority of Votes Cast has been obtained with respect to a
particular matter.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2002 Annual Meeting must be received by
the Secretary of the Company no later than January 1, 2002 in order that they
may be included in the Company's proxy statement and form of proxy relating to
that meeting.
A stockholder proposal not included in the Company's proxy statement for the
2002 Annual Meeting will be ineligible for presentation at the meeting unless
the stockholder gives timely notice of the proposal in writing to the Secretary
of the Company at the principal executive offices of the Company and otherwise
complies with the provisions of the Company's Bylaws. To be timely, the
Company's Bylaws provide that the Company must have received the stockholder's
notice not less than 50 days nor more than 75 days prior to the scheduled date
of such meeting. However, if notice or prior public disclosure of the date of
the annual meeting is given or made to stockholders less than 65 days prior to
the meeting date, the Company must receive the stockholder's notice by the
earlier of (i) the close of business on the 15th day after the earlier of the
day the Company mailed notice of the annual meeting date or provided such
public disclosure of the meeting date and (ii) two days prior to the scheduled
date of the annual meeting.
IMPORTANT
PLEASE SUBMIT YOUR INSTRUCTIONS BY PHONE, BY INTERNET, OR BY COMPLETING,
MARKING, SIGNING AND DATING THE ENCLOSED PROXY FORM AND RETURNING IT AT
YOUR EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE
SO THAT, WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT,
YOUR SHARES CAN BE VOTED, THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR
VOTE AT THE ANNUAL MEETING.
3
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Board of Directors proposes the election of seven (7) directors of the
Company to serve until the next annual meeting of stockholders and thereafter
until their successors are elected and qualified. If any nominee is unable or
declines to serve as director at the time of the Annual Meeting, an event not
now anticipated, proxies will be voted for any nominee designated by the Board
of Directors to fill the vacancy.
Names of the nominees and certain biographical information about them as of
March 31, 2001 are set forth below:
Name Age Business Experience and Education
---- --- ---------------------------------
Radha R. Basu....... 50 Ms. Basu has served as president, chief executive
officer and as a director of Support.com since July
1999. Ms. Basu has served as chairman since January
2001. Ms. Basu worked at Hewlett-Packard Company, a
computing and imaging solutions provider company,
from November 1978 to January 1999, and held various
general management positions, most recently the
general manager of the electronic business software
organization. Ms. Basu also serves as chairman of
the board of directors of Seec, Inc., an eBusiness
solutions company. Ms. Basu holds a B.S. in
engineering from the University of Madras, a masters
degree in electrical engineering and computer
science from the University of Southern California
and is a graduate of the Stanford University
executive management program.
Manuel F. Diaz...... 66 Mr. Diaz has served as a director of Support.com
since April 2000. Mr. Diaz worked at Hewlett-Packard
Company, a computing and imaging solutions provider
company, from November 1982 to February 1999, and
held various general management positions, most
recently the vice president for customer advocacy.
Mr. Diaz holds a B.S. in electrical engineering from
the University of Havana, a masters degree in solid-
state physics from the University of Cincinnati and
is a graduate of the Stanford University executive
management program.
Bruce Golden........ 42 Mr. Golden has served as a director of Support.com
since June 1998. Since September 1997, Mr. Golden
has served initially as entrepreneur-in-residence
and then as a partner at Accel Partners, a venture
capital firm. From 1993 to August 1996, Mr. Golden
served as a vice president of marketing at Illustra
Information Technology, which was acquired by
Informix Corporation, a database company, in 1996.
Mr. Golden was employed by Informix Corporation
after the acquisition. Mr. Golden holds a B.A. in
political science from Columbia University and an
MBA from Stanford University.
Claude M. Leglise... 45 Mr. Leglise has served as a director of Support.com
since January 2001. He has held various general
management positions at Intel Corporation, a
semiconductor company, since 1982. Mr. Leglise is
currently vice president and general manager of the
home products group of Intel Corporation and has
served as vice president of the content group,
director of worldwide developer relations, director
of marketing in the microprocessor division and
general manager of the supercomputer components
operation. Mr. Leglise holds a bachelor degree in
electrical engineering from ENSAM, in Paris, France,
a masters degree in electrical engineering from
ENSAM and an MBA from Stanford University.
4
Name Age Business Experience and Education
---- --- ---------------------------------
Christopher W.
Lochhead........... 32 Mr. Lochhead has served as a director of Support.com
since January 2001. He is currently an independent
strategy/marketing consultant. From April 1998 to
January 2001, Mr. Lochhead served as chief marketing
officer at Scient Corporation, a professional
services firm. From June 1996 to April 1998, Mr.
Lochhead served as an executive vice president at
The Vantive Corporation, a customer relationship
management software company, now part of PeopleSoft,
Inc. From December 1993 to June 1996, Mr. Lochhead
served as president of Always an Adventure
International, a strategy consulting firm.
Edward S. Russell... 40 Mr. Russell has served as a director of Support.com
since June 1998. Since October 1996, Mr. Russell
served as a general partner at SOFTBANK Technology
Ventures, Inc., a venture capital firm. From 1988 to
October 1996, Mr. Russell served as the executive
director at SBC Warburg, an investment bank. He is a
director of Buy.com, a multi-category Internet
superstore. Mr. Russell received his B.S. in
computer science from Carnegie Mellon University and
an executive MBA from London School of Business.
Roger J. Sippl...... 46 Mr. Sippl has served as a director of Support.com
since January 1999. Since August 1995, he has served
as the managing partner of Sippl Macdonald Ventures,
a venture capital firm. From December 1990 to 1996,
Mr. Sippl co-founded and served as a director of The
Vantive Corporation, a customer relationship
management solutions company. From 1996 to 1998, he
served as chairman of the board of The Vantive
Corporation. From February 1993 until March 1998,
Mr. Sippl was the founder and served as the chief
executive officer and chairman of the board of
Visigenic Software, Inc., a software tools provider
company. Mr. Sippl holds a B.S. in computer science
from the University of California at Berkeley.
Required Vote
The nominees for the seven director seats who receive the most affirmative
votes of shares present in person or represented by proxy and entitled to vote
on this proposal at the meeting will be elected to serve as directors. Unless
marked to the contrary, proxies received will be voted "FOR" the nominees.
The Board of Directors recommends a vote "FOR" election as director of the
nominees set forth above.
5
Board Meetings and Committees
The Board of Directors held 16 meetings during 2000. All directors attended
at least 75% of the aggregate number of meetings of the Board of Directors and
of the committees on which such directors serve, except as noted below.
Christopher Lochhead and Claude Leglise were appointed to the Board of
Directors in January 2001, and therefore, did not attend any meetings as
directors in 2000. Manuel Diaz attended at least 75% of the meetings held from
the time of his appointment to the Board of Directors in April 2000.
The Board of Directors has a standing Compensation Committee, an Audit
Committee and a Non-section 16 Option Plan Committee (the "Option Committee").
The members of the Compensation Committee are Bruce Golden and Roger J.
Sippl. The Compensation Committee held one meeting during 2000. The
Compensation Committee's primary functions are to review the performance and
establish the compensation of the Company's executive officers, to recommend
guidelines for the review of the performance and the establishment of
compensation and benefit policies for all other employees and to administer the
Company's compensation plans and programs.
The members of the Audit Committee are three non-employee directors, Edward
S. Russell, Bruce Golden and Manuel Diaz, each of whom has been determined to
be independent as defined by the Nasdaq Marketplace Rules. A copy of the Audit
Committee Charter adopted in 2000 is included herein as Appendix A. The Audit
Committee held two meetings during 2000. The Audit Committee's primary
functions are to review the scope of the annual audit, monitor the independent
auditor's relationship with the Company, advise and assist the Board of
Directors in evaluating the independent auditor's examination, supervise the
Company's financial and accounting organization and financial reporting, and
nominate, for approval of the Board of Directors, a firm of certified public
accountants whose duty it is to audit the financial records of the Company for
the fiscal year for which it is appointed.
The member of the Option Committee is Radha R. Basu. The Option Committee's
primary function is to determine stock-based compensation awards for the
Company's non-section 16 reporting employees. The Option Committee took action
on 11 occasions during 2000.
Compensation of Directors
Directors who are employees of the Company do not receive any fees for
service on the Board of Directors. We reimburse each member of the Board of
Directors who is not an employee of the Company for out-of-pocket expenses
incurred in connection with attending board meetings. Pursuant to the Company's
2000 Omnibus Equity Incentive Plan (the "2000 Incentive Plan"), nonemployee
directors of the Company are automatically granted options to purchase shares
of the Company's Common Stock. Under the 2000 Incentive Plan, each nonemployee
director will be granted an option to purchase Common Stock as determined by
the full Board of Directors on the date on which he or she first becomes a
nonemployee director. Thereafter, following the conclusion of each regular
annual meeting of the Company's Stockholders, each nonemployee director shall
be automatically granted an additional option to purchase 8,000 shares of
Common Stock (a "Subsequent Option") if, on such date, he or she will continue
to serve on the Company's Board of Directors. Each Subsequent Option shall be
immediately exercisable on the date of grant. Options granted under the 2000
Incentive Plan have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant and a term of ten (10) years. The
Company granted options to nonemployee directors in 2000 pursuant to its 1998
Stock Option Plan (the "1998 Option Plan"). In April 2000 and June 2000, the
Company granted to Manuel Diaz nonstatutory stock options to purchase 60,000
and 40,000 shares, respectively, of Common Stock at an exercise price of $9.00
per share under the 1998 Option Plan. The Company shall not make any future
grants under the 1998 Option Plan.
6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2000, the Company loaned $672,075.60 to Radha Basu, the Company's
President, Chief Executive Officer and Chairman of the Board of Directors. The
loan bears interest at a rate of 5.86% per annum. The loan is a full recourse
loan and secured by Ms. Basu's 1,680,189 shares of the Company's Common Stock.
Fifty percent of the principal and interest is due and payable on July 18,
2001. The remaining fifty percent is due on July 18, 2002.
In July 2000, the Company loaned $540,000 to Manual Diaz, a member of the
Board of Directors. The loan bears interest at the rate of 5.86% per annum. The
loan is a full recourse loan and is secured by Mr. Diaz's 60,000 shares of the
Company's Common Stock. The principal and interest is due and payable on
July 18, 2001.
In January 2000, the Company loaned $504,000 to Brian Beattie, the Company's
Chief Financial Officer, Senior Vice President of Finance and Administration.
The loan bears interest at the rate of 5.86% per annum. The loan is a full
recourse loan and is secured by Mr. Beattie's 560,000 shares of Common Stock.
The principal and interest is due and payable on July 18, 2001.
In November 1999, the Company loaned $495,000, bearing interest at a rate of
5.86% per annum, to Mark Pincus, the Company's former President, Chief
Executive Officer and Chairman. The principal amount of the loan was amended in
fiscal year 2000 to reflect shares repurchased by the Company. The principal
and interest have been repaid in full.
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2001 as
to shares of the Common Stock beneficially owned by: (i) each person who is
known by the Company to own beneficially more than 5% of the Common Stock, (ii)
each of the Company's directors, (iii) each of the Company's executive officers
named under "Executive Compensation--Summary Compensation Table," and (iv) all
directors and executive officers of the Company as a group. Ownership
information is based upon information furnished by the respective individuals
or entities, as the case may be.
Name and Address of Beneficial Shares Beneficially Percentage Beneficially
Owner (1) Owned (2) Owned(2)
------------------------------ ------------------- -----------------------
5% Stockholders:
Mark Pincus
1184 Snowcrest Street
Alpine Meadows, California
96146........................... 4,513,369 13.5%
Entities affiliated with SOFTBANK
Technology Ventures IV L.P. (3)
200 West Evelyn Avenue, Suite 200
Mountain View, California 94043.. 3,161,839 9.5
Entities affiliated with Accel VI
L.P. (4)
c/o Accel Partners
428 University Avenue
Palo Alto, California 94301..... 3,178,397 9.5
Bowman Capital Management, LLC (5)
1875 South Grant Street, Suite
600
San Mateo, California 94402..... 2,277,359 6.8
The TCW Group, Inc. (6)
865 South Figueroa Street
Los Angeles, California 90017.... 1,925,248 5.8
Executive Officers and Directors:
Radha R. Basu (7)................. 1,723,978 5.2
Manuel F. Diaz (8)................ 100,000 *
Bruce Golden...................... 50,000 *
Claude M. Leglise (9)............. 5,000 *
Christopher W. Lochhead (10)...... 7,500 *
Edward S. Russell (3)(11)......... 3,161,839 9.5
Roger J. Sippl (12)............... 602,072 1.8
Brian M. Beattie (13)............. 592,590 1.8
Scott Dale (14)................... 2,422,155 7.2
Cadir Lee (15).................... 2,435,155 7.3
Lucille Hoger (16)................ 300,041 *
Anthony Rodoni (17)............... 453,790 1.4
All directors and executive
officers as a group (12 persons)
(18)............................. 11,854,120 34.9
--------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Unless otherwise indicated, the address of each officer, director or 5%
stockholder is c/o Support.com, Inc., Attention: Directors, Investors
Relations, 575 Broadway, Redwood City, California 94063.
(2) To the Company's knowledge, 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
8
property laws where applicable and the information contained in the notes
to this table. Beneficial ownership is determined in accordance with the
rules and regulations of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options held by that person that are currently exercisable or exercisable
within 60 days of March 31, 2001 are deemed outstanding. These shares,
however, are not deemed outstanding for the purposes of computing ownership
of any other person. Applicable percentage ownership is based on 33,322,889
shares of common stock outstanding as of March 31, 2001.
(3) Includes 3,098,550 shares held by SOFTBANK Technology Ventures IV L.P. STV
IV L.L.C., the general partner of SOFTBANK Technology Ventures IV L.P.,
may be deemed to have sole voting and dispositive power of the shares.
Includes 63,289 shares held by SOFTBANK Technology Advisors Fund L.P. STV
IV L.L.C., the general partner of SOFTBANK Technology Advisors Fund L.P.,
may be deemed to have sole voting and dispositive power of the shares.
(4) Includes 2,587,214 shares held by Accel VI L.P. Accel VI Associates
L.L.C., the general partner of Accel VI L.P., may be deemed to have sole
voting and dispositive power of these shares. Includes 10,400 shares held
by Accel Internet Fund II L.P. Accel Internet Fund II Associates L.L.C.,
the general partner of Accel Internet Fund II L.P., may be deemed to have
sole voting and dispositive power of these shares. Includes 41,320 shares
held by Accel Keiretsu VI L.P. Accel Keiretsu VI Associates L.L.C., the
general partner of Accel Keiretsu VI L.P., may be deemed to have sole
voting and dispositive power of these shares. Includes 219,310 shares held
by Accel Investors '98 L.P. James W. Breyer, Arthur C. Patterson, G.
Carter Sednaoui, James R. Swartz and J. Peter Wagner, the general partners
of Accel Investors '98 L.P., may be deemed to have sole voting and
dispositive power of these shares.
(5) Based on information reported on Form 13F filed with the Securities and
Exchange Commission on February 14, 2001 for the period ending December
31, 2000.
(6) Based on information reported on Schedule 13G filed with the Securities
and Exchange Commission on February 12, 2001. The TCW Group, Inc. reports
shared voting and shared dispositive power with respect to 1,925,248
shares as of December 31, 2000.
(7) Includes 1,430,189 shares held by Anudip Limited Partnership. Ms. Basu and
Dipak Basu are the general partners of Anudip Limited Partnership and
share voting and dispositive power. Includes 980,111 shares subject to the
Company's right of repurchase, which lapses over time. Includes 43,789
shares subject to options that are exercisable within 60 days of March 31,
2001.
(8) Includes 40,000 shares issuable under immediately exercisable options and
subject to the Company's right of repurchase, which lapses over time.
(9) Includes 5,000 shares subject to options which are exercisable within 60
days of March 31, 2001.
(10) Includes 7,500 shares subject to options which are exercisable within 60
days of March 31, 2001.
(11) Mr. Russell is a member of STV IV L.L.C., the general partner of the owner
of these shares. Mr. Russell disclaims beneficial ownership of these
shares, except to the extent of his indirect pecuniary interest therein.
(12) Includes 255,672 shares held by Sippl Investments, LLC. Mr. Sippl is a
managing member of Sippl Investments, LLC. Includes 330,500 shares held by
Sippl MacDonald Ventures II, L.P. Mr. Sippl is a managing partner of Sippl
MacDonald Ventures II, L.P. Mr. Sippl has shared voting and dispositive
power over 586,172 of these shares.
(13) Includes 300,000 shares held by the Beattie 1999 Living Trust. Mr. Beattie
and Barbara Beattie, the trustees of the trust, have shared voting and
dispositive power of these 300,000 shares. Includes 260,000 shares held by
The Beattie Limited Partnership. Includes 50 shares held by Mr. Beattie's
daughter, all of which Mr. Beattie disclaims beneficial ownership.
Includes 361,666 shares subject to the Company's right of repurchase,
which lapses over time. Includes 12,540 shares subject to options which
are exercisable within 60 days of March 31, 2001.
9
(14) Includes 250,000 shares issuable under immediately exercisable options
subject to the Company's right of repurchase, which lapses over time.
Includes 200,000 shares held by SDK Limited Partnership. Mr. Dale and
Kelly Plater Dale are the general partners of SDK Limited Partnership and
share voting and dispositive power over these 200,000 shares. Includes 41
shares subject to options which are exercisable within 60 days of March
31, 2001.
(15) Includes 250,000 shares issuable under immediately exercisable options
subject to the Company's right of repurchase, which lapses over time.
Includes 300,000 shares held by Cadir Lee Limited Partnership. Includes 41
shares subject to options which are exercisable within 60 days of March
31, 2001.
(16) Includes 218,751 shares subject to the Company's right of repurchase,
which lapses over time. Includes 41 shares subject to options which are
exercisable within 60 days of March 31, 2001.
(17) Includes 447,500 shares held by Rodoni Family Trust dated March 9, 2000 of
which 115,105 shares are subject to the Company's right of repurchase,
which lapses over time. Includes 6,290 shares subject to options which are
exercisable within 60 days of March 31, 2001.
(18) Includes 1,560,528 shares subject to the Company's right of repurchase,
which lapses over time. Includes 540,000 shares issued under immediately
exercisable options subject to the Company's right of repurchase, which
lapses over time. Includes 75,292 shares subject to options which are
exercisable within 60 days of March 31, 2001.
10
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table summarizes all compensation paid to the Company's Chief
Executive Officer and each of the Company's other five (5) most highly
compensated executive officers whose total salary and bonus exceeded $100,000
in 2000, for services rendered in all capacities to the Company for the fiscal
years ended December 31, 1999 and 2000. These individuals are referred to as
the named executive officers. Other than the salary and bonus described below,
the Company did not pay any named executive officer in the Summary Compensation
Table any fringe benefits, perquisites or other compensation in excess of 10%
of that executive officer's salary and bonus during each of 1999 and 2000.
Summary Compensation Table
Annual Long Term
Compensation Compensation
------------------ ------------
Securities
Underlying
Name and Principal Position Year Salary($) Bonus($) Options(#)
--------------------------- ---- --------- -------- ------------
Radha R. Basu............................. 2000 200,000 100,000 350,000
President, Chief Executive Officer and 1999 94,744 45,834 1,680,189
Chairman of the Board
Brian M. Beattie.......................... 2000 180,000 72,000 100,000
Chief Financial Officer 1999 60,000 18,000 560,000
Anthony C. Rodoni......................... 2000 135,000 30,000 50,000
General Manager, Europe, Middle East and 1999 135,000 30,000 7,500
Africa,
formerly Vice President of Marketing
Lucille Hoger(1).......................... 2000 146,667 18,277 300,000
Vice President of Operations
Scott W. Dale............................. 2000 150,000 -- --
Chief Technical Officer 1999 120,833 -- 250,000
Cadir B. Lee.............................. 2000 150,000 -- --
Chief Software Officer 1999 120,833 -- 250,000
--------
(1) Ms. Hoger joined the Company in February 2000.
The following tables set forth certain information as of December 31, 2000
and for the fiscal year then ended with respect to stock options granted to and
exercised by the named executive officers. The options granted to Ms. Basu, Mr.
Beattie and Mr. Rodoni were granted under the Company's 2000 Omnibus Equity
Incentive Plan and are exercisable as to 1/48th each month over four years from
the date of grant. The options granted to Ms. Hoger were granted under the
Company's 1998 Stock Option Plan and vest as to 25% of the shares on the first
anniversary of her employment start date and an additional 1/48th of the shares
each month thereafter. The percent of the total options set forth below is
based on an aggregate of 3,588,272 options granted to employees during fiscal
year 2000. All options were granted at the then fair market value as determined
by the Company's Board of Directors on the date of grant.
Potential realizable value represents hypothetical gains that could be
achieved for the options if exercised at the end of the option term assuming
that the fair market value of the common stock on the date of grant appreciates
at 5% and 10% over the option term (ten years) and that the option is exercised
and sold on the last day of its option term for the appreciated stock price.
The assumed 5% and 10% rates of stock price appreciation are provided in
accordance with rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future common
stock price. Solely for purposes of determining the value of the options
granted to Ms. Hoger, we have assumed that the fair market
11
value of shares of common stock issuable upon exercise of options was $14.00
per share, the initial public offering price; since at the time the Company
granted these options to Ms. Hoger, the Company's common stock was not traded
in an established market. The options granted to Ms. Basu, Mr. Beattie and Mr.
Rodoni were granted after our initial public offering, and we have therefore
used the grant-date price (the closing price on the Nasdaq National Market on
the date of grant) in determining the value of these options. The calculation
includes the difference, if any, between the fair market value on the date of
grant and the exercise price for such options. The hypothetical gains shown are
net of the option exercise price but do not include deductions for taxes and
other expenses payable upon exercise of the option or for sale of the
underlying shares of common stock. Actual gains, if any, on stock option
exercises will depend on the future performance of the Company's common stock,
the officer's continued employment through applicable vesting periods and the
date on which the options are exercised.
Option Grants in 2000
Individual Grants Potential Realizable
---------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Option Term
Options Employees in Exercise Expiration ----------------------
Name Granted(#) Fiscal Year Price($/Sh) Date 5%($) 10%($)
---- ---------- ------------ ---------- ---------- ---------- -----------
Radha Basu.............. 350,000 9.75% $10.438 11/27/10 $2,297,541 $ 5,822,419
Brian Beattie........... 100,000 2.79 10.438 11/27/10 656,440 1,663,548
Anthony Rodoni.......... 50,000 1.39 10.438 11/27/10 328,220 831,774
Lucille Hoger........... 300,000 8.36 2.00 2/4/10 6,241,357 10,293,718
Scott Dale.............. -- -- -- -- -- --
Cadir Lee............... -- -- -- -- -- --
Aggregate Option Exercises in Last Fiscal Year
and 2000 Year End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Value December 31, 2000(#) December 31, 2000($)(2)
Acquired Realized ------------------------- -------------------------
Name on Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------- ----------- ------------- ----------- -------------
Radha Basu.............. 1,680,189 $840,095 7,291 342,709 $ 71,539 $3,362,661
Brian Beattie........... -- -- 2,083 97,917 20,438 960,762
Anthony Rodoni.......... 170,556 324,056 1,041 48,959 10,214 480,386
Lucille Hoger........... 300,000 0 -- -- -- --
Scott Dale.............. -- -- 250,000 -- 4,837,500 --
Cadir Lee............... -- -- 250,000 -- 4,837,500 --
--------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) Calculated on the basis of the fair market value of the underlying
securities at December 31, 2000 ($20.25 per share) minus the exercise
price.
Employment Agreements and Change of Control Arrangements
We currently have formal employment agreements with Scott Dale, our vice
president of engineering, and Cadir Lee, our chief software officer, which were
originally entered into in August 1999. Both agreements had an initial term of
one year and are automatically renewed for three successive one-year terms
unless terminated
12
with 30 days notice. Both agreements also contain non-competition provisions.
In November 2000, the Compensation Committee approved an annual salary of
$180,000 and a bonus of $50,000 tied to certain criteria for both Mr. Dale and
Mr. Lee, respectively, for fiscal year 2001. Under the terms of the original
employment agreement and unchanged by the Compensation Committee, Mr. Dale and
Mr. Lee are entitled to salary through date of termination if terminated for
cause; salary, benefits and bonus earned through their date of termination if
terminated without cause or because of constructive termination; and salary and
benefits for three months after termination if terminated for disability.
We have officer offer letters with Radha Basu, our president, chief
executive officer and chairman, Brian Beattie, our chief financial officer,
senior vice president of finance and administration, Lucille Hoger, our vice
president of operations, and Anthony Rodoni, our general manager, Europe,
Middle East and Africa. All of these officers may leave or be terminated at any
time.
In November 2000, the Compensation Committee approved for Ms. Basu an annual
salary of $250,000 and a potential bonus of $150,000 tied to certain criteria
for fiscal year 2001. Under the terms of Ms. Basu's offer letter, if Ms. Basu
is terminated for any reason other than for cause or if she terminates her own
employment under specified circumstances, she is entitled to 12 months of her
salary, continued participation in all benefit plans for 12 months, vesting of
all stock options granted to her that would have vested by the end of the month
of her termination, and a portion of her bonus based on the number of months
worked during that year. Within 12 months following a change of control of
Support.com, if Ms. Basu is terminated for any reason other than for cause or
if she terminates her employment under specified circumstances, she is entitled
to vesting of all stock options granted to her by Support.com, 12 months of her
salary, continued participation in all benefit plans for 12 months and a
portion of her bonus based on the number of months worked during that year.
Mr. Beattie is entitled to an annual salary of $210,000 and a potential
bonus of $105,000 tied to certain criteria as established by the Compensation
Committee in November 2000. Under the terms of Mr. Beattie's offer letter, if
Mr. Beattie is terminated for any reason other than for cause or if he
terminates his own employment under specified circumstances, he is entitled to
six months of his salary, continued participation in all benefit plans for six
months, vesting of all stock options granted to him that would have vested by
the end of the month of his termination, and a portion of his bonus based on
the number of months worked during that year. Within 12 months following a
change of control of Support.com, if Mr. Beattie is terminated for any reason
other than for cause or if he terminates his employment under specified
circumstances, he is entitled to vesting of 50% of his remaining unvested stock
options granted to him by Support.com, six months of his salary, continued
participation in all benefit plans for six months and a portion of his bonus
based on the number of months worked during that year.
Ms. Hoger is entitled to an annual salary of $175,000 and a potential bonus
of $35,000 tied to certain criteria as approved by the Compensation Committee
in November 2000. Under the terms of her offer letter, if Ms. Hoger is
terminated for any reason other than for cause or if she terminates her own
employment under specified circumstances, she is entitled to six months of her
salary, continued participation in all benefit plans for six months and vesting
of all stock options granted to her that would have vested by the end of the
month of her termination. Within 12 months following a change of control of
Support.com, if Ms. Hoger is terminated for any reason other than for cause or
if she terminates her employment under specified circumstances, she is entitled
to vesting of 50% of the remaining stock options granted to her by Support.com,
six months of her salary and continued participation in all benefit plans for
six months, and a portion of her bonus based on the number of months worked
during that year.
Mr. Rodoni is entitled to an annual salary of $175,000 and a potential bonus
of $60,000 tied to certain criteria as approved by the Compensation Committee.
Under the terms of his offer letter, upon a change of control of Support.com,
Mr. Rodoni is entitled to vesting of 50% of his remaining unvested stock
options granted to him by Support.com in connection with his original offer
letter.
13
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of two non-employee directors, Bruce
Golden and Roger Sippl. Neither Mr. Golden nor Mr. Sippl serves as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of the Company's Board of Directors
or Compensation Committee.
14
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The compensation committee of the Company's Board of Directors (the
"Compensation Committee") consists of two non-employee directors, Bruce Golden
and Roger J. Sippl, neither of whom have interlocking relationships as defined
by the Securities and Exchange Commission. The Compensation Committee is
responsible for setting and administering the policies governing annual
compensation of executive officers, considers their performance and makes
recommendations regarding their cash compensation and stock options to the full
Board of Directors. The Compensation Committee was recently established in
connection with the Company's initial public offering and therefore the
Compensation Committee has a limited history. The Compensation Committee
expects, pursuant to its charter, to periodically review the approach to
executive compensation and make changes as competitive conditions and other
circumstances warrant and will seek to ensure the Company's compensation
philosophy is consistent with the Company's best interests and is properly
implemented.
Compensation Philosophy and Review
In July 2000, the Company completed the initial public offering of its
common stock and became a reporting company at that time. To date, the
compensation of the executive officers has reflected a private "start-up"
company philosophy with the salary component at lower levels and the stock
component at higher levels than would otherwise be applicable in an established
company environment. The Compensation Committee strives to ensure that the
Company's executive compensation programs will enable the Company to attract
and retain key people and motivate them to achieve or exceed certain key
objectives of the Company, including certain financial goals, such as
profitability and asset management.
The Compensation Committee believes that compensation of the Company's
executive officers should (a) encourage creation of stockholder value and
achievement of certain corporate objectives, (b) integrate compensation with
the Company's annual and long-term corporate objectives and strategy, and focus
executive behavior on the fulfillment of those objectives, (c) provide a
competitive total compensation package that enables the Company to attract and
retain, on a long-term basis, high caliber personnel, and (d) align the
interests of executive officers with the long-term interests of stockholders.
As the Company continues to grow and develop, the Company and the Compensation
Committee will work to shift compensation arrangements to mirror those of other
publicly traded companies in similar sectors and to reflect the size and value
of the Company.
To meet these objectives, executive compensation is comprised of three
elements (i) base salary, (ii) incentive awards payable in cash and (iii) long-
term stock-based incentive awards. The overall compensation package is
variable. The Company's policy is generally to qualify and structure such
variable compensation arrangements so as to qualify for deductibility under
Section 162(m) of the Internal Revenue Code. However, the Company reserves the
discretion to pay compensation to its executive officers that may not be
deductible.
The summary below describes in more detail the factors which the Board
considers in establishing each of the three primary components of the variable
compensation package provided to the executive officers.
Key Elements of Executive Compensation
The Compensation Committee determined the base salaries and incentive awards
of the executive officers for fiscal 2001. The Company provides its executive
officers with a variable compensation package consisting of base salary, cash
incentive awards and participation in benefit plans generally available to
other employees.
Base Salary. The Compensation Committee reviews salaries recommended by the
Chief Executive Officer for executive officers other than the Chief Executive
Officer. The Compensation Committee set the salary and bonus potential of each
executive officer on a case by case basis. Final decisions on base salary
15
adjustments of executive officers other than the Chief Executive Officer are
made with the Chief Executive Officer's involvement. In determining the
appropriate salary levels for the executive officers, the Compensation
Committee considers, among other factors, each executive officer's relative
position, scope of responsibility and historical and expected contributions to
the Company.
Cash Incentive Awards. The cash incentive awards vary for each of the
executive officers. The incentive award depends on the extent to which business
and individual performance objectives are achieved. The Company's objectives
consist of operating, strategic and financial goals that are considered to be
critical to its fundamental long-term goal of building stockholder value.
Stock-based Incentive Awards. The Compensation Committee believes that stock
options provide additional incentive to executive officers to work toward
maximizing stockholder value. Grants of stock options to executive officers are
based upon each executive officer's relative position, scope of responsibility,
historical and expected contributions to the Company, and the executive
officer's existing stock ownership and previous option grants. The Committee
strives to align the interests of the Company's executive officers with the
long-term interests of stockholders through stock option grants such that
grants of stock options should relate the performance of the executive to the
market perception of the performance of the Company.
Chief Executive Officer Compensation
The Compensation Committee meets without the presence of the Chief Executive
Officer to evaluate her performance and uses the same procedures described
above in setting her annual compensation package. For fiscal year 2000, the
Compensation Committee decided to raise Ms. Basu's salary from $200,000 to
$250,000. The Compensation Committee considered Ms. Basu's many accomplishments
in helping to grow the Company, increase the Company's senior management team
as the Company's business expanded in scope and grew in size, as well as Ms.
Basu's expected contributions to the Company in the future. On November 27,
2000, Ms. Basu received an option to purchase 350,000 shares of the Company's
Common Stock at an exercise price of $10.438 per share, the closing price per
share on the Nasdaq National Market on that day. The option becomes exercisable
as to 1/48th of the shares each full month of service. As of March 31, 2001,
Ms. Basu had a right to exercise 29,166 shares. Ms. Basu received a bonus of
$100,000 for services rendered in 2000.
Submitted by the Compensation
Committee of the Company's Board of
Directors
Bruce Golden
Roger J. Sippl
16
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock and the CRSP Total Return Index for the Nasdaq U.S. and
Foreign Stocks (the "Nasdaq Composite Index") and J.P. Morgan H&Q Computer
Software Index. The graph assumes that $100 was invested on July 19, 2000 (the
date of the Company's initial public offering) at the offering price of $14 per
share, and $100 was invested on July 19, 2000 in the Nasdaq Composite Index and
the J.P. Morgan H&Q Computer Software Index and that all dividends were
reinvested. No cash dividends have been declared or paid on the Company's
Common Stock. The Company's Common Stock has been traded on the Nasdaq National
Market since July 19, 2000. The comparisons in the table are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
COMPARISON OF FIVE MONTH CUMULATIVE TOTAL RETURN AMONG
SUPPORT.COM, INC.,
THE NASDAQ COMPOSITE INDEX, AND
J.P. MORGAN H&Q COMPUTER SOFTWARE INDEX
[STOCK PRICE PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN AT PERIOD END
July 19, Sept. 29, Dec. 29,
2001 2000 2000
-------- --------- --------
Support.com, Inc.................................... $100 $219 $145
Nasdaq Composite Index.............................. $100 $ 88 $ 59
J.P. Morgan H&Q Computer Software Index............. $100 $110 $ 80
The information contained above under the captions "Report of the
Compensation Committee of the Board of Directors on Executive Compensation" and
"Stock Price Performance Graph" shall not be deemed to be soliciting material
or to be filed with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, (the "Securities Act") or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into such filing.
17
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS(1)
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors of Support.com. Management has the primary
responsibility for the financial statements and the reporting process,
including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the audited financial statements
for fiscal year 2000 with management, including a discussion of the quality,
not just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards and in
compliance with Statement on Auditing Standards No. 61. In addition, the Audit
Committee has discussed with the independent auditors the auditors'
independence from management and the Company, including the matters provided to
the Audit Committee by the independent auditors in the written disclosures and
the letter required by the Independence Standards Board No. 1. The Audit
Committee discussed with the auditors the compatibility of nonaudit services
with the auditors' independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Audit Committee met
with the independent auditors, with and without management present, to discuss
the results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Committee held two meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000 for filing with the
Securities and Exchange Commission. The Audit Committee and the Board have also
recommended, subject to stockholder approval, the selection of the Company's
independent auditors.
From the members of the Audit
Committee:
Bruce Golden
Manuel Diaz
Edward S. Russell
--------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before
or after the date hereof and irrespective of any general incorporation
language contained in such filing.
18
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Ernst & Young LLP as the Company's independent auditors
for the fiscal year ending December 31, 2001, subject to ratification by the
stockholders. Ernst & Young LLP has audited the Company's financial statements
since the Company's inception in 1997. Representatives of Ernst & Young LLP are
expected to be present at the Company's Annual Meeting. They will have an
opportunity to make a statement, if they desire to do so, and will be available
to respond to appropriate questions.
Audit and Non-Audit Fees
Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for the audit of the Company's annual financial statements
for fiscal year 2000 and the reviews of the financial statements included in
the Company's Forms 10-Q and Form 10-K was $224,000. Less than 50% of the hours
expended on the engagement to audit the Company's financial statements for
fiscal year 2000 were attributed to work performed by persons other than Ernst
& Young LLP's full time, permanent employees.
Financial Information Systems Design and Implementation Fees. No fees were
billed for professional services rendered for information technology services
related to financial information systems design and implementation by Ernst &
Young LLP for fiscal year 2000.
All Other Fees. The aggregate fees billed for services rendered by Ernst &
Young LLP other than for the services described above, including services
rendered in connection with our initial public offering, tax consulting,
permitted internal audit outsourcing and other non-audit services, for fiscal
year 2000 was $526,000.
Upon consideration, the Audit Committee determined that the provision of the
services other than the audit services is compatible with maintaining Ernst &
Young LLP's independence.
Required Vote
Ratification will require the affirmative vote of a majority of the shares
present and voting at the meeting in person or by proxy. In the event
ratification is not provided, the Board of Directors will review its future
selection of the Company's independent auditors.
The Board of Directors recommends a vote "FOR" ratification of Ernst & Young
LLP as the Company's independent auditors.
19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers and any persons holding more than 10% of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to identify in this Proxy Statement those persons
who failed to timely file these reports. Based solely on a review of Forms 3, 4
and 5 and any amendments thereto furnished to the Company, the Company believes
that all of the Section 16 filing requirements were satisfied for 2000.
OTHER MATTERS
The Company knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting,
it is intended that proxies in the enclosed form will be voted in accordance
with the judgment of the persons voting the proxies.
Whether you intend to be present at the Annual Meeting or not, we urge you
to submit your vote by telephone or via the Internet or to return your signed
proxy form promptly.
By order of the Board of Directors.
/s/ Radha R. Basu
Radha R. Basu
President, Chief Executive Officer
and Chairman of the Board
April 30, 2001
20
July 27, 2000
APPENDIX A
SUPPORT.COM AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the audit committee shall
be considered independent if they have no relationship to the Company that may
interfere with the exercise of their independence from management and the
Company. All audit committee members shall be financially literate, and at
least one member shall have accounting or related financial management
expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the stockholders, potential
stockholders, and investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In
so doing, it is the responsibility of the audit committee to maintain free and
open communication between the committee, the independent auditors, the
internal auditors and management of the Company. In discharging this oversight
role, the committee is empowered to investigate any matter brought to its
attention with full access to all books, records, facilities, and personnel of
the Company and the power to retain outside counsel, or other experts for this
purpose.
Responsibilities
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. In carrying out its
responsibilities, the audit committee believes its policies and procedures
should remain flexible, in order best to react to changing conditions. The
committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices and
ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
. The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board of directors and the audit committee, as the
stockholders' representatives, and that the board of directors and the
audit committee have the ultimate authority and responsibility to
evaluate, and where appropriate, replace the independent auditors. The
committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosure required by the Independence Standards Board. Annually, the
committee shall review and recommend to the board the selection of the
Company's independent auditors, subject to shareholders' approval.
. The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the
A-1
adequacy and effectiveness of the accounting and financial controls,
including the Company's system to monitor and manage business risk, and
legal and ethical compliance programs. Further, the committee shall meet
separately with the internal auditors and the independent auditors, with
and without management present, to discuss the results of their
examinations.
. The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q (or prior to the press release of
results, if possible). Also, the committee shall discuss the results of
the quarterly review and any other matters required to be communicated to
the committee by the independent auditors under generally accepted
auditing standards. The chair of the committee may represent the entire
committee for purposes of this review.
. The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of the Form 10-K), including their judgment about the quality,
not just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards.
. Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend the
full board of directors meeting to assist in reporting the results of the
annual audit or to answer other directors' questions (alternatively, the
other directors, particularly the other independent directors, may be
invited to attend the audit committee meeting during which the results of
the annual audit are reviewed).
. Review the report of the audit committee in the annual report to
stockholders and the Annual Report on Form 10-K disclosing whether or not
the committee had reviewed and discussed with management and the
independent auditors, as well as discussed within the committee (without
management or the independent auditors present), the financial statements
and the quality of accounting principles and significant judgments
affecting the financial statements. In addition, disclose the committee's
conclusion on the fairness of presentation of the financial statements in
conformity with generally accepted accounting principles based on those
discussions.
. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
. Monitor the Company's investments and financial position.
A-2
PROXY SUPPORT.COM, INC. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby authorizes RADHA R. BASU or BRIAN M. BEATTIE, as Proxies
with full power in each to act without the other and with the power of
substitution in each, to represent and to vote all the shares of stock the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Support.com, Inc. (the "Company") to be held at the Hotel Sofitel at 223 Twin
Dolphin Drive, Redwood City, California on June 13, 2001 at 10:00 a.m., or at
any postponements or adjournment thereof, and instructs said Proxies to vote as
follows:
Shares represented by this proxy will be voted as directed by the stockholder.
If no such directions are indicated, the Proxies will have the authority to vote
for the election of directors listed below, for Proposal 2, and in accordance
with the discretion of the Proxies on any other matters as may properly come
before the Annual Meeting.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is given, this proxy will be voted
"FOR" the election of directors listed below and Proposal 2.
1. Proposal to elect
(01) Radha R. Basu [_] [_]
(02) Manuel F. Diaz
(03) Bruce Golden FOR ALL WITHHOLD
(04) Claude M. Leglise nominees for all nominees
(05) Christopher W. Lochhead
(06) Edward S. Russell [_]
(07) Roger J. Sippl
as directors of the Company to AUTHORITY TO VOTE for all
serve until the next Annual nominees, except those listed below.
Meeting of Stockholders or
until their successors are (To withhold authority to vote for
duly elected and qualified. an individual nominee(s), write the
name of such nominee(s) for whom
you wish to withhold authority to
vote in the space provided below.)
-----------------
-----------------
2. Proposal to confirm the appointment of FOR AGAINST ABSTAIN
Ernst & Young LLP as the Company's [_] [_] [_]
Independent Auditors.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
Date:_______________________, 2001
____________________________
Signature
____________________________
Signature if held jointly
Please sign where indicated below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by an authorized officer. If a partnership, please sign in full
partnership name by an authorized person.
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VOTE TELEPHONE OR INTERNET
--
QUICK***EASY***IMMEDIATE
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Your Telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you have marked, signed and returned your proxy card.
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TO VOTE BY TELEPHONE: Call the toll free number listed below. You will be asked
to enter a CONTROL NUMBER located at the bottom of this form.
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OPTION A: To vote as the Board of Directors recommends on ALL proposals: Press 1
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OPTION B: If you choose to vote on each item separately, Press 0. You will hear
these instructions:
Item 1: To vote FOR ALL nominees, press 1; To WITHHOLD FOR ALL nominees,
press 9; To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to
the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining items to be voted.
When asked, you must confirm your vote by pressing 1
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TO VOTE BY INTERNET: Connect to the Website listed below: You will be asked to
enter a control number which is located at the bottom of this form. Then follow
the instructions. THE WEBSITE for voting is www.proxyvoting.com/support
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IF YOU VOTE BY TELEPHONE OR INTERNET DO NOT MAIL IN THE PROXY CARD.
THANK YOU FOR VOTING!
CALL **TOLL FREE** 1-800-676-5925 ON A TOUCH-TONE TELEPHONE - ANYTIME.
There is NO CHARGE to you for this call
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CONTROL NUMBER
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For Telephone/Internet voting