SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)of the Securities Exchange Act of 1934
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[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
EXCALIBUR TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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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
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previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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EXCALIBUR TECHNOLOGIES CORPORATION
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Excalibur Technologies Corporation, a Delaware corporation ("Excalibur" or the
"Company"), will be held at The McLean Hilton Hotel located at 7920 Jones Branch
Drive, McLean, Virginia 22102, at 10:00 a.m. local time, on Tuesday, August 24,
1999 for the following purposes:
1. To elect eight directors of the Company for terms expiring at the
2000 Annual Meeting.
2. To approve and adopt the Company's 1999 Incentive Stock Option
Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on June 28, 1999 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting.
PLEASE SIGN, DATE AND MAIL YOUR PROXY IN THE ENVELOPE PROVIDED FOR YOUR
CONVENIENCE. YOU MAY REVOKE THIS PROXY AT ANY TIME AND, IF YOU ATTEND THE
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
James H. Buchanan
Secretary
Dated: July 9, 1999
EXCALIBUR TECHNOLOGIES CORPORATION
___________________________
Annual Meeting of Shareholders
___________________________
PROXY STATEMENT
This Proxy Statement is furnished to shareholders in connection with the
solicitation by the Board of Directors of Excalibur Technologies Corporation, a
Delaware corporation (the "Company" or "Excalibur"), of proxies for use at the
1999 Annual Meeting of Shareholders (the "Annual Meeting") of the Company to be
held on Tuesday, August 24, 1999 at 10:00 a.m. local time, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Meeting. The Annual Meeting will be held at The McLean Hilton Hotel located at
7920 Jones Branch Drive, McLean, Virginia 22102. The Company's principal
executive offices are located at 1921 Gallows Road, Suite 200, Vienna, Virginia
22182. The proxy solicitation materials are being mailed to shareholders on or
about July 9, 1999.
On June 28, 1999, there were outstanding 14,348,463 shares of common
stock, par value $.01 per, share, each entitled to one vote. The Board of
Directors has fixed June 28, 1999 as the record date for the determination of
the shareholders entitled to notice of and to vote at the Annual Meeting.
A form of proxy is enclosed for use at the Annual Meeting. The proxy may
be revoked by a shareholder at any time prior to the exercise thereof, and any
shareholder present at the Annual Meeting may revoke his proxy thereat and vote
in person if he or she so desires. When such proxy is properly executed and
returned, the shares it represents will be voted in accordance with any
instructions noted thereon. If no direction is indicated, all shares represented
by valid proxies received pursuant to this solicitation (and not revoked prior
to exercise) will be voted for the election of the nominees for directors named
in Item 1 herein (unless authority to vote is withheld), and for the proposal
described in Item 2 of this Proxy Statement. The Board of Directors does not
anticipate that any other matters will be brought before the Annual Meeting. If,
however, other matters are properly presented, the persons named in the proxy
will have discretion, to the extent allowed by Delaware law, to vote in
accordance with their own judgment on such matters.
The Company's Annual Report for the fiscal year ended January 31, 1999 is
enclosed with this Proxy Statement for each shareholder.
Item One
ELECTION OF DIRECTORS
General
Eight individuals, seven of whom are members of the present Board of
Directors, have been nominated for election as directors of the Company until
the next annual meeting and until their respective successors are elected and
qualified. Harry C. Payne, President of Williams College, has been nominated to
newly serve as a director of the Company.
The persons named in the proxy, who have been designated by the
management, intend, unless otherwise instructed on the proxy card, to vote for
the election to the Board of Directors of the persons named below. If any
nominee should become unavailable to serve, the proxy may be voted for the
election of another person designated by the Board of Directors. The Board has
no reason to believe any of the persons named will be unable to serve if
elected. The affirmative vote of the holders of a plurality of the shares of
common stock voting at the Annual Meeting is necessary for the election of
directors. Any shares not voted (by abstention, broker non-vote, or otherwise)
have no impact on the vote. The Board of Directors recommends a vote FOR the
nominees listed below.
Information Concerning Directors and Nominees
Information regarding each nominee for director is set forth in the
following table.
Name Age Position
Donald R. Keough 72 Chairman of the Board of Directors
Patrick C. Condo 42 President and Chief Executive
Officer,
Director
Richard M. Crooks, Jr. 59 Director
John S. Hendricks 47 Director
W. Frank King III 59 Director
John G. McMillian 72 Director
Philip J. O'Reilly 61 Director
Harry C. Payne 52 Nominee
-2-
Donald R. Keough has been Chairman of the Board of Directors and a Director of
the Company since June 1996. Mr. Keough has been an advisor to the Board of
Directors of the Coca-Cola Company since April 15, 1993, and Chairman of the
Board of Allen & Company Incorporated, a New York investment banking firm that
is the Company's largest shareholder, since April 15, 1993. Mr. Keough retired
as President, Chief Operating Officer and a Director of the Coca-Cola Company on
April 15, 1993, where he had been employed since 1950. From 1986 to 1993, he
also served as Chairman of the Board of Coca-Cola Enterprises, Inc., the world's
largest bottling system. Mr. Keough serves on the Board of Directors of Allen &
Company Incorporated, H.J. Heinz Company, The Washington Post Company,
McDonald's Corporation and USA Networks, Inc.
Patrick C. Condo was named President and Chief Executive Officer in November
1995, and a Director in January 1996. Mr. Condo was President from May 1995 to
November 1995. He became Executive Vice President in January 1995 after serving
as the Director of Business Development from November 1992. From October 1987 to
November 1992, Mr. Condo held several manager level positions for Digital
Equipment Corporation's Image, Video and Voice Business Unit and Software
Business Group in New Hampshire.
Richard M. Crooks, Jr. has been a Director of the Company since June 1990 and
was Chairman of the Board from June 1990 to June 1996. Mr. Crooks has been
President of RMC Consultants, a financial advisory services firm, since June
1990. Mr. Crooks is a director of and consultant to Allen & Company
Incorporated. Mr. Crooks served as a Managing Director of Allen & Company
Incorporated for more than five years prior to June 1990. Mr. Crooks is a
director of Cypress Bioscience Inc., a biotechnology company engaged in
developing, manufacturing and marketing products for the treatment of
immune-related diseases and cancers.
John S. Hendricks was appointed as a Director of the Company in May 1997. He has
been Chairman and Chief Executive Officer of Discovery Communications, Inc., a
privately held, diversified media company, since he founded the company in 1982
in order to develop a new cable television service. The effort resulted in the
launch of the Discovery Channel in 1985, which has become one of the world's
largest cable television networks. Mr. Hendricks is a member of the boards of
various cable television industry groups, educational institutions and other
organizations promoting natural history and science. Mr. Hendricks is Chairman
of the Board of Governors of the National Academy of Cable Programming.
W. Frank King III was elected a Director of the Company in June 1992. He is
presently a private investor. Dr. King served as President, Chief Executive
Officer, and a Director of PSW Technologies, Inc., a leading provider of
technology for open systems computing, from 1992 to August 1998. From 1988 to
November 1991, Dr. King was a Senior Vice President of Development of Lotus
Development Corporation. Prior to joining Lotus, Dr. King held various positions
with IBM over 19 years, the most recent as Vice President of Development in its
Entry Systems Division. Dr. King is a director of PSW Technologies, Inc.,
Auspex, Inc., a computer server manufacturer; Best Software Inc., a provider of
human resource, asset and payroll management software solutions; Natural
Microsystems, Inc., a developer of telephony products; and several private
technology companies.
-3-
John G. McMillian was elected a Director in June 1996. Mr. McMillian owns a half
interest in Peter Hughes Diving Company, a charter company, and Contender Boats,
Inc., a boat manufacturer. He was Chairman and Chief Executive Officer of
Allegheny & Western Energy Corporation, a natural gas production and
distribution company, from July 1987 until July 1995, when the company was sold.
Mr. McMillian serves on the Advisory Committee of Sun Trust Miami, N.A.
Philip J. O'Reilly has been a Director of the Company since April 1988. Mr.
O'Reilly is a partner in the law firm of O'Reilly, Marsh, Kearney &
Corteselli P.C., in Mineola, New York. Mr. O'Reilly has been in private
practice for more than the past five years. Mr. O'Reilly is a director of
Cypress Bioscience Inc., a biotechnology company engaged in developing,
manufacturing and marketing products for the treatment of immune-related
diseases and cancers.
Harry C. Payne has been President of and a Professor of History at Williams
College since 1994. From 1988 until 1993, Dr. Payne was President of Hamilton
College in Clinton, New York. Dr. Payne is a former chair of the Board of
Directors of the National Association of Independent Colleges and
Universities and serves on the board of the American Council on Education.
Information Concerning the Board of Directors and Its Committees
The Board of Directors held six meetings during the fiscal year ended
January 31, 1999. Each incumbent director attended more than 75% of the
aggregate number of meetings of the Board of Directors and appropriate
Committees held during fiscal year 1999 since their election.
The Board of Directors has established a number of Committees. The Audit
Committee, consisting of Mr. McMillian (Chairman), Dr. King and Mr. O'Reilly,
met seven times during fiscal year 1999. The Audit Committee meets with the
Company's management, including its Chief Financial Officer, and its independent
accountants several times a year to discuss internal controls and accounting
matters, the Company's financial statements, and the scope and results of the
auditing programs of the independent accountants. The Compensation Committee,
currently composed of three directors, Messrs. Crooks (Chairman), Hendricks and
O'Reilly, administers management compensation and makes recommendations in that
regard to the Board. The Compensation Committee met on two occasions during
fiscal 1999. The Stock Option Plan Administration Committee, which currently
consists of Messrs. Crooks (Chairman) and O'Reilly, administers the Company's
Stock Option Plans. The Stock Option Administration Committee met twice during
fiscal 1999.
Each non-employee director is paid $5,000 for each meeting of the Board or
its Committees attended, whether in person or by telephone, up to a maximum of
$20,000 per fiscal year. Messrs. Keough and Crooks are not paid the foregoing
fees. All directors are reimbursed for their expenses in attending meetings of
the Board or its Committees. Each non-employee director receives options to
purchase 25,000 shares of common stock of Excalibur upon joining the Board and
additional options to purchase 25,000 shares of common stock of Excalibur after
each subsequent five-year period of service as a member of the Board. The
Chairman may be granted additional options to purchase 25,000 shares of common
stock of Excalibur upon being elected Chairman and after each subsequent
five-year period of service. Mr. Keough has not been granted any stock options.
-4-
Item 2
Approval and Adoption of the Company's 1999 Incentive Stock Option Plan
On July 1, 1999, the Board of Directors adopted the Company's 1999
Incentive Stock Option Plan, (the "1999 Plan") which authorizes the granting of
options to purchase shares of the Company's common stock, and other forms of
incentive compensation, in order to attract and retain personnel who possess a
high degree of competence, experience and motivation. Under the Plan, the total
number of shares of Stock reserved and available for distribution shall be one
million shares. As of July 1, 1999, no incentive stock options have been granted
under the 1999 Plan.
Vote Required
To be adopted, the proposal must be approved by the affirmative vote of
the majority of the shares voting on the proposal present in person or
represented by proxy at the Annual Meeting. Any shares not voted (by abstention,
broker non-vote or otherwise) have no effect on such vote.
The Board of Directors of the Company recommends a vote "FOR" approval and
adoption of the 1999 Plan.
The following is a summary of the principal features of the 1999 Plan
which will be in effect if the 1999 Plan is approved and adopted by the
stockholders. A copy of the actual 1999 Plan document is available to any
stockholder upon request.
Eligibility
- -----------
The 1999 Plan provides for the issuance of incentive stock options within
the meaning of Section 422A of the Internal Revenue Code and non-qualified stock
options, as well as stock appreciation rights. All employees, including officers
and directors who are also employees, are eligible to be granted incentive stock
options under the 1999 Plan. Non-qualified stock options may be granted under
the 1999 Plan to employees or to other persons who perform substantial services
for or on behalf of the Company, including officers and directors. Options are
not transferable by the optionee, other than by will or the laws of descent and
distribution, and are exercisable during the optionee's lifetime only by the
optionee.
Administration
- --------------
The 1999 Plan will be administered by the Committee. Subject to the terms
of the 1999 Plan, the Committee has the authority to determine all terms and
provisions under which stock options are granted under the 1999 Plan, including
determining the individuals to whom options may be granted, the exercise price
and number of shares subject to each option, the time or times during which all
or a portion of each option may be exercised and certain other terms of each
option. The maximum term of options granted under the 1999 Plan is ten years.
Terms and Conditions of Options
- -------------------------------
Under the Company's 1999 Plan, incentive stock options may be granted to
officers and key employees of the Company to purchase shares of the common stock
at a purchase price equal to the fair market value of the common stock on the
-5-
date of grant. The Committee has the power, when and to the extent it deems
appropriate and with the consent of optionees, to substitute outstanding options
with replacement options at a lower exercise price. Options granted and
outstanding under the 1999 Plan vest over a period of up to four years. The 1999
Plan provides that optionees may be granted stock appreciation rights ("SARs")
at the discretion of the Board of Directors. The vesting schedule of outstanding
options granted under the 1999 Plan would accelerate in the event of the
occurrence of certain events constituting a change in control of the Company.
Upon termination of an employee for cause, such employee's stock options
will terminate. If the employee is involuntarily terminated without cause, his
stock options will be exercisable for three months following termination or
until the end of the option period, whichever is shorter. Upon the disability or
retirement of the employee, stock options will be exercisable within the lesser
of the remainder of the option period or one year from the date of disability or
retirement. Upon the death of an employee, stock options will be exercisable by
the deceased employee's representative within the lesser of the remainder of the
option period or one year from the date of the employee's death. Unless
otherwise determined by the Committee, only options which are exercisable on the
date of termination, death, disability or retirement may be subsequently
exercised. Options granted to non-employees including directors do not terminate
upon termination of such persons' relationship with the Company.
Amendments
- ----------
The Board may amend the Plan, but no amendment shall be made which would
impair the rights of an optionee under a stock option already granted, without
the optionee's consent, or which, without the approval of the Company's
stockholders, would cause the Plan to no longer comply with Rule 16b-3 under the
Exchange Act or any successor rule or other regulatory requirements.
Effective Date
- --------------
The 1999 Plan shall be effective as of July 1, 1999. Any grants made
under the 1999 Plan prior to approval by a majority of the votes of shareholders
in person or by proxy at the Annual Meeting shall be effective when made.
Term of Plan
- ------------
Unless sooner terminated by the Board, the 1999 Plan will terminate on
the tenth anniversary of the date of stockholder approval, but awards granted
prior to such tenth anniversary may extend beyond that date.
Federal Income Tax Consequences
- -------------------------------
Under the 1999 Plan, the Company may grant non-qualified options and
incentive stock options and stock appreciation rights. In general, under the
Internal Revenue Service Code at present, an optionee will not be deemed to
recognize any income for federal income tax purposes at the time a stock option
or SAR is granted, nor will the Company be entitled to a tax deduction at that
time. However, when a stock option or SAR is exercised, the federal income tax
consequences are summarized as follows:
-6-
Incentive Stock Options
When an incentive stock option is exercised, there is generally no tax
liability. However, the excess of the fair market value of the stock on the
exercise date over the option price is included in the optionee's income for
purposes of the alternative minimum tax. If the stock is held for a period of at
least two years from the date of grant of the option and one year from exercise
of the option, then, when the stock is sold for a gain, there is a tax liability
based on the difference between the sale price and the option price, which is
treated as a long term capital gain. If the holding period requirements are not
met when the stock is sold, the difference between the option price and the
market price on the date of exercise is treated as ordinary income. The
difference between the market price on the date of exercise and the sale price
is treated as a capital gain or loss.
Non-Qualified Options
For non-qualified options, there is also no tax liability when the option
is granted. When the option is exercised, there is a tax liability based on the
difference between the exercise price and the market price on the date of
exercise, which is treated as ordinary income, taxable in the year of exercise
of the option. When the stock is sold, there is a tax liability on the
difference between the sale price and the market price on the date of exercise,
which is treated as a capital gain or loss. The capital gain or loss will be
treated as either short-term or long-term depending on the length of time the
participant held the option shares.
The Company will not receive an income tax deduction as a result of the
exercise of an incentive stock option, provided that the ISO stock is held for
the required period described above. Upon the exercise of a non-qualified stock
option or the failure to hold incentive stock option stock for the required
period described above, the Company will generally be allowed an income tax
deduction equal to the ordinary income recognized by the participant. However,
pursuant to section 162(m) of the Internal Revenue Code, deductibility is denied
to any publicly held corporation for compensation of more than $1,000,000 that
is paid in a taxable year to an individual who, on the last day of a taxable
year, is the company's chief executive officer or among one of its four other
highest compensated officers for that year. It is possible that compensation
attributable to stock options granted under the Plan may be subject to this
deduction limit.
-7-
EXECUTIVE COMPENSATION
Identification of Executive Officers and Key Employees
Each year, the Board of Directors appoints the executive officers of the
Company to serve until the next Annual Meeting of Shareholders and until their
successors have been duly appointed and qualified. The following information
indicates the position, age and business experience of the current executive
officers, Messrs. Condo, Buchanan and Nelson, as well as key employees of the
Company. There are no family relationships between any of the executive officers
of the Company.
Name Age Position
- ---- --- --------
Patrick C. Condo 42 President and Chief Executive Officer
James H. Buchanan 43 Vice President, Chief Financial Officer,
Treasurer and Secretary
Paul E. Nelson 36 Senior Vice President, Product Development
Daniel C. Agan 46 Vice President, Worldwide Marketing
Steven S. Biegler 50 Vice President, Customer Services
Kamran Khan 35 Vice President, Worldwide Sales
David Nunnerley 42 Vice President, Visual Product Development
See the discussion included in the preceding section for the business
experience of Mr. Condo.
James H. Buchanan joined the Company as Chief Financial Officer in September
1995. Mr. Buchanan was elected Secretary and Treasurer of the Company on
November 17, 1995. From March 1991 to August 1995, Mr. Buchanan was Vice
President, Controller and Treasurer of Legent Corporation, a software
development company. Prior to that, he held several financial management
positions with Norfolk Southern Corporation and PepsiCo. Mr. Buchanan is a
certified public accountant.
Paul E. Nelson was named the Company's Senior Vice President, Product
Development in January 1998. Mr. Nelson served as a Director of the Company
from January 1, 1997 to July 21, 1997. He joined the Company as Vice
President, Text Products in July 1995 in connection with the Company's
acquisition of ConQuest Software, Inc. ("ConQuest"), a company that Mr.
Nelson co-founded in 1990. Mr. Nelson was Senior Vice President of Product
Development and a Director of ConQuest.
-8-
Daniel C. Agan joined the Company as Vice President, Worldwide Marketing in
September 1996. From 1991 through 1996, Mr. Agan was President and Chief
Executive Officer of Agan Associates, Limited, a marketing consulting firm with
experience providing executive-level service to a diverse range of clients in
the technology, on-line and broadcasting industries. Prior to this, Mr. Agan
spent fifteen years with the Public Broadcasting Service (PBS) where he served
in a variety of capacities, most notably as Senior Vice President for National
Programming and Promotion.
Steven S. Biegler was named Vice President, Customer Services in February 1998.
Since joining the Company in May 1996 as Director of Professional Services, Mr.
Biegler has overseen technical support, implementation services, education
services and software manufacturing, shipping and receiving. From 1995 to 1996,
Mr. Biegler was Vice President of Operations for Seiko Computer Systems. Prior
to that, he was Vice President of Product Support and Installations for Summit
Information Systems since 1993.
Kamran Khan was named Vice President, Worldwide Sales in May 1997. Previously,
Mr. Khan held several sales management positions since joining the Company in
September 1993. Mr. Khan served as general manager of the Company's
international sales operation and wholly-owned subsidiary Excalibur
Technologies, Ltd., located in the United Kingdom, from August 1995 until his
appointment to Vice President. Prior to joining the Company, Mr. Khan held
various positions, including regional business manager, with PAFEC Limited, a
leading firm in the United Kingdom involved with the development and
implementation of computer-aided engineering and engineering document management
software systems.
David Nunnerley was named Vice President, Visual Product Development in February
1998 and has been instrumental in the development of the Company's visual
products since joining the Company in 1996. From 1994 to 1996, Mr. Nunnerley was
Vice President of Engineering for Videopress Software, a software company
providing video delivery products and solutions to cable companies deploying
cable modems. Prior to that, Mr. Nunnerley held various product
management/marketing roles and management positions with Digital Equipment
Corporation.
-9-
Summary Compensation Table
The following table presents information concerning the compensation of
the Chief Executive Officer and each of the other most highly compensated
executive officers during the 1999 fiscal year (collectively, the "Named
Executive Officers") for services rendered in all capacities to the Company for
the fiscal year ended January 31, 1999, as well as the previous two fiscal
years:
Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
---------------------------- ---------------------- ----------------
Other Securities All
Annual Restricted Under- Other
Compen- Stock lying LTIP Compen-
Name and Principal Fiscal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SAR's(#) ($) ($)
- -------------------- ---- --------- -------- ------- ---------- ---------- ------- -------
Patrick C. Condo 1999 225,000 71,281 -- -- -- -- --
Chief Executive 1998 200,000 86,000 -- -- 400,000 <F1> -- --
Officer and President 1997 200,000 46,200 -- -- -- -- --
James H. Buchanan 1999 180,000 57,024 -- -- 10,000 -- --
Vice President, Chief 1998 165,514 70,950 -- -- 150,000 <F2> -- --
Financial Officer, 1997 155,688 34,650 -- -- -- -- 1,395 <F3>
Secretary and Treasurer
Paul E. Nelson 1999 165,000 81,800 -- -- -- -- --
Senior Vice President, 1998 157,500 69,586 -- -- 84,750 <F4> -- --
Product Development 1997 150,000 34,650 -- -- -- -- --
<FN>
<F1> This amount includes options to purchase 300,000 shares that were granted
in prior years and subsequently repriced on May 8, 1997.
<F2> This amount includes options to purchase 100,000 shares that were granted
in prior years and subsequently repriced on May 8, 1997.
<F3> Other compensation includes the reported value of a quota club trip
attended by the officer's spouse.
<F4> Represents options to purchase 84,750 shares that were granted in prior
years and subsequently repriced on May 8, 1997.
</FN>
-10-
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning options
granted during fiscal 1999 to the Named Executive Officers.
Potential Realizable
Individual Grants Value at Assumed
----------------- Annual Rates of
% of Total Stock Price
Options Appreciation for
Granted to Exercise Option Term(2)
Options Employees in or Base Expiration -------------
Name Granted (#) Fiscal Year (1) Price Date 5%($) 10%($)
- ----------- ----------- --------------- -------- ---------- ----- ------
Patrick C.
Condo -- -- -- -- -- --
James H.
Buchanan 10,000 4.0% $6.25 9/01/08 39,306 99,609
Paul E.
Nelson -- -- -- -- -- --
- -------------------------------------------
(1) These options vest in equal 12-1/2% increments every six months from the
dates of original grant.
(2) The amounts shown are hypothetical gains that would exist for the respective
options if exercised at the end of the option term. The assumed 5% and 10%
rates of stock price appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent the Company's estimate or
projection of future increases in the price of its Common Stock.
-11-
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
The following table sets forth, as of January 31, 1999, the number of
options and the value of exercised and unexercised options held by the Named
Executive Officers.
- ------------------------------------------------------------------
Number of
Securities
Underlying Value of
Unexercised Unexercised
Shares Options/SARS In-the Money
Acquired at Fiscal Options/SARS at
on Value Year-End (#) Fiscal Year-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (1)
- ---------------- -------- -------- --------------- -------------------
Patrick C. Condo -- -- 287,500/112,500 $1,742,988/$494,212
James H. Buchanan -- -- 87,500/ 72,500 $516,387/$334,693
Paul E. Nelson -- -- 74,156/ 10,594 $468,147/ $66,880
(1) The closing price of the Company's common stock on January 29, 1999, the
last trading day of the Company's fiscal year, was $11.063 per share.
Description of the 1989 Incentive Plan
In September 1989, the Company adopted and its shareholders approved the
1989 Incentive Plan (the "1989 Plan") which authorized the granting of options
to purchase shares of the Company's common stock, and other forms of incentive
compensation, in order to attract and retain personnel who possess a high degree
of competence, experience and motivation. At present, options to purchase up to
2,145,823 shares have been granted and are outstanding pursuant to the 1989
Plan. Because the 1989 Plan expired in April 1999, no further options may be
granted under the 1989 Plan.
The 1989 Plan provided for the issuance of incentive stock options within
the meaning of Section 422A of the Internal Revenue Code and non-qualified stock
options, as well as stock appreciation rights. All employees, including officers
and directors who were also employees, were eligible to be granted incentive
stock options under the 1989 Plan. Non-qualified stock options were eligible to
be granted under the 1989 Plan to employees or to other persons who performed
-12-
substantial services for or on behalf of the Company, including officers and
directors who were not members of the Stock Option Plan Administration Committee
of the Board of Directors (the "Committee"). Options are not transferable by the
optionee, other than by will or the laws of descent and distribution, and are
exercisable during the optionee's lifetime only by the optionee.
The 1989 Plan is currently administered by the Committee. Subject to the
terms of the 1989 Plan, the Committee had the authority to determine all terms
and provisions under which stock options were granted under the 1989 Plan,
including determining the individuals to whom options could be granted, the
exercise price and number of shares subject to each option, the time or times
during which all or a portion of each option could be exercised and certain
other terms of each option. The maximum term of options granted under the 1989
Plan is ten years.
Under the Company's 1989 Plan, incentive stock options have been granted
to officers and key employees of the Company to purchase shares of the common
stock at a purchase price equal to the fair market value of the common stock on
the date of grant. The Committee had the power, when and to the extent it deemed
appropriate and with the consent of optionees, to substitute outstanding options
with replacement options at a lower exercise price. Options granted and
outstanding under the 1989 Plan vest over a period of up to four years. The 1989
Plan provided that optionees may be granted stock appreciation rights ("SARs")
at the discretion of the Board of Directors. No SARs have been granted to date
under the 1989 Plan. The vesting schedule of outstanding options granted under
the 1989 Plan would accelerate in the event of the occurrence of certain events
constituting a change in control of the Company.
Upon termination of an employee for cause, such employee's stock options
will terminate. If the employee is involuntarily terminated without cause, his
stock options will be exercisable for three months following termination or
until the end of the option period, whichever is shorter. Upon the disability or
retirement of the employee, stock options will be exercisable within the lesser
of the remainder of the option period or one year from the date of disability or
retirement. Upon the death of an employee, stock options will be exercisable by
the deceased employee's representative within the lesser of the remainder of the
option period or one year from the date of the employee's death. Unless
otherwise determined by the Committee, only options which are exercisable on the
date of termination, death, disability or retirement may be subsequently
exercised. Options granted to non-employees including directors do not terminate
upon termination of such persons' relationship with the Company.
The 1989 Plan may be amended by the Board of Directors, except that the
Board may not, without the approval of the Company's stockholders, increase the
number of shares available for distribution, decrease the option price of a
stock option below 100% of the fair market value at grant, change the pricing
rule applicable for stock purchase rights, change the class of employees
eligible to receive awards under the 1989 Plan or extend the term of any option
award.
-13-
Description of the 1995 Stock Option Plan
The 1995 Stock Option Plan authorizes the granting of stock options and
other forms of incentive compensation to purchase up to 400,000 shares of the
Company's common stock in order to attract and retain personnel who possess a
high degree of competence, experience and motivation. The terms of the 1995
Stock Option Plan are identical to the 1989 Stock Option Plan described above,
except that the 1995 Stock Option Plan does not provide that optionees may be
granted stock appreciation rights. The 1995 Stock Option Plan is administered by
the Committee.
Description of the Stock Purchase Plan
In June 1996, the shareholders approved the Stock Purchase Plan (the
"Stock Plan") for the purpose of encouraging eligible employees to acquire
shares of the Company's Common Stock. All active employees of the Company are
eligible to participate. The aggregate number of shares of Common Stock which
may be purchased under the Stock Plan shall not exceed 250,000, subject to
adjustment in the event of stock dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common Stock.
The Company makes grants of options on February 1 and/or August 1 of each
year the Stock Plan is in effect or on such other designated date. Each eligible
employee on a date of exercise is entitled to purchase shares of Common Stock at
a purchase price equal to 85% of the closing sale price of shares of Common
Stock in the over-the-counter market on the applicable date of exercise. Options
are exercised on April 30, July 31, October 31 and January 31 of each fiscal
year.
Payment for shares of Common Stock purchased under the Stock Plan is made
by authorized payroll deductions from an eligible employee's eligible
compensation. Eligible employees who elect to participate in the Plan designate
that a stated whole percentage equaling at least 1%, but no more than 10% of
eligible compensation be deducted. No participant in the Stock Plan is permitted
to purchase Common Stock under the Stock Plan at a rate that exceeds $25,000 in
fair market value of Common Stock, determined at the time options are granted,
for each calendar year.
It is intended that the Stock Plan constitutes an "employee stock purchase
plan" under the provisions of Section 423 of the Code. No Federal income tax
liability results from the grant or exercise of an option to purchase shares of
Common Stock pursuant to the Stock Plan, although amounts deducted from payroll
are included in an employee's compensation as ordinary income.
The Board of Directors shall have the right to terminate the Stock Plan or
any offering at any time for any reason. The Stock Plan is anticipated to
continue in effect through July 31, 2001.
-14-
Report of the Compensation Committee
The following is the Report of the Compensation Committee of the Board of
Directors, describing the compensation policies and rationale applicable to the
Company's executive officers with respect to the compensation paid to such
executive officers for the fiscal year ended January 31, 1999 (the information
contained in the report shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission (SEC) 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 Securities
Exchange Act of 1934, as amended (the Exchange Act), except to the extent that
the Company specifically incorporates it by reference into such filing):
As members of the Compensation Committee, it is our duty to set
compensation policies applicable to the Company's executive officers and to
evaluate the performance of the Company's executive officers.
The compensation policy of the Company is that a substantial portion of
the annual compensation of each executive officer should relate to and be
contingent upon the performance of the Company, as well as the individual
contribution of each executive officer. In addition, the Compensation
Committee believes that the total compensation package must be competitive
with other companies in the industry to ensure that the Company can continue
to attract, retain and motivate key executives who are critical to the
long-term success of the Company. Under the Company's bonus scheme, bonuses
are paid based upon the Company attaining certain sales, expense and
profitability goals and on each officer's individual contribution to the
Company's attainment of such goals.
Mr. Condo's base salary for the fiscal year ended January 31, 1999 was
$225,000. Mr. Condo's salary was determined by negotiation between Mr. Condo
and the Company. Mr. Condo was paid $71,281 during fiscal year 1999 for the
achievement of certain goals during the fiscal year. Forty percent of Mr.
Condo's potential bonus was based on the achievement of quarterly revenue
goals; sixteen percent was based on the achievement of quarterly profitability
goals; fourteen percent was based on the achievement of revenue and
profitability goals for the fiscal year and thirty percent was based on the
achievement of quarterly management objectives as determined by the Chief
Executive Officer and the Chairman of the Compensation Committee.
Compensation Committee: Richard M. Crooks, Jr., Chairman
John S. Hendricks
Philip J. O'Reilly
-15-
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during fiscal 1999 were Messrs.
Crooks, Hendricks and O'Reilly, none of whom is an officer or employee of the
Company or its subsidiaries. No member of the Compensation Committee or
executive officer of the Company has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
Employment Agreements
Under an agreement between the Company and Patrick C. Condo, President and
Chief Executive Officer entered into in May 1998, Mr. Condo will be paid an
amount equal to twelve months of base salary plus bonus compensation and
continuation of his employee benefits for one year in the event Mr. Condo's
employment is terminated or he is removed from his position as Chief Executive
Officer within six months following certain "change of control" events relating
to the Company. Such arrangement was approved by the full Board of Directors.
For fiscal 1999, Mr. Condo's annual salary and bonus amounted to $296,281.
The offer of employment letter dated September 7, 1995 for James H.
Buchanan, Chief Financial Officer, Secretary and Treasurer of the Company,
stipulates that Mr. Buchanan will be paid an amount equal to twelve months of
base salary in semi-monthly installments should his employment be terminated by
the Company without cause.
-16-
Performance Graph
The following graph is a comparison of the cumulative total return to
shareholders of the Company's Common Stock at January 31, 1999 since January 31,
1994 to the cumulative total return over such period of (i) the NASDAQ Stock
Market-U.S., and (ii) the Standard & Poor's High Tech Composite, assuming an
investment in each of $100 on January 31, 1994 and the reinvestment of
dividends. The information contained in the Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG EXCALIBUR TECHNOLOGIES CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
(Cumulative Total Graph appears here, plot points are as follows.)
Fiscal Year Ended January 31,
---------------------------------------
1994 1995 1996 1997 1998 1999
Excalibur Technologies
Corporation (EXCA) 100 65 243 115 92 96
NASDAQ Stock Market (U.S.) 100 95 135 177 209 326
Standard & Poor's
Technology Sector 100 112 165 256 309 578
* $100 INVESTED ON 1/31/97 IN STOCK OR INDEX -
INCLULDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING JANUARY 31.
-17-
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of June 15, 1999, information concerning
the ownership of Common Stock of the Company of (i) all persons known to the
Company to beneficially own 5% or more of the Company's Common Stock, (ii) each
director of the Company, (iii) each Named Executive Officer and (iv) all
directors and executive officers of the Company as a group.
Amount and Nature Percent
Name and Address of Beneficial of Class
of Beneficial Owner Ownership (1) Owned
- ------------------- ------------- -----
Allen & Company Incorporated 3,725,846 (2)(3) 25.5%
711 Fifth Avenue
New York, NY 10022
Alliance Capital Management L.P. 818,100 (4) 5.7%
Donald R. Keough 130,000 (5) *
Patrick C. Condo 339,065 (6) 2.3%
Richard M. Crooks, Jr. 399,750 (7) 2.8%
John S. Hendricks 25,000 (8) *
W. Frank King III 38,000 (9) *
John G. McMillian 40,000 (10) *
Philip J. O'Reilly 55,000 (11) *
James H. Buchanan 116,380 (12) *
Paul E. Nelson 322,949 (13) 2.2%
All directors and executive
officers as a group (9 persons) 1,466,144 (14) 9.7%
* Represents less than one percent of the outstanding common stock.
(1) To the Company's knowledge, each person listed has sole voting and
investment power as to the shares indicated, except as described below.
(2) Does not include shares owned by persons, including Messrs. Keough and
Crooks and entities which, together with Allen & Company Incorporated, may
be considered a "group," as such term is defined by Section 13(d) of the
Securities Exchange Act of 1934, because (as reported on Schedule 13D filed
with the SEC on July 21, 1997) many of these persons or entities are Allen
stockholders, officers, directors, relatives or affiliates of the
foregoing. No person or entity included in this possible "group," with the
exception of Allen & Company Incorporated, owns 5% or more of the
outstanding common stock.
(3) Includes 271,800 shares of common stock issuable upon conversion of 27,180
shares of the Company's cumulative convertible preferred stock.
-18-
(4) Based on information contained in a Schedule 13G filed with the Securities
and Exchange Commission on February 16, 1999 by The Equitable Companies
Incorporated and other entities as parent holding companies of
Alliance Capital Management L.P.
(5) Does not include shares owned by Allen & Company Incorporated, of which Mr.
Keough is Chairman of the Board, and as to which shares Mr. Keough
disclaims beneficial ownership.
(6) Includes (a) 10,000 shares of common stock owned beneficially but not of
record upon exercise of stock options at a price of $4.75 per share
expiring November 13, 2002; (b) 15,000 shares of common stock owned
beneficially but not of record upon exercise of stock options at a price of
$4.75 per share, expiring January 4, 2004; (c) 75,000 shares of common
stock owned beneficially but not of record upon exercise of stock options
at a price of $4.75 per share, expiring December 6, 2004; (d) 100,000
shares of common stock owned beneficially but not of record, issuable upon
exercise of stock options at a price of $4.75 per share, expiring June 2,
2005; (e) 87,500 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options at a price of $4.75 per
share expiring November 1, 2005; and (f) 50,000 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock
options at a price of $7.63 per share expiring August 13, 2007.
(7) Includes (a) 50,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $16.10 per share expiring June 28, 2000, and (b) 50,000 shares of common
stock issuable upon exercise of stock options of the Company at a price of
$20.56 per share expiring November 27, 2005. Does not include shares owned
by Allen & Company Incorporated, of which Mr. Crooks is a director and as
to which shares Mr. Crooks disclaims beneficial ownership.
(8) Includes 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options the Company at a price of
$4.875 per share expiring June 2, 2007.
(9) Includes (a) 13,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $12.50 per share, expiring July 2, 2002; and (b) 25,000 shares of common
stock owned beneficially but not of record, issuable upon exercise of stock
options of the Company at a price of $4.75 per share, expiring May 8, 2007.
(10) Includes (a) 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $22.50 per share, expiring June 28, 2006, and (b) 10,000 shares of
common stock owned beneficially but not of record, issuable upon exercise
of stock options of the Company at a price of $14.00 per share, expiring
October 28, 2006.
(11) Includes (a) 25,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $13.00 per share expiring March 12, 2003; and (b) 25,000 shares of
common stock owned beneficially but not of record, issuable upon exercise
of stock options of the Company at a price of $6.75 per share expiring
December 1, 2008.
-19-
(12) Includes (a) 26,250 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $4.75 per share expiring September 13, 2005; (b) 61,250 shares owned
beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share expiring November 1, 2005; (c)
25,000 shares of common stock owned beneficially but not of record,
issuable upon exercise of stock options of the Company at a price of $4.75
per share expiring August 13, 2007; and (d) 2,500 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock
options of the Company at a price of $6.25 per share expiring September 1,
2008.
(13) Includes 84,750 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price
of $4.75 per share expiring July 20, 2005.
(14) Includes 785,250 shares of common stock owned beneficially but not of
record, issuable upon the exercise of options to purchase common stock of
the Company.
Certain Relationships and Related Transactions
Donald R. Keough, the Chairman of the Board of Directors of the Company,
is the Chairman of the Board of Allen & Company Incorporated ("Allen"). Richard
M. Crooks, Jr., a director of the Company, is a director of and consultant to
Allen.
The Company's policy is that it will not make loans to, or enter into
other transactions with directors, officers or affiliates unless such loans or
transactions are approved by a majority of the Company's independent
disinterested directors, may reasonably be expected to benefit the Company, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and regulations of
the SEC thereunder require the Company's executive officers and directors, and
persons who own more that ten percent of a registered class of the Company's
equity securities, to file reports of initial ownership and changes in ownership
with the SEC. Based solely on its review of copies of such forms received by the
Company, or on written representations from certain reporting persons that no
other reports were required for such persons, the Company believes that during
or with respect to the period from February 1, 1998 to January 31, 1999 all of
the Section 16(a) filing requirements applicable to its executive officers,
directors and ten percent shareholders were complied with on a timely basis.
Shareholder Proposals To Be Presented At Next Annual Meeting
Proposals of shareholders intended to be presented by such shareholders
at next year's Annual Meeting must be received by the Company at its principal
office no later than March 13, 2000 and must satisfy the conditions established
by the Securities and Exchange Commission for shareholder proposals to be
included in the Company's proxy statement for that meeting.
-20-
OTHER MATTERS
Expenses of Solicitation
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, and the entire cost of such solicitation will be borne
by the Company. Proxies may also be solicited by directors, officers and
employees of the Company, without additional compensation, by personal
interview, telephone and facsimile. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material and annual reports to the beneficial owners of stock held
of record by such persons, and the Company will reimburse them for reasonable
out-of-pocket and clerical expenses incurred by them in connection therewith.
Independent Auditors
On the recommendation of the Audit Committee of the Board of Directors,
the Board has selected PricewaterhouseCoopers LLP as the Company's independent
auditors for the fiscal year ending January 31, 2000. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting to
respond to appropriate questions and to make a statement if they so desire.
On October 28, 1998, Excalibur Technologies Corporation (the "Company")
disengaged the Company's independent accounting firm, Arthur Andersen LLP
("Andersen"). The decision to dismiss Andersen was approved by the Company's
Board of Directors on the recommendation of its Audit Committee.
During the fiscal years ended January 31, 1997 and 1998 and any subsequent
interim period (the "Reporting Period"), none of Andersen's reports on the
Company's financial statements contained an adverse opinion or a disclaimer of
opinion, or was qualified or modified as to uncertainty, audit scope or
accounting principles. During the Reporting Period, there were no matters of
disagreement with Andersen on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures which, if not
resolved to the satisfaction of Andersen, would have caused Andersen to make a
reference thereto in its report, except for the following:
In Andersen's report to the Audit Committee issued in May 1997, Andersen
noted that in the quarter ending April 30, 1996, Andersen and the Company
disagreed on the accounting treatment of two sales. Andersen stated that the
issues were ultimately resolved to their satisfaction.
In the Company's quarter ending July 31, 1998, Andersen and the Company had
a difference of opinion on the appropriate accounting treatment of a contract
which granted the licensee the rights to distribute the Company's software
products as an original equipment manufacturer and use the Company's software
products for the licensee's internal business operations. The contract also
provided for custom development to the Company's software products to be
distributed by the licensee. The internal use license did not require custom
developments to the Company's software products. The difference of opinion
between Andersen and the Company related to the accounting treatment for the
internal use license granted in the contract. After discussion, the Company
accepted Andersen's proposed accounting treatment and employed the
percentage-of-completion method of accounting on the entire contract.
-21-
The Company's Audit Committee has discussed each of the matters described
above with Andersen.
On November 9, 1998, the Company engaged PricewaterhouseCoopers LLP as its
independent accounting firm. The decision to engage PricewaterhouseCoopers LLP
was approved by the Company's Board of Directors on the recommendation of its
Audit Committee.
Discretionary Authority
The Annual Meeting is called for the specific purposes set forth in the
Notice of Meeting and discussed above, and also for the purpose of transacting
such other business as may properly come before the Annual Meeting. At the date
of this Proxy Statement, the Company does not expect that any other matters will
be submitted for consideration at the Annual Meeting other than those
specifically referred to above. If any other matters properly come before the
Annual Meeting, the proxy holders will be entitled to exercise discretionary
authority to the extent permitted by applicable law.
By Order of the Board of Directors,
James H. Buchanan
Secretary
Dated: Vienna, Virginia
July 9, 1999
-22-
- --------------------------------------------------------------------------------
PROXY EXCALIBUR TECHNOLOGIES CORPORATION PROXY PROXY
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
The undersigned holder of Common Stock of Excalibur Technologies Corporation
(the "Company") hereby constitutes and appoints Patrick C. Condo and James H.
Buchanan, and each of them, attorneys and proxies with full power of
substitution to each, for and in the name of the undersigned to vote the shares
of Common Stock of the Company, which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders of the Company to be
held at The McLean Hilton Hotel, 7920 Jones Branch Drive, McLean, Virginia
22102, on Tuesday, August 24, 1999 at 10:00 a.m., local time, or at any and all
adjournments thereof, on all matters as may properly come before the meeting.
The undersigned hereby revokes any and all proxies heretofore given with respect
to such meetings.
Each of such attorneys and proxies present at the meeting shall and may exercise
the powers granted hereunder.
Receipt is acknowledged of the Notice of Annual Meeting of Shareholders dated
July 9, 1999 and the Proxy Statement accompanying said notice.
Said attorneys are hereby instructed to vote as specified below. If no
specification is made, this proxy will be voted FOR Item 1 below and FOR Item 2
on the reverse side.
1. Election of the following eight (8) nominees to serve as directors until the
next Annual Meeting of Shareholders and until their successors are elected and
qualified.
Nominees: Donald R. Keough Patrick C.Condo Richard M. Crooks, Jr.
John S. Hendricks W. Frank King III John G. McMillian
Philip J. O'Reilly Harry C. Payne
[ ]FOR [ ]WITHHELD [ ]_______________________________________________
For all nominees except as noted above
2. Approve and adopt the Company's 1999 Incentive Stock Option Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. In their discretion, to vote upon such other matters as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dated:____________________, 1999
______________________________
Signature
______________________________
Signature(s) if held jointly
Please sign your name as it appears
hereon. In the case of joint owners or
tenants in common, each should sign.
If signing as a trustee, guardian or
in any other representative capacity
or on behalf of a corporation or
partnership, please indicate your title.
- --------------------------------------------------------------------------------
APPENDIX
EXCALIBUR TECHNOLOGIES CORPORATION
1999 INCENTIVE STOCK OPTION PLAN
--------------------------------
SECTION 1. Purpose; Definitions
-------------------------------
The purpose of the Excalibur Technologies Corporation 1999 Incentive Stock
Option Plan (the "Plan") is to enable Excalibur Technologies Corporation (the
"Company") to attract, retain and reward officers, directors and key employees
of the Company and its Subsidiaries and Affiliates and any other individual as
determined by the Committee who is responsible for or contributes to the
management, growth and/or profitability of the business of the Company and/or
its Subsidiaries and Affiliates, and strengthen the mutuality of interests
between such persons and the Company's stockholders, by offering such persons
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.
(b) "Board" means the Board of Directors of the Company.
(c) "Book Value" means, as of any given date, on a per share basis (i) the
stockholders' Equity in the Company as of the end of the immediately preceding
fiscal year as reflected in the Company's consolidated balance sheet, subject to
such adjustments as the Committee shall specify at or after grant, divided by
(ii) the number of then outstanding shares of Stock as of such year-end date (as
adjusted by the Committee for subsequent events).
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 2 of the Plan.
If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
(f) "Company" means Excalibur Technologies Corporation, a corporation
organized under the laws of the State of Delaware, or any successor corporation.
(g) "Deferred Stock" means an award made pursuant to Section 8 below of
the right to receive Stock at the end of a specified deferral period.
1
(h) "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.
(i) "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the mean between the highest and
lowest quoted bid price, regular way, of the Stock on the NASDAQ System or, if
no such sale of Stock occurs on such date, the fair market value of the Stock as
determined by the Committee in good faith.
(j) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422A of
the Code.
(k) "Non-Employee Directors" shall have the meaning set forth in Rule
16b-3(b)(3) as promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
definition adopted by the Commission.
(l) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(m) "Other Stock-Based Award" means an award under Section 10 below that
is valued in whole or in part by reference to, or is otherwise based on, Stock.
(n) "Restricted Stock" means an award of shares of Stock that is subject
to restrictions under Section 7 below.
(o) "Stock" means the Common Stock, $.01 par value per share, of the
Company.
(p) "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Company all (or a portion) of
a Stock Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such Stock Option (or such portion thereof) is
surrendered, of the shares of Stock covered by such Stock Option (or such
portion thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii) and (ii) the aggregate exercise price of such Stock Option (or
such portion thereof).
(q) "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.
(r) "Stock Purchase Right" means the right to purchase Stock pursuant to
Section 9.
(s) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if the corporation
(other than the last corporation in the unbroken chain) owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
In addition, the terms "Change in Control" and "Change in Control Price"
shall have the meanings set forth, respectively, in Sections 1l(b) and (c) below
and the term "Cause" shall have the meaning set forth in Section 5(h) below.
2
SECTION 2. Administration
-------------------------
The Plan shall be administered by a Committee of no fewer than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan shall be exercised by the Board, if and to the extent that no Committee
exists which has the authority to so administer the Plan.
The Committee shall have full authority to grant, pursuant to the terms of
the Plan, to officers, directors and other key employees and any other
individual as determined by the Committee who is responsible for or contributes
to the management, growth and/or profitability of the business of the Company
and/or its Subsidiaries and Affiliates eligible under Section 4: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Deferred
Stock, (v) Stock Purchase Rights and/or (vi) Other Stock-Based Awards. In
particular, the Committee shall have the authority:
(a) to select the officers, directors and other key employees of the
Company and its Subsidiaries and Affiliates and any other individual as
determined by the Committee who is responsible for or contributes to the
management, growth and/or profitability of the business of the Company and/or
its Subsidiaries and Affiliates to whom Stock Options Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and/or Other Stock-Based
Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Stock Purchase Rights and/or Other Stock-Based Awards, or any
combination thereof, are to be granted hereunder to one or more eligible
officers, directors, employees and any other individual as determined by the
Committee who is responsible for or contributes to the management, growth and/or
profitability of the business of the Company and/or its Subsidiaries and
Affiliates;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder (including, but not limited to, the
share price and any restriction or limitation, or any vesting acceleration or
waiver of forfeiture restrictions regarding any Stock Option or other award
and/or the shares of Stock relating thereto, based in each case on such factors
as the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock Option may
be settled in cash, Restricted Stock and/or Deferred Stock under Section 5(j) or
(k), as applicable, instead of Stock;
(f) to determine whether, to what extent and under what circumstances
grants and/or other awards under the Plan and/or other cash awards made by the
Company are to be made, and operate, on a tandem basis vis-a-vis other awards
under the Plan and/or cash awards made outside of the Plan, or on an additive
basis;
3
(g) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the participant
(including providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(h) to determine the terms and restrictions applicable to Stock Purchase
Rights and the Stock purchased by exercising such Rights; and
(i) to grant with the consent of the optionee, in substitution for
outstanding Stock Options, replacement Stock Options, which may be at a lower
exercise price, provided that, in the case of Incentive Stock Options, at an
exercise price less than the Fair Market Value of the Stock at the time of
replacement.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Company and Plan participants.
SECTION 3. Stock Subject to Plan
--------------------------------
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 1,000,000 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares.Subject to Section
6(b)(iv) below, if any shares of Stock that have been optioned cease to be
subject to a Stock Option, or if any such shares of Stock that are subject to
any Restricted Stock or Deferred Stock award, Stock Purchase Right or Other
Stock-Based Award granted hereunder are forfeited or any such award otherwise
terminates, without a payment being made to the participant in the form of
Stock, such shares shall again be available for distribution in connection with
future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split spin-offs, spin-outs or other
change in corporate structure affecting the Stock, such substitution or
adjustment shall be made in the aggregate number of shares reserved for issuance
under the Plan, in the number and option price of shares subject to outstanding
Options granted under the Plan, in the number and purchase price of shares
subject to outstanding Stock Purchase Rights under the Plan, and in the number
of shares subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right associated with
any Stock Option.
4
SECTION 4. Eligibility
----------------------
Officers, directors and key employees of the Company and its Subsidiaries
and Affiliates and any other individual as determined by the Committee who are
responsible for or contribute to the management, growth and/or profitability of
the business of the Company and/or its Subsidiaries and Affiliates are eligible
to be granted awards under the Plan.
SECTION 5. Stock Options
------------------------
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant to any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights).
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under an
Incentive Stock Option shall be determined by the Committee at the time of grant
but shall be not less than 100% of the Fair Market Value of the Stock at the
time of grant. Non-Qualified Stock Options may, in the discretion of the
Committee, may be granted at a price per share less than the Fair Market Value
of the Stock at the time of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant. If the Committee provides, in its sole discretion,
that any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Committee shall determine, in its
sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in whole or
in part at any time during the option period by giving written notice of
exercise to the Company specifying the number of shares to be purchased. Such
notice shall be accompanied by payment in full of the purchase price, either by
check, note or such other instrument as the Committee may accept. As determined
by the Committee, in its sole discretion, at or after grant, payment in full or
5
in part may also be made in the form of Stock or, in the case of the exercise of
a Non-Qualified Stock Option, Restricted Stock or Deferred Stock subject to an
award hereunder (based, in each case, on the Fair Market Value of the Stock on
the date the option is exercised, as determined by the Committee).
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to dividends or other
rights of a shareholder with respect to shares subject to the Option when the
optionee has given written notice of exercise, has paid in full for such shares,
and if requested, has given the representation described in Section 14(a).
(e) Non-Transferability of Options. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee.
(f) Termination by Death. Subject to Section 5(j), if an optionee's
employment by the Company or any Subsidiary or Affiliate terminates by reason of
death, any Stock Option held by such optionee may thereafter be exercised, to
the extent such option was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the Committee), by the
legal representative of the estate or by the legatee of the optionee under the
will of the optionee, for a period of one year (or such other period as the
Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(g) Termination by Reason of Disability. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Disability, any Stock Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may determine at or
after grant (or as may be determined in accordance with procedures established
by the Committee), for a period of one year (or such other period as the
Committee may specify at grant) from the date of such termination of employment
or until the expiration of the stated term of such Stock Option, whichever
period is the shorter, provided, however, that, if the optionee dies within such
one-year period (or such other period as the Committee shall specify at grant),
any unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In the event
of termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422A of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.
(h) Other Termination. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if an
optionee's employment by the Company or any Subsidiary or Affiliate terminates
for any reason other than death or Disability, the Stock Option shall thereupon
terminate, except that such Stock Option may be exercised, to the extent
otherwise then exercisable, for the lesser of three months or the balance of
such Stock Option's term if the optionee is involuntarily terminated by the
6
Company or any Subsidiary or Affiliate without Cause. For purposes of this Plan,
"Cause" means a felony conviction of an optionee or the failure of an optionee
to contest prosecution for a felony, or an optionee's willful misconduct or
dishonesty, any of which is directly and materially harmful to the business or
reputation of the Company or any Subsidiary or Affiliate.
(i) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422A of the Code, or, without the consent of the optionee(s) affected,
to disqualify any Incentive Stock Option under such Section 422A.
To the extent required for "incentive stock option" status under
Section 422A(b)(7) of the Code (taking into account applicable Internal Revenue
Service regulations and pronouncements), the Plan shall be deemed to provide
that the aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted are exercisable for
the first time by the optionee during any calendar year under the Plan and/or
any other stock option plan of the Company or any Subsidiary or parent
corporation (within the meaning of Section 425 of the Code) shall not exceed $
100,000. If Section 422A is hereafter amended to delete the requirement now in
Section 422A(b)(7) that the plan text expressly provide for the $100,000
limitation set forth in Section 422A(b)(7), then this first paragraph of Section
5(i) shall no longer be operative.
(j) Buyout Provisions. The Committee may at any time offer to buy out for
a payment in cash, Stock, Deferred Stock or Restricted Stock an option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is made.
(k) Settlement Provisions. If the option agreement so provides at grant or
is amended after grant and prior to exercise to so provide (with the optionee's
consent), the Committee may require that all or part of the shares to be issued
with respect to the spread value of an exercised Option take the form of
Deferred or Restricted Stock, which shall be valued on the date of exercise on
the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
SECTION 6. Stock Appreciation Rights
------------------------------------
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Stock Option.
A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
subject to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number of
shares covered by a related Stock Option.
7
A Stock Appreciation Right may be exercised by an optionee, subject
to Section 6(b), in accordance with the procedures established by the Committee
for such purpose. Upon such exercise, the optionee shall be entitled to receive
an amount determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be exercisable
to the extent that the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this Section 6 of
the Plan; provided, however, that any Stock Appreciation Right granted to an
optionee subject to Section 16(b) of the Exchange Act subsequent to the grant of
the related Stock Option shall not be exercisable during the first six months of
its term, except that this special limitation shall not apply in the event of
death or Disability of the optionee prior to the expiration of the six-month
period. The exercise of Stock Appreciation Rights held by optionees who are
subject to Section 16(b) of the Exchange Act shall comply with Rule 16b-3
thereunder, to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock equal in
value to the excess of the Fair Market Value of one share of Stock over the
option price per share specified in the related Stock Option multiplied by the
number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment. When payment is to be made in shares, the number of shares to be paid
shall be calculated on the basis of the Fair Market Value of the shares on the
date of exercise. When payment is to be made in cash, such amount shall be
calculated on the basis of the average of the highest and lowest quoted bid
price, of the Stock on the NASDAQ System during the applicable period referred
to in Rule 16b-3(e) under the Exchange Act.
(iii) Stock Appreciation Rights shall be transferable only when and
to the extent that the underlying Stock Option would be transferable under
Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related shall
be deemed to have been exercised for the purpose of the limitation set forth in
Section 3 on the number of shares of Stock to be issued under the Plan, but only
to the extent of the number of shares issued under the Stock Appreciation Right
at the time of exercise based on the value of the Stock Appreciation Right at
such time.
(v) In its sole discretion, the Committee may grant "Limited" Stock
Appreciation Rights under this Section 6, i.e., Stock Appreciation Rights that
become exercisable only in the event of a Change in Control, subject to such
terms and conditions as the Committee may specify at grant. Such Limited Stock
Appreciation Rights shall be settled solely in cash.
8
(vi) The Committee, in its sole discretion, may also provide that,
in the event of a Change in Control, the amount to be paid upon the exercise of
a Stock Appreciation Right or Limited Stock Appreciation Right shall be based on
the Change of Control Price, subject to such terms and conditions on the
Committee may specify at grant.
SECTION 7. Restricted Stock
---------------------------
(a) Administration. Shares of Restricted Stock may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 7(b)), the time or
times within which such awards may be subject to forfeiture, and all other terms
and conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock may be equal
to or less than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of
60 days (or such shorter period as the committee may specify at grant) after the
award date, by executing a Restricted Stock Award Agreement and paying whatever
price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
9
(i) Subject to the provisions of this Plan and the award agreement,
during a period set by the Committee commencing with the date of such award (the
"Restricted Period"), the participant shall not be permitted to sell, transfer,
pledge or assign shares of Restricted Stock awarded under the Plan. Within these
limits, the Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restriction in
whole or in part, based on service, performance and/or such other factors or
criteria as the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a stockholder of the Company, including the right to vote the
shares and the right to receive any cash dividends. The Committee, in its sole
discretion, as determined at the time of award, may permit or require the
payment of cash dividends to be deferred and, if the Committee so determines,
reinvested, subject to Section 14(e), in additional Restricted Stock, to the
extent shares are available under Section 3, or otherwise reinvested. Pursuant
to Section 3 above, Stock dividends issued with respect to Restricted Stock
shall be treated as additional shares of Restricted Stock that are subject to
the same restrictions and other terms and conditions that apply to the shares
with respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the award agreement
and this Section 7, upon termination of a participant's employment with the
Company or any Subsidiary or Affiliate for any reason during the Restriction
Period, all shares still subject to restriction will vest or be forfeited, in
accordance with the terms and conditions established by the Committee at or
after grant.
(iv) If and when the Restricted Period expires without a prior
forfeiture of the Restricted Stock subject to such Restricted Periods,
certificates for an appropriate number of unrestricted shares shall be delivered
to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Restricted Stock award, subject to such
performance, future service deferral and other terms and conditions as may be
specified by the Committee.
SECTION 8. Deferred Stock
-------------------------
(a) Administration. Deferred Stock may be awarded either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Stock shall be awarded,
the number of shares of Deferred Stock to be awarded to any person, the duration
of period (the "Deferral Period") during which, and the conditions under which,
receipt of the Stock will be deferred, and the other terms and conditions of the
award in addition to those set forth in Section 8(b).
10
The Committee may condition the grant of Deferred Stock upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.
The provisions of Deferred Stock awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. The shares of Deferred Stock awarded pursuant to
this Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 8(b)(vi) below, Deferred Stock awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during the Deferral
Period. At the expiration of the Deferral Period (or the Elective Deferral
Period referred to in Section 8(b)(v), where applicable), share certificates
shall be delivered to the participant, or his legal representative, in a number
equal to the shares covered by the Deferred Stock award.
(ii) Unless otherwise determined by the Committee at grant, amounts
equal to any dividends declared during the Deferral Period with respect to the
number of shares covered by a Deferred Stock award shall be paid to the
participant currently, or deferred and deemed to be reinvested in additional
Deferred Stock, or otherwise reinvested, all as determined at or after the time
of the award by the Committee, in its sole discretion.
(iii) Subject to the provision of the award agreement and this
Section 8, upon termination of a participant's employment with the Company or
Subsidiary or Affiliate for any reason during the Deferral Period for a given
award, the Deferred Stock in question will vest or be forfeited, in accordance
with the terms and conditions established by the Committee at or after grant.
(iv) Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, at or after grant,
accelerate the vesting of all or any part of any Deferred Stock award and/or
waive the deferral limitations for all or any part of such award.
(v) A participant may elect to further defer receipt of an award (or
an installment of an award) for a specified period or until a specified event
(the "Elective Deferral Period"), subject in each case to the Committee's
approval and to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such election
must generally be made at least one-year prior to completion of the Deferral
Period for such Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to the terms of,
a Deferred Stock agreement executed by the Company and the participant.
(c) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a deferred stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
11
SECTION 9. Stock Purchase Rights
--------------------------------
(a) Awards and Administration. Subject to Section 3 above, the Committee
may grant eligible participants Stock Purchase Rights which shall enable such
participants to purchase Stock (including Deferred Stock and Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at 50% of such Fair Market Value on such date;
(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such Stock on such date.
The Committee shall also impose such deferral, forfeiture and/or
other terms and conditions as it shall determine, in its sole discretion, on
such Stock Purchase Rights or the exercise thereof.
The terms of Stock Purchase Rights awards need not be the same with
respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and be
subject to the terms of, a Stock Purchase Rights Agreement.
(b) Exercisability. Stock Purchase Rights shall generally be exercisable
for such period after grant as is determined by the Committee not to exceed 30
days. However, the Committee may provide, in its sole discretion, that the Stock
Purchase Rights of persons potentially subject to Section 16(b) of the Exchange
Act shall not become exercisable until six months and one day after the grant
date, and shall then be exercisable for ten trading days at the purchase price
specified by the Committee in accordance with Section 9(a).
SECTION 10. Other Stock-Based Awards
------------------------------------
(a) Administration. Other awards of Stock and other awards that are valued
in whole or in part by reference to, or are otherwise based on, Stock ("Other
Stock-Based Awards"), including, without limitation, performance shares,
convertible preferred stock, convertible debentures, exchangeable securities and
Stock awards or options valued by reference to Book Value or subsidiary
performance, may be granted either alone or in addition to or in tandem with
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock or
Stock Purchase Rights granted under the Plan and/or cash awards made outside of
the Plan.
Subject to the provision of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Stock to be awarded pursuant to
such awards, and all other conditions of the awards. The Committee may also
provide for the grant of Stock upon the completion of a specified performance
period.
12
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provision of the Plan and the award agreement
referred to in Section 10(b)(v) below, shares subject to awards made under this
Section 10 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period lapses.
(ii) Subject to the provisions of the Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient of an
award under this Section 10 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend equivalents with
respect to the number of shares covered by the award, as determined at the time
of the award by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Stock or otherwise reinvested.
(iii) Any award under this Section 10 and any Stock covered by any
such award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining limitations
imposed hereunder (if any) with respect to any or all of an award under this
Section 10.
(v) Each award under this Section 10 shall be confirmed by, and
subject to the terms of, an agreement or other instrument by the Company and by
the participant.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 10 may be issued for no cash consideration. Stock
(including securities convertible into Stock) purchased pursuant to a purchase
right awarded under this Section 10 shall be priced at least 50% of the Fair
Market Value of the Stock on the date of grant.
SECTION 11. Change in Control Provisions
----------------------------------------
(a) Impact of Event. In the event of a "Change in Control" as defined in
Section 11 (b), unless otherwise decided by the Committee, the following
acceleration and valuation provisions shall apply:
(i) Any Stock Appreciation Rights (including, without limitation,
any Limited Appreciation Rights) outstanding for at least six months and any
Stock Options awarded under the Plan not previously exercisable and vested shall
become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock, Deferred Stock, Stock Purchase rights and Other Stock-Based
Awards, in each case to the extent not already vested under the Plan, shall
lapse and such shares and awards shall be deemed fully vested.
13
(iii) The value of all outstanding Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights and Other
Stock-Based Awards, in each case to the extent vested, shall, unless otherwise
determined by the Committee in its sole discretion at or after grant but prior
to any Change in Control, be cashed out on the basis of the "Change in Control
Price" as defined in Section 11(d) as of the date such Change in Control is
determined to have occurred or such other date as the Committee may determine
prior to the Change in Control.
(b) Definition of "Change in Control". For purposes of Section 11(a), a
"Change in Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d) of the Exchange Act but excluding the Company and any
Subsidiary and any employee benefit plan sponsored or maintained by the Company
or any Subsidiary (including any trustee of such plan acting as trustee),
directly or indirectly, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act, as amended from time to time), of securities of
the Company representing 20 percent or more of the combined voting power of the
Company's then outstanding securities;
(ii) When, during any period of 24 consecutive months during the
existence of the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority thereof, provided, however, that a
director who was not a director at the beginning of such 24-month period shall
be deemed to have satisfied such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of this Section
11(b)(ii); or
(iii) The occurrence of a transaction requiring stockholder approval
for the acquisition of the Company by an entity other than the Company or a
Subsidiary through purchase of assets, or by merger, or otherwise.
(c) Change in Control Price. For purposes of this Section 11, "Change in
Control Price" means the highest price per share bid in any transaction reported
on the NASDAQ System, or paid or offered in any bona fide transaction related to
a Change in Control of the Company at any time during the 60 day period
immediately preceding the occurrence of the Change in Control, in each case as
determined by the Committee except that, in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on transactions reported for the date on which the optionee
exercises such Stock Appreciation Rights (or Limited Stock Appreciation Rights)
or, where applicable, the date on which a cashout occurs under Section 11
(a)(iii).
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SECTION 12. Amendment and Termination
-------------------------------------
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's stockholders, would cause the Plan to no longer comply with Rule 16b-3
under the Exchange Act or any successor rule or other regulatory requirements.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules.
SECTION 13. Unfunded Status of Plan
-----------------------------------
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that, unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
SECTION 14. General Provisions
------------------------------
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or other award under the Plan to represent and to agree with the
Company in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable Federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
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(b) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the Company,
or make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Stock, including Stock that is part
of the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company and its Subsidiaries and Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment or
any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Stock (or in Deferred Stock or other types of Plan
awards) at the time of any dividend payment shall be permissible only if
sufficient shares of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Stock Options, Stock Purchase Rights and
other Plan awards).
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
SECTION 15. Effective Date of Plan
----------------------------------
The Plan shall be effective as of July 1, 1999, subject to the approval of
the Plan by a majority of the votes cast by the holders of the Stock at the next
annual stockholder's meeting in 1999. Any grants made under the Plan prior to
such approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned on, and subject to,
such approval of the Plan by such shareholders.
SECTION 16. Term of Plan
------------------------
No Stock Option, Stock Appreciation Right, Restricted Stock award,
Deferred Stock award, Stock Purchase Right or Other Stock-Based Award shall be
granted pursuant to the Plan on or after the tenth anniversary of the date of
stockholder approval, but awards granted prior to such tenth anniversary may
extend beyond that date.
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