SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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CONCUR TECHNOLOGIES, INC
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
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[GRAPHIC OMITTED]
January 25, 2002
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Concur Technologies, Inc., (the "Company") which will be held at the Harbor
Club, 777 108th Avenue NE, Bellevue, Washington, at 11:00 a.m. local time on
Wednesday, March 6, 2002.
Details of the business to be conducted at the meeting are given in the
attached Notice of Annual Meeting and Proxy Statement.
It is important that you use this opportunity to take part in the affairs
of the Company by voting on the business to come before the meeting. If you do
not plan to attend the meeting, please complete, sign, date, and return the
enclosed proxy in the accompanying reply envelope. You may also submit your
proxy via the Internet or telephone as specified in the accompanying Internet
and telephone voting instructions. If you decide to attend the meeting and wish
to change your proxy vote, you may do so automatically by voting in person at
the meeting.
We look forward to seeing you at the meeting.
Sincerely,
/s/ S. Steven Singh
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S. Steven Singh
President, Chief Executive Officer
and Chairman of the Board
CONCUR TECHNOLOGIES, INC.
6222 185th Avenue NE
Redmond, WA 98052
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 6, 2002
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The Annual Meeting of Stockholders of Concur Technologies, Inc. (the
"Company") will be held at the Harbor Club, 777 108th Avenue NE, Bellevue,
Washington, at 11:00 a.m. local time on Wednesday, March 6, 2002, for the
following purposes:
1. To elect two Class III members of the Company's Board of Directors to
serve for a three-year term as more fully described in the accompanying
proxy statement.
2. To approve an amendment to the Company's 1998 Equity Incentive Plan to
increase the number of shares reserved for issuance thereunder.
3. To approve an amendment to the Company's 1998 Directors Stock Option
Plan to increase the number of shares reserved for issuance thereunder.
4. To transact such other business as may properly come before the meeting.
The foregoing items of business are more fully described in the proxy
statement accompanying this Notice. Only stockholders of record at the close of
business on January 25, 2002 are entitled to notice of and to vote at the
meeting or any adjournment or postponement thereof. A complete list of
stockholders entitled to vote at the meeting will be open to the examination of
any stockholder, for any purpose relevant to the meeting, at the Company's
offices at 6222 185th Avenue NE, Redmond, Washington, during the Company's
ordinary business hours for ten days before the meeting.
By Order of the Board of Directors of
the Company
/s/ S. Steven Singh
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S. Steven Singh
President, Chief Executive Officer
and Chairman of the Board
Redmond, Washington
January 25, 2002
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YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, please complete, sign,
date, and promptly return the accompanying proxy card in the enclosed
postage-paid return envelope so that your shares may be represented at the
meeting. You may also submit your proxy via the Internet or telephone as
specified in the accompanying Internet and telephone voting instructions.
This will ensure the presence of a quorum at the meeting and save the
expense and extra work of additional solicitation. Sending your proxy card
will not prevent you from attending the meeting, revoking your proxy, and
voting your stock in person.
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CONCUR TECHNOLOGIES, INC.
6222 185th Avenue NE
Redmond, WA 98052
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PROXY STATEMENT
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The accompanying proxy is solicited on behalf of the Board of Directors of
Concur Technologies, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders of the Company (the "Meeting"), to be held
at the Harbor Club, 777 108th Avenue NE, Bellevue, Washington, at 11:00 a.m.
local time on Wednesday, March 6, 2002, and at any adjournments or
postponements thereof. The mailing address of the Company is 6222 185th Avenue
NE, Redmond, Washington 98052.
This proxy statement and the accompanying Notice of Annual Meeting and
proxy are first being sent to stockholders on or about February 4, 2002.
Stockholders are encouraged to review the information provided in this proxy
statement in conjunction with the Company's Annual Report to Stockholders for
the fiscal year ended September 30, 2001, a copy of which also accompanies this
proxy statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Voting
The Company's common stock ("Common Stock") is the only type of security
entitled to vote at the Meeting. On January 25, 2002, the record date ("Record
Date") for determining stockholders entitled to vote at the Meeting, there were
25,847,480 shares of Common Stock outstanding. Each stockholder of record on
the Record Date is entitled to one vote for each share of Common Stock held by
such stockholder on that date. A majority of the outstanding shares of Common
Stock must be present or represented at the Meeting in order to have a quorum
for the conduct of business.
The election of the Company's directors requires a plurality of the votes
represented in person or by proxy at the Meeting. Approval of Proposals 2 and 3
requires more votes in favor of adoption of the proposals than against
adoption. Votes cast by proxy or in person at the Meeting will be tabulated by
the inspector of elections appointed for the Meeting.
Abstentions are considered as shares present and entitled to vote and
therefore will have the same effect as a vote against a matter presented at the
meeting. Brokers who hold shares in street name for customers have the
authority to vote on some matters and not others; when brokers have not
received discretionary voting authority with respect to a matter, those shares
will be considered shares not entitled to vote with respect to such matters,
but will be counted toward the establishment of a quorum.
Voting Electronically via the Internet or Telephone
In addition to voting in person or by returning the enclosed proxy card,
stockholders whose shares are registered directly with Wells Fargo Shareowner
Services may vote either via the Internet or by calling Wells Fargo Shareowner
Services. Specific instructions to be followed by any registered stockholder
interested in voting via the Internet or telephone are set forth on the
enclosed proxy card. The Internet and telephone voting procedures are designed
to authenticate the stockholder's identity and to allow stockholders to vote
their shares and confirm that their instructions have been properly recorded.
If your shares are registered in the name of a bank or brokerage you may
be eligible nonetheless to vote your shares electronically over the Internet or
by telephone. A large number of banks and brokerage firms are participating in
the ADP Investor Communication Services online program, which provides eligible
stockholders who receive a paper copy of the annual report and proxy statement
the
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opportunity to vote via the Internet or by telephone. If your bank or brokerage
firm is participating in ADP's program, your voting form from the bank or
brokerage will provide instructions. If your voting form does not reference
Internet or telephone information, please complete and return the paper proxy
card in the self-addressed, postage paid envelope provided.
Proxies
Whether or not you are able to attend the Meeting, you are urged to vote
your proxy, which is solicited by the Company's Board of Directors and which
will be voted as you direct on your proxy when properly completed. In the event
no directions are specified in the return proxy, it will be voted FOR the
director nominees identified in Proposal No. 1, FOR Proposal Nos. 2 and 3 and,
in the discretion of the proxy holders, as to other matters that may properly
come before the Meeting. You may revoke or change your proxy at any time before
the Meeting. To do this, send a written notice of revocation or another signed
proxy with a later date to the Secretary of the Company at the Company's
principal office before the beginning of the Meeting. You may also revoke your
proxy by attending the Meeting and voting in person.
Solicitation of Proxies
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this proxy statement, the proxy,
and any additional solicitation materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others,
so that they may forward such solicitation materials to those beneficial
owners.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
The Company's Board of Directors is divided into three classes: Class I,
Class II, and Class III. Each director serves for a term ending at the third
annual meeting of stockholders following the annual meeting at which he was
elected, except that any director appointed by the Board serves for a term
ending at the annual meeting of stockholders for the class to which the
director was appointed. Each director serves until his successor is elected and
qualified or until his earlier death, resignation, or removal.
Information is provided below with respect to the nominees for director.
The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominees listed below unless otherwise instructed. In
the event any nominee is unable or declines to serve as a director at the time
of the Meeting, the proxies will be voted for any nominee who may be designated
by the present Board of Directors to fill the vacancy. Each nominee for
director has consented to serve as such if elected by the stockholders. The
nominees receiving the highest number of affirmative votes of the shares
entitled to vote at the Meeting will be elected members of the Board of
Directors, to serve for the terms to which they were elected and until their
successors have been elected and qualified. Stockholders may not cumulate votes
in the election of directors.
Nominees for Election--Class III Directors (Term to expire in 2005)
Michael W. Hilton, age 37, co-founded the Company in 1993, and serves as
its Chief Technology Officer. Mr. Hilton has served as Chairman of the Board of
Directors from 1996 until September 1999, and has been a director of the
Company since 1993. Before co-founding the Company, he served as Senior
Development Manager at Symantec Corporation during 1993. Prior to his
employment at Symantec, he served as Director of Product Development for
Contact Software International, a personal computer software publisher, which
was acquired by Symantec. Mr. Hilton holds a B.A. degree in Computer and
Information Sciences and a B.S. degree in Mathematics from the University of
California, Santa Cruz.
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Norman A. Fogelsong, age 50, has been a director of the Company since
1996. He has been a General Partner of Institutional Venture Partners, a
venture capital firm, since 1989. Mr. Fogelsong holds a B.S. degree in
Industrial Engineering from Stanford University, an M.B.A. degree from Harvard
Business School, and a J.D. degree from Harvard Law School. Mr. Fogelsong is a
member of the board of directors of Aspect Communications Corporation, a
business communications software company.
Continuing Class I Directors (Term to expire in 2003)
S. Steven Singh, age 40, has served as the Company's President and Chief
Executive Officer since 1996, and as a director since 1993, including service
as Chairman of the Board of Directors since September 1999. From 1993 to 1996,
Mr. Singh was General Manager of the Contact Management Division at Symantec
Corporation, a computer software and services company. From 1992 to 1993, he
was Vice President of Development for Contact Software International, a
personal computer software publisher, which was acquired by Symantec in June
1993. Mr. Singh holds a B.S. degree in Electrical Engineering from the
University of Michigan.
Russell P. Fradin, age 46, has been a director of the Company since March
1999. Since October 1996 he has served in various capacities with Automatic
Data Processing, Inc., a provider of computerized business services, most
recently as President of Employer Services, North America. Prior to joining
ADP, Mr. Fradin was a senior partner of McKinsey & Co., a management consulting
firm, and was associated with that firm for 18 years. Mr. Fradin holds a B.S.
degree in Economics and Finance from the University of Pennsylvania, and an
M.B.A. degree from Harvard Business School.
Continuing Class II Directors (Term to expire in 2004)
Michael J. Levinthal, age 47, has been a director of the Company since
April 1998. Since 1984, he has been both a General Partner and a Managing
Director of various venture capital funds affiliated with Mayfield Fund, a
venture capital firm. Mr. Levinthal holds a B.S. degree in Engineering, an M.S.
degree in Industrial Engineering and an M.B.A. degree from the Graduate School
of Business at Stanford University. Mr. Levinthal is a member of the board of
directors of webMethods, Inc., a provider of integration software to enterprise
customers.
William P. Hannon, age 53, has been a director of the Company since
February 2001. Since 2000, he has served as the Managing Director for Citigroup
Business Services, the shared services provider for Citigroup Inc. and its
affiliates. In addition, he is the Controller of Citigroup. From 1996 to 2000,
Mr. Hannon served as Chief Financial Officer for Travelers Property Casualty
Corp., a subsidiary of Citigroup. Prior to that, Mr. Hannon was a partner at
KPMG, where he served in various capacities, including Deputy Managing Partner
for the firm's Financial Services Practice and as a member of the firm's SEC
Reviewing Partners Committee. He was associated with that firm for 27 years.
Mr. Hannon holds a B.B.A. degree in Accounting from Manhattan College.
Board of Directors Meetings and Committees
During fiscal 2001, the Board of Directors held 11 meetings. During this
period, each incumbent director attended or participated in at least 75% of the
aggregate of (i) the total number of meetings of the Board of Directors (held
during the time period for which each such director served on the Board of
Directors) and (ii) the total number of meetings held by all Committees of the
Board of Directors on which each such director served.
The Company's Board of Directors has two standing Committees: the Audit
Committee and the Compensation Committee.
The Audit Committee meets with the Company's independent auditors to
review the adequacy of the Company's internal control systems and financial
reporting procedures, reviews the general scope of the annual audit and the
fees charged by the independent auditors, and reviews and makes recommendations
to the Board of Directors regarding the fairness of any proposed transaction
between the Company and any of its officers, directors, or other affiliates.
The Audit Committee, which met three times in fiscal 2001, currently consists
of Messrs. Hannon, Fogelsong, and Levinthal.
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The Compensation Committee makes decisions regarding all forms of salary,
bonus, and stock compensation provided to executive officers of the Company,
the long-term strategy for employee compensation, the types of stock and other
compensation plans to be used by the Company and the shares and amounts
reserved thereunder, and such other compensation matters as may from time to
time be directed by the Board of Directors. The Compensation Committee, which
met two times in fiscal 2001, currently consists of Messrs. Fogelsong and
Fradin.
Director Compensation
Members of the Board of Directors receive a cash stipend of approximately
$12,000 per year for their services as directors, and are reimbursed for their
reasonable travel expenses in attending Board and committee meetings. Directors
who are not Company employees are eligible to receive periodic option grants
under the Company's 1998 Directors Stock Option Plan. Each eligible director is
automatically granted an option for 50,000 shares on the date he first becomes
a member of the Board of Directors, and, if he has served as a director
continuously since the date of his original option grant, the director is
automatically granted an option to purchase 20,000 shares on the date of each
annual meeting of stockholders. Each such director is also eligible to receive
additional option grants under the Company's 1998 Directors Stock Option Plan.
All options under the 1998 Directors Stock Option Plan vest as to 25% of
the total shares granted on the first anniversary of the grant date, and as to
1/48th of the total shares granted on each subsequent monthly anniversary of
the grant date, with exercise prices equal to the fair market value of the
Common Stock on the date of grant. Options cease to vest if the individual
ceases to provide services to the Company either as a director or consultant.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the election of each
nominated director.
PROPOSAL NO. 2
AMENDMENT TO THE 1998 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's 1998
Equity Incentive Plan (the "1998 Plan") to increase the number of shares of
Common Stock reserved for issuance thereunder by 1,200,000 shares, from
6,290,000 to 7,490,000.
The Board believes that the increase in the number of shares reserved for
issuance under the 1998 Plan is in the best interests of the Company because of
the continuing need to provide stock options to attract and retain quality
employees. Competition for skilled software engineers and other key employees
in the software and high technology industries is intense and the use of
significant stock options for retention and motivation of such personnel is
pervasive in the software and high technology industries. The Board believes
that the proposed authorization of additional shares for issuance under the
1998 Plan will provide the Company with additional flexibility to facilitate
the expansion and retention of its workforce.
The Board approved the proposed amendment as of January 18, 2002, to be
effective upon stockholder approval. The principal provisions of the 1998 Plan,
assuming stockholder approval of the amendment, are summarized below. The
summary is not necessarily complete, and you are encouraged to refer to the
full text of the 1998 Plan.
Description of the 1998 Equity Incentive Plan
The Board of Directors adopted the 1998 Plan in August 1998, and the
stockholders approved it in September 1998. The Plan became effective in
December 1998, and serves as the successor to the Company's 1994 Stock Option
Plan (the "1994 Plan").
3,240,000 shares of Common Stock were originally reserved for issuance
under the 1998 Plan. This amount was increased by 2,000,000 shares, to
5,240,000 shares, pursuant to stockholder approval
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at the 2000 Annual Meeting of Stockholders, and was increased by 1,050,000
shares, to 6,290,000 shares, pursuant to stockholder approval at the 2001
Annual Meeting of Stockholders. Also available for issuance under the 1998 Plan
are any shares that:
o remained available for issuance under the 1994 Plan when the 1998 Plan
became effective;
o were subject to options granted under the 1998 Plan, or the 1994 Plan,
that expire or terminate for any reason without being exercised;
o are issued pursuant to an option under the 1998 Plan, or the 1994 Plan,
that the Company repurchases upon termination of the option holder's
employment;
o are issued under a restricted stock award under the 1998 Plan that the
Company repurchases or that are forfeited upon the termination of the
award holder's employment; or
o are subject to a stock bonus award under the 1998 Plan that terminates
without shares being issued.
As of January 10, 2002, options to purchase an aggregate of 5,319,896
shares of Common Stock had been granted under the 1998 Plan (of which, options
to purchase 9,758 shares had been exercised) and 1,588,859 shares remained
available for grant. The proposed amendment to the 1998 Plan would increase the
number of shares of Common Stock reserved for issuance thereunder by 1,200,000
shares, from 6,290,000 to 7,490,000.
The 1998 Plan authorizes the award of incentive stock options,
non-qualified stock options, restricted stock awards, and stock bonuses.
Incentive stock options may be granted only to Company employees, including
officers and directors who are also employees. All other awards may be granted
to Company employees, officers, directors, consultants, independent
contractors, and advisors, subject to applicable federal securities laws. The
exercise price of incentive stock options must be at least equal to the fair
market value of the Common Stock on the date of grant. As of January 10, 2002,
366 persons were eligible to participate in the 1998 Plan. The exercise price
of non-qualified stock options must be equal to at least 85% of the fair market
value of the Common Stock on the date of grant. On January 10, 2002, the
closing price of the Common Stock was $2.97 per share. The maximum term of
options granted under the 1998 Plan is ten years. The 1998 Plan will terminate
in August 2008, unless it is terminated sooner in accordance with its terms.
No person will be eligible to receive more than 1,200,000 shares of the
Company's Common Stock in any calendar year under the 1998 Plan pursuant to any
grant of awards, other than new employees of the Company or of a parent or
subsidiary of the Company (including new employees who are also officers and
directors of the Company or any parent or subsidiary of the Company), who are
eligible to receive up to a maximum of 1,500,000 shares of the Company's Common
Stock in the calendar year in which they commence their employment.
Awards granted under the 1998 Plan generally may not be transferred other
than by will or by the laws of descent and distribution. In the event of the
Company's dissolution or liquidation or a "change in control" transaction,
outstanding awards may be assumed by the successor corporation. If the
successor corporation does not assume outstanding awards, they will expire. In
the discretion of the Compensation Committee, the vesting of such awards may
accelerate upon such transaction.
Administration
The 1998 Plan is administered by the Compensation Committee, which
currently consists of Mr. Fogelsong and Mr. Fradin, both of whom are
"non-employee directors" under Rule 166-3 under the Securities Exchange Act and
"outside directors" as defined under Section 162(m) of the Internal Revenue
Code. The Compensation Committee has the authority to construe and interpret
the 1998 Plan and any agreement made thereunder, to grant awards and to make
all other determinations necessary or advisable for the administration of the
1998 Plan.
The Compensation Committee in its discretion may permit payment for stock
options or restricted stock in cash, with full-recourse promissory notes,
waiver of compensation due, or "same day sales" in connection with option
exercises.
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The Compensation Committee may also guarantee third-party loans in order
to help recipients of stock option grants or restricted stock awards pay the
exercise price or purchase price of those options or awards.
The Compensation Committee also administers the Company's 1999 Stock
Incentive Plan, under which non-qualified stock options may be granted on terms
substantially the same as those under the 1998 Plan. As of January 10, 2002,
options to purchase an aggregate of 1,096,999 shares of Common Stock had been
granted under the 1999 Stock Incentive Plan (of which, no options to purchase
shares had been exercised) and 403,001 shares remained available for grant.
Federal Income Tax Information
The following is a general summary as of the date of this proxy statement
of the federal income tax consequences to the Company and participants under
the 1998 Plan. The federal tax laws may change and the federal, state, and
local tax consequences for any participant will depend upon his or her
individual circumstances. Each participant has been and is encouraged to seek
the advice of a qualified tax advisor regarding the tax consequences of
participation in the 1998 Plan.
Incentive Stock Options ("ISO")
A Participant will recognize no income upon grant of an ISO and will incur
no tax on its exercise (unless the Participant is subject to the alternative
minimum tax as described below). If the Participant holds shares acquired upon
exercise of an ISO (the "ISO Shares") for more than one year after the date the
ISO was exercised and for more than two years after the date the ISO was
granted, the Participant generally will realize capital gain or loss (rather
than ordinary income or loss) upon disposition of the ISO Shares. This gain or
loss will be equal to the difference between the amount realized upon such
disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of
either required holding period (a "disqualifying disposition"), then the gain
realized upon such disposition, up to the difference between the exercise price
and the fair market value of the ISO Shares on the later of the date of
exercise or the date of vesting (or, if less, the amount realized on a sale of
such ISO Shares) and the option exercise price, will be treated as ordinary
income. Any additional gain will be capital gain.
Alternative Minimum Tax
The difference between the fair market value of the ISO Shares on the date
of exercise and the exercise price for such shares is an adjustment to income
for purposes of the alternative minimum tax ("AMT"). The AMT (imposed to the
extent it exceeds the taxpayer's regular income tax) is 26% of the portion of
an individual taxpayer's alternative minimum taxable income (28% of that
portion in the case of alternative minimum taxable income in excess of
$175,000). A maximum 20% AMT rate applies to the portion of alternative minimum
taxable income that would otherwise be taxable as net capital gain. Alternative
minimum taxable income is determined by adjusting regular taxable income for
certain items, increasing that income by certain tax preference items
(including the difference between the fair market value of the ISO Shares on
the date of exercise and the exercise price), and reducing this amount by the
applicable exemption amount ($49,000 in case of a joint return, subject to
reduction under certain circumstances). If a disqualifying disposition of the
ISO Shares occurs in the same calendar year as exercise of the ISO, there is no
AMT adjustment with respect to those ISO Shares. Also, upon a sale of ISO
Shares that is not a disqualifying disposition, alternative minimum taxable
income is reduced in the year of sale by the excess of the fair market value of
the ISO Shares at exercise over the amount paid for the ISO Shares.
Nonqualified Stock Options ("NQSO")
A Participant will not recognize any taxable income at the time an NQSO is
granted. However, upon exercise of an NQSO, the Participant must include in
income as compensation an amount equal to the difference between the fair
market value of the purchased shares on the date of exercise and
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the Participant's exercise price for these shares. The included amount must be
treated as ordinary income by the Participant and may be subject to withholding
by the Company (either by payment in cash or withholding out of the
Participant's salary). Upon resale of the shares by the Participant, any
subsequent appreciation or depreciation in the value of the shares will be
treated as capital gain or loss.
Restricted Stock and Stock Bonus Awards
Restricted stock and stock bonus awards will generally be subject to tax
at the time of receipt, unless there are restrictions that enable the
Participant to defer tax. At the time the tax is incurred, the tax treatment
will be similar to that discussed above for NQSOs.
Maximum Tax Rates
The maximum tax rate currently applicable to ordinary income is 39.6%.
Long-term capital gain will be taxed at a current maximum rate of 20%. For this
purpose, in order to receive long-term capital gain treatment, the shares must
be held for more than 12 months. Capital gains may be offset by capital losses
and up to $3,000 of capital losses may be offset annually against ordinary
income.
Tax Treatment of the Company
The Company generally will be entitled to a deduction in connection with
the exercise of an NQSO by a Participant or the receipt of restricted stock or
stock bonuses by a Participant to the extent that the Participant recognizes
ordinary income, provided that the Company timely reports such income to the
Internal Revenue Service. The Company will be entitled to a deduction in
connection with the disposition of ISO Shares only to the extent that the
Participant recognizes ordinary income on a disqualifying disposition of the
ISO Shares.
ERISA
The 1998 Plan is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 and is not qualified under Section
401(a) of the Code.
Recommendation of the Board
The Board of Directors recommends a vote FOR the amendment to the 1998
Equity Incentive Plan.
PROPOSAL NO. 3
AMENDMENT TO THE 1998 DIRECTORS STOCK OPTION PLAN
Stockholders are being asked to approve an amendment to the Company's 1998
Directors Stock Option Plan (the "Directors Plan") to increase the number of
shares of Common Stock reserved for issuance thereunder by 200,000 shares, from
440,000 to 640,000.
The Board believes that the increase in the number of shares reserved for
issuance under the Directors Plan is in the best interests of the Company. The
primary purpose of the Directors Plan is to provide additional incentives to
attract and retain quality directors who are not employees of the Company or
certain of its affiliates by encouraging their stock ownership in the Company.
The Board of Directors regards the number of shares presently available for
grant under the Directors Plan as insufficient to carry out the purposes of the
Directors Plan in the future, and believes that the availability of additional
shares is important to the future success and growth of the Company. The Board
of Directors has not made any determinations as to the grant of any options
which would be covered by the proposed amendment to the Directors Plan.
The Board approved the proposed amendment as of January 18, 2002, to be
effective upon stockholder approval. A summary of the principal provisions of
the Directors Plan, assuming stockholder approval of the amendment, is provided
below. The summary is not necessarily complete, and you are encouraged to refer
to the full text of the Directors Plan.
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Description of the 1998 Directors Stock Option Plan
The Board of Directors originally adopted the Directors Plan in August
1998, and the stockholders approved it in September 1998. The plan became
effective in December 1998.
240,000 shares of Common Stock were originally reserved for issuance under
the Directors Plan. This amount was increased by 200,000 shares, to 440,000
shares, pursuant to stockholder approval at the 2001 Annual Meeting of
Stockholders. Upon the expiration, cancellation, or termination of unexercised
options, the shares of the Company's Common Stock subject to such options will
again be available for the grant of options under the Directors Plan. As of
January 10, 2002, options to purchase an aggregate of 294,000 shares of Common
Stock had been granted under the Directors Plan (of which, no options to
purchase shares had been exercised) and 146,000 shares remained available for
grant. The proposed amendment to the Directors Plan would increase the number
of shares of Common Stock reserved for issuance thereunder by 200,000 shares,
from 440,000 to 640,000.
The Directors Plan authorizes the grant of options to purchase shares of
the Company's Common Stock only to directors of the Company who are not
employees of the Company or certain of its affiliates, subject to applicable
federal securities laws. The Directors Plan authorizes the award of
non-qualified stock options only. Under the Directors Plan, on the date that a
qualifying director first becomes a director of the Company, the director is
automatically granted an option to purchase 50,000 shares of Common Stock. At
each Annual Meeting of Stockholders the Company thereafter, the qualifying
director is automatically granted an option to purchase an additional 20,000
shares of Common Stock, so long as he or she continuously serves as a member of
the Board of Directors. Each qualifying director may receive additional option
grants as set forth in the Company's 1998 Directors Stock Option Plan. All
options under the Directors Plan vest as to 25% of the total shares granted on
the first anniversary of the date of grant, and as to 1/48th of the total
shares granted on each subsequent monthly anniversary of the grant date. The
exercise price of such options must be equal to at least the fair market value
of the Common Stock on the date of grant. The maximum term of options granted
under the Directors Plan is ten years. The Directors Plan will terminate in
August 2008, unless it is terminated sooner in accordance with the terms of the
Directors Plan.
Options granted under the Directors Plan generally may not be transferred
other than by will or by the laws of descent and distribution. In the event of
the Company's dissolution or liquidation or a "change in control" transaction,
the vesting of all outstanding options granted pursuant to the Directors Plan
will accelerate and the options will become exercisable in full prior to the
consummation of such transaction, subject to conditions set forth in the
Directors Plan.
Administration
The Directors Plan currently is administered by the Compensation
Committee, which currently consists of Mr. Fogelsong and Mr. Fradin, both of
whom are "non-employee directors" under Rule 166-3 under the Securities
Exchange Act and "outside directors" as defined under Section 162(m) under the
Internal Revenue Code. The Compensation Committee has the authority to construe
and interpret the Directors Plan and any agreement made thereunder, to grant
awards and to make all other determinations necessary or advisable for the
administration of the Directors Plan. The Compensation Committee may, with the
consent of optionees, issue new options in exchange for the surrender and
cancellation of any outstanding options.
The Compensation Committee in its discretion may permit payment for stock
options in cash, with full-recourse promissory note, waiver of compensation
due, or "same day sales" in connection with option exercise.
Federal Income Tax Treatment
Please refer to the discussion of the federal income tax consequences
relating to NQSOs under the section of this proxy statement entitled "Proposal
2: Amendment to the 1998 Equity Incentive Plan."
8
Recommendation of the Board
The Board of Directors recommends a vote FOR the amendment to the 1998
Directors Stock Option Plan.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Meeting. However, if other matters do properly come
before the Meeting or any adjournments or postponements thereof, the Board of
Directors intends that the persons named in the proxies will vote upon such
matters in accordance with their best judgment.
EXECUTIVE OFFICERS
In addition to the executive officers who are members of the Board of
Directors, the following individuals are executive officers of the Company:
Stephen A. Yount, age 44, joined the Company in June 2000 and currently
serves as its Chief Operating Officer. From June 2000 to January 2001, he
served as its Executive Vice President of Operations and Chief Financial
Officer. From January 2000 to June 2000, he served as Executive Vice President
and Chief Financial Officer of mediapassage.com, an e-Services business for
advertising media. From October 1991 to January 2000, Mr. Yount was Executive
Vice President and Chief Financial Officer of INTERLINQ Software, an enterprise
software developer. Mr. Yount has nearly 20 years of financial and operational
management experience.
Rajeev Singh, age 33, co-founded the Company in 1993 and currently serves
as its Executive Vice President of Sales, Marketing, and Services. From 1991 to
1993, he served as Software Project Manager for the development of complex
computer simulations at Ford Motor Company. From 1986 to 1990, Mr. Singh served
as a Software and Manufacturing Engineer at General Motors Corporation.
John F. Adair, age 37, joined the Company in May 2000 and currently serves
as its Chief Financial Officer. From May 2000 to January 2001, he served as its
Vice President of Finance and Operations. From May 1997 to April 2000, he
served as Controller for PACCAR Financial and PACCAR Leasing, affiliates of
PACCAR, Inc., the parent company for Kenworth and Peterbilt trucks. From April
1993 to April 1997, Mr. Adair served as Senior Vice President of Finance for
ValliCorp Holdings and ValliWide Bank.
Kyle R. Sugamele, age 39, joined the Company in August 2000 as its Vice
President and General Counsel. From July 1995 to August 2000, Mr. Sugamele
served as Vice President, General Counsel, and Corporate Secretary at Cellular
Technical Services Company, Inc., a provider of software solutions for the
wireless telecommunications industry. From 1991 to 1995, Mr. Sugamele practiced
law at the firm of Mundt MacGregor LLP in Seattle. Prior to that time, Mr.
Sugamele practiced law at the firm of Graham & Dunn PC in Seattle.
Scott E. Schwisow, age 38, joined the Company in April 1996 and currently
serves as its Vice President of ASP Operations, with responsibility for all
operations, hosting, and client service for the Company's growing ASP customer
base. Prior to joining the Company, Mr. Schwisow was a Regional Consulting
Manager for Epicor Software Corporation, an enterprise software company. Prior
to that, Mr. Schwisow managed his own consulting business focused on financial
system design and implementation after working with Andersen Consulting for a
period of five years.
Simon Nelson, age 42, joined the Company in May 1999 and currently serves
as its Vice President and General Manager of EMEA Operations, based in
Amersham, Buckinghamshire, United Kingdom. From October 1996 to April 1999, Mr.
Nelson was European Professional Services Director for Epicor Software
Corporation, an enterprise software company. Mr. Nelson has over 20 years
experience in working in the European software industry, during which has held
senior management positions for such companies as JBA and Apple Computer.
9
OWNERSHIP OF SECURITIES
Table of Beneficial Ownership
The following table sets forth, as of January 18, 2002 (except as
otherwise indicated in the footnotes below), information with respect to the
beneficial ownership of the Company's Common Stock by: (i) each person known by
the Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock; (ii) each director of the Company; (iii) the Chief
Executive Officer and each of the other four most highly-compensated executive
officers of the Company who served as executive officers as of September 30,
2001 and who received salary and bonus in excess of $100,000 during fiscal 2001
(collectively, the "Named Executive Officers"); and (iv) all current directors
and executive officers of the Company as a group.
Amount and Nature Percent of
of Beneficial Outstanding
Name and Address of Beneficial Owner Ownership(1) Shares(1)
- -------------------------------------------------------------------- ------------------- ------------
Norman A. Fogelsong
Institutional Venture Partners VII, L.P. and affiliates ......... 2,231,200(2) 8.6%
S. Steven Singh .................................................. 1,419,438(3) 5.4
Michael W. Hilton ................................................ 1,067,654(4) 4.1
Michael J. Levinthal ............................................. 374,606(5) 1.4
Rajeev Singh ..................................................... 360,082(6) 1.4
Stephen A. Yount ................................................. 142,500(7) *
Simon Nelson ..................................................... 26,238(8) *
Russell P. Fradin ................................................ 16,833(9) *
William P. Hannon ................................................ 10,000(10) *
All current directors and executive officers as a group (12
persons) ........................................................ 5,788,345(11) 21.4%
- ----------
* Less than 1%
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and sole investment power with respect to all shares of
Common Stock. The number of shares beneficially owned includes Common
Stock of which such individual has the right to acquire beneficial
ownership upon the exercise of an option or warrant on or before November
29, 2001 (i.e., within 60 days after September 30, 2001, the Company's
fiscal year end).
(2) Represents 10,000 shares owned directly by Mr. Fogelsong, and 18,917
shares subject to options exercisable by Mr. Fogelsong on or before
November 29, 2001. Also represents 2,092,961 shares owned by
Institutional Venture Partners VII, L.P. ("IVP-VII"), 34,046 shares owned
by Institutional Venture Management VII, L.P. ("IVM-VII"), the general
partner of IVP VII, and 75,276 shares owned by IVP Founders Fund I, of
which Institutional Venture Management VI ("IVM-VI") is the general
partner. Mr. Fogelsong, a director of the Company, is a general partner
of IVM-VI and IVM-VII, and disclaims beneficial ownership of these shares
except to the extent of his actual pecuniary interest, but exercises
shared voting and shared investment power with respect to these shares.
The address for Mr. Fogelsong and all of the above Institutional Venture
Partners entities is 3000 Sand Hill Road, Building 2, Menlo Park, CA
94025.
(3) Includes 856,861 shares owned directly and 562,577 shares subject to
options exercisable on or before November 29, 2001.
(4) Includes 890,486 shares owned directly and 177,168 shares subject to
options exercisable on or before November 29, 2001.
(5) Includes 276,390 shares owned directly, 79,299 shares owned indirectly as
trustee for certain family trusts, and 18,917 shares subject to options
exercisable on or before November 29, 2001.
10
(6) Includes 165,395 shares owned directly and 194,687 shares subject to
options exercisable on or before November 29, 2001.
(7) Includes 20,000 shares owned directly and 122,500 shares subject to
options exercisable on or before November 29, 2001.
(8) Includes 2,405 shares owned directly and 23,833 shares subject to options
exercisable on or before November 29, 2001.
(9) Includes 16,833 shares subject to options exercisable on or before
November 29, 2001.
(10) Includes 10,000 shares owned directly.
(11) Includes 1,224,358 shares subject to options exercisable on or before
November 29, 2001, including options described in the above footnotes.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors
and officers, and any persons who own more than 10% of the Company's Common
Stock, are required under Section 16(a) of the Securities Exchange Act of 1934
to file initial reports of ownership and reports of changes in ownership to the
Securities and Exchange Commission (the "SEC"). Specific due dates have been
established by the SEC, and the Company is required to disclose in this proxy
statement any failure to file by those dates. Based solely upon its review of
the copies of such reports for fiscal 2001 as furnished to the Company and
written representations from the Company's directors and officers, the Company
believes that all directors, officers, and greater-than-10% beneficial owners
have made all required Section 16(a) filings for such fiscal year.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
In 2001, the Board elected to offer the Company's employees the right to
exchange outstanding options to purchase the Company's Common Stock under the
terms of a voluntary stock option exchange program. Competition for key
employees in the software industry is intense and the use of significant stock
options for retention and motivation of such personnel is pervasive in high
technology industries. The Board believes that stock options are a critical
component of the compensation offered by the Company to promote long-term
retention of key employees, motivate high levels of performance and recognize
employee contributions to the success of the Company. The market price of the
Company's Common Stock decreased substantially from a high of $51.625 in April
1999 to a low of $0.3125 in March 2001. In light of this substantial decline in
the market price, large numbers of outstanding stock options had exercise
prices substantially in excess of the market price of Common Stock and
therefore were no longer an effective tool to encourage employee retention or
to motivate high levels of performance. As a result, the Board approved the
stock option exchange program.
The program allowed employees, at their discretion, to cancel for
exchange, before January 4, 2002, unexercised stock options, whether vested or
unvested, with an exercise price equal to or greater than $1.30 per share. In
addition, if an employee elected to participate, any option granted to that
employee within the six months preceding December 3, 2001 was automatically
cancelled, and those cancelled options with an exercise price equal to or
greater than $1.30 per share became eligible for exchange under the program. It
is expected that each participating employee will be granted a new replacement
option to purchase a number of shares equal to two-thirds of the number of
shares subject to the eligible cancelled options at least six months and one
day after the date that the cancelled options are accepted by the Company for
exchange. The Company currently expects the replacement grant date to occur on
or after July 5, 2002. The exercise price of the replacement option will be
equal to the closing price of a share of the Company's common stock as reported
on the Nasdaq National Market on the replacement grant date. Each replacement
option will vest in accordance with a two and one-half year vesting schedule,
with 40% of the new option vesting one year after the new grant date and
3.3334% of the new option vesting monthly thereafter. The new options will
expire ten years from the replacement grant date. Other terms and conditions of
the new options will be substantially similar to those of the cancelled
options.
11
The expiration date for participation in this stock option exchange
program was January 4, 2002. At that time, options to purchase 374,552 shares
were surrendered in the program, of the options to purchase approximately
4,495,000 shares that were eligible to participate. If all participating
optionees are employees of the Company upon issuance of the new options,
options to purchase 249,736 shares will be granted at the new option exercise
price upon the replacement grant date. The members of the Board were not
eligible to participate in the program, and no executive officer elected to
participate in the program.
Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, and the Securities Exchange
Act of 1934 that might incorporate future filings, including this proxy
statement, in whole or in part, the following report and the performance graph
in this document shall not be incorporated by reference in any such filings.
The Compensation Committee acts on behalf of the Board to establish the
Company's general compensation policies for all employees and to determine the
compensation for the Chief Executive Officer and other executive officers. It
also administers the Company's stock plans. Additionally, the Committee is
routinely consulted to approve compensation packages for newly-hired
executives. The Committee's compensation policy for executive officers is
designed to promote continued performance, and to attract, motivate and retain
talented executives responsible for the success of the Company.
Executive Compensation
At the conclusion of each fiscal year the Committee meets with the Chief
Executive Officer to consider executive compensation plans for the next fiscal
year. The Committee determines the compensation levels for the executive
officers by reviewing certain independent information sources as they are
available, and from the recommendations of the Chief Executive Officer.
Executive officers of the Company are paid base salaries in line with
their responsibilities, as determined in the discretion of the Committee.
Executive officers are also eligible to receive incentive cash bonuses based on
achievement of performance targets established at the beginning of the fiscal
year. During fiscal year 2001, the objectives used by the Company as the basis
for incentive bonuses were the achievement of quarterly corporate revenue
goals.
Long-term equity incentives for executive officers and other Company
employees are effected through stock option grants under the Company's 1998
Plan. The Committee believes that equity-based compensation in the form of
stock options links the interests of management and employees with those of the
stockholders. Substantially all of the Company's full-time employees
participate in the 1998 Plan. The number of shares subject to each stock option
granted to executive officers is within the discretion of the Committee and is
based on each executive's position within the Company, past performance,
anticipated future contributions, and prior option grants. Each grant allows
the executive to acquire shares of the Company's Common Stock at a fixed price
per share (the market price on the grant date) in installments generally over a
four-year period. The option grants will provide a return only if the executive
remains with the Company, and only if the market price appreciates over the
option term.
CEO Compensation
The annual base salary for Mr. Singh is reviewed and approved annually by
the Committee, and is based upon the criteria set forth under the discussion of
Executive Compensation above. Mr. Singh's target incentive cash bonus is tied
to corporate revenue goals, achieving designated corporate objectives, and
satisfactorily managing the Company's overall corporate business plan.
COMPENSATION COMMITTEE
Norman A. Fogelsong
Russell P. Fradin
12
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is, or was at any time,
an officer or employee of the Company or any of its subsidiaries. None of the
Company's executive officers serves or has served on the board of directors or
compensation committee of any entity that has one or more executive officers
serving on the Company's board of directors or Compensation Committee during
the most recently completed fiscal year.
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation awarded, earned, or paid
for services rendered in all capacities by the Named Executive Officers for
each of the last three fiscal years.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards(1)
------------------------- -----------------------
Securities Underlying All Other
Year Salary Bonus Options Compensation
------ ----------- ----------- ----------------------- -------------
S. Steven Singh ............... 2001 $250,008 $178,250 0 $ 0
President, Chief Executive 2000 248,077 36,923 175,000 0
Officer, and Chairman of the 1999 250,000 85,000 100,000 0
Board
Stephen A. Yount .............. 2001 $236,579 $134,750 300,000 $ 0
Chief Operating Officer 2000 52,308 0 225,000 0
1999 N/A N/A N/A N/A
Michael W. Hilton ............. 2001 $213,918 $119,750 150,000 $ 0
Chief Technology Officer 2000 165,000 12,500 140,000 0
1999 165,509 99,937 100,000 0
Rajeev Singh .................. 2001 $211,578 $126,253 225,000 $ 0
Executive Vice President of 2000 173,731 32,918 165,000 0
Sales, Marketing, and Services 1999 165,000 50,000 100,000 0
Simon Nelson .................. 2001 $159,765 $117,673 15,000 $ 0
Vice President and General 2000 140,635 46,878 26,000 0
Manager of EMEA Operations 1999 54,200 8,016 27,200 0
- ----------
(1) None of the Named Executive Officers received any restricted stock awards
or long-term incentive plan payouts in fiscal 2001, 2000, or 1999.
13
Stock Options
The following table provides information with respect to stock option
grants made to the Named Executive Officers under the Company's stock option
plans during fiscal 2001.
Table of Option Grants in Fiscal 2001
Individual Grants(1)
-----------------------------------------------------------
Potential Realizable Value
at
% of Assumed Annual Rates of
Number of Total Stock Price Appreciation
Securities Options for
Underlying Granted to Exercise Option Term(5)
Options Employees in Price Per Expiration -------------------------
Name Granted(2) Fiscal 2001(3) Share(4) Date At 5% At 10%
- ---- ------------ ---------------- ----------- ----------- ----------- -----------
S. Steven Singh ........... n/a n/a n/a n/a n/a n/a
Stephen A. Yount .......... 225,000 10.3% $ 1.1094 12/29/10 $156,982 $397,822
Michael W. Hilton ......... 150,000 6.87% $ 1.1094 12/29/10 $104,654 $265,215
Rajeev Singh .............. 225,000 10.3% $ 1.1094 12/29/10 $156,982 $397,822
Simon Nelson .............. 2,200 0.1% $ 1.6250 1/26/11 $ 2,248 $ 5,698
25,000 1.14% $ 0.3750 4/2/11 $ 5,896 $ 14,941
- ----------
(1) No stock appreciation rights were granted to any of the Named Executive
Officers during fiscal 2001.
(2) Except where indicated otherwise, all options granted in fiscal 2001 were
granted pursuant to the 1998 Plan or the Company's 1999 Stock Incentive
Plan and become exercisable with respect to 25% of the shares on the
first anniversary of the date of grant and with respect to an additional
2.0833% options each month thereafter and, in certain cases, subject to
acceleration upon certain changes in control of the Company.
(3) Based on a total of 2,184,777 options granted to all employees during
fiscal 2001.
(4) Options were granted at an exercise price equal to the fair market value
of the Company's Common Stock as of the date of grant.
(5) The potential realizable value is calculated based upon the term of the
option at its time of grant, and by assuming that the aggregate exercise
price appreciates at the indicated annual rate compounded annually for
the entire term of the option, and that the option is exercised and sold
on the last day of its term for the appreciated price. The hypothetical
5% and 10% assumed annual compound rates of stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimates or projections of future Common
Stock prices. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all in future years.
14
Option Exercises in Fiscal 2001
The following table sets forth information with respect to stock option
grants to the Named Executive Officers, including the number of shares of
Common Stock purchased upon exercise of options in fiscal 2001, the net value
realized upon such exercise, the number of unexercised options outstanding on
September 30, 2001 and the value of unexercised "in-the-money" options on
September 30, 2001.
Table of Aggregated Option Exercises and 2001 Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired Value September 30, 2001 September 30, 2001
Name on Exercise Realized(1) Exercisable/Unexercisable(2) Exercisable/Unexercisable(3)
- ---- ------------- ------------- ------------------------------ -----------------------------
S. Steven Singh ........... 0 $0 542,447/112,553 $168,362/$1,438
Stephen A. Yount .......... 0 $0 112,500/412,500 $ 0/$0
Michael W. Hilton ......... 0 $0 171,251/270,749 $ 17,566/$374
Rajeev Singh .............. 0 $0 188,774/363,226 $ 22,766/$374
Simon Nelson .............. 0 $0 21,625/46,575 $ 0/$8,625
- ----------
(1) Based on the market price on day of exercise less the option exercise
price payable per share.
(2) There were no stock appreciation right exercises during fiscal 2001 and
no stock appreciation rights were outstanding at September 30, 2001.
(3) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been realized, and may never be realized. These
values are based on the positive spread between the respective exercise
prices of the outstanding options and the closing price of the Company's
Common Stock on the last business day of fiscal 2001 at $0.72 per share.
A lack of a value in these columns is indicative of a negative spread
between said values, and as such, is not reportable.
Employment Contracts and Change in Control Agreements
The following information is provided with respect to certain
employment-related contracts between the Company and any Named Executive
Officers.
The Company and Stephen A. Yount entered into a letter agreement dated
June 6, 2000 governing his employment with the Company. Under the agreement,
the Company paid Mr. Yount an initial annual salary of $200,000. The
compensation for Mr. Yount subsequently increased. In addition, he was granted
an initial option to purchase 300,000 shares of Common Stock, which is subject
to acceleration in full upon changes in control of the Company.
The Company and Simon Nelson entered into a letter agreement dated May 17,
2001 governing his employment with the Company effective as of such date. Under
the agreement, the Company agreed to pay Mr. Nelson an annual salary of
(pounds sterling)120,000 and to grant an option to purchase 25,000 shares of
Common Stock.
15
AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, and the Securities Exchange
Act of 1934 that might incorporate future filings, including this proxy
statement, in whole or in part, the following report shall not be incorporated
by reference to any such filings.
The Audit Committee presently is composed of three independent directors
and operates under a written charter adopted by the Board of Directors. The
members of the Committee are William P. Hannon, Norman A. Fogelsong, and
Michael J. Levinthal. The Committee recommends to the Board of Directors the
selection of the Company's independent auditors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to
issue a report thereon. The Committee's responsibility is to monitor and
oversee these processes.
In this context, the Committee has met and discussed the fiscal 2001
audited financial statements with management and the independent auditors.
Management represented to the Committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The Committee discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No.61, entitled Communication with
Audit Committees.
The Company's independent auditors also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1,
entitled Independence Discussions with Audit Committees, and the Committee
discussed with the independent auditors that firm's independence.
Based upon the Committee's discussion with management and the independent
auditors and the Committee's review of the representation of management and the
report of the independent auditors to the Committee, the Committee recommended
that the Board include the audited financial statements for fiscal 2001 in the
Company's Annual Report on Form 10-K for the year ended September 30, 2001
filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
William P. Hannon
Norman A. Fogelsong
Michael J. Levinthal
16
INDEPENDENT AUDITOR'S FEES
The Company's stockholders are not being asked to elect, approve or ratify
a principal accountant at this time, as the Company has not formally selected
the principal accountant to audit the Company's financial statements for fiscal
2002 as of the date of this Proxy Statement. We expect that one or more
representatives of Ernst & Young LLP, the Company's independent auditors for
fiscal 2001, will be present at the Annual Meeting of Stockholders, will be
able to make a statement if they wish to do so, and will be able to respond to
appropriate questions.
Audit Fees
In fiscal 2001, the aggregate fees billed by Ernst & Young LLP for its
audit of the Company's financial statements and quarterly reviews were
$174,000.
Financial Information Systems Design and Implementation
In fiscal 2001, there were no fees billed by Ernst & Young LLP for
financial information systems design and implementation services.
All Other Fees
In fiscal 2001, the aggregate fees billed by Ernst & Young LLP for all
other non-audit services were $225,710.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Russell F. Fradin, who is a director of the Company, is employed by
Automatic Data Processing, Inc. In May 2000, the Company and ADP, Inc. ("ADP"),
an affiliate of Automatic Data Processing, Inc., entered into a joint marketing
and sales representation agreement. Under the agreement, the Company and ADP
formed an alliance for strategic marketing and sales of the Company's business
travel and entertainment expense management product. The Company believes that
the terms of this agreement with ADP, taken as a whole, is no less favorable to
the Company than the Company could have obtained from unaffiliated third
parties.
17
STOCK PERFORMANCE GRAPH
General
The stock price performance graph below is required by the SEC and should
not be deemed to be incorporated by reference in any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed to be soliciting material or filed
under such acts.
The graph compares (i) the cumulative total stockholder return on the
Common Stock from the Company's public offering in December 1998 to September
30, 2001 (measured by the difference between closing prices on each such date)
with (ii) the cumulative total return of the Nasdaq National Market Index and
the Nasdaq Computer Index over the same period, assuming the investment of $100
in the Common Stock and in both of the other indices on the date of the
Company's initial public offering, and reinvestment of all dividends.
Comparison of Cumulative Total Return
[GRAPHIC OMITTED]
December 16, September 30, September 30, September 30,
1998 1999 2000 2001
----------------- ------------------ ------------------ ------------------
Concur Technologies ...................... $ 100 $ 146 $ 12 $ 4
NASDAQ National Market Index ............. 100 137 182 75
NASDAQ Computer & Data Processing Index .. 100 144 180 64
18
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2003
Annual Meeting of Stockholders must be received by the Company at its principal
executive offices no later than November 1, 2002, in order to be included in
the Company's proxy statement and form of proxy relating to that meeting.
Stockholders wishing to bring a proposal before the 2003 Annual Meeting of
Stockholders (but not include it in the Company's proxy materials) must provide
written notice of such proposal to the Secretary of the Company at the
principal executive offices of the Company by December 31, 2002. In addition,
stockholders must comply with the procedural requirements in the Company's
bylaws, a copy of which may be obtained from the Company. The bylaws are also
on file with the SEC.
By Order of the Board of Directors of the Company
/s/ S. Steven Singh
----------------------------------
S. Steven Singh
President, Chief Executive Officer
and Chairman of the Board
19
CONCUR TECHNOLOGIES, INC.
1998 DIRECTORS STOCK OPTION PLAN
1. PURPOSE. This 1998 Directors Stock Option Plan (this "PLAN") is
established to provide equity incentives for certain nonemployee members of the
Board of Directors of Concur Technologies, Inc. (the "COMPANY"), who are
described in Section 6.1 below, by granting such persons options to purchase
shares of stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. After this Plan is adopted by the
Board of Directors of the Company (the "BOARD"), this Plan will become effective
on the time and date (the "EFFECTIVE DATE") on which the registration statement
filed by the Company with the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), to register the
initial public offering of the Company's Common Stock is declared effective by
the SEC. This Plan shall be approved by the stockholders of the Company,
consistent with applicable laws, within twelve (12) months after the date this
Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan shall
be non-qualified stock options ("NQSOS"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "SHARES") are
shares of the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "MAXIMUM NUMBER") is 640,000
Shares, subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the term
of this Plan, the Company shall reserve and keep available such number of Shares
as shall be required to satisfy the requirements of outstanding Options granted
under this Plan; provided, however that if the aggregate number of Shares
subject to outstanding Options granted under this Plan plus the aggregate number
of Shares previously issued by the Company pursuant to the exercise of Options
granted under this Plan equals or exceeds the Maximum Number, then
notwithstanding anything herein to the contrary, no further Options may be
granted under this Plan until the Maximum Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "COMMITTEE"). As used in this Plan, references to the Committee shall
mean either such Committee or the Board if no Committee has been established.
The interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of
the Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below (each
such person referred to as an "OPTIONEE").
6.2 Initial Grant. Each Optionee who is or becomes a member of
the Board on or after the Effective Date will automatically be granted an Option
for 50,000 Shares (an "INITIAL GRANT") on the later of the Effective Date or on
the date such Optionee first becomes a member of the Board.
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1 As adopted on August 21, 1998 and as amended on January 19, 2001, March 8,
2001, and January 18, 2002. On January 18, 2002, the Board of Directors approved
an amendment to the Plan, subject to approval by the stockholders at the
Company's annual meeting of stockholders that will be held on March 6, 2002.
6.3 Succeeding Grants. At each Annual Meeting of the Company,
each Optionee will automatically be granted an Option for 20,000 Shares (a
"SUCCEEDING GRANT"), provided the Optionee is a member of the Board on such date
and has served continuously as a member of the Board since the date of such
Optionee's Initial Grant.
6.4 Additional Grants. In addition to the foregoing, the Board
shall have the authority, in its sole discretion, to determine: (i) the
Optionees who shall be granted options in addition to the option grants
described above; (ii) the times when such additional options shall be granted;
(iii) the number of shares of Common Stock to be subject to each such additional
option; (iv) whether and under what conditions to accelerate the date of
exercise of any such additional option; (v) whether to restrict the sale or
other disposition of the shares of Common Stock acquired upon the exercise of
such an option and, if so, whether to waive any such restriction; (vi) whether
to subject the exercise of all or any portion of an option to the fulfillment of
contingencies as specified in the stock option contract referred to in Section 7
below and to determine whether such contingencies have been met; and (vii) with
the consent of the Optionee, to cancel or modify an option, provided that the
modified provision is permitted to be included in an option granted under the
Plan on the date of the modification.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant ("GRANT") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. The date an Optionee receives an Initial Grant or
a Succeeding Grant is referred to in this Plan as the "START DATE" for such
Option.
(a) Initial Grants. Each Initial Grant will vest as
to twenty-five percent (25%) of the Shares on the first anniversary of the Start
Date for such Initial Grant, and as to one thirty-sixth (1/36th) of the Shares
on each subsequent monthly anniversary of the Start Date, so long as the
Optionee continuously remains a director or a consultant of the Company.
(b) Succeeding Grants. Each Succeeding Grant will
vest as to twenty-five percent (25%) of the Shares on the first anniversary of
the Start Date for such Succeeding Grant, and as to one thirty-sixth (1/36th) of
the Shares on each subsequent monthly anniversary of the Start Date, so long as
the Optionee continuously remains a director or a consultant of the Company.
7.3 Exercise Price. The exercise price of an Option shall be
the Fair Market Value (as defined in Section 17.4) of the Shares, at the time
that the Option is granted.
7.4 Termination of Option. Except as provided below in this
Section, each Option shall expire ten (10) years after its Start Date (the
"EXPIRATION DATE"). The Option shall cease to vest when the Optionee ceases to
be a member of the Board or a consultant of the Company. The date on which the
Optionee ceases to be a member of the Board or a consultant of the Company shall
be referred to as the "TERMINATION DATE". An Option may be exercised after the
Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to
be a member of the Board or a consultant of the Company for any reason except
death of the Optionee or disability of the Optionee (whether temporary or
permanent, partial or total, as determined by the Committee), then each Option
then held by such Optionee, to the extent (and only to the extent) that it would
have been exercisable by the Optionee on the Termination Date, may be exercised
by the Optionee no later than seven (7) months after the Termination Date, but
in no event later than the Expiration Date.
-2-
(b) Death or Disability. If the Optionee ceases to be
a member of the Board or a consultant of the Company because of the death of the
Optionee or the disability of the Optionee (whether temporary or permanent,
partial or total, as determined by the Committee), then each Option then held by
such Optionee to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee (or the Optionee's legal representative) no later than twelve (12)
months after the Termination Date, but in no event later than the Expiration
Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5
below, Options shall be exercisable as they vest; provided that the Committee
may provide that such Options shall be immediately exercisable subject to
repurchase in accordance with the vesting schedule set forth in Section 7.
8.2 Notice. Options may be exercised only by delivery to the
Company of an exercise agreement in a form approved by the Committee stating the
number of Shares being purchased, the restrictions imposed on the Shares and
such representations and agreements regarding the Optionee's investment intent
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of
an Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by the Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares) or were obtained by
the Optionee in the open public market, having a Fair Market Value equal to the
exercise price of the Option; (c) by waiver of compensation due or accrued to
the Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (f) by any combination of the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:
(a) An Option shall not be exercisable unless such
exercise is in compliance with the Securities Act and all applicable state
securities laws, as they are in effect on the date of exercise.
(b) The Committee may specify a reasonable minimum
number of Shares that may be purchased upon any exercise of an Option, provided
that such minimum number will not prevent the Optionee from exercising the full
number of Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or by the Optionee's
guardian or legal representative, unless otherwise determined by the Committee.
No Option may be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent and distribution,
unless otherwise determined by the Committee.
-3-
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a stockholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
of exercise, except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial statements of the Company at such time
after the close of each fiscal year of the Company as they are released by the
Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or stockholders of the Company and compliance with applicable securities
laws; provided, however, that no fractional shares shall be issued upon exercise
of any Option and any resulting fractions of a Share shall be rounded up to the
nearest whole Share.
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of
Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act, compliance with all other applicable state
securities laws and compliance with the requirements of any stock exchange or
national market system on which the Shares may be listed. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration or qualification requirement of any state securities laws,
stock exchange or national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Options granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Optionees), (c) a merger in which the Company
is the surviving corporation but after which the stockholders of the Company
(other than any stockholder which merges (or which owns or controls another
corporation which merges) with the Company in such merger) cease to own their
shares or other equity interests in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, the vesting of all options granted pursuant to this Plan
will accelerate and the options will become exercisable in full prior to the
consummation of such event at such times and on such conditions as the Committee
determines, and must be exercised, if at all, within seven months of the
consummation of said event. Any options not exercised within such seven-month
period shall expire.
15. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan or any outstanding option, provided that the Board
may not terminate or amend the terms of any outstanding option without the
consent of the Optionee. In any case, no amendment of this Plan may adversely
affect any then outstanding Options or any unexercised portions thereof without
the written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from
time to time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms
shall have the following meanings:
17.1 "PARENT" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing
-4-
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
17.2 "SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if each
of the corporations 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 such chain.
17.3 "AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
17.4 "FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its closing
price on the date of determination on the principal
national securities exchange on which the Common
Stock is listed or admitted to trading as reported in
The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities
exchange, the average of the closing bid and asked
prices on the date of determination as reported in
The Wall Street Journal;
(d) in the case of an Option granted on the Effective
Date, the price per share at which shares of the
Company's Common Stock are initially offered for sale
to the public by the Company's underwriters in the
initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the
SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the
Committee in good faith.
-5-
CONCUR TECHNOLOGIES, INC.
1998 EQUITY INCENTIVE PLAN (1)
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and
18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 7,490,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; or (c) an Award that otherwise terminates without Shares being
issued. In addition, any authorized shares not issued or subject to outstanding
grants under the Company's 1994 Stock Option Plan (the "PRIOR PLAN") on the
Effective Date (as defined below) and any shares issued under the Prior Plan
that are forfeited or repurchased by the Company or that are issuable upon
exercise of options granted pursuant to the Prior Plan that expire or become
unexercisable for any reason without having been exercised in full, will no
longer be available for grant and issuance under the Prior Plan, but will be
available for grant and issuance under this Plan. At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding Options granted under this Plan and
all other outstanding but unvested Awards granted under this Plan. The total
number of Shares issued under the Plan upon exercise of ISOs (as defined in
Section 5 below) will in no event exceed 25,000,000 Shares (adjusted in
proportion to any adjustment under Section 2.2 below) over the term of the Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal
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(1) As adopted on August 21, 1998 and as amended on December 1, 1999, January
19, 2001, and January 18, 2002. On January 18, 2002, the Board of Directors
approved the amendment to the Plan subject to approval by the stockholders at
the Company's annual meeting of stockholders that will be held on March 6, 2002.
1
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 1,200,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company), who are eligible to receive
up to a maximum of 1,500,000 Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be
administered by the Committee or by the Board acting as the Committee. Subject
to the general purposes, terms and conditions of this Plan, and to the direction
of the Board, the Committee will have full power to implement and carry out this
Plan. Without limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award
Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and
regulations relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other
consideration subject to Awards;
(f) determine whether Awards will be granted singly,
in combination with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or compensation plan of the
Company or any Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment
of Awards;
2
(i) correct any defect, supply any omission or
reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or
advisable for the administration of this Plan.
4.2 Committee Discretion. Any determination made by the Committee with
respect to any Award will be made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express term of this Plan or Award,
at any later time, and such determination will be final and binding on the
Company and on all persons having an interest in any Award under this Plan. The
Committee may delegate to one or more officers of the Company the authority to
grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; provided, however, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and provided further that no ISO granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted. The Committee also may
provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.
3
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"EXERCISE AGREEMENT") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason
except Death, Disability or Cause, then the Participant may exercise such
Participant's Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3) months after the
Termination Date (or such shorter or longer time period not exceeding five (5)
years as may be determined by the Committee, with any exercise beyond three (3)
months after the Termination Date deemed to be an NQSO), but in any event, no
later than the expiration date of the Options.
(b) If the Participant is Terminated because of
Participant's Death or Disability (or the Participant dies within three (3)
months after a Termination other than for Cause or because of Participant's
Disability), then Participant's Options may be exercised only to the extent that
such Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant's legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (a) three (3) months
after the Termination Date when the Termination is for any reason other than the
Participant's Death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's Death or Disability,
deemed to be an NQSO), but in any event no later than the expiration date of the
Options.
(c) Notwithstanding the provisions in paragraph
5.6(a) above, if a Participant is terminated for Cause, then the Participant may
exercise such Participant's Options, only to the extent that such Options would
have been exercisable upon the Termination Date, no later than ten (10) days
after the Termination Date, but in
4
any event, no later than the expiration date of the Options. In making such
determination, the Board shall give the Participant an opportunity to present to
the Board evidence on his behalf.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISO are exercisable for the
first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISO and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefore, provided that any such action may not,
without the written consent of a Participant, impair any of such Participant's
rights under any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered will be treated in accordance
with Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision
in this Plan, no term of this Plan relating to ISO will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
5
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant
to a Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards
shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
having different performance goals and other criteria.
6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be awarded
for past services already rendered to the Company, or any Parent or Subsidiary
of the Company pursuant
6
to an Award Agreement (the "STOCK BONUS AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of such
performance goals as are set out in advance in the Participant's individual
Award Agreement (the "PERFORMANCE STOCK BONUS AGREEMENT") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent or Subsidiary and/or individual performance factors or upon such
other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature, length
and starting date of any Performance Period for each Stock Bonus; (b) select
from among the Performance Factors to be used to measure the performance, if
any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may
be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash or whole Shares or a combination thereof, either in a lump sum
payment or in installments, all as the Committee will determine.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to
the Participant;
7
(b) by surrender of shares that either: (1) have been
owned by Participant for more than six (6) months and have been paid for within
the meaning of SEC Rule 144 (and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note
having such terms as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company will not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon exercise of
an Option, and provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment
from the Participant and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion of the Shares so
purchased to pay for the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise Price directly to
the Company; or
(2) through a "margin" commitment from the
Participant and a NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the NASD Dealer in
a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
-----------------
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
8
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
------------------------------
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's
9
Termination at any time within ninety (90) days after the later of Participant's
Termination Date and the date Participant purchases Shares under this Plan, for
cash and/or cancellation of purchase money indebtedness, at the Participant's
Exercise Price or Purchase Price, as the case may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other
10
qualification of such Shares under any state or federal law or ruling of any
governmental body that the Company determines to be necessary or advisable. The
Company will be under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing requirements
of any state securities laws, stock exchange or automated quotation system, and
the Company will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 18.1,
such Awards will expire on such transaction at such time and on such conditions
as the Committee will determine. Notwithstanding anything in this Plan to the
contrary, the Committee may, in its sole discretion, provide that the vesting of
any or all Awards granted pursuant to this Plan will accelerate upon a
transaction described in this Section 18. If the Committee exercises such
discretion with respect to Options, such Options will become exercisable in full
prior to the consummation of such event at such time and on such conditions as
the Committee determines, and if such Options are not
11
exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date on which the registration statement filed by the Company with the
SEC under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "EFFECTIVE DATE").
This Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Committee may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial stockholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is not obtained
within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and any
purchase of Shares issued hereunder shall be rescinded; and (d) in the event
that stockholder approval of such increase is not obtained within the time
period provided herein, all Awards granted pursuant to such increase will be
cancelled, any Shares issued pursuant to any Award granted pursuant to such
increase will be cancelled, and any purchase of Shares pursuant to such increase
will be rescinded.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements
12
thereunder shall be governed by and construed in accordance with the laws of the
State of California.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.
22. NONEXCLUSIVITY OF PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the commission of an act of theft, embezzlement,
fraud, dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means Concur Technologies, Inc. or any successor
corporation.
"DISABILITY" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
13
"FAIR MARKET VALUE" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is
then listed on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the Common
Stock is listed or admitted to trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is
not quoted on the Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked prices on
the date of determination as reported in The Wall Street Journal;
(d) in the case of an Award made on the Effective
Date, the price per share at which shares of the Company's Common Stock are
initially offered for sale to the public by the Company's underwriters in the
initial public offering of the Company's Common Stock pursuant to a registration
statement filed with the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the
Committee in good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares
pursuant to Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Plan.
"PERFORMANCE FACTORS" means the factors selected by the
Committee from among the following measures to determine whether the performance
goals established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization
and/or earnings before income taxes and amortization growth;
14
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share
growth;
(f) Total stockholder return and/or total stockholder
return growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by
the Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"PLAN" means this Concur Technologies, Inc. 1998 Equity
Incentive Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations 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 such chain.
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the
15
Company or a Parent or Subsidiary of the Company. An employee will not be deemed
to have ceased to provide services in the case of (i) sick leave, (ii) military
leave, or (iii) any other leave of absence approved by the Committee, provided,
that such leave is for a period of not more than 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract or statute or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated to employees in writing. In the case of any
employee on an approved leave of absence, the Committee may make such provisions
respecting suspension of vesting of the Award while on leave from the employ of
the Company or a Subsidiary as it may deem appropriate, except that in no event
may an Option be exercised after the expiration of the term set forth in the
Option agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the
Participant ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the
Award Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
16
[CONCUR TECHNOLOGIES LOGO] CONCUR TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
6222 - 185TH AVENUE N.E. WEDNESDAY, MARCH 6, 2002
REDMOND, WA 98052 11:00 a.m.
HARBOR CLUB
777 - 108th AVENUE N.E.
BELLEVUE, WA
TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS: CONCUR KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
CONCUR TECHNOLOGIES, INC.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE BOARD OF DIRECTOR NOMINEES AND
PROPOSALS 2 AND 3.
1. Proposal No. 1 - Election of Directors;
Class III
01) Michael W. Hilton
02) Norman A. Fogelsong
For Withhold For All To withhold authority to vote, mark "For All Except"
All All Except and write the nominee's number on the line below.
[ ] [ ] [ ]
___________________________________
VOTE ON PROPOSALS
2. Proposal No. 2 - Amendment to the 1998 Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal No. 3 - Amendment to the 1998 Directors Stock Option Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Please sign exactly as your name(s) appear on this Proxy. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the Proxy.
Address Change? Mark Box and indicate changes on the reverse. [ ]
- --------------------------------------------
- --------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date
- --------------------------------------------
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Signature (Joint Owners) Date
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE - TOLL FREE - 1-800-690-6903 - QUICK *** EASY *** IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11:59 p.m. Eastern Time on March 5, 2002.
o You will be prompted to enter your 12-digit Control Number which is located
on the reverse.
o Follow the simple instructions the Vote Voice provides you.
VOTE BY INTERNET - www.proxyvote.com - QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
11:59 p.m. Eastern Time on March 5, 2002.
o You will be prompted to enter your 12-digit Control Number which is located
on the reverse, to obtain your records and to create an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Concur Technologies, Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
| PLEASE DETACH HERE |
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[CONCUR TECHNOLOGIES LOGO]
6222 - 185th Avenue NE
Redmond, WA 98052 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF CONCUR TECHNOLOGIES, INC.
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS ON MARCH 6, 2002.
The shares of stock you hold in your account will be voted as you specify on
the reverse.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" THE BOARD OF DIRECTOR
NOMINEES AND PROPOSALS 2 AND 3.
By signing the proxy, you revoke all prior proxies and appoint S. Steven Singh
and Kyle R. Sugamele (the "Named Proxies"), and each of them, with full power of
substitution, to vote your shares on the matters shown on the reverse side and
in their discretion, on any other matters which may properly come before the
Annual Meeting and all adjournments and postponements thereof.
Address Change:
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If you noted an Address Change on the lines above, please check
the corresponding box on the reverse side.
(SEE ABOVE FOR VOTING INSTRUCTIONS)
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