SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CONCUR TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
CONCUR TECHNOLOGIES, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[LOGO OF CONCUR TECHNOLOGIES]
January 26, 2001
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Concur Technologies, Inc., which will be held at the DoubleTree Hotel Bellevue,
300 112th Avenue SE, Bellevue, Washington, at 10:00 a.m. local time on
Thursday, March 8, 2001.
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. 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
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 8, 2001
----------------
The Annual Meeting of Stockholders of Concur Technologies, Inc. (the
"Company") will be held at the DoubleTree Hotel Bellevue, 300 112th Avenue SE,
Bellevue, Washington, at 10:00 a.m. local time on Thursday, March 8, 2001, for
the following purposes:
1. To elect two Class II 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 ratify the selection of Ernst & Young LLP as the Company's
independent auditors for fiscal year 2001.
5. 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 24, 2001 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
S. Steven Singh
President, Chief Executive Officer and
Chairman of the Board
Redmond, Washington
January 26, 2001
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. 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.
CONCUR TECHNOLOGIES, INC.
6222 185th Avenue NE
Redmond, WA 98052
----------------
PROXY STATEMENT
----------------
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 DoubleTree Hotel Bellevue, 300 112th Avenue SE, Bellevue, Washington, at
10:00 a.m. local time on Thursday, March 8, 2001, 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 5, 2001. 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, 2000, 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 24, 2001, the record date ("Record
Date") for determining stockholders entitled to vote at the Meeting, there were
25,482,698 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.
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, 3,
and 4 requires more votes in favor of adoption of the Proposals than those
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 certain matters; with respect to any other matters, shares
as to which brokers have not received discretionary voting authority from their
customers are considered as shares not entitled to vote with respect to such
matters, but are counted toward the establishment of a quorum.
Voting Electronically via the Internet or Telephone
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 opportunity to vote via the
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Internet or by telephone. If your bank or brokerage firm is participating in
ADP's program, your voting form 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, 3, and 4
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 such 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 II Directors (Term to expire in 2004)
Jeffrey D. Brody, age 41, has been a director of the Company since October
1994. Since October 1999 he has served as a Managing Director at Redpoint
Ventures, a venture capital firm, and, from 1994 to October 1999, he was a
general partner of Brentwood Venture Capital, a venture capital firm. From 1988
until 1994, Mr. Brody served as Senior Vice President of Comdisco Ventures, a
venture leasing firm. Mr. Brody holds a B.S. degree in Mechanical Engineering
from the University of California, Berkeley, and an M.B.A. degree from the
Stanford University Graduate School of Business. Mr. Brody is a member of the
boards of directors of NextCard, Inc., an electronic commerce company, and
several private companies.
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Michael J. Levinthal, age 46, 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 boards of
directors of webMethods, Inc., an electronic commerce company, and several
private companies.
Continuing Class III Directors (Term to expire in 2002)
Michael W. Hilton, age 36, co-founded the Company in August 1993, and serves
as its Chief Technical Officer. Mr. Hilton has served as Chairman of the Board
of Directors from February 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.
Norman A. Fogelsong, age 49, has been a director of the Company since July
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 boards of directors of Aspect Communications Corporation (NASDAQ:
ASPT), an eCRM software company, and several private companies.
Continuing Class I Directors (Term to expire in 2003)
S. Steven Singh, age 39, has served as the Company's President and Chief
Executive Officer since February 1996, and as a director since 1993, including
service as Chairman of the Board of Directors since September 1999. From 1993
to February 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. Mr. Singh is a member of the board of
directors of Allegis Corporation, a Partner Relationship Management (PRM)
software company.
Russell P. Fradin, age 45, 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.
Board of Directors Meetings and Committees
During fiscal 2000, the Board of Directors held seven 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.
3
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 officer, director, or other affiliate of the Company. The Audit
Committee currently consists of Messrs. Levinthal and Fogelsong.
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
currently consists of Messrs. Brody and Fogelsong.
Director Compensation
Members of the Board of Directors receive no cash compensation for their
services as directors, but are reimbursed for their reasonable travel expenses
in attending meetings of the Board of Directors. Directors who are not
employees of the Company 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 20,000 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 8,000 shares on the date of each
annual meeting of stockholders.
All options under the 1998 Directors Stock Option Plan vest in increments
over a four-year period, 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 1,050,000 shares, from
5,240,000 to 6,290,000.
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 Internet industries is intense and the use of significant
stock options for retention and motivation of such personnel is pervasive in
the Internet and high technology industries. The Board believes that the
additional reserve of shares with respect to which equity incentives may be
granted 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 19, 2001, to be
effective upon stockholder approval. Below is a summary of the principal
provisions of the 1998 Plan, assuming stockholder approval of the amendment.
The summary is not necessarily complete, and you are encouraged to refer to the
full text of the 1998 Plan.
4
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").
Under the 1998 Plan, 3,240,000 shares of Common Stock were originally
reserved for issuance, which was increased by 2,000,000 shares to 5,240,000
shares pursuant to stockholder approval at the 2000 Annual Meeting of
Stockholders. In addition, the following shares may be issued pursuant to the
1998 Plan:
. Any shares that remained available for issuance under the 1994 Plan when
the 1998 Plan became effective;
. Any shares that were subject to options granted under the 1998 Plan, or
the 1994 Plan, that expire or terminate for any reason without being
exercised;
. Any shares that 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;
. Any shares that 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; and
. Any shares that are subject to a stock bonus award under the 1998 Plan
that terminates without shares being issued.
As of January 10, 2001, options to purchase an aggregate of 4,850,258 shares
of Common Stock have been granted and/or have been exercised under the 1998
Plan. The proposed amendment to the 1998 Plan would increase the number of
shares of Common Stock reserved for issuance thereunder by 1,050,000 shares,
from 5,240,000 to 6,290,000.
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, 2001, 440 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, 2001, the closing price of
the Common Stock was $1.3125 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.
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. Brody and Mr. Fogelsong, both of whom are "non-employee
directors" under applicable federal securities laws and "outside directors" as
defined under applicable federal securities laws. 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 may, with the consent of optionees, issue new options in exchange for
the surrender and cancellation of any outstanding options.
5
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.
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.
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 ($45,000 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
6
difference between the fair market value of the purchased shares on the date of
exercise and 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
240,000 to 440,000.
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. 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.
7
The Board approved the proposed amendment as of January 19, 2001, 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.
Description of the 1998 Directors Stock Option Plan
The Board of Directors adopted the Directors Plan in August 1998, and the
stockholders approved it in September 1998. The plan became effective in
December 1998.
Under the Directors Plan, 240,000 shares of Common Stock were originally
reserved for issuance. 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, 2001, options to purchase an aggregate of 160,000
shares of Common Stock have been granted and/or have been exercised under the
Directors Plan. 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 240,000 to 440,000.
The Directors Plan currently 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 qualifying
director is automatically granted an option to purchase 20,000 shares of Common
Stock. At each Annual Meeting of the Company thereafter, the qualifying
director is automatically granted an option to purchase an additional 8,000
shares of Common Stock, so long as he or she continuously serves as a member of
the Board of Directors. The vesting schedule of such options is structured as
set forth in the Directors Plan, and 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. Brody and Mr. Fogelsong, both of whom are "non-
employee directors" under applicable federal securities laws and "outside
directors" as defined under applicable federal securities laws. 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.
8
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."
Recommendation of the Board
The Board of Directors recommends a vote FOR the amendment to the 1998
Directors Stock Option Plan.
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT AUDITORS
General
The Company is asking stockholders to ratify the selection of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending September
30, 2001. Ernst & Young performs the audit of the Company's financial
statements, and has been the Company's independent accounting firm since the
inception of the Company. Representatives of Ernst & Young will be present at
the Meeting, will have the opportunity to make a statement at the Meeting if
they desire to do so, and will be available to respond to appropriate
questions from shareholders.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the ratification of Ernst &
Young LLP as the Company's independent auditors.
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 43, joined the Company in June 2000 as its Executive
Vice President of Operations and Chief Financial Officer and has served as its
Chief Operating Officer since January 2001. Mr. Yount has nearly 20 years of
financial and operational management experience. Prior to joining the Company,
he served as Executive Vice President and Chief Financial Officer of
mediapassage.com, an e-Services business for advertising media. Prior to that,
Mr. Yount was Executive Vice President and Chief Financial Officer of
INTERLINQ Software, an enterprise software developer.
John F. Adair, age 36, joined the Company in May 2000 as its Vice President
of Finance and Operations. He currently serves as its Chief Financial Officer.
Prior to joining the Company, Mr. Adair served as Controller for PACCAR
Financial and PACCAR Leasing. Prior to that, Mr. Adair served as Senior Vice
President of Finance for ValliCorp Holdings and ValliWide Bank.
Rajeev Singh, age 32, co-founded the Company in August 1993 and currently
serves as its Executive Vice President of Sales, Marketing, and Services.
Prior to co-founding the Company, Mr. Singh served as a Software
9
and Manufacturing Engineer at General Motors Corporation from July 1986 to
January 1990 and he served as a Software Project Manager for the development of
complex computer simulations at Ford Motor Company from January 1991 to March
1993.
Kyle R. Sugamele, age 38, joined the Company in August 2000 as its Vice
President and General Counsel. Prior to joining the Company, 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 March
1991 to July 1995, Mr. Sugamele practiced law at the firm of Mundt, MacGregor,
Happel, Falconer, Zulauf & Hall in Seattle. Prior to that time, Mr. Sugamele
practiced law at the firm of Graham & Dunn in Seattle.
Scott E. Schwisow, age 37, 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 rapidly growing ASP
customer base. Prior to joining the Company, Mr. Schwisow was a Regional
Consulting Manager for Epicor Software Corporation (formerly Platinum
Software). 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.
Kenneth Cooper, age 48, joined the Company in March 1999 and currently
serves as its Vice President and General Manager of EMEA Operations, based in
Amersham, Buckinghamshire, United Kingdom. Prior to joining the Company, Mr.
Cooper was Vice President of European Operations for Epicor Software
Corporation (formerly Platinum Software). With over 17 years management and
director level experience in manufacturing and IT, Mr. Cooper has experience in
various European countries and with North American liaison.
Donna E. Hilty, age 46, joined the Company in November 2000 as its Vice
President of Human Resources and has 20 years of experience in human resources,
operations, and finance. Prior to joining the Company, Ms. Hilty was a Senior
Manager at The Boeing Company and was responsible for the recruitment and
retention of professional employees across the company.
10
OWNERSHIP OF SECURITIES
Table of Beneficial Ownership
The following table sets forth, as of January 10, 2001 (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 beneficially own 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,
2000 and who received salary and bonus in excess of $100,000 during fiscal
2000, which includes two former executive officers of the Company who would
otherwise have been included as one of such highly-compensated executive
officers but for the fact that their employment with the Company terminated
during fiscal 2000 (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)
------------------------------------ ----------------- -----------
Jeffrey D. Brody............................. 2,330,922(2) 9.2%
Brentwood Associates VI, L.P. and affiliates
Norman A. Fogelsong.......................... 2,222,700(3) 8.8
Institutional Venture Partners VII, L.P. and
affiliates
American Express Travel Related Services
Company, Inc. .............................. 1,570,161(4) 6.2
S. Steven Singh.............................. 1,222,129(5) 4.7
Michael W. Hilton............................ 1,178,586(6) 4.6
Rajeev Singh................................. 442,714(7) 1.7
Jon T. Matsuo................................ 272,933(8) 1.1
Robert K. Reid............................... 129,098(9) *
Michael J. Levinthal......................... 89,646(10) *
Russell P. Fradin............................ 8,333(11) *
Alan A. Brown................................ 0 *
All current directors and executive officers
as a group (13 persons)..................... 7,567,778(12) 29.9%
- --------
* 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 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, 2000
(i.e., within 60 days after September 30, 2000, the Company's fiscal year
end).
(2) Includes 3,871 shares owned directly by Mr. Brody, and 10,417 shares
subject to options exercisable by Mr. Brody on or before November 29,
2000. Also includes 1,715,014 shares owned by Brentwood Associates VI,
L.P., 512,034 shares owned by Brentwood Associates VIII, L.P., 21,334
shares owned by Brentwood Affiliates Fund, L.P., and 68,252 shares owned
by Brentwood Affiliates Fund II, L.P. Mr. Brody, a director of the
Company, is (i) a managing member of Brentwood VIII Ventures, LLC, the
general partner of Brentwood Associates VIII, L.P. and Brentwood
Affiliates Fund II, L.P., and (ii) a general partner of Brentwood VII
Ventures, L.P., the general partner of Brentwood Affiliates Fund L.P. Mr.
Brody disclaims beneficial ownership of these shares except to the extent
of his actual pecuniary interest. The address for Mr. Brody, and all of
the above Brentwood entities, is 3000 Sand Hill Road, Suite 260, Building
1, Menlo Park, CA 94025.
(3) Represents 10,000 shares owned directly by Mr. Fogelsong, and 10,417
shares subject to options exercisable by Mr. Fogelsong on or before
November 29, 2000. 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
11
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 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.
(4) Represents 870,161 shares held of record by American Express Travel
Related Company ("TRS") and 700,000 shares subject to a warrant held by
TRS that is exercisable at any time on or before January 15, 2002 at a
cash purchase price of $85.00 per share. The address for TRS is World
Financial Center, New York, NY 10285.
(5) Includes 730,452 shares owned directly and 491,677 shares subject to
options exercisable on or before November 29, 2000.
(6) Includes 879,867 shares owned directly and 298,719 shares subject to
options exercisable on or before November 29, 2000.
(7) Includes 153,957 shares owned directly and 288,757 shares subject to
options exercisable on or before November 29, 2000.
(8) Includes 36,774 shares owned directly and 236,159 shares subject to
options exercisable on or before November 29, 2000. Mr. Matsuo ceased to
be an employee of the Company as of January 8, 2001.
(9) Includes 18,300 shares owned directly based on information available to
the Company as of June 30, 2000, and 110,798 shares subject to options
exercisable on or before November 29, 2000.
(10) Represents 79,299 shares owned indirectly as trustee for certain family
trusts, and 10,417 shares subject to options exercisable on or before
November 29, 2000.
(11) Includes 8,333 shares subject to options exercisable on or before
November 29, 2000.
(12) Includes 1,175,118 shares subject to options exercisable on or before
November 29, 2000, including options described in the above footnotes,
except for footnote (4).
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 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 2000, as
furnished to the Company, and written representations from the Company's
directors and officers, the Company believes that there has been compliance
with all SEC filing requirements applicable to directors, officers, and 10%
beneficial owners for such fiscal year.
12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, 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
general compensation policy of the Company for all employees of the Company 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 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 2000, 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
Jeffrey D. Brody
Norman A. Fogelsong
13
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
Annual Compensation
Compensation Awards(1)
----------------- ---------------------
Securities Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
- --------------------------- ---- -------- -------- --------------------- ------------
S. Steven Singh..................... 2000 $248,077 $ 36,923 175,000 $ 0
President, Chief Executive Officer, 1999 250,000 85,000 100,000 0
and Chairman of the Board 1998 200,000 140,529 200,000 0
Michael W. Hilton................... 2000 165,000 12,500 140,000 0
Chief Technical Officer 1999 165,509 99,937 100,000 0
1998 132,000 48,393 52,000 0
Rajeev Singh........................ 2000 173,731 32,918 165,000 0
Executive Vice President 1999 165,000 50,000 100,000 0
of Sales, Marketing, and Service 1998 115,000 108,027 52,000 0
Jon T. Matsuo(2).................... 2000 198,654 76,346 265,000 0
Former President of Expense 1999 175,000 112,500 100,000 0
Management Division 1998 150,000 157,000 52,0000 0
Robert K. Reid(3)................... 2000 251,202 52,000 10,000 0
Former President of Concur 1999 56,250 0 293,708 0
Commerce Network Division 1998 N/A N/A N/A N/A
Alan A. Brown(4).................... 2000 156,811 26,538 40,000 74,824
Former Executive Vice 1999 77,308 0 125,000 0
President of Global Marketing 1998 N/A N/A N/A N/A
- --------
(1) None of the Named Executive Officers received any restricted stock awards
or long-term incentive plan payouts in fiscal 2000, 1999 or 1998.
(2) Represents compensation paid to Mr. Matsuo during fiscal 2000, 1999, and
1998. Mr. Matsuo's employment with the Company ceased effective as of
December 31, 2000.
(3) Represents compensation paid to Mr. Reid since the date he joined the
Company in January 1999. Mr. Reid's position as an executive officer of
the Company ceased effective as of June 30, 2000.
(4) Represents compensation paid to Mr. Brown during his employment with the
Company from May 1999 to June 2000, at which time his employment with the
Company ceased. In connection with his termination of employment, Mr.
Brown received additional compensation during fiscal 2000 in the amount of
$67,500. During fiscal 2000, the Company made payments to Mr. Brown or on
his behalf in connection with relocation costs and expenses, together with
a gross-up to cover applicable taxes, for a total amount of $7,324.
14
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 2000.
Table of Option Grants in Fiscal 2000
Individual Grants(1)
--------------------------------------------------- Potential Realizable Value
Number of % of at Assumed Annual Rates
Securities Total Options of Stock Price Appreciation
Underlying Granted to for Option Term(6)
Options Employees in Exercise Price Expiration ---------------------------
Name Granted(2) Fiscal 2000(3) Per Share(4) Date At 5% At 10%
- ---- ---------- -------------- -------------- ---------- ---------------------------
S. Steven Singh......... 175,000 3.5% $ 5.00 6/9/10 $ 550,283 $ 1,394,525
Michael W. Hilton....... 15,000 0.3 23.25 12/1/09 219,327 555,818
125,000 2.5 5.00 6/9/10 393,059 996,089
Rajeev Singh............ 15,000 0.3 23.25 12/1/09 219,327 555,818
150,000 3.0 5.00 6/9/10 471,671 1,195,307
Jon T. Matsuo........... 15,000 0.3 23.25 12/1/09 219,327 555,818
250,000 5.0 5.00 6/9/10 786,118 1,992,178
Robert K. Reid.......... 10,000 0.2 23.25 12/1/09 146,218 370,545
Alan A. Brown........... 40,000 0.8 23.25 12/1/09 584,872 1,482,180
- --------
(1) No stock appreciation rights were granted to any of the Named Executive
Officers during fiscal 2000.
(2) Except where indicated otherwise, all options granted in fiscal 2000 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 5,018,973 options granted to all employees during
fiscal 2000.
(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) Options were granted under a special company-wide grant following the
announcement of the Company's restructure in June 2000, and were granted
pursuant to the 1998 Plan and the Company's 1999 Stock Incentive Plan.
Options become exercisable with respect to 30% of the total options on
March 9, 2001 and with respect to an additional 3.333% of the shares each
month thereafter and, in certain cases, subject to acceleration upon
certain changes in control of the Company and upon the Company meeting
certain financial performance goals.
(6) 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. Mr. Brown's employment with
the Company ceased effective as of June 30, 2000 and all of his options to
purchase Company stock expired 90 days thereafter.
15
Option Exercises in Fiscal 2000
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 2000, the net value
realized upon such exercise, the number of unexercised options outstanding on
September 30, 2000 and the value of unexercised "in-the-money" options on
September 30, 2000.
Table of Aggregated Option Exercises and 2000 Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired September 30, 2000(2) September 30, 2000(3)
on Value ------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ----------- ----------- ------------- ----------- -------------
S. Steven Singh......... 0 $ 0 378,809 276,191 $690,366 $108,334
Michael W. Hilton....... 0 0 88,225 203,775 75,834 28,166
Rajeev Singh............ 0 0 98,051 228,949 97,132 28,618
Jon T. Matsuo........... 45,000 138,235 225,444 328,956 357,952 28,638
Robert K. Reid.......... 33,000 579,855 98,911 138,497 117,210 152,269
Alan A. Brown........... 0 0 41,666 83,334 0 0
- --------
(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 2000 and no
stock appreciation rights were outstanding at September 30, 2000.
(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 2000 at $2.375 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 Jon Matsuo entered into a letter agreement dated June 20,
1994 governing his employment with the Company. Under the agreement, the
Company paid Mr. Matsuo an initial annual salary of $90,000. The compensation
for Mr. Matsuo subsequently increased. In addition, he was granted an initial
option to purchase 104,000 shares of Common Stock. This agreement and Mr.
Matsuo's employment with the Company terminated effective as of January 8,
2001.
The Company and Robert Reid entered into a letter agreement dated May 26,
1999 governing his employment with the Company. Under the agreement, the
Company offered Mr. Reid an initial annual salary of $225,000. Pursuant to the
mutual agreement of the Company and Mr. Reid, this agreement and Mr. Reid's
employment with the Company will terminate effective as of April 15, 2001.
The Company and Alan Brown entered into a letter agreement dated April 12,
1999 governing his employment with the Company. Under the agreement, the
Company offered Mr. Brown an initial annual salary of $200,000. In addition, he
was granted an initial option to purchase 125,000 shares of Common Stock. The
Company also agreed to reimburse Mr. Brown for his actual relocation expenses
and up to $20,000 in real estate closing costs associated with acquiring a home
in the Seattle area. This agreement and Mr. Brown's employment with the Company
terminated effective as of June 30, 2000.
16
AUDIT COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, 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 two independent directors and
operates under a written charter adopted by the Board of Directors, which is
attached as Appendix A to this proxy statement. The members of the Committee
are Michael J. Levinthal and Norman A. Fogelsong. The Committee recommends to
the Board of Directors the selection of the Company's independent auditors,
subject to stockholder ratification.
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 2000 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 2000 in the
Company's Annual Report on Form 10-K for the year ended September 30, 2000
filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Michael J. Levinthal
Norman A. Fogelsong
17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Safeco Corporation and Safeco Life Insurance Company
Randall Talbot, who was a director of the Company from February 2000 to
January 2001, is employed by SAFECO Life Insurance Company ("SAFECO"). The
Company believes that the terms of the agreements described below between the
Company and SAFECO and/or its affiliates, taken as a whole, are no less
favorable to the Company than the Company could have obtained from unaffiliated
third parties.
On February 22, 2000, the Company entered into a strategic marketing
agreement and a distribution agreement with SAFECO, under which SAFECO agreed
to resell certain of the Company's products through its distribution network
and to undertake joint marketing activities with the Company to promote certain
of the Company's products. These agreements also called for revenues generated
from the joint marketing activities to be shared between the Company and
SAFECO. The Company did not recognized any revenue under these agreements
during fiscal 2000. Under the terms of these agreements, the Company also
granted SAFECO warrants to purchase up to 3,750,000 shares of the Company's
common stock. These warrants become exercisable only if SAFECO achieves certain
annual milestones relating to revenue, derived in connection with the
agreements described above over the next five years. The exercise price is the
greater of $30.26 or 50 percent of the fair value of the common stock price on
prescribed dates.
On February 22, 2000, the Company entered into a stock purchase agreement
with SAFECO Corporation, an affiliate of SAFECO, for the purchase of 1,073,929
of the Company's common stock at a purchase price of $23.28 per share, which
was the closing price of the Company's common stock on that date. On March 31,
2000, the Company entered into a volume license agreement with SAFECO, under
which SAFECO was granted internal use rights with respect to certain of the
Company's products. Pursuant to the terms of the volume license agreement,
SAFECO paid an aggregate of $2,518,847 in fiscal year 2000 to the Company for
license fees and related maintenance and consulting services.
Transactions with Automatic Data Processing, Inc.
Russell F. Fradin, who is currently a director of the Company, is employed
by Automatic Data Processing, Inc. As of May 17, 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 have formed an alliance for strategic marketing and sales of
the Company's business travel and entertainment expense management product. The
Company paid ADP less than $60,000 in the aggregate in fiscal year 2000 for
marketing and related services provided by ADP under the agreement. 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.
18
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 Exchange Act of 1933, as amended, or under the 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, 2000
(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
[PERFORMANCE GRAPH]
December 16, September 30, September 30,
1998 1999 2000
------------ ------------- -------------
Concur Technologies, Inc. ......... $100 $146 $ 12
Nasdaq National Market Index....... 100 137 182
Nasdaq Computer Index.............. 100 144 180
19
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2002 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices no later than November 1, 2001, 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 2002 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, 2001. 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
20
Appendix A
CONCUR TECHNOLOGIES, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. Purpose
The purpose of the Audit Committee (the "Committee") of the Board of
Directors (the "Board") of Concur Technologies, Inc. (the "Company") is to
assist the Board in fulfilling its statutory and fiduciary oversight
responsibilities relating to the Company's financial accounting, reporting and
controls. The Committee's principal functions are to:
. monitor the periodic reviews of the adequacy of the accounting and
financial reporting processes and systems of internal control that are
conducted by the Company's independent auditors, and the Company's
financial and senior management;
. review and evaluate the independence and performance of the Company's
independent auditors; and
. facilitate communication among the Company's independent auditors, the
Company's financial and senior management, and the Board.
The Committee will fulfill these functions primarily by carrying out the
activities enumerated in Part IV of this charter. In order to serve these
functions, the Committee shall have unrestricted access to Company personnel
and documents, and shall have authority to direct and supervise an
investigation into any matters within the scope of its duties, including the
power to retain outside counsel in connection with any such investigation.
While the Audit Committee has the responsibilities and powers set forth in
this charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is
the responsibility of management and the Company's independent auditors. Nor is
it the duty of the Committee to conduct investigations, to resolve
disagreements, if any, between management and its independent auditors or to
assure compliance with laws and regulations and the Company's policies and
procedures.
II. Membership
All members of the Committee will be appointed by, and shall serve at the
discretion of, the Board. Unless a chairman is elected by the full Board, the
members of the Committee may designate a chairman by majority vote of the
Committee membership.
As of the date this charter is adopted and until June 13, 2001, the
Committee shall consist of at least two members of the Board. At least a
majority of the members shall be persons who are not officers or employees of
the Company or any subsidiary and who do not have any other relationship which,
in the opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. As of
June 14, 2001, the Committee shall consist of three or more members of the
Board, with the exact number being determined by the Board. Each member of the
Committee shall be "independent" as defined by the rules of The Nasdaq Stock
Market, as they may be amended from time to time (the "Rules"), except as
otherwise permitted by such Rules. Each member of the Committee shall have the
ability to read and understand fundamental financial statements (or become able
to do so within a reasonable time after joining the Committee) and at least one
member shall have prior experience in accounting, financial management or
financial oversight, as required by the Rules.
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III. Meetings
Meetings of the Committee shall be held quarterly. In addition, the
Committee members, or the Chairman of the Committee on behalf of all of the
Committee members, should communicate with management and the independent
auditors on a quarterly basis in connection with their review of the Company's
financial statements. The Committee should periodically meet with the
independent auditors out of the presence of management about internal controls,
the fullness and accuracy of the Company's financial statements and any other
matters that the Committee or these groups believe should be discussed
privately with the Committee.
IV. Responsibilities and Duties
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. These processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate and may establish policies and procedures from time to time that it
deems necessary or advisable in fulfilling its responsibilities.
1. Review the Company's quarterly and annual financial statements, including
any report or opinion by the independent auditors, prior to distribution to the
public or filing with the Securities and Exchange Commission.
2. In connection with the Committee's review of the annual financial
statements:
. Discuss with the independent auditors and management the financial
statements and the results of the independent auditors' audit of the
financial statements.
. Discuss any items required to be communicated by the independent
auditors in accordance with SAS 61, as amended. These discussions
should include the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles and the
adequacy and effectiveness of its accounting and financial controls,
including the Company's system to monitor and manage business risk,
and legal and ethical compliance programs. The discussions should
also include the reasonableness of significant judgments, the
clarity of the disclosures in the Company's financial statements and
any significant difficulties encountered during the course of the
audit, including any restrictions on the scope of work or access to
required information.
3. In connection with the Committee's review of the quarterly financial
statements:
. Discuss with the independent auditors and management the results of
the independent auditors' SAS 71 review of the quarterly financial
statements.
. Discuss significant issues, events and transactions and any
significant changes regarding accounting principles, practices,
judgments or estimates with management and the independent auditors,
including any significant disagreements among management and the
independent auditors.
4. Discuss any comments or recommendations of the independent auditors
outlined in their annual management letter. Approve a schedule for implementing
any recommended changes and monitor compliance with the schedule.
5. Discuss with the independent auditors and management their periodic
reviews of the adequacy of the Company's accounting and financial reporting
processes and systems of internal control, including the adequacy of the
systems of reporting to the Audit Committee by each group.
6. Periodically consult with the independent auditors out of the presence of
management about internal controls, the fullness and accuracy of the Company's
financial statements and any other matters that the Committee or these groups
believe should be discussed privately with the Committee.
7. Review the independence and performance of the independent auditors.
Recommend to the Board of Directors the appointment or discharge of the
independent auditors.
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8. Communicate with the Company's independent auditors about the Company's
expectations regarding its relationship with the auditors, including the
following: (i) the independent auditors' ultimate accountability to the Board
and the Committee, as representatives of the Company's stockholders; and (ii)
the ultimate authority and responsibility of the Board and the Committee to
select, evaluate and, where appropriate, replace the independent auditors.
9. Review and approve processes and procedures to ensure the continuing
independence of the Company's independent auditors. These processes shall
include obtaining and reviewing, on an annual basis, a letter from the
independent auditors describing all relationships between the independent
auditors and the Company required to be disclosed by Independence Standards
Board Standard No. 1, reviewing the nature and scope of such relationships and
discontinuing any relationships that the Committee believes could compromise
the independence of the auditors.
10. Review the independent auditors' overall scope and audit plan.
11. Approve the fees and other significant compensation to be paid to the
independent auditors.
12. Periodically review the status of any legal matters that could have a
significant impact on the Company's financial statements.
13. Annually prepare a report to the Company's stockholders for inclusion in
the Company's annual proxy statement as required by the rules and regulations
of the Securities and Exchange Commission, as they may be amended from time to
time.
14. Maintain minutes of meetings and periodically report to the Board of
Directors on significant matters related to the Committee's responsibilities.
15. Review and reassess the adequacy of the Committee's charter at least
annually. Submit the charter to the Company's Board of Directors for review and
include a copy of the charter as an appendix to the Company's proxy statement
as required by the rules and regulations of the Securities and Exchange
Commission, as they may be amended from time to time (currently, once every
three years).
16. Perform any other activities required by applicable law, rules or
regulations, including the rules of the Securities and Exchange Commission and
any stock exchange or market on which the Company's Common Stock is listed, and
perform other activities that are consistent with this charter, the Company's
Bylaws and governing laws, as the Committee or the Board deems necessary or
appropriate.
A-3
CONCUR TECHNOLOGIES, INC.
1998 EQUITY INCENTIVE PLAN
As Adopted August 21, 1998
As Amended December 1, 1999
As Further Amended January 19, 2001*
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 6,290,000 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
__________________
* On January 19, 2001, 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 8, 2001.
fractions of a Share will not be issued but will either be replaced by a cash
payment equal 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 therefor, 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 Termination at any time within ninety (90) days
after the later of Participant's
9
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, INC.
1998 DIRECTORS STOCK OPTION PLAN
As Adopted August 21, 1998
As Amended January 19, 2001*
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 440,000
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").
_______________
* On January 19, 2001, 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 8, 2001.
Concur Technologies, Inc.
1998 Directors Stock Option Plan
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.
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.
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.
(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.
-2-
Concur Technologies, Inc.
1998 Directors Stock Option Plan
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.
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.
-3-
Concur Technologies, Inc.
1998 Directors Stock Option Plan
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 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.
-4-
Concur Technologies, Inc.
1998 Directors Stock Option Plan
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-
+-----------------+
| COMPANY # |
| CONTROL # |
+-----------------+
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Names Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m.(ET) on March 7, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/cnqr/ - QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. (CT) on March 7, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Concur Technologies, Inc., c/o Shareowner
Services,/SM/ P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
. Please detach here .
The Board of Directors Recommends a Vote FOR Proposals 1, 2, 3 and 4
1. Proposal No. 1 - Election of Directors:
Class II
01 Michael J. Levinthal
02 Jeffrey D. Brody
(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s) of the nominee(s) in
the box to the right)
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| |
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[ ] Vote FOR [ ] Vote WITHHELD
all nominees from all nominees
(except as marked)
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
4. Proposal No. 4 - Ratification of Ernst & Young LLP as the Company's
independent auditors for fiscal year 2001.
[ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTOR OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
indicate changes below:
Date
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| |
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Signature(s) in Box
Please sign exactly as your name(s)
appear on 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.
[LOGO OF CONCUR/TM/ TECHNOLOGIES]
CONCUR TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, March 3, 2001
10:00 a.m.
DoubleTree Hotel Bellevue
300-112th Avenue S.E.
Bellevue, WA
[LOGO OF CONCUR/TM/ TECHNOLOGIES]
Concur Technologies, Inc.
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 8, 2001.
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" Proposals 1, 2, 3, and
4.
By signing the proxy, you revoke all prior proxies and appoint S. Steven Singh
and Stephen A. Yount (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
any other matters which may properly come before the Annual Meeting and all
adjournments thereof.
See reverse for voting instructions.