SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[ ] Definitive Information Statement
CONVERA CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(2) Aggregate number of securities to which transaction applies:
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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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(5) Total fee paid:
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(1) Amount Previously Paid: ............................................
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(4) Date Filed: ........................................................
CONVERA CORPORATION
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
NOTICE TO STOCKHOLDERS
To all Stockholders of
CONVERA CORPORATION:
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY.
This information statement is being provided to the stockholders of
Convera Corporation. (the "Company"). The Company's board of directors and the
holders of a majority of its issued and outstanding Class A common stock have
approved an amendment (the "Amendment") to the Company's Amended and Restated
1996 Employee Stock Purchase Plan (the "Plan"). Pursuant to the Amendment, the
Plan will be amended and restated to increase the number of shares of Class A
common stock available for purchase under the Plan from 250,000 to 1,250,000;
As a matter of regulatory compliance we are sending you this
Information Statement that describes the purpose and effect of the Amendment.
We thank you for your continued interest in the Company.
By order of the Board of Directors of the Company.
/s/ Marc Martin
----------------------
Marc Martin, Secretary
Vienna, Virginia
December 17, 2001
CONVERA CORPORATION
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
INFORMATION STATEMENT
General
General Information for Stockholders
This Information Statement is furnished to the holders of common stock
of Convera Corporation, a Delaware corporation (the "Company"), in order to
comply with the requirements of Section 14(c) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Regulation 14C under the Exchange
Act. On November 29, 2001, the Company's board of directors and holders of a
majority of its issued and outstanding Class A common stock approved an
amendment (the "Amendment") to the Company's Amended and Restated 1996 Employee
Stock Purchase Plan (the "Plan"). Pursuant to the Amendment, the number of
shares of Class A common stock available for purchase under the Plan will be
increased from 250,000 to 1,250,000.
Pursuant to Section 228 of the Delaware General Corporation Law (the
"Delaware Act"), any action that may be taken at any meeting of our stockholders
may also be taken without a meeting, without prior notice and without a vote, if
a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted (here, a majority of
the outstanding shares of our Class A common stock) and delivered to us.
The record date for the determination of holders of Class A common
stock entitled to receive notice of the Amendments described herein is the close
of business December 17, 2001. As of the record date, we had 30,762,296 shares
of Class A common stock outstanding. Each outstanding share of Class A common
stock is entitled to one vote per share. The affirmative vote of a majority of
the outstanding shares of Class A common stock was required to approve the
Amendment. By written consent in lieu of a meeting, Intel Corporation and Allen
& Company Incorporated who own in the aggregate 18,265,230 shares of the
Company's Class A common stock, representing 59% of the outstanding Class A
common stock of the Company entitled to vote on the Amendment approved the
Amendment. The written consent of these entities to the Amendment will become
effective twenty days following the mailing of this Information Statement,
following which the Company will effect the Amendment.
The Company determined that it was advisable to obtain the written
consent of the holders of a majority of the outstanding shares of Class A common
stock stockholders to approve these matters rather than wait until the Company's
next annual meeting.
Pursuant to Delaware Act, the Company is required to provide prompt
notice of the taking of the corporate action without a meeting to the
stockholders of record who have not consented in writing to such action.
Inasmuch as the Company will have provided to its stockholders of record on the
record date this Information Statement, no additional action will be undertaken
pursuant to such written consents, and no dissenters' rights under the Delaware
Act are afforded to the Company's stockholders upon the adoption of the
Amendment.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of December 6, 2001, information
concerning the ownership of all classes of common stock of the Company of (i)
all persons known to the Company to beneficially own 5% or more of the Company's
common stock, (ii) each director of the Company, (iii) each Named Executive
Officer (as defined under "Summary Compensation Table" below) and (iv) all
directors and executive officers of the Company as a group. Share ownership
includes shares issuable upon exercise of outstanding options that are
exercisable within 60 days of December 6, 2001.
Name and Address of Beneficial Amount and Nature of Percent
of Beneficial Owner Class Ownership (1) Owned Class
- ------------------------------- -------------------- ------- -----
Intel Corporation 14,949,384 48.6% A
2200 Mission College Boulevard 12,207,038 (2) 100.0% B
Santa Clara, California 95052
Allen & Company Incorporated 3,315,846 (3) 10.8% A
711 Fifth Avenue
New York, NY 10022
Ronald J. Whittier 1,438 * A
Herbert A. Allen 556,515 (4) 1.8% A
Andy D. Bryant -- --
Robert A. Burgelman -- --
Stephen P. Greenberg 10,000 -- A
Gerhard H. Parker -- --
Patrick C. Condo 402,662 (5) 1.3% A
James H. Buchanan 162,478 (6) * A
Kamran Khan 87,260 (7) * A
David Nunnerley 59,415 (8) * A
All directors and executive officers 1,279,768 (9) 4.1% A
as a group (13 persons)
* Represents less than one percent of the outstanding common stock.
(1) To the Company's knowledge, each person or entity listed has sole voting and
investment power as to the shares indicated, except as described below.
(2) The Class B common stock of Convera Corporation is non-voting stock.
(3) Does not include shares owned by Mr. Herbert A. Allen, who together with
Allen & Company Incorporated may be considered a "group," as such term is
defined by Section 13(d) of the Securities Exchange Act of 1934.
(4) Does not include shares owned by Allen & Company Incorporated, of which Mr.
Allen is President and Chief Executive Officer and as to which shares Mr. Allen
disclaims beneficial ownership.
(5) Includes (a) 10,000 shares of common stock owned beneficially but not of
record upon exercise of stock options at a price of $4.75 per share expiring
November 13, 2002; (b) 15,000 shares of common stock owned beneficially but not
of record upon exercise of stock options at a price of $4.75 per share, expiring
January 4, 2004; (c) 75,000 shares of common stock owned beneficially but not of
record upon exercise of stock options at a price of $4.75 per share, expiring
December 6, 2004; (d) 100,000 shares of common stock owned beneficially but not
of record, issuable upon exercise of stock options at a price of $4.75 per
share, expiring June 2, 2005; (e) 100,000 shares of common stock owned
beneficially but not of record, issuable upon exercise of stock options at a
price of $4.75 per share expiring November 1, 2005; and (f) 100,000 shares of
common stock owned beneficially but not of record, issuable upon exercise of
stock options at a price of $7.63 per share expiring August 13, 2007.
(6) Includes (a) 30,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price of
$4.75 per share expiring September 13, 2005; (b) 70,000 shares owned
beneficially but not of record, issuable upon exercise of stock options of the
Company at a price of $4.75 per share expiring November 1, 2005; (c) 50,000
shares of common stock owned beneficially but not of record, issuable upon
exercise of stock options of the Company at a price of $7.63 per share expiring
August 13, 2007; (d) 10,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price of
$6.25 per share expiring September 1, 2008.
(7) Includes (a) 1,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price of
$4.75 per share expiring August 23, 2005; (b) 30,000 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share expiring December 3, 2005; (c) 250
shares of common stock owned beneficially but not of record, issuable upon
exercise of stock options of the Company at a price of $4.75 per share expiring
February 5, 2006; (d) 15,000 shares of common stock owned beneficially but not
of record, issuable upon exercise of stock options of the Company at a price of
$4.75 per share expiring December 16, 2006; (e) 12,500 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share expiring May 7, 2007; (f) 16,000
shares of common stock owned beneficially but not of record, issuable upon
exercise of stock options of the Company at a price of $8.56 per share expiring
January 1, 2008; and (g) 5,000 shares of common stock owned beneficially but not
of record, issuable upon exercise of stock options of the Company at a price of
$6.25 per share expiring August 31, 2008.
(8) Includes (a) 5,000 shares of common stock owned beneficially but not of
record, issuable upon exercise of stock options of the Company at a price of
$4.75 per share expiring September 8, 2006; (b) 25,000 shares of common stock
owned beneficially but not of record, issuable upon exercise of stock options of
the Company at a price of $4.75 per share expiring January 7, 2007; (c) 12,000
shares of common stock owned beneficially but not of record, issuable upon
exercise of stock options of the Company at a price of $8.56 per share expiring
January 1, 2008; and (d) 15,000 shares of common stock owned beneficially but
not of record, issuable upon exercise of stock options of the Company at a price
of $6.25 expiring August 31, 2008.
(9) Includes 696,750 shares of common stock owned beneficially but not of
record, issuable upon the exercise of options to purchase common stock of the
Company.
Summary Compensation Table
The following table presents information concerning the compensation of
the Company's Chief Executive Officer and each of the other most highly
compensated executive officers during the 2001 fiscal year (collectively, the
"Named Executive Officers") for services rendered in all capacities to the
Company for the fiscal year ended January 31, 2001, as well as the previous two
fiscal years:
Long Term Compensation
Annual Compensation Awards Payouts
--------------------------------- ---------------------- --------
Other Securities All
Annual Restricted Under- Other
Compen- Stock lying LTIP Compen-
Name and Principal Fiscal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
- -------- ---- ---------- --------- -------- ---------- --------- ------- -------
Ronald J. Whittier 2001 42,564 (1) -- -- -- 900,000 -- --
Chairman and Chief
Executive Officer (2)
Patrick C. Condo 2001 277,757 158,957 -- -- 100,000 -- --
President and Chief 2000 275,000 102,369 -- -- 175,000 -- --
Operating Officer (2) 1999 225,000 71,281 -- -- -- -- --
James H. Buchanan 2001 250,000 130,060 -- -- 205,000 -- --
Vice President, Chief 2000 230,000 84,425 -- -- 35,000 -- --
Financial Officer, 1999 180,000 57,024 -- -- 10,000 -- --
Asst. Secretary and
Treasurer
Kamran Khan 2001 200,000 106,116 17,437 (3) -- 285,250 -- --
Vice President, Sales 2000 145,000 117,246 44,990 (4) -- 35,000 -- --
and Marketing 1999 151,438 106,733 54,644 (5) -- 5,000 -- --
David Nunnerley (8) 2001 200,000 77,442 9,594 (6) -- 293,000 -- --
Vice President 2000 180,000 68,000 18,428 (7) -- 50,000 -- --
Content Management 1999 175,038 48,428 27,260 (8) -- 15,000 -- --
Products
(1) Represents compensation paid from December 22, 2000, when Mr. Whittier
became CEO of the Company through January 31, 2001. (2) On April 5, 2001, Mr.
Condo replaced Mr. Whittier as Chief Executive Officer. (3) Represents expenses
associated with a sales award trip, grossed up for taxes. (4) In connection with
Mr. Khan's relocation from the United Kingdom, payments of $28,169 were made by
the Company on Mr. Khan's behalf for an apartment in Virginia. The remainder of
Other Annual Compensation represents income tax consulting services, a payment
made to Mr. Khan's pension plan in the United Kingdom and expenses associated
with a sales award trip. All of the items were grossed up for taxes.
(5) Represents payments of $42,254 made by the Company on Mr. Khan's behalf for
an apartment in Virginia. The remainder of Other Annual Compensation represents
income tax consulting services, travel expenses for Mr. Khan's spouse and
expenses associated with a sales award trip. All of the items were grossed up
for taxes. (6) Represents rental payments paid by the Company on Mr. Nunnerley's
behalf, grossed up for taxes. (7) Represents rental payments and travel expenses
paid by the Company on Mr. Nunnerley's behalf, grossed up for taxes.
(8) Represents rental payments and travel expenses paid by the Company on
Mr. Nunnerley's behalf, grossed up for taxes.
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning options
granted during fiscal 2001 to the Named Executive Officers.
Potential Realizable
Value at Assumed
Annual Rates of
Individual Grants Stock Price
% of Total Appreciation for
Options Option Term (2)
Granted to Exercise ----------------------
Options Employees in or Base Expiration
Name Granted (#) Fiscal Year Price Date (1) 5% ($) 10% ($)
- ---- ----------- ----------------- -------- -------- ----------- -----------
Ronald J. Whittier 900,000 11.6% $20.52 12/21/10 11,614,426 29,433,236
Patrick C. Condo 100,000 1.3% $33.25 4/28/10 2,091,075 5,299,194
James H. Buchanan 100,000 1.3% $33.25 4/28/10 2,091,075 5,299,194
105,000 1.3% $20.52 12/21/10 1,355,016 3,433,878
Kamran Khan 50,000 0.6% $33.25 4/28/10 1,045,537 2,649,597
235,250 3.0% $20.52 12/21/10 3,035,882 7,693,521
David Nunnerley 50,000 0.6% $33.25 4/28/10 1,045,537 2,649,597
243,000 3.1% $20.52 12/21/10 3,135,895 7,946,974
- -------------------------------------------
(1) The options listed with an expiration date of 12/21/10 vest in equal
12-1/2% increments every six months from the date of original grant. The
options listed with an expiration date of 4/28/10 vest in equal 25%
increments every six months from the date of original grant.
(2) The amounts shown are hypothetical gains that would exist for the
respective options if exercised at the end of the option term. The
assumed 5% and 10% rates of stock price appreciation are mandated by
rules of the Securities and Exchange Commission ("SEC") and do not
represent the Company's estimate or projection of future increases in the
price of its common stock.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values
The following table sets forth, as of January 31, 2001, the number of
options and the value of exercised and unexercised options held by the Named
Executive Officers.
Number of
Securities
Underlying
Unexercised Value of Unexercised
Options/SARS at In-the Money
Fiscal Year-End Options/SARS at
Shares (#) Fiscal Year-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable (1)
---- ------------ ------------ ------------- -----------------
Ronald J. Whittier -- -- --/900,000 --/--
Patrick C. Condo -- -- 600,000/75,000 $6,004,475/--
James H. Buchanan -- -- 220,000/180,000 $2,224,535/--
Kamran Khan -- -- 127,250/272,750 $1,162,144/--
David Nunnerley -- -- 119,500/280,500 $907,771/--
The closing price of the Company's common stock on January 31, 2001, the last
trading day of the Company's fiscal year, was $18.813 per share.
Amendment to the Company's 1996 Employee Stock Purchase Plan
Generally
The Amendment amend Plan the following ways:
o the number of shares of Class A common stock available for
purchase under the Plan will increase from 250,000 shares to
1,250,000 shares;
o no shares of Class A common stock may be purchased under the Plan
if the closing sale price per share on the applicable grant date
[or the applicable exercise date of the option] is below $1.50;
and
o the Committee may suspend the Plan for any period or terminate the
Plan.
The Company is increasing the number of shares of Class A common stock
available under the Plan because the amount of shares of Class A common shares
available prior to this Amendment has been exhausted, and the Company wants to
maintain the Plan because it believes that it is an appropriate benefit that
will attract and retain competent, experienced and motivated personnel.
The following is a description of the Plan, as proposed to be amended
and restated, which is attached to this Information Statement as Appendix A.
Description of the Plan
In June 1996, the stockholders of Excalibur Corporation, the
predecessor to the Company, approved the Plan for the purpose of encouraging
eligible employees to acquire shares of the Company's common stock. All full
time or part-time employees of the Company whose customary employment is more
than twelve hours per week are eligible to participate. The aggregate number of
shares of common stock which may be purchased under the Plan shall not exceed
1,250,000, subject to adjustment in the event of stock dividends, stock splits,
combination of shares, recapitalizations, or other changes in the outstanding
common stock.
The Company makes grants of options on February 1 and/or August 1 of
each year the Plan is in effect or on such other designated date. Options are
exercised on April 30, July 31, October 31 and January 31 of each fiscal year.
Payment for shares of common stock purchased under the Plan is made by
authorized payroll deductions from an eligible employee's eligible compensation.
Eligible employees who elect to participate in the Plan designate that a stated
whole percentage equaling at least 1%, but no more than 10% of eligible
compensation be deducted. No participant in the Plan is permitted to purchase
common stock under the stock purchase plan at a rate that exceeds $25,000 in
fair market value of common stock, determined at the time options are granted,
for each calendar year. The price per share pursuant to which each eligible
employee is entitled to purchase shares of common stock under the Plan is equal
to the lesser of 85% of the closing price of the Company's common stock in the
over-the-counter market on the applicable date of exercise or on the date of the
grant of the option to purchase shares.
It is intended that the Plan constitute an "employee stock purchase
plan" under the provisions of Section 423 of the tax code. No Federal income tax
liability results from the grant or exercise of an option to purchase shares of
common stock pursuant to an employee stock purchase plan, although amounts
deducted from payroll are included in an employee's compensation as ordinary
income. No deduction is allowable to the employer with respect to the discount
available to the employees under an employee stock purchase plan.
The board of directors shall have the right to terminate the Plan or
any offering at any time for any reason. The Plan is anticipated to continue in
effect through July 31, 2006.
The number of purchases, if any, to be made after the Amendment to the
Plan by employees or groups thereof cannot be currently determined.
By order of the Board of Directors of the Company.
/s/ Marc Martin
----------------------
Marc Martin, Secretary