SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DALEEN TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[GRAPHIC OMITTED]
May 1, 2000
Dear Daleen Stockholders,
You are cordially invited to attend the Annual Meeting of Stockholders of
Daleen Technologies, Inc. (the "Company") on Tuesday, June 6, 2000. The meeting
will begin promptly at 10:00 a.m. local time, at the Boca Raton Marriott Hotel,
5150 Town Center Circle, in Boca Raton, Florida.
The notice of the meeting and proxy statement on the following pages
contain information on the formal business of the meeting. Whether or not you
expect to attend the meeting, please sign, date and return your proxy promptly
in the enclosed envelope to assure your stock will be represented at the
meeting. If you decide to attend the annual meeting and vote in person, you
will, of course, have that opportunity.
The continuing interest of the stockholders in the business of the Company
is gratefully acknowledged. We hope many will attend the meeting.
Sincerely,
/s/James Daleen
JAMES DALEEN,
Chairman and Chief Executive Officer
EXECUTIVE OFFICES: 1750 CLINT MOORE ROAD, BOCA RATON, FL 33487
PHONE: (561) 999-8000 FACSIMILE: (561) 999-8080 HTTP://WWW.DALEEN.COM
<PAGE>
DALEEN TECHNOLOGIES, INC.
1750 CLINT MOORE ROAD
BOCA RATON, FLORIDA 33487
(561) 999-8000
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 6, 2000
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Daleen
Technologies, Inc. (the "Company") will be held at the Boca Raton Marriott
Hotel, 5150 Town Center Circle, Boca Raton, Florida 33486, at 10:00 a.m. local
time, on June 6, 2000 (the "Annual Meeting"), to consider and act upon:
1. the election of three (3) nominees as directors to the Company's Board
of Directors;
2. a proposal to adopt the Daleen Technologies, Inc. Amended & Restated
1999 Stock Incentive Plan; and
3. such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on April 17, 2000,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
Stephen M. Wagman,
SECRETARY
May 1, 2000
Boca Raton, Florida
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE, WHICH HAS BEEN PROVIDED.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES. IN THE EVENT YOU ARE
ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE>
DALEEN TECHNOLOGIES, INC.
1750 CLINT MOORE ROAD
BOCA RATON, FLORIDA 33487
(561) 999-8000
----------------
PROXY STATEMENT
----------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 2000
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
STOCKHOLDERS MEETING
This Proxy Statement and the enclosed Proxy Card ("Proxy") are furnished
on behalf of the Board of Directors of Daleen Technologies, Inc., a Delaware
corporation ("Daleen Technologies" or the "Company" or "we"), for use at the
Annual Meeting of Stockholders to be held on June 6, 2000 at 10:00 a.m.,
Eastern time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Boca Raton Marriott
Hotel, 5150 Town Center Circle, Boca Raton Florida. The Company intends to mail
this Proxy Statement and the accompanying Proxy on or about May 4, 2000, to all
stockholders entitled to vote at the Annual Meeting.
STOCKHOLDERS ENTITLED TO VOTE
Only holders of record of the Company's $.01 par value per share common
stock (the "Common Stock") at the close of business on April 17, 2000 will be
entitled to notice of and to vote at the Annual Meeting. At the close of
business on April 17, 2000, the Company had outstanding and entitled to vote
21,629,749 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting. The holders of a majority of the total shares
of Common Stock outstanding on the record date, whether present at the Annual
Meeting in person or represented by Proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. The shares held by each
stockholder who signs and returns the enclosed Proxy will be counted for the
purposes of determining the presence of a quorum at the meeting, whether or not
the stockholder abstains on all or any matter to be acted on at the meeting.
Abstentions and broker non-votes both will be counted toward fulfillment of
quorum requirements. A broker non-vote occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal and has
not received instructions from the beneficial owner.
COUNTING OF VOTES
The purpose of the Annual Meeting is to consider and act upon the matters
which are listed in the accompanying Notice of Annual Meeting and set forth in
this Proxy Statement. The enclosed Proxy provides a means for a stockholder to
vote upon all of the matters listed in the accompanying Notice of Annual
Meeting and described in the Proxy Statement. The enclosed Proxy also provides
a means for a stockholder to vote for all of the nominees for Director listed
thereon or to withhold authority to vote for one or more of such nominees. The
Company's Bylaws provide that Directors are elected by a plurality of the votes
cast. Accordingly, the withholding of authority by a stockholder
<PAGE>
(including broker non-votes) will not be counted in computing a plurality and
thus will have no effect on the results of the election of such nominees.
The accompanying Proxy also provides a means for a stockholder to vote
for, against or abstain from voting on each of the other matters to be acted
upon at the Annual Meeting. Each Proxy will be voted in accordance with the
stockholder's directions. The affirmative vote of a majority of the shares of
Common Stock present in person or represented by a Proxy and entitled to vote
on proposal number 2 set forth in the accompanying Notice of Annual Meeting is
required for the approval of such proposal. Approval of any other matters as
may properly come before the meeting also will require the affirmative vote of
a majority of the shares of Common Stock present in person or represented by a
Proxy and entitled to vote at the meeting. Abstentions with respect to proposal
2 will have the same effect as a vote against such proposal. With respect to
broker non-votes, the shares will not be considered present at the meeting for
the proposal to which authority was withheld. Consequently, broker non-votes
will not be counted with regard to such proposals, but they will have the
effect of reducing the number of affirmative votes required to approve the
proposals, because they reduce the number of shares present or represented from
which a majority is calculated.
PROXIES
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company from its stockholders.
When the enclosed Proxy is properly signed and returned, the shares which
it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instructions, the shares
represented by a signed Proxy will be voted in favor of the nominees for
election to the Board of Directors, and in favor of the approval of proposal 2.
Stockholders who hold their shares through an intermediary must provide
instructions on voting as requested by their bank or broker. A stockholder who
signs and returns a proxy may revoke it at any time before it is voted by
taking one of the following three actions: (i) giving written notice of the
revocation to the Secretary of the Company; (ii) executing and delivering a
proxy with a later date; or (iii) voting in person at the Meeting.
The executive offices of the Company are located at 1750 Clint Moore Road,
Boca Raton, Florida 33487, and the Company's telephone number is (561)
999-8000.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of Common
Stock that, as of April 1, 2000, are deemed under the rules of the Securities
and Exchange Commission (the "Commission") to be "beneficially owned" by any
person or "group" (as that term is used in the Securities Exchange Act of 1934,
as amended) known to the Company as of that date to be a "beneficial owner" of
more than 5% of the outstanding shares of Common Stock of the Company, by each
Executive Officer of the Company, by each member of the Board of Directors of
the Company, by each nominee to become a member of the Board of Directors, and
by all Directors and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(2)
----------------------------
NUMBER OF
SHARES OF PERCENTAGE
NAME OF BENEFICIAL OWNER(1) COMMON STOCK OF CLASS
- -------------------------------------------------------------------------- -------------- -----------
<S> <C> <C>
HarbourVest Partners V--Direct Fund L.P.(3) .............................. 5,068,063 23.1%
J.D. Investment Limited Partnership(4) ................................... 1,744,338 8.0%
SAIC Venture Capital Corporation(5) ...................................... 1,501,615 6.8%
James Daleen(6) .......................................................... 1,744,338 8.0%
Mohammad Aamir(7) ........................................................ 1,439,022 6.6%
David B. Corey(8) ........................................................ 172,086 *
Richard A. Schell(9) ..................................................... 184,214 *
David J. McTarnaghan(10) ................................................. 36,000 *
Timothy C. Moss(11) ...................................................... 14,000 *
Ofer Nemirovsky(12) ...................................................... 5,068,063 23.1%
William A. Roper, Jr.(13) ................................................ 1,501,615 6.8%
Daniel J. Foreman(14) .................................................... 981,677 4.5%
Paul G. Cataford(15) ..................................................... 654,750 3.0%
Stephen J. Getsy(16) ..................................................... 100,973 *
All directors and executive officers as a group (18 persons)(17) ......... 12,050,614 54.9%
</TABLE>
- ----------------
<TABLE>
<S> <C>
* Less than 1% of the outstanding Common Stock.
(1) Except as set forth herein, the street address of the named beneficial owner is c/o Daleen Technologies, Inc., 1750 Clint
Moore Road, Boca Raton, Florida 33487.
(2) For purposes of calculating the percentage beneficially owned, the number of shares of common stock deemed
outstanding include (i) 21,551,014 shares outstanding as of April 1, 2000 and (ii) 389,863 shares issuable by us pursuant
to options held by the respective person or group which may be exercised within 60 days following April 1, 2000
("Presently Exercisable Options"). Presently Exercisable Options are considered to be outstanding and to be beneficially
owned by the person or group holding such options for the purpose of computing the percentage ownership of such
person or group but are not treated as outstanding for the purpose of computing the percentage ownership of any other
person or group.
(3) Includes 1,250,000 shares issuable upon exercise of a warrant. The street address of the named beneficial owner is One
Financial Center, 44th Floor, Boston, MA 02111.
(4) Includes 49,682 shares issuable to James Daleen upon exercise of an option that will be exercisable within 60 days of
April 1, 2000. Also includes 48,220 shares held by the James Daleen Irrevocable Trust. Mr. Daleen disclaims beneficial
ownership of the shares held by the trust. The street address of the named beneficial owner is 4535 W. Sahara Ave.,
Suite 100A, Las Vegas, NV 89102.
(5) Includes 5,000 shares held by Mr. Roper, an executive vice president and the chief financial officer of SAIC. The street
address of the named beneficial owner is 3753 Howard Hughes Parkway, Suite 200, Las Vegas, NV 89109.
(6) 1,644,632 shares held by J.D. Investment Limited Partnership ("JDLP"). Mr. Daleen is the President of J.D.
Management, Inc., the managing general partner of JDLP. Also includes 49,682 shares issuable upon exercise of an
option that will be exercisable within 60 days of April 1, 2000 and 48,220 shares held by the James Daleen Irrevocable
Trust. Mr. Daleen disclaims beneficial ownership of the shares held by the trust and JDILP.
(7) Includes 452,096 shares held by 1303949 Ontario, Inc. Mr. Aamir is the President and sole director and a minority
shareholder of 1303949 Ontario, Inc.
(8) Includes 125,425 shares issuable upon exercise of an option that will be exercisable within 60 days of April 1, 2000. Also
includes 8,600 shares held by The Luke Corey Irrevocable Trust and 8,600 shares held by The Sydney Corey Irrevocable
Trust. Mr. Corey disclaims beneficial ownership of the shares held by the trusts.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(9) Includes 30,000 shares held by Mr. Schell's wife, 85,627 shares issuable upon exercise of an option that will be
exercisable within 60 days of April 1, 2000, 900 shares held by Nicole K. Schell Irrevocable Trust, 900 shares held
by the Ginger Schell Irrevocable Trust and 900 shares held by the Richard R. Schell Irrevocable Trust. Mr. Schell
disclaims beneficial ownership of the shares held by his wife and the trusts.
(10) Includes 35,000 shares issuable upon exercise of an option that will be exercisable within 60 days of April 1, 2000.
(11) Includes 12,500 shares issuable upon exercise of an option will be exercisable within 60 days of April 1, 2000
(12) Consists of 5,068,063 shares held by HarbourVest Partners V--Direct Fund L.P. HarbourVest Partners, LLC is the
managing member of the general partner of HarbourVest Partners V--Direct Fund L.P. Mr. Nemirovsky is a managing
director of HarbourVest Partners, LLC and a member of the general partner of HarbourVest Partners V--Direct Fund
L.P. and therefore may be considered to share beneficial ownership of the shares held by HarbourVest. Mr. Nemirovsky
disclaims beneficial ownership of these shares.
(13) Consists of 1,496,615 shares held by SAIC Venture Capital Corporation, of which Mr. Roper is a director and the chief
financial officer.
(14) Consists of 981,677 shares held by ABN AMRO Inc. Mr. Foreman is a managing director of this firm and therefore may
be considered to share beneficial ownership of these shares.
(15) Consists of 654,450 shares held by Bell Canada. Mr. Cataford is the managing director and president for BCE Capital,
Inc., a management company charged with all venture capital activities of Bell Canada and BCE, Inc., and therefore may
be considered to share beneficial ownership of these shares.
(16) Includes 100,973 shares held by the Stephen Getsy Living Trust.
(17) Includes 389,863 shares issuable upon exercise of options that will be exercisable within 60 days of April 1, 2000. See
also footnotes (2), (4), (6) and (9) through (11) above.
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
Our board of directors is divided into three classes, each of whose
members serve for a staggered three-year term. At each annual meeting of
stockholders, a class of directors are elected for a three-year term to succeed
the directors of the same class whose terms are then expiring. Our bylaws
provide that each class of directors will be elected by a plurality of all
votes cast at the meeting.
At the Annual Meeting, three (3) directors are to be elected for the terms
described below. The Board of Directors is divided into three classes, each of
whose members serve for staggered three-year terms. The Board is currently
comprised of three (3) Class I directors (Messrs. Cataford, Roper, and Aamir),
three (3) Class II directors (Messrs. Cox, Corey, and Foreman), and three (3)
Class III directors (Messrs. Daleen, Nemirovsky, and Getsy). At each annual
meeting of stockholders, a class of directors will be elected for a three-year
term to succeed the directors of the same class whose terms are then expiring.
The terms of the Class I directors, Class II directors and Class III directors
will expire upon the election and qualification of successor directors at the
2000, 2001 and 2002 annual meeting of stockholders, respectively. There are no
family relationships among any of the directors or director nominees of the
Company.
Shares represented by executed Proxies will be voted, if authority to do
so is not withheld, for the election of the one nominee named below. In the
event that the nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as the Board of Directors may select. The nominees for
re-election as Class I Directors, Messrs. Aamir, Cataford, and Roper, have
agreed to serve as directors if elected, and management has no reason to
believe that they will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
4
<PAGE>
INFORMATION CONCERNING THE DIRECTORS
The name and age, principal occupation or employment, and other data
regarding each director (or nominee), based on information received from the
respective director, are set forth below:
NOMINEES TO SERVE AS CLASS I DIRECTORS
PAUL G. CATAFORD, age 36, has served as a director since August 1998. Mr.
Cataford is the managing director and president of BCE Capital, Inc., a
management company responsible for all venture capital activities of BCE Inc.
and Bell Canada. Mr. Cataford joined BCE Capital in August 1997. From January
1994 until July 1997, Mr. Cataford was the team leader of investments of
Working Ventures Canadian Fund, a venture capital fund. Mr. Cataford also
serves on the board of directors of Sierra Wireless, Inc., a public company
that develops wireless data modems, the audit committee of Sierra Wireless,
Inc. and the board of directors of both Bulldog Group, Inc. and Morphics
Technologies, Inc. The Bulldog Group, Inc. and Morphics Technologies, Inc. are
both private companies.
WILLIAM A. ROPER, JR. age 54, has served as a director since July 1999.
Mr. Roper has been the executive vice president and chief financial officer of
Science Applications International Corporation, or SAIC, a technology research
and development company, since April 1990 and since October 1999. Before
joining SAIC, Mr. Roper served as executive vice president and chief financial
officer of Intelogic Trace, Inc., from 1987 to 1990. Mr. Roper is also a
director of Network Solutions, Inc., a provider of Internet address
registration, intranet development and network security services, and ODS
Networks, Inc., a provider of high performance telecommunications and security
products.
MOHAMMAD AAMIR, age 37, joined Daleen as an executive vice president in
December 1999 and a director in January 2000 following our acquisition of
Inlogic Software, Inc. Before joining Daleen, Mr. Aamir was the chief executive
officer of Inlogic Software, the company he founded in February 1997. Mr. Aamir
was a consultant and project manager of Objectel Software from February 1995
until February 1997, now a part of Architel Corporation.
OTHER DIRECTORS
The Directors of the Company continuing in office as Class II Directors,
elected to serve until the 2001 Annual Meeting, are as follows:
DAVID B. COREY, age 40, has served as president and chief operating
officer of Daleen since February 1998 and as a director since June 1998. Before
joining Daleen, Mr. Corey served as senior vice president of Global Marketing
for Westell, Inc., a telecommunications equipment company, from November 1996
to February 1998, and as vice president and managing director/Asia Pacific for
Westell International, a telecommunications company, from January 1994 to
November 1996.
NEIL E. COX, age 50, has served as a director since August 1999. Mr. Cox
has served, since January 1998, as the president of SecurityLink from
Ameritech, a business unit of Ameritech Corporation that provides international
security and monitoring services. From 1987 to January 1998, Mr. Cox served in
various management capacities at Ameritech, a full-service communications
company, last serving as president of information services.
DANIEL J. FOREMAN, age 42, has served as a director since June 1998. Mr.
Foreman has served as a managing director of ABN AMRO, Inc., an investment
firm, since October 1997 and was previously vice president of investments and
acquisitions for Ameritech Corporation, a communications company, from October
1987 to October 1997.
5
<PAGE>
The Directors of the Company continuing in office as Class III Directors,
elected to serve until the 2002 Annual Meeting, are as follows:
JAMES DALEEN, age 40, our founder, has served as chairman of the board and
chief executive officer of the Company since its inception in 1989. Mr. Daleen
served as president and chief executive officer of Sound Impulse Company, an
electrical construction company, from 1983 until 1995.
STEPHEN J. GETSY, age 55, has served as a director since October 1997. Mr.
Getsy has been the president and chief executive officer of On-Line Ventures,
Inc., a business consulting and investment company, from November 1993 to
present.
OFER NEMIROVSKY, age 42, has served as a director since September 1997.
Mr. Nemirovsky has been a managing director of HarbourVest Partners, LLC since
January 1997. HarbourVest Partners, LLC was formed by the management team of
Hancock Venture Partners where Mr. Nemirovsky had served in various capacities
since 1986. Mr. Nemirovsky is a director of The Ultimate Software Group,
Paradigm Geophysical Ltd. and Primix Solutions, Inc.
MEETINGS OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors held seven meetings and took one
Action in Lieu of a Meeting. All of the incumbent directors attended at least
75% of the aggregate total number of meetings of the Board of Directors and
meetings of committees of the Board of Directors on which they served.
COMMITTEES OF THE BOARD OF DIRECTORS
The audit committee of the Board of Directors, which consists of Mr.
Foreman, the chairman, and Mr. Roper held one meeting during 1999. The audit
committee reviews the scope and timing of our audit services and any other
services our independent auditors are asked to perform. In addition, the audit
committee reviews and evaluates our audit and control functions and makes
recommendations to the board of directors for the selection of independent
auditors for the following year.
The compensation committee of the Board of Directors, which consists of
Mr. Getsy, the chairman, and Messrs. Cataford and Nemirovsky, held one meeting
and took action by written consent eleven times during 1999. The compensation
committee reviews and evaluates the compensation and benefits of our executive
officers, reviews and approves corporate performance objectives, reviews
general policy matters relating to compensation and benefits of our employees
and makes recommendations concerning these matters to the board of directors.
The compensation committee also administers our stock incentive plans.
COMPENSATION OF DIRECTORS
Neither employee nor non-employee directors receive compensation for
services performed in their capacity as directors except as provided below. We
reimburse each director for reasonable out-of-pocket expenses incurred in
attending meetings of the board of directors and any of its committees. In
addition, it is our policy that outside directors who are not employed by
venture capital firms are eligible to receive options to purchase our common
stock under our amended and restated stock incentive plan. The board of
directors determines the vesting schedule for options granted to non-employee
directors under our amended and restated stock incentive plan.
In October 1997, the board of directors granted Mr. Getsy an option to
purchase 75,000 shares of common stock at $3.25 per share. The board of
directors also granted Mr. Getsy an option to purchase 15,000 shares at $3.25
per share in December 1998. The options become exercisable at the rate of 25%
of the total number of shares per year. 78,750 of these options have been
exercised. In January 2000, the Board of Directors granted an additional option
to purchase 15,000 shares to
6
<PAGE>
Mr. Getsy and an additional option to purchase 5,670 shares to Mr. Cox. The
amount of Mr. Cox's option grant was a proportion of the 15,000 shares based
upon his joining the board in August 1999. The options become exercisable over
a three-year vesting period.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table presents the total
compensation for our chief executive officer and our four other most highly
compensated executive officers who were serving as executive officers for the
three years ended December 31, 1999 (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- ----------------------------
NUMBER OF
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
- ------------------------------ ------ ---------------- ----------- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
James Daleen
Chairman of the Board 1999 $ 286,000 $214,500 $ 10,000 125,000 2,315,898
and Chief Executive Officer 1998 260,000 136,500 12,246 201,549 --
1997 250,000 85,000 8,400 -- --
David B. Corey
President and Chief 1999 220,000 165,000 -- 79,000 152,114
Operating Officer 1998 176,154(2) 93,500 101,725(3) 304,500 --
1997 -- -- -- -- --
Richard A. Schell
Chief Financial Officer 1999 181,500 136,125 9,632 38,500 210,211
and Treasurer 1998 165,000 86,625 9,148 81,000 --
1997 150,000 63,750 6,840 -- --
David J. McTarnaghan(4)
Vice President, 1999 150,000 66,500 580 22,250 --
North American Sales 1998 75,385 31,525 35,975 -- --
& Partner Management 1997 -- -- -- -- --
Timothy C. Moss(5)
Vice President 1999 144,231 71,394 34,722 102,236 --
of Operations 1998 -- -- -- -- --
1997 -- -- -- -- --
</TABLE>
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(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation received in the form of perquisites and other personal
benefits has been omitted because such perquisites and other personal
benefits constituted less than the lesser of $50,000 or 10% of the total
annual salary and bonus for the Named Executive Officer for such year.
(2) Mr. Corey commenced employment with Daleen on February 10, 1998; his
annualized base salary for fiscal 1998 was $200,000.
(3) Includes closing cost reimbursement for relocation expenses of $58,554 and
a payment of $43,171 to reimburse Mr. Corey for taxes paid by him.
(4) Mr. McTarnaghan commenced employment with Daleen on June 15, 1998; his
annualized base salary for fiscal 1998 was $140,000.
(5) Mr. Moss commenced employment with Daleen on January 1, 1999; his
annualized base salary for fiscal 1999 was $150,000.
7
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth all individual grants of stock options
during the year ended December 31, 1999, to each of the Named Executive
Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR OPTION TERM(1)
NUMBER OF SECURITIES GRANTED TO EXERCISE OR ------------------------------
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ----------------------------- ---------------------- -------------- ------------ ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James Daleen ................ 125,000 5.6388% $ 21.38 12/30/09 $ 1,679,703 $ 4,257,656
David B. Corey .............. 4,000 .1804 9.00 9/28/09 22,640 57,375
75,000 3.3833 21.38 12/30/09 1,007,822 2,554,593
Richard A. Schell ........... 1,000 .0451 9.00 9/28/09 5,660 14,344
37,500 1.6916 21.38 12/30/09 503,911 1,277,297
David J. McTarnaghan ........ 3,000 .1353 9.00 9/28/09 16,980 43,031
500 .0226 28.00 12/15/09 8,805 22,312
18,750 .8458 21.38 12/30/09 251,955 638,648
Timothy C. Moss ............. 50,000 2.2555 3.25 2/24/04 44,896 99,208
26,000 1.1729 6.00 6/29/09 98,108 248,624
7,000 .3158 9.00 9/28/09 39,620 100,406
1,000 .0451 28.00 12/15/09 17,609 44,625
18,236 .0823 21.38 12/30/09 245,049 621,141
</TABLE>
- ----------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on the fair market value per share on the date of grant and
assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. These assumptions are mandated by the rules of the
Securities and Exchange Commission and are not intended to forecast future
appreciation of our stock price. The potential realizable value
computation is net of the applicable exercise price, but does not take
into account federal or state income tax consequences and other expenses
of option exercises or sales of appreciated stock. Actual gains, if any,
are dependent upon the timing of such exercise and the future performance
of our common stock. There can be no assurance that the rates of
appreciation in this table can be achieved. This table does not take into
account any appreciation in the price of our common stock to date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table summarizes the number of shares and value realized by
each of the Named Executive Officers upon the exercise of options and the value
of the outstanding options held by the Named Executive Officers at December 31,
1999:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCALYEAR-END(2)
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James Daleen ................. 395,899 $ 3,539,098 0 329,623 $ 0 $ 3,906,278
David B. Corey ............... 46,661 210,129 81,963 254,876 1,526,971 3,398,186
Richard A. Schell ............ 49,603 311,485 91,027 164,628 1,698,883 2,383,095
David J. McTarnaghan ......... 0 0 35,000 82,250 652,050 1,165,815
Timothy C. Moss .............. 0 0 0 102,236 0 1,443,658
</TABLE>
- ----------------
(1) Amounts disclosed in this column do not reflect amounts actually received
by the Named Executive Officers but are calculated based on the difference
between the fair market value on the date of exercise of the options and
the exercise price of the options. The Named Executive Officers will
receive cash only if and when they sell the common stock issued upon
exercise of the options, and the amount of cash received by such
individuals is dependent on the price of our common stock at the time of
such sale.
(2) Based on the fair market value of our common stock as of December 31, 1999
of $22.0625 per share as reported on the Nasdaq National Market, less the
exercise price payable upon exercise of such options.
8
<PAGE>
EMPLOYMENT AGREEMENTS
We entered into a five-year employment agreement with James Daleen, our
chief executive officer, on December 1, 1994, which was amended on September 5,
1997 and March 1, 1999. Upon expiration of the current term in December 1999,
the agreement automatically renews for additional terms of three years each
unless either party notifies the other of its intent to terminate the
agreement. The agreement provides for a base salary of $286,000 in 1999 and
$328,900 in 2000 and an annual bonus to be determined by our compensation
committee, with the annual bonus targeted at 50% of his base salary. The
agreement also provides for annual salary increases, as determined by our
compensation committee, and option grants under our stock option plans, as
determined by our board of directors. In the event of the termination of his
employment without substantial cause, Mr. Daleen is entitled to severance
payment equal to two years' base salary in effect at the time of termination
and a bonus in addition to the payment of all related excise, federal or state
income taxes incurred by the executive as a result of the lump sum cash
payment.
We entered into an employment agreement with David Corey, our president
and chief operating officer, on January 31, 1998. This agreement may be
terminated by either party at any time. The agreement provides for a base
salary of $220,000 in 1999 and $253,000 in 2000, and an annual salary increase
to be determined by our compensation committee, and an annual bonus to be
determined by our compensation committee, with the annual bonus targeted at 50%
of his base salary. In the event of the termination of his employment without
substantial cause, Mr. Corey is entitled to a severance payment equal to one
year's base salary in effect at the time of termination. We can elect to pay
Mr. Corey only six months of severance if we release him from his non-compete
agreement.
We entered into a three-year employment agreement with Richard Schell, our
chief financial officer and treasurer, on November 15, 1994, which was amended
on January 31, 1997. Upon expiration of the current term in November 2000, the
agreement automatically extends for additional three-year terms unless either
party notifies the other of its intent to terminate the agreement. The
agreement provides for a base salary of $181,000 per year and in $208,725 in
2000, and an annual bonus to be determined by our compensation committee, with
the annual bonus targeted at 50% of his base salary. The agreement also
provides for salary increases as determined by our compensation committee. In
the event of the termination of Mr. Schell's employment without substantial
cause, he is entitled to a severance payment equal to one year's base salary in
effect at the time of termination.
We entered into an employment agreement with David J. McTarnaghan, our
vice president of sales, in June 1998. The agreement can be terminated by
either party of at any time. The agreement provides for a base salary of
$140,000 in 1999 and $175,000 in 2000 and an annual bonus to be determined by
our compensation committee. The agreement also provides for annual salary
increases, as determined by our compensation committee, and option grants under
our stock option plans, as determined by our board of director. In the event of
the termination of his employment without substantial cause, Mr. McTarnaghan is
entitled to a lump sum severance payment equal to six months of base pay.
We entered into an employment agreement with Timothy C. Moss, our vice
president of operations in December 1998. The agreement can be terminated by
either party at any time. The agreement provides for a base salary of $150,000
in 1999 and $175,000 in 2000 and an annual bonus to be determined by our
compensation committee. The agreement also provides for annual salary
increases, as determined by our compensation committee, and option grants under
our stock option plans, as determined by our board of directors. In the event
of the termination of his employment without substantial cause, Mr. Moss is
entitled to a lump sum severance payment equal to twelve months pay.
Our executive officers and all applicable other employees have signed
invention assignment and confidentiality agreements as well as non-compete
agreements. Under the invention assignment and confidentiality agreement, these
individuals have assigned to us all of their copyrights, trade secrets
9
<PAGE>
and patent rights that relate to our business. Under the terms of the
non-compete agreement, each of these individuals have agreed not to compete,
directly or indirectly, with us in the billing and customer care industry
during the term of employment and for one year after termination of employment.
Each individual also has agreed not to solicit our customers or employees,
directly or indirectly, during the period of employment and for one year
following termination of employment.
STOCK OPTION AND OTHER COMPENSATION PLANS
AMENDED & RESTATED 1999 STOCK INCENTIVE PLAN. We have established a stock
incentive plan, the Amended & Restated 1999 Stock Incentive Plan. The plan is
intended to promote our interests by providing employees and key persons the
opportunity to purchase shares of common stock and to receive compensation
based upon appreciation in the value of those shares. We have reserved
5,648,881 shares of common stock for issuance under this plan, including
3,500,000 additional shares that are subject to stockholder approval under
Proposal 2. As of December 31, 1999, options to purchase an aggregate of
2,075,841 shares of common stock were outstanding under this plan at a weighted
average exercise price of $16.72 per share. No shares of common stock have been
issued upon exercise of options granted under this plan. A more detailed
description of this plan is found under Proposal 2 below.
PRIOR STOCK OPTION PLANS. We adopted six (6) other stock option plans
between 1994 and 1998. Some of these plans provided for incentive stock options
within the meaning of Subsection 422 of the Internal Revenue Code while others
provided for non-qualified stock options.
The Company has seven (7) fixed stock option plans: the 1994 Employee
Non-Qualified Stock Option Plan ("the 1994 Plan"), the 1995 Qualified Employee
Incentive Stock Option Plan ("the 1995 Plan"), the 1996 Employee Non-Qualified
Stock Option Plan ("the 1996 Plan"), the 1997 Employee Incentive Stock Option
Plan ("the 1997 Plan"), the 1998 Non-Qualified Employee Stock Option Plan ("the
1998 Plan") and the 1998 Qualified Employee Incentive Stock Option Plan ("the
1998 ISO Plan"), and the Amended & Restated 1999 Stock Incentive Plan ("the
1999 Plan"). Each Plan provides that the exercise price of the options granted
will be issued at no less than the fair market value of the underlying common
stock at the date of grant. A summary of the Company's stock option plans is
presented below:
<TABLE>
<CAPTION>
SHARES
AUTHORIZED
FOR ISSUANCE CONTRACTUAL LIFE
UNDER PLAN VESTING PERIOD OF OPTIONS
-------------- ------------------------- --------------------
<S> <C> <C> <C>
1994 Plan ............. 125,000 100% upon grant 5 years from grant
1995 Plan ............. 200,000 100% upon grant 5 years from grant
1996 Plan ............. 400,000 100% upon grant 5 years from grant
1997 Plan ............. 200,000 1/3% beginning one year 5 years from grant
from grant
1998 Plan ............. 500,000 23% to 50% beginning 5 years from grant
year from grant
1998 ISO Plan ......... 1,600,000 25% each year beginning 5 years from grant
one year from grant
1999 Plan ............. 2,075,843 25% each year beginning 10 years from grant
one year from grant
</TABLE>
As of December 31, 1999, options to purchase an aggregate of 3,794,256
shares of common stock were outstanding under these plans at a weighted average
exercise price of $10.58 per share. 664,721 shares of common stock have been
issued upon exercise of options granted under these plans. We are not
authorized to issue any more options under any of these plans except the 1999
Plan.
10
<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our certificate of incorporation provides that the liability of the
directors for monetary damages shall be eliminated to the fullest extent
permissible under Delaware law and that we shall indemnify our officers,
employees and agents to the fullest extent permitted under the Delaware law.
Our certificate of incorporation provides that our directors will not be
personally liable to Daleen Technologies or any stockholder for monetary
damages for breach of fiduciary duty as a director, except if the director:
/bullet/ is liable under Section 174 of the Delaware General Corporation
Law;
/bullet/ has breached the director's duty of loyalty to Daleen or its
stockholders;
/bullet/ has acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, has acted in a
manner involving intentional misconduct or a knowing violation
of law; or
/bullet/ has derived an improper personal benefit.
Any amendment, modification or repeal of these provisions will not
eliminate or reduce the effect of these provisions for any act or failure to
act, or any cause of action, suit or claim that would accrue or arise before
any amendment, repeal or adoption of this inconsistent provision. If Delaware
law is amended to provide for further limitations on the personal liability of
directors of corporations for breach of duty of care or other duty as a
director, then the personal liability of the directors will be so further
limited to the greatest extent permitted by Delaware law.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The following non-employee directors were the members of the compensation
committee of the board of directors during 1999: Messrs. Getsey, the chairman,
Cataford and Nemirovsky. None of the members of the Compensation Committee is
an executive officer of Daleen.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Commission thereunder requires the Company's directors
and executive officers and persons who own beneficially more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership of
such stock with the Commission. Based upon a review of such reports, the
Company believes that all its directors, executive officers and 10%
stockholders complied with all applicable Section 16(a) filing requirements
during the last fiscal year.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Company's Board of Directors has
furnished the following report on Executive Compensation in accordance with the
rules and regulations of the Commission. This report outlines the duties of the
Committee with respect to executive compensation, the various components of the
Company's compensation program for executive officers and other key employees,
and the basis on which the 1999 compensation was determined for the executive
officers of the Company.
The Compensation Committee of the board of directors (the "Committee") is
responsible for establishing compensation levels for the executive officers of
the Company, including the annual bonus plan for executive officers and for
administering the Company's stock option plans. The Committee is comprised of
three non-employee directors: Stephen J. Getsy, the chairman, Paul G. Cataford
and Ofer Nemirovsky. The Committee's overall objective is to establish a
compensation policy that will (i) attract, retain and reward executives who
contribute to achieving the Company's business objectives; (ii) motivate
executives to obtain these objectives; and (iii) align the interests of
executives with those of the Company's long-term investors. The Company
compensates executive officers with a combination of salary and incentives
designed to focus their efforts on maximizing both the near-term and long-term
financial performance of the Company. In addition, the Company's compensation
program rewards individual performance that furthers Company goals. The
executive compensation program includes the following: (i) base salary; (ii)
incentive bonuses; (iii) long-term equity incentive awards in the form of stock
option grants; and (iv) other benefits. Each executive officer's compensation
package is designed to provide an appropriately-weighted mix of these elements,
which cumulatively provide a level of compensation roughly equivalent to that
paid by companies of similar size and complexity.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
BASE SALARY. Base salary levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within a
range of base salaries that the Committee believes are paid to similar
executive officers at companies deemed comparable based on the similarity in
revenue level, industry segment and competitive employment market to the
Company. In addition, the Committee generally takes into account the Company's
past financial performance and future expectations, as well as the performance
of the executives and changes in the executives' responsibilities.
INCENTIVE BONUSES. The Committee recommends the payment of bonuses to
provide an incentive to executive officers to be productive over the course of
each fiscal year. These bonuses are awarded only if the Company achieves or
exceeds certain corporate performance objectives. In 1999, incentive bonuses
were based on the Company's achievement of nine strategic business and
financial objectives. In 2000, incentive bonuses will be based on the Company's
achievement of several strategic business and financial objectives together
with the executive's individual performance as it relates to the Company's
performance.
EQUITY INCENTIVES. Stock options are used by the Company for payment of
long-term compensation to provide a stock-based incentive to improve the
Company's financial performance and to assist in the recruitment, retention and
motivation of professional, managerial and other personnel. Generally, stock
options are granted to executive officers from time to time based primarily
upon the individual's actual and/or potential contributions to the Company and
the Company's financial performance. Stock options are designed to align the
interests of the Company's executive officers with those of its stockholders by
encouraging executive officers to enhance the value of the Company, the price
of the common stock, and hence, the stockholders' return. In addition, the
vesting of stock options over a period of time is designed to create an
incentive for the individual to remain with the
12
<PAGE>
Company. The Company has granted options to the executives on an ongoing basis
to provide continuing incentives to the executives to meet future performance
goals and to remain with the Company. Generally, ongoing option grants occur at
year-end and in connection with promotions or an executive's acceptance of
significant new and additional responsibilities. During the fiscal year ended
December 31, 1999, options to purchase an aggregate of 981,208 shares of common
stock were granted to the Company's executive officers.
OTHER BENEFITS. Benefits offered to the Company's executive officers are
provided to serve as a safety net of protection against the financial
catastrophes that can result from illness, disability, or death. Benefits
offered to the Company's executive officers are substantially the same as those
offered to all of the Company's regular employees. In January 1994, the Company
established a tax-qualified deferred compensation 401(k) Savings Plan (the
"Plan") covering all of the Company's eligible full-time employees. Under the
Plan, participants may elect to contribute, through salary reductions, up to
15% of their annual compensation subject to a statutory maximum. In 1999, the
Company provided additional matching contributions in the amount of 25% up to
the first 8% contributed under the Plan. In 2000, the Company's matching
contribution was changed to 35% up to the first 8% contributed under the Plan.
The Plan is designed to qualify under Section 401 of the Internal Revenue Code
so that the contributions by employees or by the Company to the Plan, and
income earned on plan contributions, are not taxable to employees until
withdrawn from the Plan, and so that contributions by the Company will be
deductible by the Company when made.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee annually reviews the performance and compensation of the
chief executive officer based on the assessment of his past performance and its
expectation of his future contributions to the Company's performance. James
Daleen has served as the Company's chief executive officer from since our
founding in 1989. In 1999, Mr. Daleen's base salary was set at $286,000. The
Committee believes the compensation paid to Mr. Daleen was reasonable.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code imposes a limit on tax
deductions for annual compensation (other than performance-based compensation)
in excess of one million dollars paid by a corporation to its chief executive
officer and the other four most highly compensated executive officers of a
corporation. The Company has not established a policy with regard to Section
162(m) of the Code, since the Company has not and does not currently anticipate
paying cash compensation in excess of one million dollars per annum to any
employee. None of the compensation paid by the Company in 1999 was subject to
the limitations on deductibility. The board of directors will continue to
assess the impact of Section 162(m) on its compensation practices and determine
what further action, if any, is appropriate.
Compensation Committee
Stephen J. Getsy, Chairman
Paul J. Cataford
Ofer Nemirovsky
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph presents the Company's total stockholder return of an
investment of $100 in cash on October 1, 1999(1) for (i) the Company's Common
Stock, (ii) the Nasdaq Stock Market--U.S. Index (the "Nasdaq Index")(2), and
(iii) the Nasdaq Computer & Data Processing Services Stocks represented by
companies in SIC code 737 (the "Computer & Data Processing Index")(2). All
values and returns assume reinvestment of the full amount of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD FROM 10/1/99 THROUGH 12/31/99
AMONG DALEEN TECHNOLOGIES, INC., THE NASDAQ INDEX
AND THE COMPUTER & DATA PROCESSING INDEX
[GRAPHIC OMITTED]
The information presented in the graph above was obtained by the Company
from outside sources it considers to be reliable but has not been independently
verified by the Company.
The graph shown above plotted using the following data:
<TABLE>
<CAPTION>
DALEEN COMPUTER & DATA
PERIOD ENDED TECHNOLOGIES, INC. NASDAQ INDEX PROCESSING INDEX
- ------------------ -------------------- -------------- -----------------
<S> <C> <C> <C>
10/01/99 ......... $100.00 $ 100.00 $ 100.00
10/29/99 ......... 244.83 107.61 106.31
11/30/99 ......... 410.91 119.09 121.36
12/31/99 ......... 182.32 144.78 164.77
</TABLE>
- ----------------
(1) The Company completed the initial public offering of its Common Stock on
October 1, 1999. The Company's 1999 fiscal year ended December 31, 1999.
This "Performance Graph" assumes that $100 was invested on October 1, 1999
in the Company's Common Stock at the Company's initial public offering
price of $12.00 per share and at the closing sales price for each index on
that date. No cash dividends have been declared on the Company's Common
Stock. Stockholder returns over the indicated periods should not be
considered indicative of future stockholder returns.
(2) The Nasdaq Index and the Computer & Data Processing Index are calculated by
the Center for Research in Securities Prices.
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (collectively, the "Acts"), except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
14
<PAGE>
CERTAIN TRANSACTIONS
ISSUANCE OF COMMON STOCK IN ACQUISITION OF INLOGIC
Effective December 16, 1999, we acquired all of the issued and outstanding
capital shares of Inlogic Software Inc., a Nova Scotia corporation ("Inlogic").
We acquired the capital shares of Inlogic in exchange for an aggregate of
2,160,239 exchangeable shares (the "Exchangeable Shares") and 57,435 shares of
the Company's Common Stock. The Exchangeable Shares were issued by our wholly
owned subsidiary, Daleen Canada Corporation, but are exchangeable at any time
into shares of our Common Stock on a one-for-one basis. As of March 21, 2000,
an aggregate of 2,145,471 Exchangeable Shares had been converted into shares of
our Common Stock. We also issued options to acquire an aggregate of 167,326
shares of our Common Stock in exchange for all of the outstanding options to
acquire capital shares of Inlogic. The terms of the transaction are set forth
in a Share Purchase Agreement as well as certain other transaction documents
which are filed as Exhibits to our Current Report on Form 8-K filed on December
30, 1999.
RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH COMPANIES ASSOCIATED WITH SAIC
Mr. Roper, a member of the board of directors, is the senior vice
president and chief financial officer of Science Applications International
Corporation ("SAIC"). SAIC is a significant stockholder of the Company. SAIC
owns 43% of all voting stock of Danet, Inc. and 100% of the voting stock of
Telcordia. Danet is a customer of the Company and a distributor of its
products. Sales to Danet for the years ended December 31, 1997, 1998 and 1999
amounted to $0, $334,794 and $1,031,350. The Company paid Danet, in its
capacity as distributor of its products, $0, $2.2 million and $99,468 for the
years ended December 31, 1997, 1998 and 1999. The Company had a strategic
alliance relationship with Telcordia. No revenue was received and no payments
were made in connection with this relationship for each of the years in the
three-year period ended December 31, 1999.
LOANS TO EXECUTIVES
In June 1999, we offered loans to three executive officers and other
employees for an aggregate amount of approximately $435,000 for the purposes of
providing funds for the exercise of vested, non-qualified stock options and
payment of tax obligations resulting from the exercise of those options. The
loans bear interest at a rate of 8.75 percent per annum. All principal and
accrued interest payable under the notes is due no later than June 2004. The
loans are full recourse and each officer has pledged the stock issued upon
exercise of this options as security for his loan. As of December 31, 1999,
approximately $372,000 of these loans has been repaid. We loaned executive
officers and other employees an amount to pay the income tax related to the
exercise of stock options. The total amount of loans was approximately $498,000
of which $389,000 was repaid as of December 31, 1999. We loaned an executive
$50,000 in November 1999 in accordance with this executive's employment
agreement. This amount remains outstanding at December 31, 1999.
OTHER TRANSACTIONS
We entered into indemnification agreements with our executive officers and
directors containing provisions that may require us to indemnify these
individuals against liabilities that may arise by reason of their status or
service as officers and directors, other than liabilities arising from willful
misconduct of a culpable nature, and to advance expenses incurred as a result
of any proceedings against them for which they could be indemnified.
POLICY ON FUTURE TRANSACTIONS
Our board of directors has adopted a resolution providing that all future
transactions with related parties, including our officers, directors, principal
stockholders or affiliates, must be approved by a
15
<PAGE>
majority of the board of directors, including a majority of the independent and
disinterested members of the board of directors, or a majority of the
disinterested stockholders and must be on terms no less favorable to us than
could be obtained from unaffiliated third parties.
PROPOSAL 2
ADOPTION OF THE DALEEN TECHNOLOGIES INC.
AMENDED & RESTATED 1999 STOCK INCENTIVE PLAN
The board has approved, subject to stockholder approval, a proposal to
amend and restate the Company's 1999 Stock Incentive Plan (the "1999 Plan").
The amendment will increase the number of shares of Common Stock available for
grant under such plan from 2,148,881 to 5,648,881, an increase of 3,500,000
shares of Common Stock. As of April 1, 2000, there were approximately 2,075,841
outstanding options to purchase shares of Common Stock under the 1999 Plan.
Therefore, in the event that the proposed amendment is approved, approximately
3,573,040 options would be available for grant under the 1999 Plan. The text of
the proposed Amended & Restated 1999 Plan is set forth in Annex A to this Proxy
Statement. The 1999 Plan is also described above under "Proposal 1 -- Election
of Directors -- Stock Option and Other Compensation Plans" and is qualified in
its entirety by reference to the text of the 1999 Plan.
DESCRIPTION OF THE AMENDED & RESTATED 1999 STOCK INCENTIVE PLAN. The 1999
plan provides for the grant of four types of awards:
/bullet/ incentive stock options;
/bullet/ non-qualified stock options;
/bullet/ restricted stock awards; and
/bullet/ stock appreciation rights.
Under the 1999 plan, options have been granted to purchase 2,075,841
shares of our common stock at a weighted average exercise price of $16.72 per
share.
Beginning in year 2000, the 1999 Plan authorizes us to automatically
increase the number of shares of common stock available for issuance under the
plan on the first day of each fiscal year by 5,000,000 shares, on a cumulative
basis. In no event shall an increase in reserved shares under the 1999 Plan
cause the total number of shares reserved under the plan to exceed 20% of the
total number of outstanding shares of the Company on the last day of the
preceding fiscal year.
The proposed amendment and restatement will (i) clarify the Board's powers
under the 1999 Plan, (ii) increase the number of shares available for stock
incentives under the 1999 Plan and the number of shares automatically added
each year under the 1999 Plan, (iii) approve the payment with outstanding stock
of the Corporation for purposes of exercising options granted under the 1999
Plan and for purposes of tax withholding, (iv) provide that incentive stock
options may continue beyond the termination of employment of an employee in
accordance with current legal limitations, (v) continue rewarding and
incentivizing employees of and key persons affiliated with the Corporation by
providing such persons with an interest in the Corporation which corresponds to
that of the Corporation's stockholders, and (vi) make other changes to the plan
as reflected in the attached copy of the plan.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise
16
<PAGE>
is an adjustment item for alternative minimum tax purposes and may subject the
optionee to the alternative minimum tax. Upon a disposition of the shares more
than two years after grant of the option and one year after exercise of the
option, any gain or loss is treated as long-term capital gain or loss. Net
capital gains on shares held more than 12 months may be taxed at a maximum
federal rate of 20%. Capital losses are allowed in full against capital gains
and up to $3,000 against other income. If these holding periods are not
satisfied, the optionee recognizes ordinary income at the time of disposition
equal to the difference between the exercise price and the lower of (i) the
fair market value of the shares at the date of the option exercise or (ii) the
sale price of the shares. Any gain or loss recognized on such a premature
disposition of the shares in excess of the amount treated as ordinary income is
treated as long-term or short-term capital gain or loss, depending on the
holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director,
or 10% stockholder of the Company. Unless limited by Section 162(m) of the
Code, the Company is entitled to a deduction in the same amount as the ordinary
income recognized by the optionee.
NONSTATUTORY STOCK OPTIONS. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. Unless limited by
Section 162(m) of the Code, the Company is entitled to a deduction in the same
amount as the ordinary income recognized by the optionee. Upon a disposition of
such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
provided above, is treated as long-term or short-term capital gain or loss,
depending on the holding period. Net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 20%. Capital losses are
allowed in full against capital gains and up to $3,000 against other income.
STOCK PURCHASE RIGHTS. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock options. However, restricted stock is
subject to a "substantial risk of forfeiture" within the meaning of Section 83
of the Code, because the Company may repurchase the stock when the purchaser
ceases to provide services to the Company. As a result of this substantial risk
of forfeiture, the purchaser will not recognize ordinary income at the time of
purchase. Instead, the purchaser will recognize ordinary income on the dates
when the stock is no longer subject to a substantial risk of forfeiture (i.e.,
when the Company's right of repurchase lapses). The purchaser's ordinary income
is measured as the difference between the purchase price and the fair market
value of the stock on the date the stock is no longer subject to right of
repurchase. The purchaser may accelerate to the date of purchase his or her
recognition of ordinary income, if any, and begin his or her capital gains
holding period by timely filing (i.e., within thirty days of purchase), an
election pursuant to Section 83(b) of the Code. In such event, the ordinary
income recognized, if any, is measured as the difference between the purchase
price and the fair market value of the stock on the date of purchase, and the
capital gain holding period commences on such date. The ordinary income
recognized by a purchaser who is an employee will be subject to tax withholding
by the Company. Different rules may apply if the purchaser is also an officer,
director, or 10% shareholder of the Company.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE 1999 PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
The proposed amendment & restatement of the 1999 Plan will be adopted upon
receiving the affirmative vote of holders of a majority of the shares present
or represented by proxy at the Annual
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Meeting. Proxies will be voted in accordance with the specifications marked
thereon, and if no specification is made, will be voted "FOR" adoption of the
proposed amendment and restatement of the 1999 Plan. The Board has determined
that the amendment and restatement of the 1999 Plan is in the best interest of
the Company and its stockholders.
The Board of Directors recommends a vote FOR the adoption of the Daleen
Technologies, Inc. Amended & Restated 1999 Stock Incentive Plan.
OTHER MATTERS
PROPOSALS INTENDED TO BE PRESENTED AT NEXT ANNUAL MEETING. Rules of the
Commission require that any proposal by a stockholder of the Company for
consideration at the 2001 Annual Meeting of Stockholders must be received by
the Company no later than January 4, 2001 if any such proposal is to be
eligible for inclusion in the Company's proxy materials for its 2001 Annual
Meeting. Under such rules, the Company is not required to include stockholder
proposals in its proxy materials unless certain other conditions specified in
such rules are met.
In order for a stockholder to bring any business or nominations before the
Annual Meeting of Stockholders, certain conditions set forth in the Company's
Bylaws must be complied with, including, but not limited to, delivery of notice
to the Company not less than 90, nor more than 120 days prior to the first
anniversary of the Company's annual meeting held in the prior year.
OTHER BUSINESS. Management knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
meeting. If, however, other matters are properly brought before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares represented thereby on such matters in accordance with their best
judgment.
PROXY SOLICITATION. The expense of solicitation of proxies will be borne
by the Company. In addition to solicitation of proxies by mail, certain
officers, directors and Company employees who will receive no additional
compensation for their services my solicit proxies by telephone, telegraph or
personal interview. The Company is required to request brokers and nominees who
hold stock in their name to furnish this proxy material to beneficial owners of
the stock and will reimburse such brokers and nominees for their reasonable
out-of-pocket expenses in so doing.
ANNUAL REPORT. The Company will provide a copy of its Annual Report on
Form 10-K for the year ended December 31, 1999, without charge, to any
stockholder who makes a written request to Stephen M. Wagman, Secretary, Daleen
Technologies, Inc., 1750 Clint Moore Road, Boca Raton, FL 33487.
BY ORDER OF THE BOARD OF DIRECTORS,
Stephen M. Wagman,
SECRETARY
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ANNEX A
DALEEN TECHNOLOGIES, INC.
AMENDED & RESTATED
1999 STOCK INCENTIVE PLAN
SECTION 1.
PURPOSE
The purpose of this Plan is to promote the interests of the Company by
providing the opportunity to purchase Shares or to receive compensation which
is based upon appreciation in the value of Shares to Employees and Key Persons
in order to attract and retain Employees and Key Persons by providing an
incentive to work to increase the value of Shares and a stake in the future of
the Company which corresponds to the stake of each of the Company's
shareholders. The Plan provides for the grant of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards and Stock Appreciation
Rights to aid the Company in obtaining these goals. This amended and restated
plan supercedes and replaces in its entirety the Daleen Technologies, Inc.
Amended & Restated Stock Incentive Plan previously adopted by the Board.
SECTION 2.
DEFINITIONS
Each term set forth in this Section shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular, and reference to one gender shall include the other gender.
2.1 BOARD means the Board of Directors of the Company.
2.2 CODE means the Internal Revenue Code of 1986, as amended.
2.3 COMMITTEE means the Compensation Committee of the Board.
2.4 COMMON STOCK means the common stock of the Company.
2.5 COMPANY means Daleen Technologies, Inc., a Delaware corporation, and
any successor to such organization.
2.6 DIRECTOR means a member of the Board.
2.7 EMPLOYEE means an employee of the Company, a Subsidiary or a Parent.
2.8 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.9 EXERCISE PRICE means the price that shall be paid to purchase one (1)
Share upon the exercise of an Option granted under this Plan.
2.10 FAIR MARKET VALUE of each Share on any date shall mean the following:
(a) STOCK LISTED AND SHARES TRADED. If Shares are listed and traded on
a national securities exchange (as such term is defined by the 1934 Act) or on
The Nasdaq National Market on the date of determination, the Fair Market Value
per share shall be the closing price of a Share on said national securities
exchange or The Nasdaq National Market on the date of determination. If the
Shares are traded in the over-the-counter market, the Fair Market Value per
Share shall be the average of the closing bid and asked prices on the date of
determination.
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(b) STOCK LISTED BUT NO SHARES TRADED. If the Shares are listed on a
national securities exchange or on The Nasdaq National Market but no Shares are
traded on the date of determination but there were shares traded on dates
within a reasonable period before the date of determination, the Fair Market
Value shall be the closing price of the Shares on the most recent date before
the date of determination. If the Shares are regularly traded in the
over-the-counter market but no Shares are traded on the date of determination
(or if records of such trades are unavailable or burdensome to obtain) but
there were Shares traded on dated with a reasonable period before the date of
determination the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date before the date of
determination.
(c) STOCK NOT LISTED. If the Shares are not listed on a national
securities exchange or The Nasdaq National Market and are not regularly traded
in the over-the-counter market, then the Committee shall determine the Fair
Market Value of the Shares from all relevant available facts, which may include
the average of the closing bid and ask prices reflected in the over-the-counter
market on a date within a reasonable period either before or after the date of
determination or opinions of independent experts as to value and may take into
account any recent sales and purchases of such Shares to the extent they are
representative.
The Committee's determination of Fair Market Value, which shall be made
pursuant to the foregoing provisions, shall be final and binding for all
purposes of this Plan.
2.11 INSIDER means an individual who is, on the relevant date, an officer,
director or ten percent (10%) beneficial owner of any class of the Company's
equity securities that is registered pursuant to Section 12 of the Exchange
Act, all as defined under Section 16 of the Exchange Act.
2.12 ISO means an option granted under this Plan to purchase Shares, which
is intended by the Company to satisfy the requirements of Code /section/422 as
an incentive stock option.
2.13 KEY PERSON means (i) a member of the Board who is not an Employee,
(ii) a consultant, distributor or other person who has rendered or committed to
render valuable services to the Company, a Subsidiary or a Parent, (iii) a
person who has incurred, or is willing to incur, financial risk in the form of
guaranteeing or acting as co-obligor with respect to debts or other obligations
of the Company, or (iv) a person who has extended credit to the Company. Key
Persons are not limited to individuals and, subject to the preceding
definition, may include corporations, partnerships, associations and other
entities.
2.14 NON-ISO means an option granted under this Plan to purchase Shares,
which is not intended by the Company to satisfy the requirements of Code
/section/422.
2.15 OPTION means an ISO or a Non-ISO.
2.16 OUTSIDE DIRECTOR means a Director who is not an Employee and who
qualifies as (1) a "non-employee director" under Rule 16b-3(b)(3) under the
1934 Act, as amended from time to time, and (2) an "outside director" under
Code /section/162(m) and the regulations promulgated thereunder.
2.17 PARENT means any corporation, which is a parent of the Company
(within the meaning of Code /section/424).
2.18 PARTICIPANT means an individual who receives a Stock Incentive
hereunder.
2.19 PERFORMANCE-BASED EXCEPTION means the performance-based exception
from the tax deductibility limitations of Code /section/162(m).
2.20 PLAN means the Daleen Technologies, Inc. Amended & Restated 2000
Stock Incentive Plan, as may be amended from time to time.
2.21 SHARE means a share of the Common Stock of the Company.
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2.22 STOCK INCENTIVE means an ISO, a Non-ISO, a Restricted Stock Award or
a Stock Appreciation Right.
2.23 STOCK INCENTIVE AGREEMENT means an agreement between the Company and
a Participant evidencing an award of a Stock Incentive.
2.24 SUBSIDIARY means any corporation, which is a subsidiary of the
Company (within the meaning of Code /section/424(f)).
2.25 SURRENDERED SHARES means the Shares described in Section 8.2 which
(in lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 8.
2.26 TEN PERCENT SHAREHOLDER means a person who owns (after taking into
account the attribution rules of Code /section/424(d)) more than ten percent
(10%) of the total combined voting power of all classes of shares of either the
Company, a Subsidiary or a Parent.
SECTION 3.
SHARES SUBJECT TO STOCK INCENTIVES
The total number of Shares that may be issued pursuant to Stock Incentives
under this Plan shall not exceed the number of Reserved Shares (as calculated
below). The initial number of Reserved Shares shall be 5,648,881 (five million,
six hundred forty-eight thousand, eight hundred eighty one). Commencing on
January 1, 2001 and continuing on each January 1 thereafter, the number of
Reserved Shares shall be increased each year, on a cumulative basis, by
5,000,000 Shares (or, if less, the maximum number of Shares permitted based on
the limitations set forth in the following sentence), all as adjusted pursuant
to Section 11. Notwithstanding the foregoing, in no event shall the increase in
the number of Reserved Shares from one fiscal year to the next exceed a number
of Shares that would cause the total number of Reserved Shares to exceed 20% of
the total number of Fully Diluted Shares of Common Stock (as defined below)
calculated as of 5:00 p.m., eastern time, on the immediately preceding December
31. The term "Fully Diluted Shares of Common Stock Outstanding" shall mean the
shares of Common Stock outstanding calculated on a fully diluted basis,
including without limitation shares of Common Stock actually outstanding plus
shares of Common Stock issuable in exchange for convertible securities and upon
exercise of outstanding options and warrants, whether or not such convertible
securities, options and warrants are then vested or otherwise convertible. Such
Reserved Shares shall be reserved, to the extent that the Company deems
appropriate, from authorized but unissued Shares, and from Shares which have
been reacquired by the Company. Furthermore, any Shares subject to a Stock
Incentive which remain after the cancellation, expiration or exchange of such
Stock Incentive thereafter shall again become available for use under this
Plan, but any Surrendered Shares which remain after the surrender of an ISO or
a Non-ISO under Section 8 shall not again become available for use under this
Plan. Notwithstanding anything herein to the contrary, no Participant may be
granted Options or Stock Appreciation Rights covering an aggregate number of
Shares in excess of 500,000 (five hundred thousand) in any calendar year.
SECTION 4.
EFFECTIVE DATE
The effective date of this amended and restated Plan, as documented
hereby, shall be the date it is adopted by the Board, as noted in resolutions
effectuating such adoption, provided the shareholders of the Company approve
this Plan within twelve (12) months after such effective date. If such
effective date comes before such shareholder approval, any Stock Incentives
granted under this Plan before the date of such approval automatically shall be
granted subject to such approval. The
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provisions of this amended and restated Plan shall apply to all Stock
Incentives granted under this Plan on and after the effective date of this
Plan. Prior versions of this Plan shall continue to govern Stock Incentives
granted under such versions.
SECTION 5.
ADMINISTRATION
5.1 GENERAL ADMINISTRATION. This Plan shall be administered by the Board.
The Board, acting in its absolute discretion, shall exercise such powers and
take such action as expressly called for under this Plan. The Board shall have
the power to interpret this Plan and, subject to the terms and provisions of
this Plan, to take such other action in the administration and operation of the
Plan as it deems equitable under the circumstances. The Board's actions shall
be binding on the Company, on each affected Employee or Key Person, and on each
other person directly or indirectly affected by such actions.
5.2 AUTHORITY OF THE BOARD. Except as limited by law or by the Articles of
Incorporation or Bylaws of the Company, and subject to the provisions herein,
the Board shall have full power to select Employees and Key Persons who shall
participate in the Plan, to determine the sizes and types of Stock Incentives
in a manner consistent with the Plan, to determine the terms and conditions of
Stock Incentives in a manner consistent with the Plan, to construe and
interpret the Plan and any agreement or instrument entered into under the Plan,
to establish, amend or waive rules and regulations for the Plan's
administration, and to amend the terms and conditions of any outstanding Stock
Incentives as allowed under the Plan and such Stock Incentives. Further, the
Board may make all other determinations, which may be necessary or advisable
for the administration of the Plan.
5.3 DELEGATION OF AUTHORITY. The Board may delegate its authority under
the Plan, in whole or in part, to a Committee (the Compensation Committee)
appointed by the Board consisting of not less than two (2) directors. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board. The Committee (if appointed) shall act
according to the policies and procedures set forth in the Plan and to those
policies and procedures established by the Board, and the Committee shall have
such powers and responsibilities as are set forth by the Board. Reference to
the Board in this Plan shall specifically include reference to the Committee
where the Board has delegated its authority to the Committee, and any action by
the Committee pursuant to a delegation of authority by the Board shall be
deemed an action by the Board under the Plan. Notwithstanding the above, the
Board may assume the powers and responsibilities granted to the Committee at
any time, in whole or in part. With respect to Committee appointments and
composition, only a Committee (or a sub-committee thereof) comprised solely of
two (2) or more Outside Directors may grant Stock Incentives which will meet
the Performance-Based Exception, and only a Committee comprised solely of
Outside Directors may grant Stock Incentives to Insiders that will be exempt
from Section 16(b) of the Exchange Act.
5.4 DECISIONS BINDING. All determinations and decisions made by the Board
(or its delegate) pursuant to the provisions of this Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, Employees, Key
Persons, Participants, and their estates and beneficiaries
SECTION 6.
ELIGIBILITY
Employees and Key Persons selected by the Board shall be eligible for the
grant of Stock Incentives under this Plan, but no Employee or Key Person shall
have the right to be granted a Stock Incentive under this Plan merely as a
result of his or her status as an Employee or Key Person. Only Employees shall
be eligible to receive a grant of ISO's.
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SECTION 7
TERMS OF STOCK INCENTIVES
7.1 TERMS AND CONDITIONS OF ALL STOCK INCENTIVES.
(a) The Board, in its absolute discretion, shall grant Stock Incentives
under this Plan from time to time and shall have the right to grant new Stock
Incentives in exchange for outstanding Stock Incentives. Stock Incentives shall
be granted to Employees or Key Persons selected by the Board, and the Board
shall be under no obligation whatsoever to grant Stock Incentives to all
Employees or Key Persons, or to grant all Stock Incentives subject to the same
terms and conditions.
(b) The number of Shares as to which a Stock Incentive shall be granted
shall be determined by the Board in its sole discretion, subject to the
provisions of Section 3 as to the total number of shares available for grants
under the Plan.
(c) Each Stock Incentive shall be evidenced by a Stock Incentive
Agreement executed by the Company and the Participant, which shall be in such
form and contain such terms and conditions as the Board in its discretion may,
subject to the provisions of the Plan, from time to time determine.
(d) The date a Stock Incentive is granted shall be the date on which
the Board has approved the terms and conditions of the Stock Incentive
Agreement and has determined the recipient of the Stock Incentive and the
number of Shares covered by the Stock Incentive and has taken all such other
action necessary to complete the grant of the Stock Incentive.
7.2 TERMS AND CONDITIONS OF OPTIONS. Each grant of an Option shall be
evidenced by a Stock Incentive Agreement, which shall:
(a) specify whether the Option is an ISO or Non-ISO; and
(b) incorporate such other terms and conditions as the Board, acting in
its absolute discretion, deems consistent with the terms of this Plan,
including (without limitation) a restriction on the number of Shares subject to
the Option which first become exercisable or subject to surrender during any
calendar year.
In determining Employee(s) or Key Person(s) to whom an Option shall be
granted and the number of Shares to be covered by such Option, the Board may
take into account the recommendations of the Chief Executive Officer of the
Company and its other officers, the duties of the Employee or Key Person, the
present and potential contributions of the Employee or Key Person to the
success of the Company, the anticipated number of years of service remaining
before the attainment by the Employee of retirement age, and other factors
deemed relevant by the Board, in its sole discretion, in connection with
accomplishing the purpose of this Plan. An Employee or Key Person who has been
granted an Option to purchase Shares, whether under this Plan or otherwise, may
be granted one or more additional Options. If the Board grants an ISO and a
Non-ISO to an Employee on the same date, the right of the Employee to exercise
or surrender one such Option shall not be conditioned on his or her failure to
exercise or surrender the other such Option.
(a) EXERCISE PRICE. Subject to adjustment in accordance with Section 11
and the other provisions of this Section, the Exercise Price shall be as set
forth in the applicable Stock Incentive Agreement. With respect to each grant
of an ISO to a Participant who is not a Ten Percent Shareholder, the Exercise
Price shall not be less than the Fair Market Value on the date the ISO is
granted. With respect to each grant of an ISO to a Participant who is a Ten
Percent Shareholder, a Ten Percent Shareholder shall not be less than one
hundred ten percent (110%) of the Fair Market Value on the date the ISO is
granted. If a Stock Incentive is a Non-ISO, the Exercise Price for each Share
shall be no less than the minimum price required by applicable state law, or by
the Company's governing instrument, or $0.01, whichever price is greater. Any
Stock Incentive intended to meet the Performance-Based Exception must be
granted with an Exercise Price equivalent to or greater than the Fair Market
Value of the Shares subject thereto.
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(b) OPTION TERM. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Stock Incentive Agreement, but no Stock Incentive Agreement shall:
(i) make an Option exercisable before the date such Option is
granted; or
(ii) make an Option exercisable after the earlier of:
(A) the date such Option is exercised in full, or
(B) the date which is the tenth (10th) anniversary of the date
such Option is granted, if such Option is a Non-ISO or an ISO granted to a
non-Ten Percent Shareholder, or the date which is the fifth (5th) anniversary
of the date such Option is granted, if such Option is an ISO granted to a Ten
Percent Shareholder.
A Stock Incentive Agreement may provide for the exercise of an Option
after the employment of an Employee has terminated for any reason whatsoever,
including death or disability; provided, however, in no event may an Option
which is an ISO provide for the exercise of the Option later than ninety (90)
days following a termination of employment or later than one year following a
termination of employment on account of disability. The Employee's rights, if
any, upon termination of employment will be set forth in the applicable Stock
Incentive Agreement.
(c) PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised accompanied by full payment for
the Shares. Payment for shares of Stock purchased pursuant to exercise of an
Option shall be made in cash or, unless prohibited by the Stock Incentive
Agreement, by delivery to the Company of a number of Shares which have been
owned and completely paid for by the holder for at least six (6) months prior
to the date of exercise (i.e., "mature shares" for accounting purposes) having
an aggregate Fair Market Value equal to the amount to be tendered, or a
combination thereof. In addition, unless prohibited by the Stock Incentive
Agreement, the Option may be exercised through a brokerage transaction
following registration of the Company's equity securities under Section 12 of
the Securities Exchange Act of 1934 as permitted under the provisions of
Regulation T applicable to cashless exercises promulgated by the Federal
Reserve Board. However, notwithstanding the foregoing, with respect to any
Option recipient who is an Insider, a tender of shares or a cashless exercise
must (1) have met the requirements of an exemption under Rule 16b-3 promulgated
under the Exchange Act, or (2) be a subsequent transaction the terms of which
were provided for in a transaction initially meeting the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act. Unless the Stock
Incentive Agreement provides otherwise, the foregoing exercise payment methods
shall be subsequent transactions approved by the original grant of an Option.
Except as provided in subparagraph (f) below, payment shall be made at the time
that the Option or any part thereof is exercised, and no Shares shall be issued
or delivered upon exercise of an Option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the rights of
a stockholder.
Notwithstanding the above, and in the sole discretion of the Board, an
Option may be exercised as to a portion or all (as determined by the Board) of
the number of Shares specified in the Stock Incentive Agreement by delivery to
the Company of a promissory note, such promissory note to be executed by the
Participant and which shall include, with such other terms and conditions as
the Board shall determine, provisions in a form approved by the Board under
which: (i) the balance of the aggregate purchase price shall be payable in
equal installments over such period and shall bear interest at such rate (which
shall not be less than the prime bank loan rate as determined by the Board) as
the Board shall approve, and (ii) the Participant shall be personally liable
for payment of the unpaid principal balance and all accrued but unpaid
interest.
(d) CONDITIONS TO EXERCISE OF AN OPTION. Each Option granted under the
Plan shall be exercisable at such time or times, or upon the occurrence of such
event or events, and in such
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amounts, as the Board shall specify in the Stock Incentive Agreement; provided,
however, that subsequent to the grant of an Option, the Board, at any time
before complete termination of such Option, may accelerate the time or times at
which such Option may be exercised in whole or in part. The Board may impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
as it may deem advisable, including, without limitation, vesting or
performance-based restrictions, restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and under any blue sky or
state securities laws applicable to such Shares.
(e) TRANSFERABILITY OF OPTIONS. An Option shall not be transferable or
assignable except by will or by the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by the Participant, or
in the event of the disability of the Participant; provided, however, that in
the event the Participant is incapacitated and unable to exercise his or her
Option, such Option may be exercised by such Participant's legal guardian,
legal representative, or other representative whom the Board deems appropriate
based on applicable facts and circumstances. The determination of incapacity of
a Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is
incapacitated shall be determined by the Board in its sole and absolute
discretion. Notwithstanding the foregoing, a Non-ISO may also be transferred as
a bona fide gift to one or more members of the Optionee's family or to a trust
for the benefit of one or more family members, in which case the transferee
shall be subject to all provisions of the Plan, the Stock Incentive Agreement
and the Exercise and Shareholder Agreement provided by the Company in
connection with the exercise of the Option and purchase of Shares. In the event
of such a gift, the Optionee shall promptly notify the Board of such transfer
and deliver to the Board such written documentation as the Board may in its
discretion request, including, without limitation, the written acknowledgment
of the donee that the donee is subject to the provisions of the Plan, the Stock
Incentive Agreement and the Exercise and Shareholder Agreement.
(f) SPECIAL PROVISIONS FOR CERTAIN SUBSTITUTE OPTIONS. Notwithstanding
anything to the contrary in this Section, any Option in substitution for a
stock option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code /section/424(a) is applicable, may
provide for an exercise price computed in accordance with Code /section/424(a)
and the regulations thereunder and may contain such other terms and conditions
as the Board may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued stock
option being replaced thereby.
7.3 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an
Option. A Stock Appreciation Right shall entitle the Participant to receive
upon exercise or payment the excess of: (I) the Fair Market Value of a
specified number of Shares at the time of exercise, over (II) a specified price
which shall be not less than the Exercise Price for that number of Shares in
the case of a Stock Appreciation Right granted in connection with a previously
or contemporaneously granted Option, or in the case of any other Stock
Appreciation Right not less than one hundred percent (100%) of the Fair Market
Value of that number of Shares at the time the Stock Appreciation Right was
granted. A Stock Appreciation Right granted in connection with an Option may
only be exercised to the extent that the related Option has not been exercised.
The exercise of a Stock Appreciation Right shall result in a pro rata surrender
of the related Option to the extent the Stock Appreciation Right has been
exercised.
(a) PAYMENT. Upon exercise or payment of a Stock Appreciation Right,
the Company shall pay to the Participant the appreciation in cash or Shares (at
the aggregate Fair Market Value on the date of payment or exercise) as provided
in the Stock Incentive Agreement or, in the absence of such provision, as the
Board may determine.
(b) CONDITIONS TO EXERCISE. Each Stock Appreciation Right granted under
the Plan shall be exercisable at such time or times, or upon the occurrence of
such event or events, and in such
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amounts, as the Board shall specify in the Stock Incentive Agreement; provided,
however, that subsequent to the grant of a Stock Appreciation Right, the Board,
at any time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised in whole or in part.
(c) TRANSFERABILITY OF STOCK APPRECIATION RIGHTS. Except as otherwise
provided in a Participant's Stock Incentive Agreement, no Stock Appreciation
Right granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise provided in a
Participant's Stock Incentive Agreement, all Stock Appreciation Rights granted
to a Participant under the Plan shall be exercisable, during the Participant's
lifetime, only by the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Stock
Appreciation Right, such Stock Appreciation Right may be exercised by such
Participant's legal guardian, legal representative, or other representative
whom the Board deems appropriate based on applicable facts and circumstances.
Notwithstanding the foregoing, a Stock Appreciation Right which is granted in
connection with the grant of a Non-ISO may be transferred, but only with the
Non-ISO and only as a bona fide gift, to one or more members of the Optionee's
family or to a trust for the benefit of one or more family members, in which
case the transferee shall be subject to all provisions of the Plan and the
Stock Incentive Agreement. In the event of such a gift, the Optionee shall
promptly notify the Board of such transfer and deliver to the Board such
written documentation as the Board may in its discretion request, including,
without limitation, the written acknowledgment of the donee that the donee is
subject to the provisions of the Plan and the Stock Incentive Agreement. The
determination of incapacity of a Participant and the determination of the
appropriate representative of the Participant shall be determined by the Board
in its sole and absolute discretion.
7.4 TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. Shares awarded
pursuant to Restricted Stock Awards shall be subject to such restrictions as
determined by the Board for periods determined by the Board. Unless the
applicable Stock Incentive Agreement provides otherwise, holders of Restricted
Stock Awards shall be entitled to vote and receive dividends during the periods
of restriction to the same extent as holders of unrestricted Common Stock. The
Board shall have the power to permit, in its discretion, an acceleration of the
expiration of the applicable restriction period with respect to any part or all
of the Shares awarded to a Participant. The Board may require a cash payment
from the Participant in an amount no greater than the aggregate Fair Market
Value of the Shares awarded determined at the date of grant in exchange for the
grant of a Restricted Stock Award or may grant a Restricted Stock Award without
the requirement of a cash payment.
SECTION 8.
SURRENDER OF OPTIONS
8.1 GENERAL RULE. The Board, acting in its absolute discretion, may
incorporate a provision in a Stock Incentive Agreement to allow an Employee or
Key Person to surrender his or Option in whole or in part in lieu of the
exercise in whole or in part of that Option on any date that:
(a) the Fair Market Value of the Shares subject to such Option exceeds
Exercise Price for such Shares, and
(b) the Option to purchase such Shares is otherwise exercisable.
8.2 PROCEDURE. The surrender of an Option in whole or in part shall be
effected by the delivery of the Stock Incentive Agreement to the Board,
together with a statement signed by the Participant which specifies the number
of Shares ("Surrendered Shares") as to which the Participant surrenders his or
her Option and how he or she desires payment be made for such Surrendered
Shares.
8.3 PAYMENT. A Participant in exchange for his or her Surrendered Shares
shall receive a payment in cash or in Shares, or in a combination of cash and
Shares, equal in amount on the date
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such surrender is effected to the excess of the Fair Market Value of the
Surrendered Shares on such date over the Exercise Price for the Surrendered
Shares. The Board, acting in its absolute discretion, can approve or disapprove
a Participant's request for payment in whole or in part in cash and can make
that payment in cash or in such combination of cash and Shares as the Board
deems appropriate. A request for payment only in Shares shall be approved and
made in Shares to the extent payment can be made in whole shares of Shares and
(at the Board's discretion) in cash in lieu of any fractional Shares.
8.4 RESTRICTIONS. Any Stock Incentive Agreement which incorporates a
provision to allow a Participant to surrender his or her Option in whole or in
part also shall incorporate such additional restrictions on the exercise or
surrender of such Option as the Board deems necessary to satisfy the conditions
to the exemption under Rule 16b-3 (or any successor exemption) to Section 16(b)
of the Exchange Act.
SECTION 9.
SECURITIES REGULATION
Each Stock Incentive Agreement may provide that, upon the receipt of
Shares as a result of the surrender or exercise of a Stock Incentive, the
Participant shall, if so requested by the Company, hold such Shares for
investment and not with a view of resale or distribution to the public and, if
so requested by the Company, shall deliver to the Company a written statement
satisfactory to the Company to that effect. Each Stock Incentive Agreement may
also provide that, if so requested by the Company, the Participant shall make a
written representation to the Company that he or she will not sell or offer to
sell any of such Shares unless a registration statement shall be in effect with
respect to such Shares under the Securities Act of 1933, as amended ("1933
Act"), and any applicable state securities law or, unless he or she shall have
furnished to the Company an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required. Certificates representing the Shares transferred upon the
exercise or surrender of a Stock Incentive granted under this Plan may at the
discretion of the Company bear a legend to the effect that such Shares have not
been registered under the 1933 Act or any applicable state securities law and
that such Shares may not be sold or offered for sale in the absence of an
effective registration statement as to such Shares under the 1933 Act and any
applicable state securities law or an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required.
SECTION 10.
LIFE OF PLAN
No Stock Incentive shall be granted under this Plan on or after the
earlier of:
(a) the tenth (10th) anniversary of the effective date of this Plan (as
determined under Section 4 of this Plan), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Stock Incentives have
been surrendered or exercised in full or no longer are exercisable, or
(b) the date on which all of the Shares reserved under Section 3 of this
Plan have (as a result of the surrender or exercise of Stock Incentives granted
under this Plan) been issued or no longer are available for use under this
Plan, in which event this Plan also shall terminate on such date.
SECTION 11.
ADJUSTMENT
The number of Shares reserved under Section 3 of this Plan, the limit on
the number of Shares which may be granted during a calendar year to any
individual under Section 3 of this Plan, the
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number of Shares subject to Stock Incentives granted under this Plan, and the
Exercise Price of any Options, shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of the Company, including,
but not limited to, such changes as stock dividends or stock splits.
Furthermore, the Board shall have the right to adjust (in a manner which
satisfies the requirements of Code /section/424(a)) the number of Shares
reserved under Section 3, and the number of Shares subject to Stock Incentives
granted under this Plan, and the Exercise Price of any Options in the event of
any corporate transaction described in Code /section/424(a) which provides for
the substitution or assumption of such Stock Incentives. If any adjustment
under this Section creates a fractional Share or a right to acquire a
fractional Share, such fractional Share shall be disregarded, and the number of
Shares reserved under this Plan and the number subject to any Stock Incentives
granted under this Plan shall be the next lower number of Shares, rounding all
fractions downward. An adjustment made under this Section by the Board shall be
conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3.
SECTION 12.
SALE OR MERGER OF THE COMPANY
If the Company agrees to sell substantially all of its assets for cash or
property, or for a combination of cash and property, or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares
are converted into another security or into the right to receive securities or
property, and such agreement does not provide for the assumption or
substitution of the Stock Incentives granted under this Plan, each Stock
Incentive, at the direction and discretion of the Board, or as is otherwise
provided in the Stock Incentive Agreements, may be canceled unilaterally by the
Company in exchange for whole Shares (or, subject to satisfying the conditions
of an exemption under Rule 16b-3 or any successor exemption to Section 16(b) of
the Exchange Act, for the whole Shares and cash in lieu of any fractional
Share) which each Participant otherwise would receive if he or she had the
right to surrender or exercise his or her outstanding Stock Incentive in full
and he or she exercised that right exclusively for Shares on a date fixed by
the Board which comes before such sale or other corporate transaction.
SECTION 13.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of the Company: (a) to
increase the number of Shares reserved under Section 3, except as set forth in
Section 11, (b) to extend the maximum life of the Plan under Section 10 or the
maximum exercise period under Section 7, (c) to decrease the minimum Exercise
Price under Section 7, or (d) to change the designation of Employees or Key
Persons eligible for Stock Incentives under Section 6. The Board also (1) may
suspend the granting of Stock Incentives under this Plan at any time, (2) may
terminate this Plan at any time, and (3) may amend any outstanding Stock
Incentive previously granted under this Plan at any time (for example, to
accelerate the vesting provisions thereof or to extend the term of a Stock
Incentive); provided, however, the Board shall not have the right to modify,
amend or cancel any Stock Incentive granted under this Plan unless: (I) the
Participant consents in writing to such modification, amendment or
cancellation, (II) there is a dissolution or liquidation of the Company or a
transaction described in Section 11 or Section 12, or (III) the modification,
amendment or cancellation would not adversely affect, in any way, the rights of
a Participant owning such outstanding Stock Incentive without the written
consent of such Participant. To the extent that the material terms (within the
meaning of Treas. Reg. [0015]1.162-27(e)(4)) of the Plan would be modified by
the Board but shareholders approval would not be required by the foregoing
provisions of this Section, the Board may, in its sole discretion, nonetheless
determine that approval of the shareholders of the Company is desired.
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SECTION 14.
MISCELLANEOUS
14.1 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder of the Company as a result of the grant of a Stock Incentive to him
or to her under this Plan or his or her exercise or surrender of such Stock
Incentive pending the actual delivery of Shares subject to such Stock Incentive
to such Participant.
14.2 NO GUARANTEE OF CONTINUED RELATIONSHIP. The grant of a Stock
Incentive to a Participant under this Plan shall not constitute a contract of
employment and shall not confer on a Participant any rights upon his or her
termination of employment or relationship with the Company in addition to those
rights, if any, expressly set forth in the Stock Incentive Agreement which
evidences his or her Stock Incentive.
14.3 WITHHOLDING. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company as a condition
precedent for the fulfillment of any Stock Incentive, an amount sufficient to
satisfy Federal, state and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan Whenever Shares are to be issued or cash paid to a Participant
upon exercise of an Option, the Company shall have the right to require the
Participant to remit to the Company, as a condition of exercise of the Option,
an amount sufficient to satisfy federal, state and local withholding tax
requirements at the time of exercise. However, notwithstanding the foregoing,
to the extent that a Participant is an Insider, satisfaction of withholding
requirements by having the Company withhold Shares may only be made to the
extent that such withholding of Shares (1) has met the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3 promulgated
under the Exchange Act. Unless the Stock Incentive Agreement provides
otherwise, the withholding of shares to satisfy federal, state and local
withholding tax requirements shall be a subsequent transaction approved by the
original grant of a Stock Incentive. Notwithstanding the foregoing, in no event
shall payment of withholding taxes be made by a retention of Shares by the
Company unless the Company retains only Shares with a Fair Market Value equal
to the minimum amount of taxes required to be withheld.
14.4 NOTIFICATION OF DISQUALIFYING DISPOSITIONS OF ISO OPTIONS. If a
Participant sells or otherwise disposes of any of the Shares acquired pursuant
to an Option which is an ISO on or before the later of (1) the date two (2)
years after the date of grant of such Option, or (2) the date one (1) year
after the exercise of such Option, then the Participant shall immediately
notify the Company in writing of such sale or disposition and shall cooperate
with the Company in providing sufficient information to the Company for the
Company to properly report such sale or disposition to the Internal Revenue
Service. The Participant acknowledges and agrees that he may be subject to
income tax withholding by the Company on the compensation income recognized by
Participant from any such early disposition by either (or both) his payment to
the Company in cash or his payment out of the current wages or earnings
otherwise payable to him by the Company, and agrees that he shall include the
compensation from such early disposition in his gross income for federal tax
purposes. Participant also acknowledges that the Company may condition the
exercise of any Option, which is an ISO on the Participant's express written
agreement with these provisions of this Plan.
14.5 TRANSFER. The transfer of an Employee between or among the Company, a
Subsidiary or a Parent shall not be treated as a termination of his or her
employment under this Plan.
14.6 CONSTRUCTION. This Plan shall be construed under the laws of the
State of Delaware.
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DALEEN TECHNOLOGIES, INC.
1750 Clint Moore Road
Boca Raton, FL 33487
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James Daleen, David Corey and Richard
Schell and each of them, with full power of substitution, as Proxy, to
represent and vote all the shares of Common Stock of Daleen Technologies, Inc.
held of record by the undersigned on April 17, 2000, at the annual meeting of
Stockholders to be held on June 6, 2000 or any adjournment thereof, as
designated on the reverse side hereof and in their discretion as to other
matters.
Please sign exactly as name appears on the reverse side. When shares are
held by joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
The shares represented by this proxy will be voted as directed by the
Stockholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" all nominees in Proposal 1 and "FOR" Proposal 2.
I PLAN TO ATTEND MEETING [ ]
(PLEASE DATE AND SIGN ON REVERSE)
(CONTINUED ON REVERSE SIDE)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN PROPOSAL 1 AND
"FOR" PROPOSAL 2.
Proposal 1--Election of the following Nominees as Directors:
NOMINEES: PAUL G. CATAFORD MOHAMMAD AAMIR WILLIAM A. ROPER, JR.
<TABLE>
<S> <C>
FOR all Nominees listed at right WITHHELD
(except as marked to the contrary) [ ] For all Nominees listed at right [ ]
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
Proposal 2--Approval of amendment and restatement to the Company's Amended and
Restated 1999 Stock Incentive Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE
OR BLACK INK. Dated:
Signature
Signature if held jointly
Please mark, date and sign as your name
appears above and return in the enclosed
envelope.
