SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTELIDATA TECHNOLOGIES CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required.
( ) Fee computed on 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 transaction 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.
(1) Amount Previously Paid:
(2) Form, Schedule, or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
May 15, 1998
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
InteliData Technologies Corporation to be held on Tuesday, June 9, 1998 at 9:00
a.m. at the Days Inn located at 2200 Centreville Road, Herndon, Virginia 20170.
Enclosed are a proxy statement and a form of proxy.
At this meeting we will ask the Stockholders: (i) to elect two Class II
Directors to serve until the 2001 Annual Meeting; and (ii) to ratify the
selection of Deloitte & Touche LLP as the Company's independent public
accountants for the year ending December 31, 1998.
We value your participation by voting your shares on matters that come
before the meeting. Please follow the instructions on the enclosed proxy to
ensure representation of your shares at the meeting.
Sincerely,
/s/William F. Gorog
-------------------
William F. Gorog
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of InteliData Technologies
Corporation (the "Company") will be held on Tuesday, June 9, 1998 at the Days
Inn, 2200 Centreville Road, Herndon, Virginia 20170 at 9:00 a.m. local time, for
the following purposes:
1. To elect two Class II members of the Board of Directors (Proposal 1);
2. To ratify the selection of Deloitte & Touche LLP as independent certified
public accountants for the Company for the year ending December 31, 1998
(Proposal 2); and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on April 16, 1998, the record date fixed by the Company's Board of
Directors, are entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
Albert N. Wergley
Vice President and Secretary
Herndon, Virginia
May 15, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. YOU MAY, IF YOU
WISH, REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
<PAGE>
INTELIDATA TECHNOLOGIES CORPORATION
13100 WORLDGATE DRIVE, SUITE 600
HERNDON, VIRGINIA 20170
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1998
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to stockholders in connection with
the solicitation by the Board of Directors of InteliData Technologies
Corporation ("InteliData" or the "Company") of proxies in the accompanying form
for use at the Annual Meeting of Stockholders of the Company to be held at the
Days Inn, 2200 Centreville Road, Herndon, Virginia 20170, at 9:00 a.m. on
Tuesday, June 9, 1998, and at any adjournment thereof. If a proxy in the
accompanying form is duly executed and returned, the shares represented thereby
will be voted at the Annual Meeting and, where a choice is specified, will be
voted in accordance with the specification made. Any stockholder who gives a
proxy may revoke it at any time before it is exercised by giving a later proxy,
by attending the meeting and voting in person, or by giving notice of revocation
to the Company's Secretary.
The Annual Meeting has been called for the following purposes: (1) to
elect two Class II members of the Board of Directors; (2) to ratify the
selection of Deloitte & Touche LLP as the Company's independent auditors to
audit the financial statements of the Company for fiscal year 1998; and (3) to
transact such other business as may properly come before the meeting or any
adjournment thereof. Only holders of record of the Company's Common Stock at the
close of business on April 16, 1998, the record date fixed by the Company's
Board of Directors, are entitled to notice of and to vote at the Annual Meeting.
This proxy statement and the attached form of proxy are first being sent or
given to stockholders on or about May 15, 1998.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked therein.
Executed but unmarked proxies will be voted FOR the election of the Company's
two nominees to the Board of Directors and FOR the ratification of Deloitte &
Touche LLP as the Company's auditors.
The Company's capital stock consists of a single class of Common Stock,
par value $0.001 per share, of which 31,170,949 shares were outstanding and
entitled to vote at the close of business on April 16, 1998.
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting, but if
a quorum should not be present, the meeting may be adjourned from time to time
until a quorum is obtained. Stockholders' votes will be
<PAGE>
tabulated by persons appointed by the Board of Directors to act as inspectors of
election for the Annual Meeting. The affirmative vote of a majority of the
shares present or represented and entitled to vote at the Meeting is required to
approve each proposal, other than the election of directors which requires a
plurality of the shares voted affirmatively or negatively at the Annual Meeting.
With respect to the tabulation of votes on any matter, abstentions are treated
as votes against a proposal, while broker non-votes have no effect on the vote.
A copy of the annual report to stockholders for the fiscal year ended
December 31, 1997 accompanies this Proxy Statement, but does not constitute a
part hereof. The Company is required to file an annual report on Form 10-K for
its 1997 fiscal year with the Securities and Exchange Commission ("SEC").
Stockholders may obtain, free of charge, a copy of the Form 10-K by writing:
InteliData Technologies Corporation, 13100 Worldgate Drive, Suite 600, Herndon,
Virginia 20170, Attention: Investor Relations.
On November 7, 1996, US Order, Inc. ("US Order") and Colonial Data
Technologies Corp. ("Colonial Data") merged into InteliData (the "Merger")
pursuant to an Agreement and Plan of Merger, dated as of August 5, 1996 (the
"Merger Agreement"). In the Merger, each common stockholder of US Order or of
Colonial Data received one share of the Company's common stock for each share of
US Order or Colonial Data common stock held. The Company also assumed certain of
US Order's and Colonial Data's employee benefit and stock incentive plans. Where
information is provided as of a date or period prior to November 7, 1996, such
information is provided with respect to US Order or Colonial Data, as
appropriate.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of April 16, 1998,
regarding beneficial ownership of the Company's Common Stock by (i) each person
who is known to the Company to own beneficially more than five percent of the
Company's Common Stock, (ii) each director and each nominee for election as a
director of the Company, (iii) each executive officer named in the Summary
Compensation Table (the "Named Executive Officers") set forth in this Proxy
Statement, and (iv) all current directors and executive officers of the Company
as a group. The information on beneficial ownership in the table and the
footnotes thereto is based upon the Company's records and the most recent
Schedule 13D or 13G filed by each such person or entity and information supplied
to the Company by such person or entity. Unless otherwise indicated, each person
has sole voting power and sole investment power with respect to the shares
shown. Under the proxy rules of the Securities and Exchange Commission, a person
who directly or indirectly has or shares voting power or investment power with
respect to a security is considered a beneficial owner of the security. Voting
power is the power to vote or direct the voting of securities, and investment
power is the power to dispose of or direct the disposition of securities.
Securities as to which voting power or investment power may be acquired within
60 days are also considered as beneficially owned under the proxy rules.
<PAGE>
<TABLE>
OWNERSHIP OF COMMON STOCK
Beneficial Ownership
-----------------------------
Number of
Name of Stockholder Shares Percent
- ------------------- --------- -------
<S> <C> <C>
WorldCorp, Inc. 9,179,273 <F1> 29.4%
13873 Park Center Road
Suite 490
Herndon, Virginia 22071
Morgan Stanley, Dean Witter, Discover & Co. 3,185,323 <F2> 10.2%
1585 Broadway
New York, New York 10036
John C. Backus, Jr. 696,033 <F3> 2.2%
William F. Gorog 641,212 <F4> 2.0%
Albert N. Wergley 36,332 <F5> *
Patrick F. Graham 26,291 <F6> *
Mark L. Baird 20,583 <F7> *
L. William Seidman 9,000 <F8> *
John W. Hillyard 8,333 <F9> *
T. Coleman Andrews, III 6,000 <F10> *
Robert J. Schock 500 <F11> *
Brian A. Bogosian -- --
John J. McDonnell, Jr. -- --
Directors and Executive Officers
as a Group (11 persons) 1,444,284 <F12> 4.5%
<FN>
- ---------------
<F1> Consists of shares owned by WorldCorp Investments, Inc., a wholly owned
subsidiary of WorldCorp.
<F2> As reported in the Schedule 13G filed with the SEC with information as of
December 31, 1997, includes shares held in accounts managed by Morgan
Stanley Asset Management Limited, a wholly owned subsidiary of Morgan
Stanley, Dean Witter, Discover & Co.
<F3> Includes 500,000 shares of Common Stock issuable upon the exercise of
options and options to purchase 125,000 shares transferred by Mr. Backus
to an irrevocable trust for the benefit of his children.
<F4> Includes 450,000 shares of Common Stock issuable upon the exercise of
options and 35,000 shares held by Mr. Gorog's wife. Does not include
10,000 shares held by a foundation trust for which Mr. Gorog is trustee.
Mr. Gorog disclaims beneficial ownership of such shares held by his wife
and by the trust.
<F5> Includes 36,332 shares of Common Stock issuable upon the exercise of
options.
<F6> Includes 25,791 shares of Common Stock issuable upon the exercise of
options. Does not include 9,179,273 shares of Common Stock beneficially
held by WorldCorp, of which Mr. Graham serves as chief executive officer.
Mr. Graham disclaims beneficial ownership of such shares.
<PAGE>
<F7> Includes 18,583 shares of Common Stock issuable upon the exercise of
options.
<F8> Includes 6,000 shares of Common Stock issuable upon the exercise of
options.
<F9> Includes 8,333 shares of Common Stock issuable upon the exercise of
options.
<F10> Includes 6,000 shares of Common Stock issuable upon the exercise of
options. Does not include 9,179,273 shares of Common Stock beneficially
held by WorldCorp, of which Mr. Andrews serves as chairman. Mr. Andrews
disclaims beneficial ownership of such shares.
<F11> Includes 500 shares held by his wife as to which Mr. Schock may be deemed
to share voting and investment power. Mr. Schock disclaims beneficial
ownership of such shares held by his wife.
<F12> Includes 1,176,039 shares of Common Stock issuable upon the exercise of
options.
* Less than 1%.
</FN>
</TABLE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Certificate of Incorporation provides that the Board of
Directors be divided into three classes as nearly equal in number as possible.
The term of Class I directors expires in 2000, the term of Class II directors
expires in 1998, and the term of Class III directors expires in 1999. Directors
elected at the Annual Meeting will hold office for a three-year term expiring in
2001 or until their successors are elected and qualified. The other directors
will continue in office for the remainder of their terms as indicated below. The
Executive Committee has recommended two nominees for a new three-year term in
Class II. No arrangement or understanding exists with respect to the manner
which the Board, at its discretion, may fill any remaining vacancy being created
or any other vacancies that may occur during the year. Unless authority so to
vote is withheld, proxies received pursuant to this solicitation will be voted
for the election of the two nominees named below. If any of the nominees should
for any reason not be available for election, proxies will be voted for the
election of the remaining nominees and such substitute nominees as may be
designated by the Board of Directors. The election of each nominee requires the
affirmative vote of the holders of a plurality of the shares of Common Stock
cast in the election of directors.
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 2001
T. COLEMAN ANDREWS, III, age 43, has served as a director of the
Company since 1996 and was a director of US Order from 1990 until the Merger. He
is chairman of WorldCorp, Inc., a position he has held since April 1997, and
chairman of World Airways, Inc., a position he has held since 1986. From 1987 to
April 1997, Mr. Andrews also served as chief executive officer of WorldCorp, and
prior to 1996, he served as chief executive officer of World Airways. From 1978
through 1986, he was affiliated with Bain & Company, Inc., an international
strategy consulting firm. Prior to his experience with Bain, Mr. Andrews served
in several appointed positions in The White House during the Ford
Administration.
<PAGE>
JOHN J. MCDONNELL, JR., age 60, has served as a director of the Company
since 1997. Since 1990, he has served as president, chief executive officer, and
a director of Transaction Network Services, Inc., a provider of data
communications services for transaction oriented applications. From 1987 to
1989, Mr. McDonnell served as president and chief executive officer of Digital
Radio Networks, Inc., a local access bypass carrier for point-of-sale
transactions. Mr. McDonnell has previously served as group vice president for
the information technologies and telecommunications group of the Electronic
Industries Association; vice president, international operations and vice
president, sales, for Tymnet, Inc. with responsibility for both private network
sales and public network services; and director of technology and
telecommunications for the National Commission on Electronic Funds Transfer. Mr.
McDonnell was one of the founding members of the Electronics Fund Transfer
Association and serves on its board. Mr. McDonnell is also a director of Credit
Management Solutions, Inc., a software development company.
DIRECTORS CONTINUING IN OFFICE IN THE CLASS OF 1999
JOHN C. BACKUS, JR., age 39, has been President and a director of the
Company since 1996 and became Chief Executive Officer in 1997. Prior to the
Merger, he worked at US Order since its inception in 1990 and had served as
President, Chief Operating Officer and a director of US Order since 1994. Prior
to working with US Order, Mr. Backus worked for six years at WorldCorp, Inc. and
its subsidiaries holding a variety of executive positions including vice
president of corporate development, vice president of finance, and vice
president of sales and marketing at a WorldCorp subsidiary. Prior to joining
WorldCorp, Mr. Backus worked for Bain & Company, Inc., a worldwide strategy
consulting firm, in its consulting and venture capital groups where he focused
on consumer products and services. Mr. Backus serves on the board of directors
of World Airways, Inc. and Home Financial Network, Inc.
BRIAN A. BOGOSIAN, age 41, has been a director since January 1998 and
President and Chief Executive Officer of the Company's Telecommunications
Division since December 1997. Previously, Mr. Bogosian was president of
USTeleCenters, Inc., a marketer for the Regional Bell Operating Companies. Prior
to USTeleCenters, Mr. Bogosian was senior vice president of AIM Telecom, a
telephone equipment company. Before AIM, he served in management positions with
Bell Atlantic, SNET, and CTC Communications.
PATRICK F. GRAHAM, age 58, has served as a director of the Company
since 1996 and was a director of US Order from 1993 until the Merger. Since
1997, he has served as chief executive officer of WorldCorp, Inc. and was
previously a director of Bain & Company, Inc., a management consulting firm
co-founded by Mr. Graham in 1973. In addition to his primary responsibilities
with Bain clients, he has served as Bain's vice chairman and chief financial
officer. Prior to founding Bain, Mr. Graham was a group vice president with the
Boston Consulting Group. Mr. Graham currently serves as a director of WorldCorp.
DIRECTORS CONTINUING IN OFFICE IN THE CLASS OF 2000
WILLIAM F. GOROG, age 72, has served as Chairman of the Board of
Directors of the Company since 1996. Mr. Gorog was the founder of US Order and
had served as its chairman
<PAGE>
and chief executive officer from May 1990 until the Merger. He is chairman of
the executive committee of WorldCorp, Inc., and prior to April 1997, he served
as chairman of the board of directors of WorldCorp. From October 1987 until
founding US Order, he served as chairman of the board of Arbor International, an
investment management firm. From 1982 to 1987, he served as president and chief
executive officer of the Magazine Publishers of America, an association
representing the principal consumer publications in the United States. During
the Ford Administration, Mr. Gorog served as deputy assistant to the President
for Economic Affairs and Executive Director of the Council on International
Economic Policy. Prior to that time, he founded and served as chief executive
officer of DataCorp., which developed the Lexis and Nexis information systems
for legal and media research. He also serves as a director of Home Financial
Network, Inc.
L. WILLIAM SEIDMAN, age 77, has served as a director of the Company
since 1997. He is the publisher of Bank Director magazine and chief commentator
on CNBC-TV. He served on the board of US Order from 1995 until the Merger. Mr.
Seidman served from 1985 to 1991 as the chairman of the Federal Deposit
Insurance Corporation ("FDIC") and from 1989 to 1991 also served as the first
Chairman of the Resolution Trust Corporation. Before joining the FDIC, Mr.
Seidman served as Dean of the College of Business at Arizona State University.
From 1977 to 1982 he was vice-chairman and chief financial officer of Phelps
Dodge Corporation. Mr. Seidman has also served as managing partner of Seidman &
Seidman, Certified Public Accountants (now BDO Seidman), and as Assistant to the
President for Economic Affairs during the Ford Administration. Mr. Seidman
presently serves as a director of Fiserv, Inc., a data processing company.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors held five regular meetings and one
telephonic meeting during fiscal year 1997. Each incumbent director attended at
least 75 percent of the meetings held during fiscal year 1997 by the Board and
each committee of the Board of which he was a member. The Company's Board of
Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee (consisting of Messrs. Andrews and Graham)
reviews and recommends to the Board appropriate action with respect to the
compensation of and benefits granted to officers and other key employees of the
Company and administers the Company's 1996 Incentive Plan. The Compensation
Committee held four meetings during fiscal year 1997.
The Audit Committee (consisting of Messrs. Gorog, Graham and McDonnell)
nominates the Company's independent auditors, reviews with the Company's
independent auditors matters relating to the scope and plan of the audit, the
adequacy of internal controls, and the preparation of the Company's financial
statements, reports and makes recommendations to the Board with respect thereto,
and reviews related party transactions for conflicts of interest. The Audit
Committee held one meeting during fiscal year 1997.
The Company does not have a nominating committee.
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Company who are not also executive officers of the
Company or of an affiliate of the Company ("Non-Affiliate Directors") receive a
quarterly payment of $1,250 and $500 for each Board meeting attended, excluding
telephonic meetings. They are also reimbursed for usual and ordinary expenses of
meeting attendance. Under the Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") each Non-Affiliate Director is offered options to purchase
6,000 shares of Common Stock following the Company's Annual Meeting of
Stockholders. The exercise price for any option grants under the Directors' Plan
will be the average closing price of the Common Stock during the 30 trading days
immediately preceding the date of grant. Options granted under the Directors'
Plan vest in 12 equal monthly installments during the Non-Affiliate Director's
continued service on the Board. The option price may be paid in cash, by
surrendering shares of Common Stock or by a combination of cash and Common
Stock. All options expire ten years after their grant. Up to 200,000 shares of
Common Stock may be issued under the Directors' Plan, subject to certain
adjustments.
RATIFICATION OF AUDITORS
(PROPOSAL 2)
Action is to be taken at the Annual Meeting with respect to the
ratification of independent auditors, who were selected by the Board of
Directors, to audit the financial statements of the Company for fiscal year
1998. Unless otherwise directed therein, proxies received pursuant to this
solicitation will be voted for the ratification of Deloitte & Touche LLP, who
served as the Company's auditors for fiscal year 1997. Although the ratification
of independent auditors is not required to be submitted to a vote of the
stockholders, the Board of Directors believes that such ratification is a matter
on which the stockholders should express their opinion. Deloitte & Touche LLP
has advised the Company that no member of its firm has any direct or indirect
material financial interest in the Company. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting, will have the opportunity
to make a statement if they so desire, and will be available to respond to
appropriate questions from the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Because (i) the Company was not a reporting company pursuant to Section
13(a) or 15(d) of the Exchange Act until November 7, 1996, and (ii) each of its
predecessors, US Order and Colonial Data, were reporting companies and have
reported executive compensation information through the year ended December 31,
1995, the following table sets forth information concerning the annual,
long-term and all other compensation for services rendered in all capacities to
the
<PAGE>
Company, its subsidiaries and predecessors for the years ended December 31,
1997, 1996 and 1995 of (a) the two individuals who served as the Company's Chief
Executive Officer during 1997, and (b) each of the four most highly compensated
executive officers (other than the chief executive officer) of the Company (the
"Named Executive Officers") whose aggregate cash compensation exceeded $100,000
for the fiscal year ended December 31, 1997.
<TABLE>
Long-Term Compensation
--------------------------
Awards
--------------------------
Annual Compensation Restricted Securities
---------------------------------------- Stock Underlying All Other
Year Salary($) Bonus($)<F1> Other($) Awards(#) Options(#) Compensation($)<F2>
---- --------- ----------- -------- ---------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. Backus, Jr. 1997 301,032 -- -- -- 1,025,000 <F4> 9,025
President and Chief 1996 250,000 -- -- -- -- 7,180
Executive Officer <F3> 1995 250,000 25,000 -- -- -- 9,250
Robert J. Schock 1997 118,269 -- -- -- -- 760,453 <F5>
Chief Executive 1996 200,000 350,000 -- -- 100,000 <F6> 19,991
Officer <F3> 1995 150,000 98,075 -- -- --
9,942
William F. Gorog 1997 250,000 -- -- -- 100,000 2,375
Chairman 1996 250,000 -- -- -- -- --
1995 250,000 25,000 -- -- -- --
Mark L. Baird 1997 132,308 25,000 -- -- 77,000 <F7> 3,128
Vice President, 1996 114,846 10,000 -- -- 22,000 1,280
Operations 1995 78,333 12,000 -- -- -- --
John W. Hillyard <F8> 1997 131,366 25,000 -- -- 75,000 87,168
Vice President and 1996 -- -- -- -- -- --
Chief Financial 1995 -- -- -- -- -- --
Officer
Albert N. Wergley <F9> 1997 131,537 25,000 -- -- 94,502 <F10> 2,375
Vice President, 1996 121,225 11,500 -- -- 16,000 --
General Counsel and 1995 72,814 11,558 -- -- 50,000 --
Secretary
<FN>
- ------------------------
<F1> Bonus awards are reported for the year earned but may have been
paid in the subsequent year.
<F2> For 1997, includes: (i) fees paid under a consulting agreement
with Mr. Schock; (ii) the dollar value of insurance premiums
paid by the Company for the benefit of Mr. Schock ($8,078) and
Mr. Backus ($6,650); (iii) the amount of Company matching
contributions made on behalf of the named individuals under the
Company's 401(K) Plan as follows: Messrs. Schock, Backus, Gorog,
Baird and Wergley ($2,375 each) and Mr. Hillyard ($1,363); (iv)
automobile allowance for Mr. Baird ($753); and (v) reimbursement
of relocation expenses for Mr. Hillyard ($85,805).
<F3> Mr. Backus succeeded Mr. Schock as Chief Executive Officer on
May 7, 1997.
<F4> Mr. Backus was granted 600,000 options in August 1997. In
December 1997, 425,000 of these options were canceled and
850,000 options previously granted to Mr. Backus were repriced.
<F5> Mr. Schock served as Chief Executive Officer of the Company from
January 1, 1997 until May 7, 1997. On May 7, 1997, Mr. Schock's
employment agreement with the Company terminated and he entered
into a consulting agreement with the Company. The amounts shown
in the table above include $750,000 of payments under the
consulting agreement. See "Employment Contracts,
<PAGE>
Termination of Employment and Change-In-Control Arrangements -
Robert J. Schock" for a description of the terms of the
consulting agreement.
<F6> These options were canceled in May 1997.
<F7> Includes 22,000 options previously granted that were repriced in
1997.
<F8> Mr. Hillyard became an employee of the Company on January 8,
1997.
<F9> Mr. Wergley became an employee of the Company on May 3, 1995.
<F10> Includes 44,502 options previously granted that were repriced in
1997.
</FN>
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to stock option
grants under the Company's 1996 Incentive Plan or under any stock plan of either
US Order or Colonial Data, which were assumed by the Company pursuant to the
Merger.
<TABLE>
Potential Realizable Value at
Assumed Annual Rates of Stock
Number of Securities % of Total Price Appreciation for Option
Underlying Options/SARs Exercise or Term <F1>
Options/SARs Granted to Employees Base Price Expiration -----------------------------
Name Granted (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- -------------------- -------------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John C. Backus, Jr. 175,000 <F2> 7.0% $3.00 8/11/07 330,750 836,500
850,000 33.9% $1.80 8/1/04 321,007 916,969
Robert J. Schock -- -- -- -- -- --
William F. Gorog 100,000 4.0% $6.00 5/21/07 235,000 729,000
Mark L. Baird 5,000 0.2% $5.125 5/21/05 12,225 29,325
50,000 2.0% $3.00 8/11/05 71,500 171,500
22,000 0.9% $6.00 11/5/06 42,912 133,848
John W. Hillyard 25,000 1.0% $6.00 1/8/05 39,299 124,650
50,000 2.0% $3.00 8/11/05 71,500 171,500
Albert N. Wergley 50,000 2.0% $3.00 8/11/05 71,500 171,500
30,001 1.2% $6.00 5/3/03 16,200 67,502
4,501 0.2% $6.00 2/13/04 3,916 13,863
10,000 0.4% $6.00 10/1/04 12,100 39,900
<FN>
- --------------------------
<F1> The actual value, if any, an employee may realize will depend on
the excess of the stock price over the exercise price on the date
the stock option is exercised. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates
set by the rules of the SEC and therefore are not intended to
forecast future appreciation, if any, of the Company's stock
price.
<F2> Mr. Backus was granted 600,000 options in August 1997. In
December 1997, 425,000 of these options were canceled and 850,000
options previously granted to Mr. Backus were repriced.
</FN>
</TABLE>
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUE TABLE
The following table sets forth information regarding the exercise of
stock options and the unexercised stock options as of December 31, 1997 granted
to the Chief Executive Officer and the Named Executive Officers under the
Company's 1996 Incentive Plan or any stock plan of either US Order or Colonial
Data, which were assumed by the Company pursuant to the Merger.
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs Options/SARs
at December 31, 1997(#) at December 31, 1997($)<F1>
Shares Acquired Value ------------------------------- ----------------------------
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ----------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Backus, Jr. - 0 - - 0 - 625,000 400,000 25,000 9,000
Robert J. Schock - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
William F. Gorog - 0 - - 0 - 450,000 50,000 344,000 - 0 -
Mark L. Baird - 0 - - 0 - 10,000 77,000 - 0 - - 0 -
John W. Hillyard - 0 - - 0 - - 0 - 75,000 - 0 - - 0 -
Albert N. Wergley - 0 - - 0 - 21,498 94,502 - 0 - - 0 -
<FN>
- ---------------------
<F1> Value based on last reported sale price of the Company's common stock on
December 31, 1997 (the last trading day of the year) on the Nasdaq National
Market minus the exercise price. The last reported sale price at December
31, 1997 was $1.84 per share.
</FN>
</TABLE>
TEN YEAR OPTION/REPRICINGS
<TABLE>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price Remaining
Options Time of at Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Amended Amendment Amendment Price Amendment
Name Date (#) ($) ($) ($) (in months)
- ---- -------- ----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
John C. Backus, Jr. 12/15/97 850,000 1.625 7.13 1.80 79
President and Chief
Executive Officer
Mark L. Baird 5/21/97 22,000 5.125 8.88 6.00 115
Vice President,
Operations
John W. Hillyard 5/21/97 25,000 5.125 8.38 6.00 92
Vice President and
Chief Financial Officer
Albert N. Wergley 5/21/97 30,001 5.125 9.50 6.00 72
Vice President, General 5/21/97 4,501 5.125 20.25 6.00 82
Counsel and Secretary 5/21/97 10,000 5.125 11.44 6.00 89
</TABLE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON
OPTION REPRICING
In May 1997, the Compensation Committee approved the repricing of
certain options granted to employees pursuant to the Company's stock option
plans. Because of the decline in the market price of the Common Stock, certain
outstanding options in May 1997 were exercisable at prices that exceeded the
market price of Common Stock, thereby substantially impairing the effectiveness
of such options as performance incentives. In view of this decline and
consistent with the Company's philosophy of providing equity incentives to
motivate and retain qualified employees, the Compensation Committee believed it
was important to restore for the Company's employees the performance incentives
intended to be provided by options through the repricing of options with
exercise prices in excess of the market price at the time of repricing. No
options issued to directors of the Company were repriced.
Pursuant to the terms of the repricing, employees who held options that
were not vested in May 1997 having an exercise price per share greater than
$6.00 were offered the opportunity to reprice those options to an exercise price
of $6.00 per share. The new exercise price was approximately 17% above the
$5.125 closing price of the stock on the date of the repricing. The vesting
schedule for all repriced options was amended to provide that the options become
exercisable in equal annual increments over three years from the date of the
repricing.
In order to make available options for recruiting and retaining other
executives, Mr. Backus agreed to cancel 425,000 options previously granted to
him with an exercise price of $3.00. The Compensation Committee repriced 850,000
options previously granted to Mr. Backus (of which 750,000 were vested) from an
exercise price of $7.13 to an exercise price of $1.80. The vesting schedule for
the repriced options was also changed to provide that 425,000 options are vested
and the remaining 425,000 options will vest in 2002, but will accelerate upon
certain stock performance milestones.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Company's Compensation Committee (the "Committee") is comprised of
outside directors whose role is to oversee the development and administration of
the compensation and benefit programs for the Company's executive officers. The
Committee also administers the Company's 1996 Incentive Plan that permits stock
option grants to employees and the Company's 1997 Incentive Compensation Plan
that provides for bonuses to employees in management positions based on the
achievement of individual, group or Company goals. In the case of Mr. Backus,
the Company's President and Chief Executive Officer, and Messrs. Baird, Hillyard
and Wergley, the salary levels are set pursuant to employment agreements entered
into between the Company and the executive during 1997. The employment
agreements, which are
<PAGE>
described below, will continue to prescribe the base salaries and certain other
benefits for these executives until these agreements are terminated or expire.
The Committee made no awards in 1997 to the Named Executive Officers
under the Company's 1997 Incentive Compensation Plan. However, in 1997, the
Committee also implemented a retention plan for certain key employees, including
Messrs. Baird, Hillyard and Wergley. Pursuant to that plan, each of these three
named executives received a $25,000 bonus payment for continued employment
through December 31, 1997 and also received a grant of 50,000 options at an
exercise price of $3.00 that will vest on March 31, 1999 provided that the
executive remains employed by the Company through that date. Neither Mr. Backus
nor Mr. Gorog were participants in the retention plan and no bonuses were paid
to them for 1997.
The Compensation Committee
--------------------------
T. Coleman Andrews, III
Patrick F. Graham
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are T. Coleman
Andrews, III and Patrick F. Graham.
EMPLOYMENT AGREEMENTS
JOHN C. BACKUS, JR.
The Company has entered into an employment agreement with John C.
Backus, Jr. as of August 11, 1997, providing that Mr. Backus will serve as
President and Chief Executive Officer of the Company until December 31, 2000,
unless further extended or sooner terminated as set forth in the agreement.
Furthermore, the Company will annually nominate and take such action as may be
appropriate or necessary to seek stockholder election of Mr. Backus to the
Company's Board of Directors. Mr. Backus has agreed to resign from the Board in
connection with, and effective upon, termination of his employment with the
Company.
Mr. Backus is entitled to a base salary of $350,000 per year and an
annual bonus of up to 75% of his base salary and certain fringe benefits. In
addition, Mr. Backus is entitled to participate in all bonus and incentive
compensation plans or arrangements made available by the Company to its officers
and directors. Mr. Backus was granted options to purchase 600,000 shares of
Common Stock pursuant to the Company's 1996 Incentive Plan and Mr. Backus has
agreed to hold 25,000 shares of Common Stock for the duration of his employment
agreement.
Mr. Backus' employment agreement terminates automatically upon his
death in which case the Company would have no further obligation to Mr. Backus
or his estate other than the
<PAGE>
disposition of life insurance and related benefits and accrued and unpaid base
salary and incentive compensation for periods prior to the date of death and the
Retirement Benefit (as defined). The Company may terminate the agreement for
"cause" (as defined) or if Mr. Backus incurs a disability that continues for a
period of 12 consecutive months. Mr. Backus may terminate the agreement upon
prior written notice to the Company or for "good reason" (as defined). If the
Company terminates Mr. Backus for other than "cause," or if Mr. Backus
terminates the agreement for "good reason," (as defined) or if Mr. Backus'
employment is terminated within two years prior to or following a "Change in
Control" (as defined), then Mr. Backus is entitled to: (i) the undiscounted
remainder of his base salary, any deferred salary and/or bonus compensation, and
a Retirement Benefit (as defined), whether or not vested immediately prior to
his termination; (ii) an amount equal to the highest incentive bonus paid to him
during the three years preceding his termination, prorated through his month of
termination; (iii) certain other compensation; and (iv) all granted but unvested
options become immediately exercisable and remain exercisable for their
respective remaining terms.
In December 1997, Mr. Backus agreed to cancel 425,000 options with an
exercise price of $3.00 previously granted to him in 1997. In consideration of
this cancellation of options, the Compensation Committee of the Board of
Directors repriced 850,000 options previously granted to Mr. Backus (of which
750,000 were vested) from an exercise price of $7.13 to an exercise price of
$1.80. The vesting schedule for the repriced options was also changed to provide
that 425,000 options are vested and the remaining 425,000 options will vest in
2002, but will accelerate upon certain stock performance milestones.
JOHN W. HILLYARD, MARK L. BAIRD AND ALBERT N. WERGLEY
The Company has entered into an employment agreement with each of John
W. Hillyard, Mark L. Baird and Albert N. Wergley (each an "Executive"), each as
of December 17, 1997, providing that Messrs. Hillyard, Baird and Wergley will
serve as Vice President and Chief Financial Officer, Vice President of
Operations, and Vice President and General Counsel, respectively, of the Company
until December 31, 1999, unless further extended or sooner terminated as set
forth in the agreement.
Each Executive is entitled to a base salary per year and annual
bonuses. In addition, each is entitled to participate in all bonus and incentive
compensation plans or arrangements made available by the Company to its officers
and directors and is entitled to receive such benefits as provided to all
salaried employees as well as those established by the Compensation Committee
for the Company's executives.
Each Executive's employment agreement terminates automatically upon
such Executive's death in which case the Company would have no further
obligation to such Executive or his estate other than the disposition of life
insurance and related benefits and accrued and unpaid base salary, bonus,
unreimbursed expenses and incentive compensation for periods prior to the date
of death (the "Standard Termination Payments"). The Company may terminate the
agreement for "cause" (as defined) or if the Executive incurs a disability that
continues for a period of 180 consecutive days. The Executive may terminate the
agreement for "good reason"
<PAGE>
(as defined). The Executive may also terminate the agreement in which case the
Company would have no further obligation to such Executive except for the
Standard Termination Payments. If the Company terminates an Executive for other
than "cause" or upon death or total disability, or if such Executive terminates
the agreement because the Company fails to comply with the agreement or
following a "Change in Control" whereby the Executive's duties are substantially
diminished or the Executive is relocated, then such Executive is entitled to:
(i) the Standard Termination Payment; (ii) any bonus earned but not yet paid
under any "Stay Put" or any other bonus program; (iii) 100% of his annual base
salary; and (iv) any and all options granted shall be vested for twelve months
and exercisable for the longer of twelve months after the termination date or
period for exercise as provided in such Executive's option agreement. In
addition, if the Company terminates such Executive following a "Change of
Control" for other than "cause," total disability or upon death, or if such
Executive terminates the agreement due to a substantial change in duties or
relocation following a "Change in Control," the Executive shall have the
following additional rights: (i) the Company shall pay an additional 50% of such
Executive's annual base salary, (ii) all granted but unvested options shall
become immediately vested and nonforfeitable and remain exercisable for their
respective remaining terms, and (iii) such Executive shall have the right to
cause the Company to purchase all or a portion of the options at their fair
value on the date of termination.
ROBERT J. SCHOCK
During the period from January 1, 1997 to May 7, 1997, Robert J. Schock
was Chief Executive Officer of the Company. Prior to May 7, 1997, Mr. Schock had
an employment agreement with the Company which provided that should the
employment agreement be terminated under certain circumstances, Mr. Schock would
have the option of entering into a consulting agreement with the Company for a
term of three years.
Mr. Schock resigned his position as Chief Executive Officer on May 7,
1997, and at that time Mr. Schock and the Company entered into a consulting
agreement (the "Consulting Agreement") with a term commencing on that date and
ending June 30, 2000. Under the Consulting Agreement, the Company paid Mr.
Schock an initial payment of $750,000 and pays an additional $25,000 per year,
payable ratably in equal monthly installments. The Consulting Agreement also
provides Mr. Schock with continued participation or equivalent benefits in the
Company's disability and health insurance plans (including dependent coverage)
and continues the life insurance provided to Mr. Schock as of the commencement
of the Consulting Agreement.
Pursuant to the Consulting Agreement, Mr. Schock provides consulting
services to the Company with respect to the Company's telecommunications
equipment business. Under the Consulting Agreement, Mr. Schock agreed not to
compete with the business of the Company during the term of the Consulting
Agreement and for two years after the termination of the Consulting Agreement.
Mr. Schock also agreed to keep certain information confidential and to provide
certain other support and assistance to the Company.
The Consulting Agreement is terminable upon certain events, including
disability, death or material breach.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and beneficial owners of more than
10% of the Company's Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership of equity securities of the
Company. Officers, directors and beneficial owners of more than 10% of the
Company's Common Stock are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge
based solely upon a review of copies of such reports furnished to the Company
and written representations that no other reports were required, during the
fiscal year ending December 31, 1996, all Section 16(a) filing requirements
applicable to its officers, directors and beneficial owners of more than 10% of
the Company's common stock were complied with, except that a Form 3 with respect
to Mr. McDonnell becoming a member of the Board and which disclosed that he
owned no shares of the Company's stock was filed sixteen days late.
PERFORMANCE GRAPH
The following graph compares the cumulative total returns from November
8, 1996 (when the Company's Common Stock commenced public trading) through
December 31, 1997 for the Company, the Nasdaq Market Index and an index
constructed from a peer group of companies in the telephone equipment,
electronic commerce, or interactive services businesses. The peer group consists
of Checkfree Holdings Corp., CIDCO, Inc., Comdial Corp., Edify Corp., Security
First Network Bank, and Smartserv Online, Inc. Verifone, Inc. is not included in
the table this year because it was acquired in 1997 and is no longer a publicly
traded company.
<PAGE>
Period Ending 11/8/96 12/31/96 6/30/97 12/31/97
------- -------- ------- --------
InteliData Technologies Corporation 100.00 75.32 50.00 19.16
Peer Group 100.00 95.36 90.32 127.97
Nasdaq Market Index 100.00 105.97 119.00 130.00
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to an Agreement dated as of March 1, 1996, Colonial Data sold
to Robert J. Schock, director, Chairman, President and Chief Executive Officer,
all of the stock of a subsidiary which owned as its sole asset an airplane.
Since the sale of the subsidiary to Mr. Schock, the Company has continued to
utilize the airplane for business purposes. Pursuant to a lease agreement
between the Company and a corporation owned by Robert J. Schock, the Company
leases an airplane owned by the corporation and pays rent to the lessor based on
the number of flight hours and directly pays expenses relating to the Company's
use and operation of the airplane. The Company paid $259,297 in 1997 for
expenses related to the use of the airplane.
OTHER MATTERS
No business other than that set forth above is expected to come before
the Annual Meeting or any adjournment thereof. Should other business properly
come before the meeting or any adjournment thereof, the proxy holders will vote
upon the same according to their discretion and best judgment.
To permit the meeting of stockholders to be conducted in an orderly
manner, the Company's Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual or a special meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive office of the
Company, not less than 60 days prior to the scheduled annual meeting, regardless
of any postponements, deferrals or adjournments of the meeting. The Bylaws also
specify certain requirements pertaining to the form and substance of a
stockholder's notice.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies for the Annual Meeting will be paid
by the Company. In addition to solicitation of proxies by mail, the officers,
directors, and regular employees of the Company may solicit proxies on behalf of
the Board of Directors in person or by telephone, facsimile, telex or telegraph.
No additional compensation will be received by any officer, director or employee
of the Company in connection with any such proxy solicitation. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested by the Company to
forward proxy soliciting material to beneficial owners of shares held of record
by them and, upon request, the Company may reimburse them for reasonable
out-of-pocket expenses incurred in doing so.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the 1998
<PAGE>
Annual Meeting of Stockholders by submitting their proposals to the Company in a
timely manner. In order to be considered for the 1999 Annual Meeting of
Stockholders, stockholder proposals must be received at the Company's
headquarters, attention of the Secretary, 13100 Worldgate Drive, Suite 600,
Herndon, Virginia 20170 no later than January 15, 1999 and have complied with
the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as
amended.
By Order of the Board of Directors,
Albert N. Wergley
Secretary
<PAGE>
INTELIDATA TECHNOLOGIES CORPORATION
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders, June 9, 1998
The undersigned hereby appoints William F. Gorog, John C. Backus, Jr.
and Albert N. Wergley, as proxies, each with the power to appoint his substitute
and hereby authorizes such person acting individually, to represent and to vote,
as specified on the reverse side hereof, all of the shares of common stock of
InteliData Technologies Corporation which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders to be held on June 9, 1998 and at any
postponement or adjournment thereof; and in the discretion of the proxies, their
substitutes or delegates, to vote such shares and to represent the undersigned
in respect of other matters properly brought before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED BY THE
SIGNING STOCKHOLDER ON THE REVERSE SIDE HEREOF. UNLESS THE AUTHORITY TO VOTE FOR
ELECTION OF ANY NOMINEE FOR DIRECTOR IS WITHHELD IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE REVERSE SIDE HEREOF, THIS PROXY WILL BE VOTED "FOR" THE
ELECTION OF EACH NOMINEE FOR DIRECTOR AND "FOR" PROPOSAL 2.
(To Be Signed on Reverse Side.)
- --------------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
INTELIDATA TECHNOLOGIES CORPORATION
June 9, 1998
1. To elect two Class II directors to the Board of Directors
___ FOR all nominees ___ WITHHOLD authority for all nominee(s)
Nominees: T. Coleman Andrews, III
John J. McDonnell, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the person's name below)
---------------------------------------------
2. Ratification of Deloitte & Touche, LLP as Independent Accountants
___ FOR ___ AGAINST ___ ABSTAIN
Signature________ Date_____ SIGNATURE IF SHARES HELD JOINTLY________ Date ______
Instruction: Please sign exactly as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as
attorney, 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.
