<PAGE> 1
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 [ ]
<TABLE>
<CAPTION>
Check the appropriate box:
<S> <C>
[ ] 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
</TABLE>
ESHARE TECHNOLOGIES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(4) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
-------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and
the date of its filing.
-------------------------------------------------------------------
(1) Amount Previously Paid:
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(4) Date Filed:
<PAGE> 2
[LOGO] ESHARE
TECHNOLOGIES
April 19, 2000
DEAR FELLOW SHAREOWNER:
In 1999, we experienced a year of reinvention and transformation. We forged a
stronger, more competitive organization better positioned to capitalize on one
of the most compelling opportunities in e-business today: electronic Customer
Relationship Management (eCRM) -- an emerging segment of the CRM market that
utilizes multi-channel communications to humanize and enhance the online and
voice-based customer experience.
Interactive, collaborative customer service solutions delivered via the Internet
have the potential to change the fundamental nature of every voice-based contact
center in the world. eShare Technologies, Inc. is intensely focused on staking
out a leadership position in its chosen segment of this marketplace. We are
poised on the cutting edge of the innovations driving this change, helping our
clients realize tangible improvements in customer relationships by optimizing
online interactions.
The most compelling growth prospects in our industry lie in the
business-to-business (B2B) market -- where the total value of online
transactions is currently estimated at $50 trillion annually in the U.S.(1) and
some $250 trillion globally -- an order of magnitude larger than the
business-to-consumer (B2C) market. Recent research on our target segment
indicates that, "CRM software vendors participate in a large and growing market;
estimated at $1.3 trillion in 1998 and estimated to grow to $13 trillion by
2003, a CAGR of 46 percent.(2)"
To enhance our presence in this market, Melita(R) International merged with
eShare(R) Technologies, Inc. last September, subsequently adopting the eShare
name. This transaction dramatically expanded the scope of our customer contact
center business to encompass a critical emerging, Internet-enabled aspect of
eCRM that we define as Customer Interaction Management (CIM). eShare currently
delivers CIM solutions via voice, email, real-time web interaction and hosting
to more than 2,200 e-businesses, ASPs, ISPs and portals in over 30 countries.
Acquiring eShare's advanced Web-based technology and its significant client base
- -- including America Online, AT&T Corporation, 1-800-FLOWERS and Sprint
Corporation -- immediately provided us with access to growing niche markets, new
revenue streams and exciting opportunities to further broaden our business reach
across the CIM sector. Complementing the merger with eShare, our acquisition
last June of smallwonder! Softworks, Inc. added powerful stand-alone customer
contact management and Web-enabled contact center solutions to our formidable
suite of product offerings.
<PAGE> 3
During 1999, we also expanded our channels distribution network, including our
Internet partners. We now have over 20 channel partners in different countries
who focus on our solutions, including Snickleways Interactive and Linkshare
Corporation. As part of our reseller network, these channel partners are
providing presence globally for eShare and our solutions.
These planned strategic actions demanded a significant investment from us in
terms of our financial and intellectual capital. We also drew upon the strength
of the original predecessor of our combined entity, Melita International, having
experienced consistent revenue growth and strong profitability since its
founding in 1983. Last year was an exception, as the two complex merger
transactions required our management team and sales force to devote significant
time and attention to maximizing synergies, temporarily competing with our
customary focus on growing the company's core business.
Revenues for 1999 declined 2.2 percent to $94.9 million from $97.1 million in
fiscal 1998. This revenue shortfall, coupled with the $9.3 million in
acquisition and restructuring expenses associated with the eShare and
smallwonder! acquisitions contributed to a loss from operations for the year of
$11.8 million. Excluding these one-time charges as well as the amortization of
goodwill, we would have reported a much narrower -- but still disappointing --
operating loss of approximately $2.0 million.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS 1995 1996 1997 1998 1999
- -------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUE $35,282 $48,021 $66,520 $ 97,081 $94,855
GROSS MARGIN % 60.3% 61.5% 62.1% 63.9% 61.9%
OPERATING EXPENSES 16,609 22,813 34,351 48,006 70,483
OPERATING INCOME 4,661 6,720 6,950 14,049 (11,791)
NET INCOME 2,955+ 4,069+ 2,898+ 8,540 (15,808)*
EPS (PRO FORMA DILUTED) 0.24 0.23 0.14 0.40 (0.76)
</TABLE>
+ Pro forma
* Includes a one-time non-cash stock preference charge of $5.85 million
offset by a $1.88 million tax benefit and other income, as described in
eShare's Form 10-K for the period ended 12/31/99.
The operating loss was primarily the result of fixed operating expenses which
could not be reduced proportionately with revenues, as well as reinvestment of
voice/call center operating margin in the Internet side of our business, where
software revenues have been growing at more than 100 percent annually. It is
noteworthy that despite these challenges, last year we attained a 61.9 percent
gross margin -- in line with the company's historic range underscoring the
ongoing strength of our core franchise. On the whole, we are pleased to report
that as of the first quarter of 2000, we have successfully addressed the
majority of our merger integration issues and significantly reduced contact
center operating expenses, and are on target toward restoring this unit to
profitability by the end of the year.
While the global market for traditional outbound call center technology
continues to expand, growth in the North American segment has leveled out. We
believe this is due to the commoditization of pure voice contact center
technology stemming from the difficulty in reaching customers because of call
blocking, privacy issues and Internet usage. While voice interaction will always
be
<PAGE> 4
an important communications channel to customers, CIM solutions must also
incorporate Internet-based communications as a mainstream direct channel.
Accordingly, we have been focusing new sales efforts on transforming our
voice-based contact center solutions into full-fledged CIM solutions. With
increasing domestic contact center competition and the maturation of voice
technology, price pressures continue to reduce the average price of a "pure"
outbound contact center "seat." Thus, even with increased unit volume in 1999,
the resulting revenues have actually been lower than the previous year.
These are some of the contributing reasons for the decline in our voice-based
contact center revenues and operating results in the third and fourth quarters.
Also impacting our 1999 revenue stream to a lesser extent were client
uncertainties involving Y2K, which caused some current and prospective clients
to postpone information technology investments beyond the end of the year. We
believe the Internet-based revenues will drive new business opportunities -- the
first and foremost of the benefits of our merger with eShare.
One of the key reasons we merged with eShare is their outstanding reputation for
delivering innovative enterprise interaction software and services which are
crucial to the ability of e-business to service and retain customers. These
technologies include Web-based customer service and support, email, instant
messaging, customer self-service, live conferencing and events, distance
learning, community chat, threaded discussion forums and custom integration
tools. We have been particularly impressed with eShare's rapid development from
a startup in 1997 to revenues of $9 million in 1999 and relationships with more
than 1700 clients including autobytel.com, iWon.com, Snap.com, First USA Bank
and Hewlett-Packard. At year-end, our combined company had a roster of more than
2,200 clients, and we anticipate realizing significant cross-selling
opportunities over the next several years.
Today, we stand at the epicenter of a revolution in CRM driven by technologies,
which enhance the speed, convenience, integrity and quality of customer
interaction management. Armed with these capabilities, eShare clients in
virtually any business sector can realize significant, quantifiable improvements
in customer contact and collaboration. We believe that using eShare solutions
enables e-businesses and service providers to markedly increase customer loyalty
and retention by demonstrating greater sensitivity to their customers' needs,
preferences and expectations. Experience and research tell us that these
capabilities will be vital to success in the intensely competitive online
marketplace.
We begin the new millennium as a renewed organization, better equipped than ever
for success. As the virtual world of online business converges with
bricks-and-mortar, preserving customer relationships will become paramount --
and eShare is well positioned as a full-service software facilitator in the B2B
and B2C markets. We offer multi-channel solutions that unite voice, email, data,
chat, and live collaboration. We help humanize the business applications that
enhance the online customer service experience. We enable e-businesses to better
retain their customers, remember their likes and dislikes, and keep them highly
satisfied. Our new eShare Conversations solution extends inbound/outbound voice
management to the next level. Our soon-to-be-announced e360 CIM offering will
provide customer interaction management across our full voice and Internet
product suite, providing a seamless solution for e-business and customer contact
centers to service their buyers, sellers and customers -- worldwide, 24 hours
per day.
<PAGE> 5
In closing, considering last year's challenges and events, we would like to
express our sincere appreciation to all eShare shareholders -- our employees,
customers, business partners and investors -- for their continued confidence and
encouragement. With your support, we look forward to an exciting and rewarding
2000.
/s/ Aleksander Szlam /s/ James Tito
---------------------- ---------------------------
Aleksander Szlam James Tito
CEO and Chairman President and Vice Chairman
Safe Harbor Statement
This document contains forward-looking statements relating to results of
operations, market acceptance of products, strategic relationships, marketing
strategies and conditions and product functionality, availability, integration
and benefits. Such statements are made based on beliefs as well as assumptions
made by, and information currently available to management, pursuant to
'safe-harbor' provisions of the Private Securities Litigation Reform Act of
1995. While these statements reflect our best current judgment, they are subject
to risks and that could cause a change in focus and direction. A discussion of
certain risk that may cause actual results to differ from these forward-looking
statements can be found in eShare's Form 10-K for the period ended December 31,
1999, on file with the SEC.
(1) Technology Industry Overview, "B2B e-commerce: enabling the $50
trillion new business economy," Bank of America, January 3, 2000.
(2) Equity Research Industry Analysis, "CRM Capturing Corporate
Interactions," Legg Mason Equity Research Technology Group, November 4,
1999.
[LOGO] ESHARE
TECHNOLOGIES
CORPORATE HEADQUARTERS: 5051 Peachtree Corners Circle -
Norcross, Georgia 30092-2500 USA - Phone: (770) 239-4000 -
1-800-635-4821
Additional Major Offices: New York - California - Illinois - UK - France -
Mexico
E-mail: [email protected] - Website: www.eshare.com
<PAGE> 6
ESHARE TECHNOLOGIES, INC.
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GEORGIA 30092-2500
(770) 239-4000
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2000
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of eShare
Technologies, Inc. ("eShare") will be held at the Atlanta Financial Center, 18th
Floor, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326, at 10:00 a.m.,
Atlanta, Georgia time, on Tuesday, May 23, 2000 (the "Meeting"), to consider and
act upon:
1. the election of four persons to serve as members of eShare's Board of
Directors;
2. a proposal to increase the number of shares available for issuance under
the Company's Stock Incentive Plan by 1,500,000 shares;
3. a proposal to ratify the selection of independent public accountants for
eShare's current fiscal year; and
4. 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 March 31, 2000,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting.
By Order of the Board of Directors,
/s/ DAN K. LOWRING
Dan K. Lowring
Secretary
April 19, 2000
Atlanta, Georgia
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL 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 ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
<PAGE> 7
ESHARE TECHNOLOGIES, INC.
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GEORGIA 30092-2500
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2000
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
SHAREHOLDERS MEETING
This Proxy Statement and the enclosed proxy ("Proxy") are furnished on
behalf of the Board of Directors of eShare Technologies, Inc., a Georgia
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held on Tuesday, May 23, 2000 at 10:00 a.m., Atlanta, Georgia 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 Atlanta Financial Center, 18th Floor, 3343 Peachtree
Road, N.E., Atlanta, Georgia 30326. eShare intends to mail this Proxy Statement
and the accompanying Proxy card on or about April 20, 2000, to all shareholders
entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of eShare's common stock, no par value ("Common
Stock"), at the close of business on March 31, 2000 will be entitled to notice
of and to vote at the Annual Meeting. At the close of business on March 31,
2000, eShare had outstanding and entitled to vote 21,209,885 shares of common
stock, no par value per share ("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. Any shareholder who signs and
returns a Proxy has the power to revoke it at any time before it is exercised by
providing written notice of revocation to the Secretary of eShare or by filing
with the Secretary of eShare a Proxy bearing a later date. 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 shareholder who signs and returns the enclosed form of Proxy
will be counted for the purposes of determining the existence of a quorum at the
Annual Meeting, whether or not the shareholder abstains on all or any matter to
be acted on at the Annual 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 form of Proxy provides a means for a
shareholder to vote for all of the matters listed in the accompanying Notice of
Annual Meeting and described in the Proxy Statement. The enclosed form of Proxy
also provides a means for a shareholder to vote for all of the nominees for
Director listed thereon or to withhold authority to vote for one or more of such
nominees. eShare's Bylaws provide that Directors are elected by a plurality of
the votes cast. Plurality means that more votes must be cast in favor of the
election of a Director than those cast against
<PAGE> 8
election of such Director. Accordingly, the withholding of authority by a
shareholder (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 form of Proxy also provides a means for a shareholder 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 shareholder'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 proposals two and three set forth in the accompanying Notice of Annual
Meeting is required for the approval of each 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 proposals two and three will have the same effect as a vote against
these proposals. 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 the
proposal, but they will have the effect of reducing the number of affirmative
votes required to approve the proposal, because they reduce the number of shares
present or represented from which a majority is calculated. There are no
dissenter's rights with respect to any matter to be acted upon pursuant to this
Proxy Statement.
PROXIES AND SOLICITATION
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 proposals
two and three.
Proxies will be solicited from eShare's shareholders by mail. eShare will
pay all expenses in connection with the solicitation, including postage,
printing and handling, and the expenses incurred by brokers, custodians,
nominees and fiduciaries in forwarding proxy material to beneficial owners. It
is possible that directors, officers and other employees of eShare may make
further solicitation personally or by telephone, facsimile or mail. Directors,
officers and other employees of eShare will receive no additional compensation
for any such further solicitation.
2
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount and percent of shares of Common
Stock which, as of March 31, 2000, are deemed under the rules of the Securities
and Exchange Commission (the "Commission") to be "beneficially owned" by each
member of the Board of Directors of eShare, by each nominee for election to the
Board of Directors, by each executive officer of eShare, by all directors,
nominees and executive officers of eShare as a group, and by any person or
"group" (as that term is used in the Securities Act of 1934, as amended) known
to eShare as of that date to be a "beneficial owner" of more than 5% of the
outstanding shares of Common Stock of eShare.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
--------------------------------
NUMBER OF SHARES OF PERCENTAGE
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK OF CLASS
- -------------------------------- ------------------- ----------
<S> <C> <C>
Aleksander Szlam(2)......................................... 11,147,395 50.69%
James Tito(3)............................................... 673,491 3.06%
Donald L. House(4).......................................... 31,000 *
Andrew J. Filipowski(5)..................................... 417,500 1.90%
George W. Landgrebe(6)...................................... 34,695 *
William K. Dumont(7)........................................ 31,251 *
Dan K. Lowring(8)........................................... 29,435 *
Chase Venture Capital Association........................... 1,880,801 8.55%
All executive officers and directors as a group (7
persons)(9)............................................... 12,364,767 56.23%
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Information with respect to "beneficial ownership" shown in the table above
is based on information supplied by the directors and executive officers of
eShare and filings made with the Commission or furnished to eShare by other
shareholders. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. Except as indicated
by footnote, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage of beneficial ownership is based on
21,990,868 shares of Common Stock outstanding as of March 31, 2000 and
includes shares of Common Stock subject to options which may be exercised
within 60 days of March 31, 2000. Such shares are deemed to be outstanding
for the purposes of computing the percentage ownership of the individual
holding such shares, but are not deemed outstanding for purposes of
computing the percentage of any other person shown in the table.
(2) Consists of 11,143,395 shares held by a limited partnership controlled by
Mr. Szlam and 4,000 shares held indirectly by Mr. Szlam's children.
(3) Includes 0 shares issuable pursuant to options exercisable within 60 days of
March 31, 2000.
(4) Includes 28,500 shares issuable pursuant to options exercisable within 60
days of March 31, 2000.
(5) Includes 4,167 shares issuable pursuant to options exercisable within 60
days of March 31, 2000.
(6) Includes 23,130 shares issuable pursuant to options exercisable within 60
days of March 31, 2000.
(7) Includes 31,251 shares issuable pursuant to options exercisable within 60
days of March 31, 2000.
(8) Includes 29,250 shares issuable pursuant to options exercisable within 60
days of March 31, 2000.
(9) Includes 11,143,395 shares held by a limited partnership controlled by Mr.
Szlam, 4,000 shares held indirectly by Mr. Szlam's children, 115,298 shares
issuable pursuant to options exercisable within 60 days of March 31, 2000.
3
<PAGE> 10
PROPOSAL 1
ELECTION OF DIRECTORS
INTRODUCTION
At the Annual Meeting, four directors are to be elected for the terms
described below. Each of the nominees for election to the Board of Directors is
currently a director of eShare. If elected at the Annual Meeting, each of the
nominees would serve until the Annual Meeting of Shareholders held in 2001 and
thereafter until his successor is duly elected and qualified, or until such
directors earlier death, resignation or removal.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the four nominees named below. In the event
that any 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. Each person nominated for election
has agreed to serve if elected, and management has no reason to believe that any
nominee will be unable to serve.
The Board of Directors recommends a vote FOR each named nominee.
NOMINEES
The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
ALEKSANDER SZLAM
Mr. Szlam, 49, founded eShare in 1979 and has served as Chairman of
the Board and Chief Executive Officer of eShare since its inception. Prior
to founding eShare, Mr. Szlam worked as a design engineer and scientist at
Lockheed Corporation, NCR and Solid State Systems. Mr. Szlam serves as a
Director of divine interVentures, inc.
JAMES TITO
Mr. Tito, 43, has served as our president since October 1999. Mr. Tito
was a co-founder of eShare.com (formerly eShare Technologies, Inc. and
served as the Chairman and Chief Executive Officer of eShare.com from its
inception in October 1996 until its acquisition by eShare. Prior to co-
founding eShare.com, Mr. Tito served as the president of its predecessor,
Interactive Marketing Technologies (IMT), a database marketing, consulting
and services firm, since 1988. Mr. Tito serves as a director of LISTNet,
Long Island's Software Technology Network.
DONALD L. HOUSE
Mr. House, 58, is a private investor and business consultant. He is
currently Chairman of Ockham Technologies, Inc., an internet sales
management information company. He is a member of the Board of Directors of
Clarus Corporation, for which he served as Chairman from 1993 through 1997.
He is also on the Board of Carreker Corporation, where he serves on its
Audit Committee. Since 1988, he has been a business advisor, investor, and
director for a number of public and private high technology companies. From
1968 through 1987, he served in a number of senior executive positions with
Management Science America, Inc., a provider of application software.
ANDREW J. FILIPOWSKI
Mr. Filipowski, 49, is a founder of divine interVentures, inc. and has
served as its President, Chief Executive Officer and Chairman since its
formation in 1999. Mr. Filipowski was a founder of Platinum Technology
Inc., and served as President, Chief Executive Officer and Chairman of the
Board of Directors of Platinum Technology from its formation in April 1987
until its sale to Computer Associates
4
<PAGE> 11
in 1999. Mr. Filipowski is also a director of Mastering, Inc., System
Software Associates, Inc. and Platinum Entertainment, Inc., a publicly held
integrated music recording and publishing company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1999, the Board of Directors held 11 meetings. All of the directors
attended at least 75% of the aggregate total number of meetings of the Board of
Directors held during their tenure and meetings of committees of the Board of
Directors on which they served.
eShare's Board of Directors has established an Audit Committee and
Compensation Committee. Donald L. House and Andrew J. Filipowski presently serve
on the Audit Committee. The Audit Committee met 4 times in 1999. The primary
functions of the Audit Committee are to (i) review the scope and timing of the
audit and non-audit services to be rendered by eShare's independent accountants,
to review audit plans of the independent accountants and internal auditors and
to review the reports upon completion of their audits, (ii) to review the
appropriateness of eShare's accounting policies, the adequacy of its financial
controls and the reliability of the financial information reported to the
public, and (iii) to report to the Board of Directors on its activities. Donald
L. House and Andrew J. Filipowski presently serve on the Compensation Committee.
The Compensation Committee met 5 times in 1999. The primary functions of the
Compensation Committee are to review and approve, subject to ratification of the
Board of Directors, the Chief Executive Officer's compensation, to consult with
the Chief Executive Officer and approve compensation for executive officers and
other key employees, to administer eShare's stock option plans and employee
stock purchase plan including approval of all awards thereunder, to approve
management incentive plans for senior management, and to report to the Board of
Directors on these activities.
As compensation for serving on the Board of Directors, directors who are
not also employees of eShare ("Nonemployee Directors") receive $1,000 for each
meeting of the full Board and $500 for each Committee meeting. In eShare's
discretion, Nonemployee Directors may also be reimbursed for reasonable expenses
incurred by them in connection with their attendance at Board Meetings.
Nonemployee Directors are also eligible to receive options under eShare's 1997
Stock Option Plan. Under this plan, Nonemployee Directors receive an option to
purchase 10,000 shares of eShare's common stock each year, with one-fourth of
such options vesting for each calendar quarter during which the Nonemployee
Director serves.
EXECUTIVE OFFICERS
In addition to the individuals nominated for director above who are also
executive officers of eShare, the following individuals presently serve as
executive officers of eShare:
GEORGE W. LANDGREBE
George W. Landgrebe has served as our Chief Operating Officer since
December 1999, and as our Chief Financial Officer since February 2000. Mr.
Landgrebe was a Director of eShare.com from its inception until its merger
with us. From January 1999 until November 1999, Mr. Landgrebe was managing
partner in Performance Leadership, LLC, a human resources consulting group.
From 1994 until 1999, Mr. Landgrebe was the general manager of L&R
Associates, a consulting firm he co-founded. Mr. Landgrebe has also held
executive positions with AutEx Systems, an online equity block trading
firm, Thomson Financial Information (American Banker/Bond Buyer), Robbins
Research International & Infinite Possibilities LLC, WorkLife Solutions,
and Xerox Corporation.
WILLIAM K. DUMONT
William K. Dumont has served as Executive Vice President, Business
Development, since January 2000. Mr. Dumont was Chief Operating Officer of
eShare from January 1999 until December 1999. He was Senior Vice President,
Worldwide Sales from August 1998 until December 1998. Mr. Dumont also
served as Vice President, Sales from December 1996 until August 1998. Prior
to joining eShare, Mr. Dumont served as Regional Manager for Octel
Communications Corporation from 1994 to 1996, and
5
<PAGE> 12
from 1990 to 1994 he served as Regional Vice President of VMX, Inc., both
of which are voice processing companies.
There are no family relationships between any of our directors or executive
officers.
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned for services rendered to eShare by eShare's Chief Executive
Officer and each of the other four most highly compensated executive officers of
eShare during 1999 (collectively the "Named Executive Officers") for the fiscal
years ended December 31, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS (#) COMPENSATION
- --------------------------- ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Aleksander Szlam.......... 1999 $330,000 $160,000(3) -- -- --
Chairman of the Board 1998 $330,000 $300,000(3) -- -- --
and Chief Executive
Officer
James Tito................ 1999 $240,000 $120,000 -- 125,000 --
Vice Chairman of the 1998 $250,952 $ 55,000 -- 0 --
Board and President
George W. Landgrebe....... 1999 -- -- -- 61,565 --
Chief Operating Officer, 1998 -- -- -- 0 --
Chief Financial and
Administration Officer
William K. Dumont......... 1999 $205,000 $ 99,302 -- 40,000 --
Executive Vice President, 1998 $139,846 $124,000 -- 65,000 --
Business Development
Dan K. Lowring............ 1999 $150,000 $ 57,474 -- 10,000 --
Vice President, Finance 1998 $119,923 $ 22,666 -- 50,000 --
and Secretary
John Lamb................. 1999 $135,577 $ 54,150 -- -- --
(formerly) Senior 1998 $130,385 $ 18,000 -- 27,500 --
Vice President,
Corporate Development
</TABLE>
- ---------------
(1) Except as noted, bonuses awarded and paid in each year were based upon prior
year performance.
(2) In accordance with rules of the Securities and Exchange Commission, other
compensation 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 $50,000 or 10% of the total annual salary and bonus
for the Named Executive Officer for such year.
(3) Bonus is based upon Mr. Szlam's employment agreement with eShare.
6
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted during
the year ended December 31, 1999 to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(2)
OPTION OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME DATE GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- -------- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Aleksander Szlam....... -- -- -- -- --
James Tito............. 11/4/99 125,000 5.9171 4.00 11/4/09 $263,544 $715,817
George Landgrebe....... 12/16/99 50,000 2.3669 9.00 12/16/09 $227,620 $628,997
5/14/99 11,565 .5475 .43 5/14/09 $239,358 $412,083
William K. Dumont...... 11/4/99 40,000 1.8935 4.00 11/4/09 $ 84,334 $229,061
Dan K. Lowring......... 11/4/99 10,000 .4734 4.00 11/4/09 $ 21,083 $ 57,265
</TABLE>
- ---------------
(1) The options granted to the named executive officers were awarded under
eShare's 1997 Stock Option Plan (the "1997 Plan"). The options granted under
the 1997 Plan are exercisable for a period not to exceed ten years from the
date of grant. Options generally vest over four years of continuous
employment with eShare. The exercise price of each option granted was not
less than 100% of the fair market value of a share of Common Stock on the
date of grant.
(2) Amounts represent the hypothetical gains that could be achieved for the
respective options at the end of the ten year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by the rules of the
Securities and Exchange Commission and may not accurately reflect the
appreciation of the price of the Common Stock from the grant date until the
expiration of the option term. These assumptions are not intended to
represent a forecast of future stock appreciation of eShare's Common Stock.
No assurance can be given that eShare's Common Stock will appreciate at all.
OPTIONS EXERCISED AND YEAR-END VALUES OF AN EXERCISED OPTION
The following table sets forth information, as of December 31, 1999,
regarding the number of shares received and the value realized upon exercise of
the stock options, and the number and value of exercisable and unexercisable
options to purchase Common Stock of eShare held by eShare's Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Aleksander Szlam.......................... -- -- -- --
James Tito................................ 85,773 125,000 $1,410,966 $ 1,632,500
George W. Landgrebe....................... 23,130 50,000 $ 384,652 $ 403,000
William Dumont............................ 33,751 106,249 $ 258,845 $ 991,306
Dan K. Lowring............................ 25,125 53,375 $ 267,053 $ 494,338
</TABLE>
- ---------------
(1) Calculated by multiplying the number of shares underlying options by the
difference between the closing sale price for the Common Stock of $17.06 as
reported by The NASDAQ Stock Market on December 31, 1999 and the exercise
price of the options.
7
<PAGE> 14
AGREEMENTS WITH EMPLOYEES
Principal employees of eShare, including executive officers, are required
to sign an agreement with eShare restricting the ability of the employee to
compete with eShare during his or her employment and for a period of one year
thereafter, restricting solicitation of customers and employees following
employment with eShare, and providing for ownership and assignment of
intellectual property rights to eShare.
Mr. Szlam has entered into an employment agreement with us effective June
4, 1997. Pursuant to the agreement, Mr. Szlam is entitled to receive an annual
base salary of $300,000, and is entitled to an annual bonus of $160,000. Based
on his performance in 1998, our Board of Directors granted Mr. Szlam an
additional bonus of $140,000. The Board of Directors has increased Mr. Szlam's
base salary in 1999 to $330,000. Mr. Szlam's employment agreement has an initial
term of two years and automatically renews for additional two-year terms unless
eShare or Mr. Szlam cancels such renewal by giving three months' prior written
notice. As neither eShare nor Mr. Szlam canceled this agreement by March 4,
1999, it has been extended automatically until June 2001. Under the terms of the
agreement, Mr. Szlam has agreed to assign to us all patents, copyrights and
other intellectual property developed by him during the course of his
employment. In addition, Mr. Szlam has agreed not to solicit our customers or
employees or to compete with us for two years following any termination of his
employment.
Mr. Landgrebe has entered into an employment agreement with us effective
December 15, 1999. Pursuant to the agreement, Mr. Landgrebe is entitled to
receive an annual base salary of $252,000, and is eligible for a performance
bonus as determined by the Board of Directors. Mr. Landgrebe's employment
agreement runs for an indefinite term and may be terminated by either party on
90 days notice. Under the terms of the agreement, Mr. Landgrebe has agreed to
assign to us all patents, copyrights and other intellectual property developed
by him during the course of his employment. In addition, Mr. Landgrebe has
agreed not to solicit our customers or employees or to compete with us for two
years following any termination of his employment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires eShare's officers and directors and persons who own
more than ten percent of the Common Stock to file initial statements of
beneficial ownership (Form 3) and statements of changes in beneficial ownership
(Forms 4 and 5) of Common Stock and any other equity securities of eShare with
the Securities and Exchange Commission and The NASDAQ Stock Market. Officers,
directors and greater than ten percent shareholders are required by Securities
Exchange Commission regulations to furnish eShare with copies of all such forms
they file.
Based solely on a review of the copies of the forms that it has received,
and on written representations from certain reporting persons that no additional
forms were required, eShare believes that its officers, directors and greater
than ten percent beneficial owners complied with all of these filing
requirements in 1999; except that Mr. Filipowski inadvertently reported certain
acquisitions of the common stock of eShare late.
401(K) PROFIT SHARING PLAN
eShare maintains a 401(k) Profit Sharing Plan (the "401(k) Plan") which is
intended to be a tax-qualified defined contribution plan under Section 401(k) of
the Code. In general, all U.S. employees of eShare are eligible to participate
at the beginning of the quarter following their hire date. The 401(k) Plan
includes a salary deferral arrangement pursuant to which participants may
contribute, subject to certain Code limitations, a maximum of 15% of their
salary on a pre-tax basis, with a maximum deferral of $10,000. Starting in 1998,
eShare guarantees a matching contribution of 40% of each participant's
contribution up to 6% of the participant's salary and a discretionary match of
up to 60% of each participant's contribution up to 6% of the participant's
salary. In 1999, eShare's matching contribution was 40% of each participant's
contribution up to 6% of the participant's salary, for an aggregate contribution
of $418,413. A separate account is maintained for each participant in the 401(k)
Plan. The portion of a participant's account attributable to his or her own
contributions is 100% vested. The portion of the account attributable to Company
contributions (including matching contributions) vests ratably over the next two
years of service with eShare. Distributions
8
<PAGE> 15
from the 401(k) Plan may be made in the form of a lump-sum payment in cash or
property or in the form of an annuity.
STOCK OPTION PLANS AND STOCK PURCHASE PLAN
1997 Stock Option Plan. eShare's 1997 Stock Option Plan (the "1997 Stock
Option Plan") became effective on February 6, 1997. The aggregate number of
shares reserved for issuance under the 1997 Stock Option Plan is 1,850,000
shares, plus an annual adjustment beginning January 1, 1998, of an amount equal
to 5% of the number of outstanding shares as of the end of the previous fiscal
year, less the number of shares issued pursuant to eShare's 1992 Discounted
Stock Option Plan. The purpose of the 1997 Stock Option Plan is to provide
incentives for key employees, officers, consultants and directors to promote the
success of eShare, and to enhance eShare's ability to attract and retain the
services of such persons. Options granted under the 1997 Stock Option Plan may
be either options intended to qualify as "incentive stock options" under Section
422 of the Code or nonqualified stock options.
As of March 31, 2000, options to purchase 1,994,520 shares of Common Stock
were outstanding under the 1997 Stock Option Plan at a weighted average exercise
price of $11.95 per share and 198,192 shares of Common Stock have been issued
upon exercise of options granted under the 1997 Stock Option Plan.
1992 Discounted Stock Option Plan. eShare's 1992 Discounted Stock Option
Plan (the "1992 Stock Option Plan") became effective on January 1, 1992. The
aggregate number of shares reserved for issuance under the 1992 Stock Option
Plan is 1,000,000 shares. The purpose of the 1992 Stock Option Plan is to
provide incentives for key employees to promote the success of eShare, and to
enhance eShare's ability to attract and retain the services of such persons.
Options granted under the 1992 Stock Option Plan are not intended to qualify as
"incentive stock options" under Section 422 of the Code. Options granted under
the 1992 Stock Option Plan vest over a period of time specified in the relevant
option agreement.
As of March 31, 2000, options to purchase 163,289 shares of Common Stock
were outstanding under the 1992 Stock Option Plan at a weighted average exercise
price of $3.57 per share and 754,975 shares of Common Stock have been issued
upon exercise of options granted under the 1992 Stock Option Plan.
Employee Stock Purchase Plan. eShare adopted an Employee Stock Purchase
Plan (the "Stock Purchase Plan") on March 1, 1997, to become effective on June
4, 1997. A total of 250,000 shares of eShare's Common Stock have been reserved
for issuance under the Stock Purchase Plan. The Stock Purchase Plan is intended
to qualify under sec.423 of the Code. An employee electing to participate in the
Stock Purchase Plan must authorize on a semi-annual basis a stated dollar amount
or percentage of the employee's regular pay (not to exceed 10%) to be deducted
by eShare from the employee's pay. The price at which employees may purchase
Common Stock is 85% of the closing price of the Common Stock on the NASDAQ
National Market on the first day of the semi-annual period or the last day of
the semi-annual period, whichever is lower. An employee may not sell shares of
Common Stock purchased under the Stock Purchase Plan until the later of: (i) 180
days after the closing of this offering; or (ii) the first day of the second
semi-annual period following the semi-annual period in which the right to
purchase such shares was granted. Employees of eShare who have completed six
full months of service with eShare and whose customary employment is more than
20 hours per week for more than nine months per calendar year are eligible to
participate in the Stock Purchase Plan. An employee may not be granted an option
under the Stock Purchase Plan if after the granting of the option such employee
would be deemed to own 5% or more of the combined voting power or value of all
classes of stock of eShare. As of March 31, 2000, approximately 472 employees
are eligible to participate in the Stock Purchase Plan. The Stock Purchase Plan
is administered by the Compensation Committee of the Board of Directors.
9
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of eShare's Board of Directors has furnished the
following report on Executive Compensation in accordance with the rules and
regulations of the Securities and Exchange Commission. This report outlines the
duties of the Committee with respect to executive compensation, the various
components of eShare's compensation program for executive officers and other key
employees, and the basis on which the 1998 compensation was determined for the
executive officers of eShare, with particular detail given to the 1998
compensation for eShare's Chief Executive Officer.
During 1999, the Compensation Committee was comprised of Donald L. House
and Don W. Hubble, until Mr. Hubble's resignation from the Board of Directors,
at which point Andrew J. Filipowski replaced Mr. Hubble on the Compensation
Committee.
Duties of the Committee include establishing and approving compensation of
the Chief Executive Officer, consulting with the Chief Executive Officer for the
purpose of reviewing and approving compensation for other executive officers and
key employees, administering eShare's stock option plans for employees, and
approving management incentive bonuses. In performing the duties described
above, the Compensation Committee seeks to achieve the following:
(i) to provide compensation opportunities that are based on the
performance of eShare,
(ii) to provide competitive compensation programs that enable eShare to
attract and retain highly qualified executive managers who are
focused on enhancing shareholder value, and
(iii) to coordinate compensation programs and practices so that they
promote eShare's annual and long-term business objectives and
strategies.
The Compensation Committee in all instances seeks to link compensation to
the value and level of the performance of the executive. The Compensation
Committee seeks to achieve this objective by implementing, as the principal
components of compensation, a program of base salary, incentive compensation and
equity-based incentives. The compensation decisions of the Committee relative to
eShare's executive officers and key employees are described below as to each of
the foregoing components.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY
Salary. The salary levels of eShare's executive officers and other key
employees are reviewed by the Committee annually. In determining appropriate
base-salary levels, the Committee considers factors such as duties and
responsibilities inherent in the position held, initiative, performance, tenure
and pay practices for other companies of similar size in the electronics
industry, as well as business conditions generally prevailing in the software
and technology industries.
eShare refers to external information to determine base salaries paid by
other companies for comparable positions. For example, eShare refers to surveys
by organizations such as the American Electronics Association and Culpepper and
Associates for both executives and non-executives to determine market salaries
for comparable positions paid by other software and electronic companies of
similar size, and awards salary increases based on the number of years
experience and performance, giving consideration to the market salaries
reflected by these surveys.
Cash Bonuses. Annual cash bonuses are determined and paid to executives
and key employees pursuant to eShare's compensation plan for executive officers
and other key employees. For each executive and key employee, the cash bonus is
based upon the attainment of financial and other objectives, either for eShare
as a whole, or for the employee's area of responsibility. Cash bonuses for
executive officers and other key employees are targeted at ranges from 15% of
base salary to 100% of base salary. The amount of the bonus payable to any
executive officer or other key employee ranges from 0% of targeted bonus to a
maximum of 100% of targeted bonus depending on the level of performance goals
achieved. Since bonus payments are based on the degree in which eShare achieves
its overall operating income and revenue goals, the
10
<PAGE> 17
compensation of executive officers and key employees is higher during years in
which eShare meets or exceeds its specified financial performance goals.
Equity-based Incentives. eShare maintains stock option plans to provide
executive officers and other key employees and consultants with additional
incentive to promote the financial success of eShare which, in turn, is intended
to positively impact the value of eShare's Common Stock. Options granted under
eShare's Stock Option Plans have generally been long-term (ten years). All such
options are granted at an exercise price equal to fair market value on the date
of grant. With such features, eShare considers stock options as a way of
aligning the interest of management with the interest of eShare's shareholders
to promote growth in eShare's stock price and inducing executive officers and
other key employees to remain with eShare on a long-term basis. The Compensation
Committee believes that eShare's long-term goals will best be achieved by
maintaining in place the core management team of executive officers and other
key employees. During 1999, options to purchase 271,565 shares of eShare's
Common Stock were awarded to executive officers of eShare. As of March 31, 2000,
options to purchase an aggregate 780,983 shares of eShare's Common Stock were
held by 327 employees under eShare's Stock Option Plans. Included in this amount
as of March 31, 2000 are options to purchase approximately 115,464 shares of
eShare's Common Stock at an average exercise price of $7.73 held by executive
officers named in the Summary Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing the 1999 cash bonus compensation for Mr. Szlam, eShare
observed similar guidelines as set forth for executive officers generally.
eShare does not assign specific weighting to the various guidelines or factors,
other than the consideration that is given to eShare's achievement of its
overall operating income and revenue goals. During 1999, Mr. Szlam's base salary
was set at $330,000, as compared to $300,000 for the immediately preceding year.
The Compensation Committee approved no additional bonus above the $160,000
contractual bonus owed Mr. Szlam for 1999, reflecting the fact that although
eShare achieved a number of strategic goals in 1999, it failed to achieve its
targeted goals for operating income and revenue during the year. In 1998, Mr.
Szlam received an additional bonus of $140,000 above the contractual bonus of
$160,000.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION FOR DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deduction allowable to eShare for compensation paid to the Chief Executive
Officer and each of the four other most highly compensated executive officers to
$1.0 million. Qualified performance-based compensation is excluded from this
limitation if certain requirements are met. eShare's policy is generally to
preserve the federal income tax deductibility of compensation paid, to the
extent feasible. The Compensation Committee believes that awards under eShare's
management incentive plan and its award of options made under stock option plans
for employees will qualify as performance-based compensation and thereby be
excluded from the $1.0 million limitation. Notwithstanding eShare's policy to
preserve the federal income tax deductibility of compensation payments, under
certain circumstances, the Compensation Committee, in its discretion, may
authorize payment, such as salary, bonuses or otherwise, that may cause an
executive officer's income to exceed the deductible limits.
Compensation Committee
Donald L. House
Andrew J. Filipowski
11
<PAGE> 18
STOCK PERFORMANCE GRAPH
The following line-graph provides a comparison of the cumulative total
shareholder return on eShare's Common Stock for the period from the date of
eShare's initial public offering on June 4, 1997 through December 31, 1999,
against the cumulative shareholder return during such period achieved by the
NASDAQ Stock Market (U.S. Companies) and an index of eShare's competitors in the
customer contact and call management systems industry (the "Call Management
Index"). All amounts have been calculated as if all dividends were reinvested.
<TABLE>
<CAPTION>
ESHARE TECH INC PEER GROUP S&P SMALLCAP 600
--------------- ---------- ----------------
<S> <C> <C> <C>
6/97 100.00000000 100.00000000 100.00000000
1997 90.62000000 97.30000000 117.55000000
1998 210.00278800 23.89688000 116.01009500
1999 170.62726530 83.53154404 130.40694780
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Donald L. House, Don W. Hubble and Andrew J. Filipowski served
as members of the Compensation Committee of the Board of Directors. Neither of
these directors served as an officer or employee or was formerly an officer of
eShare or its subsidiaries. Aleksander Szlam, Chairman of the Board and Chief
Executive Officer of eShare, serves as a director and member of the compensation
committee of the board of directors of divine interVentures, inc. Andrew J.
Filipowski, a member of the Compensation Committee of the Board of Directors, is
Chairman of the Board, Chief Executive Officer and President of divine
interVentures, inc.
CERTAIN TRANSACTIONS
TAX INDEMNIFICATION AGREEMENT
eShare has entered into Tax Indemnification Agreements with its existing
shareholders providing for, among other things, the indemnification of eShare by
such shareholders for any federal and state income taxes (including interest)
incurred by eShare if for any reason eShare is deemed to be treated as a C
corporation during any period for which it reported its earnings to the taxing
authorities as an S corporation. The Tax Indemnification Agreements further
provide for the cross-indemnification of eShare and of each existing shareholder
for certain additional taxes (including interest and, in the case of existing
shareholders, penalties) resulting from eShare's operations during the period in
which it was an S corporation.
12
<PAGE> 19
PROPOSAL 2
AMENDMENT TO THE STOCK OPTION PLAN
The Board has approved and recommends to the shareholders that they approve
the proposal to amend the Company's 1997 Stock Option Plan to increase the
number of shares of Common Stock available for grant under the plan by
1,500,000. The text of the proposed amendment to the 1997 Stock Option Plan is
set forth in "Annex A" to this Proxy Statement. The 1997 Stock Option Plan is
described above under "Stock Option Plans" and is qualified in its entirety by
reference to the text of the 1997 Stock Option Plan.
The proposed amendment to the 1997 Stock Option 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 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 to the 1997 Stock Option Plan.
The Board has determined that the amendment to the 1997 Stock Option Plan is in
the best interest of the eShare and its shareholders. The proposed amendment
would provide a stable pool of additional shares for grant to officers,
directors, consultants and key employees of the eShare. The Board believes that
grants of stock options are an effective method to attract and retain officers,
directors, consultants and key employees and that the availability of shares for
future grants under the plan is important to the eShare's business prospects and
operations.
The Board of Directors recommends a vote FOR the approval of the amendment
to the 1997 Stock Option Plan.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the accounting firm of Arthur
Andersen, LLP to serve as its independent auditor for 2000. The appointment of
this firm was recommended to the Board by its Audit Committee. A proposal to
ratify that appointment will be presented at the Annual Meeting. Representatives
of Arthur Andersen, LLP are expected to be present at the Annual Meeting. They
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
The Board of Directors recommends that the shareholders vote FOR
ratification of selection of independent auditors.
SHAREHOLDER PROPOSALS
Rules of the Securities and Exchange Commission require that any proposal
by a shareholder of eShare for consideration at the 2001 Annual Meeting of
Shareholders must be received by eShare no later than December 21, 2000, if any
such proposal is to be eligible for inclusion in eShare's proxy materials for
its 2001 Annual Meeting. Under such rules, eShare is not required to include
shareholder proposals in its proxy materials unless certain other conditions
specified in such rules are met.
In order for a shareholder to bring any business or nominations before any
Annual Meeting of Shareholders, certain conditions set forth in Section 2.13 of
eShare's Amended and Restated Bylaws must be complied with, including, but not
limited to, delivery of notice to eShare not less than 60 days prior to the
meeting as originally scheduled; provided, however, that in the event that less
than 70 days notice or prior public disclosure of the date of the meeting is
given or made to the shareholders, notice by the shareholders to be timely must
be received not later than the close of business on the 10th day following the
date on which such notice of the date of meeting was mailed.
13
<PAGE> 20
OTHER MATTERS
Management of eShare is not aware of any other matter to be presented for
action at the Annual Meeting other than those mentioned in the Notice of Annual
Meeting of Shareholders and referred to in this Proxy Statement. However, if any
other matters are properly presented to the Annual Meeting, it is the intention
of the persons named in the accompanying proxy to vote, or otherwise act, in
accordance with their judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Dan K. Lowring
Dan K. Lowring
Secretary
April 19, 2000
14
<PAGE> 21
ANNEX A
AMENDMENT NO. 2
TO
ESHARE TECHNOLOGIES, INC.
1997 STOCK OPTION PLAN
The eShare Technologies, Inc. 1997 Stock Option Plan (the "Plan") is hereby
amended as follows:
1. Increase in Authorized Shares. Section 3 of the Plan is hereby amended
as follows:
Section 3.
SHARES SUBJECT TO OPTIONS
The initial number of Shares reserved for issuance under this Plan shall be
3,350,000 Shares of Common Stock, less the number of Shares (a) which have been
issued pursuant to exercised grants made under the eShare Technologies, Inc.
1992 Discounted Stock Option Plan (the "1992 Plan"), or (b) which are subject to
options granted which remain outstanding under the 1992 Plan. The number of
shares of Common Stock available for issuance under the Plan shall be
automatically adjusted on the first day of each fiscal year, beginning with the
1998 fiscal year, by a number of Shares such that the total number of shares
reserved for issuance under this Plan equals the sum of (i) the aggregate number
of Shares previously issued under this Plan and the 1992 Plan; (ii) the
aggregate number of Shares subject to then outstanding or authorized options
under this Plan and the 1992 Plan; and (iii) 5% of the number of shares of
Common Stock outstanding on the last day of the preceding fiscal year.
Notwithstanding the foregoing, not more than 750,000 of the Shares available for
grant each year shall be available for issuance pursuant to ISOs, such that not
more than 7,500,000 shares resulting from such automatic adjustments may ever be
issued pursuant to ISOs during the term of the Plan.
Such 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 an Option
which remain unissued after the cancellation, expiration or exchange of such
Option thereafter shall again become available for use under this Plan, and any
Shares subject to an option granted under the 1992 Plan which remain unissued
after the cancellation, expiration or exchange of such option thereafter shall
become available for use under this Plan. Notwithstanding the above, any
Surrendered Shares which remain after the surrender of an Option under Section
11 shall not again become available for use under this Plan.
2. Effective Date. The effective date of this Amendment shall be April 17,
2000.
3. Miscellaneous.
(a) Capitalized terms not otherwise defined herein shall have the
meanings given them in the Plan.
(b) Except as specifically amended hereby, the Plan shall remain in
full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment No. 2 to the
eShare Technologies, Inc. 1997 Stock Option Plan to be executed on the Effective
Date.
ESHARE TECHNOLOGIES, INC.
By:
------------------------------------
Aleksander Szlam, Chairman
Attest:
- --------------------------------------
Print Name:
- --------------------------------------
Print Title:
- --------------------------------------
A-1
<PAGE> 22
PROXY ESHARE TECHNOLOGIES, INC. PROXY
5051 PEACHTREE CORNERS CIRCLE
NORCROSS, GA 30092-2500
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF ESHARE TECHNOLOGIES,
INC. (THE "COMPANY") FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
TUESDAY, MAY 23, 2000 (THE "ANNUAL MEETING").
The undersigned hereby appoints Aleksander Szlam and Dan K. Lowring, and
each of them, with full power of substitution, as proxies to vote all of the
shares of Common Stock of the Company which the undersigned may be entitled to
vote at the Annual Meeting, and at any adjournments thereof, on the following
matters in the following manner:
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<S> <C> <C>
1. Election of Directors. [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees listed below
below)
</TABLE>
Aleksander Szlam, James Tito, Donald L. House, Andrew J. Filipowski
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below).
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2. Approval of the appointment of Arthur Andersen, LLP as the independent
auditors of the Company for the fiscal year ended December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve Amendment No. 2 to the eShare Technologies, Inc. 1997 Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In accordance with their judgement, upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
PLEASE SIGN AND DATE ON REVERSE.
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, AND NOT REVOKED, THE
SHARES IT REPRESENTS WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE CHOICE
SPECIFIED ABOVE. IF NO CHOICE IS SPECIFIED, IT WILL BE NOTED FOR THE ELECTION OF
THE NOMINEES LISTED IN PROPOSAL 1 ABOVE, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS BELOW.
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<S> <C>
------------------------------ ------------------
Signature* Date
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Signature* Date
* NOTE: When signing as attorney, trustee, administrator,
executor or guardian, please give your full title as such.
If a corporation, please sign in full corporate name by
President or other authorized officer. In the case of
joint tenants, each joint owner may sign.
</TABLE>
I PLAN TO ATTEND THE MEETING [ ]
