<PAGE>
SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the 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 section 240.14a-11(c) or section 240.14a-
12
pcOrder.com, 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)(l) 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. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date filed:
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[LOGO OF PCORDER.COM]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 6, 2000
To Our Stockholders:
Notice is hereby given that the annual meeting of stockholders of
pcOrder.com, Inc. (the "Company") will be held at the Renaissance Austin Hotel,
9721 Arboretum Blvd., Austin, Texas on July 6, 2000, at 9:00 a.m. local time,
for the following purposes:
1. To elect five directors of the Company to hold office until the Company's
next annual meeting of stockholders;
2. To approve the Company's Employee Stock Purchase Plan and Foreign
Subsidiary Employee Stock Purchase Plan;
3. To approve amendments of the Company's 1999 Stock Incentive Plan to (a)
increase the number of shares reserved for issuance under that plan by
1,500,000 and (b) impose a limit on the number of shares with respect to
which awards may be made to each executive officer under that plan in any
one year;
4. To ratify the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000; and
5. To transact such other business as may properly come before the meeting.
These items of business are more fully described in the attached Proxy
Statement.
Stockholders of record at the close of business on May 22, 2000 are entitled
to notice of and to vote at the Annual Meeting. A list of stockholders eligible
to vote at the Annual Meeting will be available for inspection at the Annual
Meeting and for a period of ten days prior to the meeting during regular
business hours at our corporate headquarters at 5001 Plaza on the Lake, Austin,
Texas.
By Order of the Board of Directors,
/s/ Richard Friedman
Richard Friedman
Secretary
Austin, Texas
June 9, 2000
The Company cordially invites all stockholders to attend the annual meeting in
person. However, to ensure your representation at the annual meeting, we
encourage you to read the attached proxy statement and complete, date, sign and
return the enclosed proxy card as promptly as possible in the enclosed postage-
paid envelope.
<PAGE>
PCORDER.COM, INC.
5001 Plaza on the Lake
Austin, Texas 78746
(512) 684-1100
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 6, 2000
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of pcOrder.com, Inc. (the "Company" or
"pcOrder") for use at the annual meeting of the stockholders of the Company, or
at any adjournment or postponement thereof (the "Annual Meeting"). The Annual
Meeting will be held at the Renaissance Austin Hotel, 9721 Arboretum Blvd.,
Austin, Texas on July 6, 2000, starting at 9:00 a.m. local time. This Proxy
Statement and the accompanying form of proxy are first being mailed to the
stockholders on or about June 9, 2000.
GENERAL INFORMATION
Voting Rights; Votes required for approval
The Board has fixed the close of business on May 22, 2000 (the "Record Date")
as the date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting. At the close of business on the Record Date, there
were 6,514,659 shares of Class A Common Stock outstanding and 10,317,620 shares
of Class B Common Stock outstanding. Each holder of Class A Common Stock is
entitled to one vote per share held and each holder of Class B Common Stock is
entitled to eight votes per share held. The holders of Class A Common Stock and
Class B Common Stock will vote together as a single class on all matters.
All of the outstanding shares of the Class B Common Stock are beneficially
owned by Trilogy Software, Inc. ("Trilogy"), representing approximately 93% of
the combined voting power of the outstanding common stock. Trilogy intends to
vote its shares FOR the election of each of the nominees named in Proposal 1 and
FOR each of the other proposals.
The presence, in person or by proxy, of the holders of a majority of the
combined voting power of the outstanding shares entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting. Election of
directors will be determined by a plurality of the votes represented in person
or by proxy and entitled to vote at the Annual Meeting. All other proposals
require the affirmative votes of a majority of the votes represented in person
or by proxy and entitled to vote at the Annual Meeting.
Proxies
All shares represented by properly executed proxies received prior to or at
the Annual Meeting, and not revoked, will be voted in accordance with the
instructions indicated in such proxies. If no instructions are indicated, such
proxies will be voted FOR the election of each of the five nominees named in
Proposal 1 and FOR each of the other proposals included in this Proxy Statement.
So far as the Board is aware, the proposals included in this Proxy Statement are
the only matters to be acted upon at the Annual Meeting. As to any other
matter, which may properly come before the Annual Meeting, the persons named in
the accompanying proxy card will vote thereon in accordance with their best
judgment.
A properly executed proxy marked "ABSTAIN," although counted for purposes of
determining whether there is a quorum and for purposes of determining the
aggregate voting power and number of shares represented and entitled to vote at
the Annual Meeting, will not be voted and, therefore, except in the case of
Proposal 1, will have the same effect as a vote cast against such proposal.
Shares represented by "broker
<PAGE>
non-votes" (i.e., shares held by brokers or nominees which are represented at a
meeting but with respect to which the broker or nominee is not empowered to vote
on a particular proposal) will not be considered as voting with respect to that
proposal. All votes will be tabulated by the inspector of elections appointed
for the Annual Meeting, who will separately tabulate affirmative and negative
votes, abstentions and "broker non-votes".
A stockholder may revoke his or her proxy at any time prior to its use by
delivering to the Secretary of the Company a signed notice of revocation or a
later dated signed proxy or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not in itself constitute the
revocation of a proxy.
The cost of solicitation of proxies will be paid by the Company. In addition
to solicitation by mail, officers and regular employees of the Company may
solicit proxies by telephone, telegram, in person or by other means. Such
persons will receive no additional compensation for such services. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares held of record by them
and will be reimbursed for their reasonable out-of-pocket expenses in connection
therewith.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
At the Annual Meeting, the stockholders will elect five directors to serve
until the 2001 annual meeting of stockholders or until their respective
successors are duly elected and qualified. In the event any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the proxies
may be voted for the balance of those nominees named and for any substitute
nominee designated by the present Board or the proxy holders to fill such
vacancy, or for the balance of the nominees named without nomination of a
substitute, or the Board may be reduced in accordance with the Bylaws of the
Company. As of the date of this Proxy Statement, the Board has no reason to
believe that any of the persons named below will be unable or unwilling to serve
as a nominee or as a director if elected.
Vote Required
Assuming a quorum is present, the five nominees receiving the highest number
of affirmative votes of shares entitled to vote for them will be elected as
directors of the Company for the ensuing year. Stockholders are not entitled to
cumulate votes in the election of directors. Unless marked otherwise, proxies
received will be voted FOR the election of each of the five nominees named
below.
Nominees
The names of the nominees, their ages as of April 15, 2000, and certain other
information about them are set forth below:
<TABLE>
<CAPTION>
Name of Nominee Age Director since Position Held with the Company
--------------- --- -------------- ------------------------------
<S> <C> <C> <C>
Ross A. Cooley........................... 59 1996 Chairman and Chief Executive Officer
Joseph A. Liemandt (1).................. 31 1994 Director
Peter J. Barris (1) ....................... 48 1998 Director
Linwood A. Lacy (2)..................... 54 1998 Director
Robert W. Stearns (2)...................... 50 1998 Director
----------------------------
</TABLE>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
2
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There are no family relationships among any of the directors or executive
officers of the Company.
Ross A. Cooley has been Chairman and Chief Executive Officer since November
1996. From 1984 to 1996, Mr. Cooley was employed by Compaq, most recently as
Senior Vice President and General Manager responsible for all North American
business and operations. Mr. Cooley is a member of the RosettaNet board of
directors, the computer industry's e-commerce standards effort, and a member of
its executive committee. During his 18-year career at IBM, Mr. Cooley completed
the Harvard Business School Senior Executive Program. Mr. Cooley holds an A.A.S.
from Broome Community College.
Joseph A. Liemandt has been a director since our inception. From July 1994 to
June 1996, Mr. Liemandt was President of pcOrder. Mr. Liemandt co-founded
Trilogy in 1989. Since that time, Mr. Liemandt has served as the President,
Chief Executive Officer and Chairman of Trilogy.
Peter J. Barris has been a director since June 1998. Since 1992, Mr. Barris
has been a partner and, in 1994, was appointed a General Partner, of New
Enterprise Associates, a firm that manages venture capital investments. In 1999,
Mr. Barris was appointed Managing General Partner. Mr. Barris is also a member
of the board of directors of Mobius Management Systems, Inc., CareerBuilder,
Inc. and Pathnet, Inc. Mr. Barris holds a B.S.E.E. from Northwestern University
and an M.B.A. from the Amos Tuck School at Dartmouth College.
Linwood A. Lacy, Jr. has been a director since August 1998. In November 1997,
Mr. Lacy retired from Micro Warehouse Incorporated where he had served as
President and Chief Executive Officer since October 1996. From 1985 to May 1996,
Mr. Lacy served as the Co-Chairman and Chief Executive Officer of Ingram Micro,
Inc., a microcomputer products distributor and a then wholly-owned subsidiary of
Ingram Industries, Inc. From December 1993 to June 1995, Mr. Lacy was also
President of Ingram Industries Inc. From June 1995 until April 1996, he was
President and Chief Executive Officer of Ingram Industries Inc., and from April
1996 to May 1996 served as its Vice Chairman. Mr. Lacy is Chairman of the Board
and a Director of Shopping4Sure.com. Mr. Lacy also serves as a director of
Ingram Industries Inc., Modus Media, Inc. and Earthlink Network, Inc. Mr. Lacy
holds a B.S.ChE from the University of Virginia and an M.B.A. in Business from
the Darden Graduate School of Business Administration at the University of
Virginia.
Robert W. Stearns has been a director since September 1998. Mr. Stearns is
currently a Managing Director of Sternhill Partners, a venture capital firm.
From January 1996 to August 1998, Mr. Stearns served as the Senior Vice
President of Technology and Corporate Development of Compaq. He joined Compaq as
Vice President of Corporate Development in July 1993. Before his arrival at
Compaq, he was employed as a management consultant with McKinsey & Co., focusing
on high technology clients. Mr. Stearns serves as a director of various private
companies and the Cynthia Woods Mitchell Pavilion. In November 1996, Mr. Stearns
was appointed to the Texas Science and Technology Council and in March 1998 he
became a fellow of the Aspen Institute and a member of the Brookings Council of
the Brookings Institute. Mr. Stearns holds a B.S. in Chemistry from Brown
University and a Master of Science from the Massachusetts Institute of
Technology.
Meetings and Committees of the Board
During the fiscal year ended December 31, 1999, the Board held 8 meetings and
acted by unanimous written consent in lieu of a meeting on 10 occasions, and no
director then in office attended fewer than 75% of the aggregate number of
meetings of the Board and meetings of the committees of the Board on which he
serves. The Board has an Audit Committee and a Compensation Committee. There is
no standing nominating committee of the Company's Board.
During the fiscal year ended December 31, 1999, the Audit Committee of the
Board met twice. The Audit Committee of the Board reviews and monitors the
corporate financial reporting and our internal and external audits, including,
our control functions, the results and scope of the annual audit and other
services
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provided by our independent accountants, and our compliance with legal matters
that have a significant impact on our financial condition. The Audit Committee
also consults with our management and our independent accountants before the
presentation of financial statements to stockholders and, as appropriate,
initiates inquiries into aspects of our financial affairs. In addition, the
Audit Committee has the responsibility to consider and recommend the appointment
of, and to review fee arrangements with, our independent accountants. The
current members of the Audit Committee are Messrs. Lacy and Stearns.
During the fiscal year ended December 31, 1999, the Compensation Committee of
the Board met once. The Compensation Committee of the Board reviews and makes
recommendations to the Board regarding our compensation policies and all forms
of compensation to be provided to executive officers and directors, including,
annual salaries and bonuses and stock option and other incentive compensation
arrangements. In addition, the Compensation Committee reviews bonus and stock
compensation arrangements for other employees. The current members of the
Compensation Committee are Messrs. Barris and Liemandt.
Director Compensation
We do not currently compensate outside directors for attending Board or
committee meetings, but we reimburse directors for their reasonable travel
expenses incurred in connection with attending the meetings. On November 1,
1996, we granted to Mr. Liemandt an option to purchase 100 shares of our Class A
Common Stock at an exercise price of $3.00 per share. Upon joining the board,
Mr. Barris received options to acquire 10,000 shares of Class A Common Stock at
$6.40 per share, Mr. Lacy received options to acquire 30,000 shares of Class A
Common Stock at $8.00 per share, and Mr. Stearns received options to acquire
15,000 shares of Class A Common Stock at $9.00 per share. In 1999, Mr. Lacy
received options to acquire 10,000 shares of Class A Common Stock at $39.875 per
share and Mr. Stearns received options to acquire 20,000 shares of Class A
Common Stock at $39.875 per share.
Recommendation of the Board
The Board recommends a vote FOR the election of all nominees named above.
PROPOSAL NO. 2
APPROVAL OF EMPLOYEE STOCK PURCHASE PLANS
Background
The Board has approved, subject to stockholder approval, the pcOrder Employee
Stock Purchase Plan and the pcOrder Foreign Subsidiary Stock Purchase Plan (the
"Purchase Plans"), covering an aggregate of 250,000 shares of Class A Common
Stock issuable under the two plans. The Purchase Plans permit our employees to
purchase the Company's Class A Common Stock at a discounted price. These plans
are designed to encourage and assist employees of the Company and participating
subsidiaries to acquire an equity interest in the Company through the purchase
of Class A Common Stock. The Purchase Plans are also intended to provide to
participating United States employees the tax benefits available under Section
421 of the Internal Revenue Code.
Description of Purchase Plans
All employees, including executive officers and directors who are employees,
customarily employed at least 20 hours per week and at least five months per
year by the Company or any participating subsidiary of the Company are eligible
to participate in these plans as of the first semi-annual enrollment date
following employment. However, employees who hold, directly or through options,
five percent or more of the total combined voting power or value of the voting
securities of the Company are not eligible to participate. Independent
consultants and contractors are not eligible to participate in these plans.
Participants may elect to make contributions up to a maximum of 15% of
compensation, including regular salary payments, bonuses and overtime pay. The
enrollment dates for the Purchase Plans are the first trading days of April
2000, November 2000, and of each May and November thereafter. On the last
trading date of each October
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and April, the Company applies the funds then in each participant's account to
the purchase of shares. The cost of each share purchased is 85% of the lower of
the closing prices for Class A Common Stock on: (i) the first trading day in the
enrollment period in which the purchase is made; and (ii) the purchase date. The
length of the enrollment period may not exceed a maximum of 12 months except for
the enrollment period commencing in April 2000, which may last 13 months. The
Board has limited the maximum number of shares that may be purchased by a
participant on any purchase date to 500 shares of Class A Common Stock, and no
participant's right to acquire shares may accrue at a rate exceeding $25,000 of
fair market value of Class A Common Stock (determined as of the first trading
day in an enrollment period) in any calendar year.
The Board may administer these plans or the Board may delegate its authority
to a committee of directors and may delegate routine matters to management. The
Board may amend or terminate these plans at any time and may provide for an
adjustment in the purchase price and the number and kind of securities available
under the plans in the event of a reorganization, recapitalization, stock split,
or other similar event. However, amendments that would increase the number of
shares reserved for purchase, or would otherwise require stockholder approval in
order to comply with certain federal securities regulations, require stockholder
approval. Shares available under these plans may be either outstanding shares
repurchased by the Company or newly issued shares.
Approximately 256 employees of the Company are eligible to participate in the
Purchase Plans. Since the number of shares purchased under the Purchase Plans by
an employee and the purchase price thereof are determined by the level of
voluntary contribution by such employee and the market price of the shares in
effect from time to time, the Company currently cannot determine the number of
shares that may be purchased in the future by any eligible individual or group
of individuals or the purchase price thereof.
Federal Income Tax Consequences
The following summary of federal income tax consequences is based upon
existing statutes, regulations and interpretations thereof. The applicable
rules are complex, and income tax consequences may vary depending upon the
particular circumstances of each plan participant. This Proxy Statement
describes federal income tax consequences of general applicability, but does not
purport to describe particular consequences to each individual plan participant
or foreign, state or local income tax consequences, which may differ from the
United States federal income tax consequences.
If shares purchased by a U.S. participant under the Purchase Plans are held
more than one year after the date of purchase and more than two years after the
applicable enrollment date, the participant will have taxable ordinary income on
a sale or other disposition (including by gift) of the shares to the extent of
the lesser of: (a) 15% of the fair market value of the shares on the enrollment
date; or (b) the actual gain (the amount by which the market value of the shares
on the date of sale or other disposition exceeds the purchase price). Any
additional gain upon the sale of the shares will be long-term capital gain. If
the shares are sold for less than the purchase price, there is no ordinary
income, and the participant will have a long-term capital loss equal to the
difference between the sale price and the purchase price. These rules apply to
shares held by a participant at death whether or not the one-year and two-year
holding periods have been met.
If the shares are sold, or otherwise disposed of (including by way of gift)
before both of the holding periods described above have been met (in either
case, a "disqualifying disposition"), the participant has taxable ordinary
income at the time of the disqualifying disposition to the extent that the fair
market value of the stock at the date of purchase was greater than the purchase
price. This amount is taxable in the year of the disqualifying disposition
regardless of whether the sale price (or fair market value on the date of gift)
exceeds the purchase price. If the disqualifying disposition is a sale, any
change in the value of the shares after the purchase date is a capital gain or
loss, which will be long-term if the stock has been held more than one year.
Thus, on a disposition at a loss more than one year from the date of purchase
but less than two years from the applicable enrollment date, a participant would
have ordinary income and a long-term capital loss.
5
<PAGE>
Ordinary income taxable to a participant upon a disqualifying disposition
constitutes compensation that will be reported to the IRS for the year in which
the disqualifying disposition occurs. The Company will report this income on
each participant's Form W-2, but, based on IRS rulings, does not intend to
withhold on this income. However, the IRS has reportedly taken the position in
some instances that such income is subject to withholding, and the Company may
start withholding in the future.
The Company receives a deduction for federal income tax purposes to the extent
that a participant realizes ordinary income on a disqualifying disposition under
the Purchase Plans. The Company does not receive a deduction, however, if a
participant meets the holding period requirements, even if the participant has
ordinary income. The Company will treat any sale or other transfer of shares,
including a gift or a transfer into "street name", as a disposition. In order to
enable the Company to learn of disqualifying dispositions and ascertain the
amount of deduction to which it is entitled, participants are required to
provide to the Company, in writing, the date and terms of any disposition of
stock purchased under the Purchase Plans. If a participant does not notify the
Company, the Company will assume the disposition to be a disqualifying
disposition.
Special rules apply to U.S. participants who are directors and officers of the
Company. The consequences to non-U.S. participants are governed by foreign laws.
Proposal
At the annual meeting, the Company's stockholders will be asked to approve
both Purchase Plans. Approval of the Purchase Plans requires the affirmative
vote of a majority of the votes cast at a duly held stockholders meeting at
which a quorum of the voting power is represented.
Recommendation
The Board recommends a vote "FOR" approval of the Purchase Plans.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT OF THE 1999 STOCK OPTION INCENTIVE PLAN
Description of the Proposal
The stockholders are being asked to approve amendments of the pcOrder.com,
Inc. 1999 Stock Option Incentive Plan (the "1999 Plan") to (a) increase the
number of shares of the Company's Class A Common Stock reserved for issuance
under the 1999 Plan by 1,500,000 shares from 2,331,175 to 3,831,175 and (b)
impose a limit on the number of shares with respect to which awards may be made
to each executive officer under that plan in any one year. The Board
unanimously adopted these amendments, subject to stockholder approval.
The first proposed amendment the Company believes is necessary in order to
provide a sufficient reserve of shares to permit the grant of future options to
existing and new employees of and consultants to the Company. As of February
29, 2000 and prior to giving effect to the proposed amendments to the 1999 Plan,
1,572,220 shares of Class A Common Stock were subject to outstanding options
under the 1999 Plan, no shares of Class A Common Stock had been issued under the
1999 Plan, and 758,955 shares of Class A Common Stock remained available for
future issuance.
The second proposed amendment to the 1999 Plan was adopted by the Board,
subject to stockholder approval, in response to Section 162(m) of the Code.
Section 162(m) of the Code limits the deductibility by public companies of
compensation in excess of $1 million per year (subject to some exemptions) paid
to certain executive officers (generally, the CEO and the four most highly
compensated executive officers). As the limit applies in the year in which the
compensation is paid, it could apply to income derived from the exercise of
certain stock options, measured by the spread between the exercise price and the
fair market
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<PAGE>
value at the time the option is exercised. Options granted by pcOrder prior to
the proposed 1,500,000-share increase in the 1999 Plan are generally
grandfathered under this law.
Performance-based compensation is excluded from compensation counted toward
the $1 million deduction limit if certain conditions are met. Compensation
resulting from the exercise of stock options will be treated as "performance
based" and excluded from the limit on deductibility if, among other things, the
plan under which the options are granted specifies limits on the number of
shares issuable to executive officers under the plan and these limits are
approved by the issuer's stockholders.
In order to exclude from the $1 million deduction limit compensation resulting
from the exercise of options granted under the 1999 Plan, the Board has adopted,
subject to stockholder approval, an amendment to the 1999 Plan to limit the
number of shares with respect to which options may be granted to no more than
750,000 shares for each executive officer in any fiscal year of the Company.
The effect of approval of this amendment by the stockholders will be to
exclude from the $1 million deduction limit compensation expense recognized by
the Company pursuant to the exercise of certain options granted after the
adoption of this amendment by executive officers of the Company.
The following table sets forth the number of shares of Class A Common Stock
covered by options awarded to the executive officers and the identified groups
under the 1999 Plan from the February 3, 1999 effective date of the 1999 Plan
through February 29, 2000, together with the weighted average exercise price
payable per share for such option grants. The Company to date has not made any
awards under the 1999 Plan other than stock options.
<TABLE>
<CAPTION>
Number of Shares Weighted Average
Underlying Options Exercise Price per
Name and Position Granted (#) Share(s)
----------------- ----------- --------
<S> <C> <C>
Ross Cooley......................................... 0 ----
Chairman and Chief Executive Officer
Christina C. Jones.................................. 50,000 $12.00
President and Chief Operating Officer
James J. Luttenbacher............................... 0 ----
Vice President and Chief Financial Officer
Richard Friedman.................................... 75,000 $35.00
Vice President, General Counsel
and Secretary
All current executive officers as a
group............................................ 125,000 $25.80
All current non-employee directors as a
group............................................ 30,000 $39.88
All employees, including current
officers who are not executive
officers, as a group............................. 1,419,220 $34.29
</TABLE>
Description of 1999 Plan
The purpose of the 1999 Plan is to attract and retain the best available
personnel, to provide additional incentive to employees, directors and
consultants of the Company and its related entities and to promote the success
of the Company's business. A total of 1,500,000 shares of Class A Common Stock
was initially reserved for issuance under the 1999 Plan when it was adopted in
February 1999. In addition, the 1999 Plan authorizes an annual increase in the
number of shares of Class A Common Stock issuable thereunder equal to five
percent (5%) of the total number of shares of Class A Common Stock and Class B
Common Stock outstanding on the first day of each fiscal year of the Company,
beginning fiscal 2000, which resulted in an increase by 831,175 in the number of
shares authorized for issuance under the 1999 Plan on January 1, 2000. The
shares to be issued pursuant to 1999 Plan may be authorized but unissued or
reacquired Class A Common Stock.
7
<PAGE>
The 1999 Plan provides for the granting to employees of incentive stock
options ("ISOs") and the granting of nonstatutory stock options, stock
appreciation rights, dividend equivalent rights, restricted stock, performance
units, performance shares, and other equity-based rights (collectively,
"Awards") to employees, directors and consultants of the Company and its related
entities. With respect to Awards granted to directors or officers, the 1999 Plan
is administered by the Board or a committee designated by the Board constituted
to permit such Awards to be exempt from Section 16(b) of the Securities Exchange
Act of 1934 (the "Exchange Act") in accordance with Rule 16b-3 thereunder. With
respect to Awards granted to other participants, the 1999 Plan is administered
by the Board or a committee designated by the Board. In each case, the
respective plan administrator shall determine the provisions, terms and
conditions of each Award, including, but not limited to, the Award vesting
schedule, repurchase provisions, rights of first refusal, forfeiture provisions,
form of payment upon settlement of the Award, payment contingencies and
satisfaction of any performance criteria.
ISOs are not transferable by the optionee other than by will or the laws of
descent or distribution, and each ISO is exercisable during the lifetime of the
grantee only by such grantee. Other Awards shall be transferable to the extent
provided in the agreement evidencing the Award.
The per share exercise price of ISOs granted pursuant to the 1999 Plan must be
at least equal to the per share fair market value of the Class A Common Stock on
the date of grant, and the term of the option must not exceed ten years. The
term of other Awards will be determined by the respective plan administrator.
With respect to an employee who owns stock representing more than 10% of the
voting power of the Company's outstanding capital stock, the per share exercise
price of any ISOs must equal at least 110% of the per share fair market value of
the Class A Common Stock on the date of grant and the term of the option must
not exceed five years. The exercise price or purchase price, if any, of other
Awards will be determined by the respective plan administrator, but shall not be
less than 100% of the fair market value of the stock granted thereunder. The
consideration to be paid upon exercise or purchase of the shares of Class A
Common Stock pursuant to an Award will be determined by the respective plan
administrator and may include cash, check, promissory note, shares of Class A
Common Stock, or the assignment of part of the proceeds from the sale of shares
acquired upon exercise or purchase of the Award.
The 1999 Plan limits the aggregate number of shares of Class A Common Stock
available for grant as ISOs to 1,500,000 shares, plus an annual increase to be
added on the first day of each fiscal year beginning in fiscal 2000 equal to the
lesser of (i) 500,000 shares of Class A Common Stock, (ii) two percent (2%) of
the number of shares of Class A Common Stock outstanding as of such date, or
(iii) a lesser number of shares of Class A Common Stock determined by the
Administrator.
Where the Award agreement permits the exercise or purchase of an Award for a
certain period of time following the recipient's termination of service with the
Company, disability, or death, such Award will terminate to the extent not
exercised or purchased on the last day of the specified period or the last day
of the original term of such Award, whichever occurs first.
The Administrator may at any time offer to buy out for a payment in cash or
Class A Common Stock, an Award previously granted, based on such terms and
conditions as the respective administrator shall establish and communicate to
the grantee at the time that such offer is made.
In the event of certain mergers and other corporate transactions enumerated in
the 1999 Plan, each Award which is at the time outstanding automatically shall
become vested and exercisable and be released from any restrictions on transfer
(other than transfer restrictions applicable to ISOs) and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
corporate transaction, as to one half of the then unvested shares at the time
represented by such Award unless it is either assumed by the successor
corporation or parent thereof, replaced with a comparable Award with respect to
shares of the capital stock of the successor corporation or parent thereof or
replaced with a cash incentive program of the successor corporation which
preserves the compensation element of such Award existing at the time of the
corporate transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to such Award. In the event of the termination
of the optionee's employment without cause or
8
<PAGE>
certain enumerated effective termination events within 12 months of the
corporate transaction, such assumed or substituted Award or cash incentive
program automatically shall become vested, exercisable and payable and be
released from any restrictions on transfer (other than transfer restrictions
applicable to ISOs) and repurchase or forfeiture rights as to one half of the
then unvested shares (or cash payments) at the time represented by such Award.
Following certain change in control events enumerated in the 1999 Plan (other
than a change in control which also is a corporate transaction) and upon the
termination or effective termination of the employment of an optionee without
cause within 12 months of a change in control, each Award held by such optionee
which is at the time outstanding under the 1999 Plan automatically shall
immediately become vested and exercisable and be released from any restrictions
on transfer (other than transfer restrictions applicable to ISOs) and repurchase
or forfeiture rights as to one half of the then unvested shares at the time
represented by such Award.
Effective upon the consummation of certain related entity dispositions
enumerated in the 1999 Plan employment of each optionee who is at the time
engaged primarily in service to the related entity involved shall be deemed to
terminate and each Award of such optionee which is at the time outstanding under
the 1999 Plan automatically shall become vested and exercisable and be released
from any restrictions on transfer (other than transfer restrictions applicable
to ISOs) and repurchase or forfeiture rights as to one half of the unvested
shares at the time represented by such Award and be exercisable in accordance
with the terms of the agreement evidencing such Award unless the Award is
assumed or replaced with a similar award by the successor entity or its parent.
In the event of the termination of the optionee's employment without cause or
the optionee's effective termination within 12 months of the related entity
disposition, such assumed or substituted Award or cash incentive program
automatically shall become vested, exercisable and payable and be released from
any restrictions on transfer (other than transfer restrictions applicable to
ISOs) and repurchase or forfeiture rights as to one half of the then unvested
shares (or cash payments) at the time represented by such Award.
Unless terminated sooner, the 1999 Plan will terminate automatically in 2009.
The Board has the authority to amend, suspend or terminate the 1999 Plan subject
to stockholder approval of certain amendments and provided no such action may
affect Awards previously granted under the 1999 Plan unless agreed to by the
affected grantees.
Federal Income Tax Consequences Relating to Options
The following summary of federal income tax consequences is based upon
existing statutes, regulations and interpretations thereof. The applicable
rules are complex, and income tax consequences may vary depending upon the
particular circumstances of each plan participant. This Proxy Statement
describes federal income tax consequences of general applicability, but does not
purport to describe particular consequences to each individual plan participant
or foreign, state or local income tax consequences, which may differ from the
United States federal income tax consequences.
Incentive Stock Options
ISOs granted under the 1999 Plan are intended to constitute "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code. ISOs
may be granted only to employees of the Company (including directors who are
also employees). The recipient of an Option (the "Optionee") does not recognize
taxable income upon either the grant or exercise of an ISO. However, the excess
of the fair market value of the shares purchased upon exercise over the Option
exercise price (the "Option Spread") is includable in the Optionee's
"alternative minimum taxable income" ("AMTI") for purposes of the alternative
minimum tax ("AMT"). The Option Spread is generally measured on the date of
exercise and is includable in AMTI in the year of exercise. Special rules
regarding the time of AMTI inclusion may apply for shares subject to a
repurchase right or other "substantial risk of forfeiture" (including, in the
case of each person subject to the reporting requirements of Section 16 of the
Exchange Act, certain limitations on resale of shares imposed under Section
16(b) of the Exchange Act).
9
<PAGE>
If an Optionee holds the shares purchased under an ISO for at least two years
from the date the ISO was granted and for at least one year from the date the
ISO was exercised, any gain from a sale of the shares other than to the Company
should be taxable as long-term capital gain. Under these circumstances, the
Company would not be entitled to a tax deduction at the time the ISO was
exercised or at the time the stock was sold. If an Optionee were to dispose of
stock acquired pursuant to an ISO before the end of the required holding periods
(a disqualifying disposition), the amount by which the market value of the stock
at the time the ISO was exercised exceeded the exercise price (or, if less, the
amount of gain realized on the sale) would be taxable as ordinary income, and
the Company would be entitled to a corresponding tax deduction. Such income is
subject to information reporting requirements and may become subject to
withholding. Gain from a disqualifying disposition in excess of the amount
required to be recognized as ordinary income is capital gain. Optionees are
required to notify the Company immediately prior to making a disqualifying
disposition. If stock is sold to the Company rather than to a third party, the
sale may not produce capital gain or loss but will constitute a redemption of
such shares, which could be taxable as a dividend unless the redemption is "not
essentially equivalent to a dividend" within the meaning of the Code.
If an Optionee pays for ISO shares with shares of the Company acquired under
an ISO or a qualified employee stock purchase plan ("statutory option stock"),
the tender of shares is a disqualifying disposition of the statutory option
stock if the above described (or other applicable) holding periods respecting
those shares have not been satisfied. If the holding periods with respect to the
statutory option stock are satisfied, or the shares were not acquired under a
statutory stock option of the Company, then any appreciation in value of the
surrendered shares is not taxable upon surrender. Special basis and holding
period rules apply where previously-owned stock is used to exercise an ISO.
In published rulings the IRS appears to take the position that income and
employment withholding taxes are not imposed upon the exercise of an ISO or the
sale of ISO shares, including a disqualifying disposition. However, the IRS has
reportedly taken the position in some instances that withholding is required on
exercise of an ISO or on a disqualifying disposition. The Company may be
required to withhold in the future, possibly with retroactive effect.
Nonqualified Stock Options
An Optionee is not taxable upon the award of a nonqualified stock option
("NQO"). Federal income tax consequences upon exercise will depend upon whether
the shares thereby acquired are subject to a "substantial risk of forfeiture."
If the shares are not subject to a substantial risk of forfeiture, or if they
are so restricted and the Optionee files an election under Section 83(b) of the
Code (a "Section 83(b) Election") with respect to the shares, the Optionee will
have ordinary income at the time of exercise measured by the Option Spread on
the exercise date. The Optionee's tax basis in the shares will be the share's
fair market value on the date of exercise, and the holding period for purposes
of determining whether capital gain or loss upon sale is long- or short-term
also will begin on that date.
The amount of ordinary income taxable to an Optionee who was an employee at
the time of grant constitutes "supplemental wages" subject to withholding of
income and employment taxes by the Company, and the Company receives a
corresponding income tax deduction.
Upon sale, other than to the Company, of shares acquired under a NQO, an
Optionee generally will recognize capital gain or loss to the extent of the
difference between the sale price and the Optionee's tax basis in the shares,
which will be long-term gain or loss if the employee's holding period in the
shares is more than one year. If stock is sold to the Company rather than to a
third party, the sale will constitute a redemption of such shares, which could
be taxable as a dividend unless the redemption is "not essentially equivalent to
a dividend" within the meaning of the Code.
If an Optionee tenders common stock (other than statutory option stock -- see
above) to pay all or part of the exercise price of a NQO, the Optionee will not
have a taxable gain or deductible loss on the surrendered shares. Instead,
shares acquired upon exercise that are equal in value to the fair market value
of the shares
10
<PAGE>
surrendered in payment are treated as if they had been substituted for the
surrendered shares, taking as their basis and holding period the basis and
holding period that the Optionee had in the surrendered shares. The additional
shares are treated as newly acquired as compensation in an amount equal to the
then fair market value.
If the surrendered shares are statutory option stock as described above under
"Incentive Stock Options", with respect to which the applicable holding period
requirements for favorable income tax treatment have not expired, then the newly
acquired shares substituted for the statutory option shares should remain
subject to the federal income tax rules governing the surrendered shares, but
the surrender should not constitute a disqualifying disposition of the
surrendered stock.
Proposal
At the annual meeting, the Company's stockholders will be asked to approve the
amendments to the 1999 Plan described above. Approval of the amendments to the
1999 Plan requires the affirmative vote of a majority of the votes cast at a
duly held stockholders meeting at which a quorum of the voting power is
represented.
Recommendation
The Board recommends a vote "FOR" approval of the amendments to the 1999 Plan.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP, independent auditors, to audit the
financial statements of the Company for the fiscal year ending December 31,
2000. Ernst and Young LLP has audited the Company's financial statements since
the Company's formation in 1994. If the stockholders fail to ratify the
selection of Ernst & Young LLP, the Board will reconsider its selection. It is
anticipated that a representative of Ernst & Young LLP will be present at the
Annual Meeting with the opportunity to make a statement and to respond to
appropriate questions.
The Board recommends a vote "FOR" the ratification of the selection of Ernst &
Young LLP.
OTHER MATTERS
The Company knows of no other matters that will be presented for consideration
at the Annual Meeting. If any other matters properly come before the Annual
Meeting, the proxy solicited by this Proxy Statement will be voted in accordance
with the judgment of the person or persons holding such proxy. Discretionary
authority with respect to such other matters is expressly granted by the
execution of the enclosed Proxy.
OWNERSHIP OF SECURITIES
The following table sets forth information known to us with respect to the
beneficial ownership of our Class A Common Stock as of March 31, 2000 by (i)
each of our executive officers named in the Summary Compensation Table under
"Executive Compensation and Other Information" below, and directors; (ii) all of
our current executive officers and directors as a group; and (iii) each person
we know to own beneficially more than 5% of our Class A Common Stock. We have
determined beneficial ownership in accordance with the rules of the Securities
and Exchange Commission. The number of shares beneficially owned by a person
includes shares of Class A Common Stock that are issuable within 60 days of
March 31, 2000 upon exercise of outstanding options or conversion of outstanding
shares of Class B Common Stock. The shares issuable pursuant to these options
or Class B Common Stock are deemed outstanding for purposes of computing the
percentage ownership of the person holding the options or Class B Common
11
<PAGE>
Stock but are not deemed outstanding for purposes of computing the percentage
ownership of any other person. Except pursuant to applicable community property
laws or as otherwise indicated in the paragraphs following this table, to our
knowledge, the stockholders identified in the table have sole voting and
investment power with respect to all shares beneficially owned by that
stockholder. Percent of Class A Common Stock ownership is based on 6,452,237
shares of Class A Common Stock outstanding on March 31, 2000. As of March 31,
2000, 10,317,620 shares of Class B Common Stock were outstanding, 100% of which
were beneficially owned by Trilogy, Inc. Percent of Total Common Stock ownership
is based on a total of 16,769,857 shares of Class A Common Stock and Class B
Common Stock outstanding on March 31, 2000.
<TABLE>
<CAPTION>
Shares Beneficially
Name and Address Owned
---------------- ------------------------------------------
Percent of Class A Percent of Total
Number Common Stock Common Stock
---------- ------------------- -----------------
<S> <C> <C> <C>
Trilogy, Inc. (1)............................ 10,317,620 61.52% 61.52%
Joseph A. Liemandt (1)....................... 10,317,695 61.52% 61.52%
6034 West Courtyard Drive
Austin, TX 78730
West Highland Capital, Inc. (2).............. 1,020,000 15.81% 6.08%
300 Drake's Landing Road, Suite 290
Greenbrae, CA 94904
Janus Capital Corporation (3)................ 634,550 9.83% 3.78%
100 Fillmore Street
Denver, CO 80206
FMR Corp. (4)................................ 405,700 6.29% 2.42%
82 Devonshire Street
Boston, MA 02109
Ross A. Cooley............................... 575,000 8.30% 3.33%
5001 Plaza on the Lake
Austin, TX 78746
Christina C. Jones........................... 518,200 7.43% 3.00%
5001 Plaza on the Lake
Austin, TX 78746
James J. Luttenbacher........................ 77,200 1.19% *
Richard Friedman............................. * * *
Peter J. Barris.............................. 2,500 * *
Linwood A. Lacy, Jr.......................... 2,500 * *
Robert W. Stearns............................ 3,750 * *
All directors and officers as a group (8
persons)..................................... 11,496,845 67.94% 67.94%
------------
</TABLE>
* Less than 1% of the outstanding shares of Class A Common Stock
(1) Shares beneficially owned by Trilogy, Inc. are registered in the name of
Trilogy Software, Inc., a wholly-owned subsidiary of Trilogy, and
Trilogy Partnership, a Delaware general partnership of which Trilogy
Software, Inc. is the general partner and the managing partner. Of the
shares beneficially owned by Trilogy, Inc., 20,620 of these shares are
subject to options granted by Trilogy Software, Inc. to some of its
employees, entitling these employees to purchase the shares at any time
prior to August 25, 2009, at a price of $5.00 per share. Through his
ownership of securities of Trilogy, Inc., Mr. Liemandt has the right to
cause to be elected a majority of the board of directors of Trilogy,
Inc. As a result, Mr. Liemandt may, under the rules of the Securities
and Exchange Commission, be deemed to be the beneficial owner of the
shares beneficially owned by Trilogy, Inc. Mr. Liemandt disclaims
beneficial ownership of the shares beneficially owned by Trilogy, Inc.,
except with respect to any proportional pecuniary interest therein.
(2) According to a Schedule 13G filed on April 19, 2000. Includes: (a)
956,280 shares beneficially owned by Estero Partners LLC, (b) 774,730
shares beneficially owned by West Highland Partners, L.P., and (c)
181,550 shares beneficially owned by Buttonwood Partners, L.P. Lang H.
Gerhard is the sole shareholder of West Highland Capital, Inc. and the
manager of Estero Partners
12
<PAGE>
LLC. West Highland Capital, Inc., Estero Partners LLC and Mr. Gerard are
the general partners of West Highland Partners, L.P and Buttonwood
Partners, L.P. In the foregoing capacities, Mr. Gerard may be deemed to
be the beneficial owner of the shares beneficially held by those
entities.
(3) According to a Schedule 13G/A filed on February 15, 2000. Includes
390,785 shares owned by Janus Capital Fund. Through his ownership of
securities of, and executive position with, Janus Capital Corporation,
Thomas H. Bailey may be deemed to have voting or dispositive power over
the shares beneficially owned by Janus Capital Corporation. Mr. Bailey
does not own of record any shares of pcOrder. Mr. Bailey disclaims
beneficial ownership of the shares beneficially owned by Janus Capital
Corporation.
(4) According to a Schedule 13G filed on February 14, 2000. Includes 329,600
shares owned by Fidelity Select Technology. Through his control over
Fidelity Management & Research Company, Edward C. Johnson, 3/rd/ has the
sole power to vote the shares beneficially owned by FMR Corp. Through
their ownership of securities of FMR Corp. and the execution of a
shareholder's voting agreement, Mr. Johnson and Abigail P. Johnson may
be deemed to form a controlling group with respect to FMR Corp.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission ("SEC"). Officers, directors and greater
than ten-percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such Section 16(a) forms filed on
Forms 3, 4 and 5, and amendments thereto furnished to the Company with respect
to its most recent fiscal year, the Company believes that, during the year ended
December 31, 1999, its executive officers, directors and greater-than-ten-
percent beneficial owners complied on a timely basis with all Section 16(a)
filing requirements.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table provides information concerning the compensation earned by
our Chief Executive Officer and our other executive officers whose salary and
bonus exceeded $100,000 for services rendered in all capacities to us during the
fiscal year ended December 31, 1999. All of these individuals are called the
"Named Executive Officers". The amounts in the Bonus column reflect the bonus
amount earned and accrued during the fiscal year ended December 31, 1999. The
amounts in the Securities Underlying Options column represent shares of our
Class A Common Stock. Ms. Jones's salary for fiscal year 1997, 1998 and 1999
includes $900 of reimbursement for excess amounts paid toward our standard
employee medical benefit plan. Mr. Luttenbacher joined us in March 1998 and
resigned effective March 31, 2000. The $59,571 paid to Mr. Luttenbacher during
fiscal year 1998 as other compensation represents relocation expenses reimbursed
by us. The $23,916 paid to Mr. Luttenbacher during fiscal 1999 as other
compensation includes $19,647 for relocation expenses and $4,269 for travel
expenses reimbursed by us. The $103,650 paid to Mr. Friedman during fiscal
year 1999 as other compensation includes $98,762 for relocation expenses and
$4,888 for travel expenses reimbursed by us.
13
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Number of
Securities
Annual Compensation
----------------------------------- Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Ross A. Cooley..................................... 1999 $ 1 -- -- --
Chairman and Chief Executive Officer 1998 $ 1 -- --
1997 $ 1 -- -- --
Christina C. Jones.................................. 1999 $146,734 $150,000 50,000 --
President and Chief Operating Officer 1998 $100,908 $ 500 125,000 --
1997 $100,908 -- -- --
James J. Luttenbacher............................... 1999 $175,000 $140,000 -- $ 23,916
Vice President and Chief Financial Officer 1998 $145,362 $ 5,000 150,000 $ 59,571
1997 -- -- -- --
Richard Friedman.................................... 1999 $ 79,032 $ 50,000 75,000 $103,650
Vice President, General Counsel and Secretary 1998 -- -- -- --
1997 -- -- -- --
</TABLE>
Stock Option Grants in Last Fiscal Year
The following table sets forth information regarding stock option grants made
to each of the Named Executive Officers in fiscal year 1999. We did not grant
any stock appreciation rights to the Named Executive Officers during this fiscal
year. In the following table, potential realizable value is based on an
assumption that the price per share of Class A Common Stock appreciates annually
at the rate shown below (compounded annually) from the date of grant until the
end of the option term. Potential realizable value is shown net of exercise
price. These rates of appreciation are derived from the regulations promulgated
by the SEC and do not represent our estimate or projection of future stock price
growth. The options in the following table have exercise prices equal to the
fair market value of our Class A Common Stock on the date of grant. All of these
options have 10-year terms and vest over four years.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------
Potential realizable value at
Number of Percent of total assumed annual rates of stock
securities options granted Per share price appreciation for option term
underlying to employees in exercise Expiration ----------------------------------
Name options granted fiscal year price date 5% 10%
---- --------------- --------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ross Cooley............... 0 --- --- --- --- ---
Christina C. Jones........ 50,000 2.30% $12.00 2/15/09 $ 377,337 $ 956,245
James J. Luttenbacher..... 0 --- --- --- --- ---
Richard Friedman.......... 75,000 3.45% $35.00 7/23/09 $1,650,848 $4,183,574
</TABLE>
The percentages in the Percent of Total Granted to Employees in Fiscal Year
column are based on options to purchase an aggregate of 2,171,474 shares of
Class A Common Stock granted during fiscal 1999.
Aggregated Option Exercises and Fiscal Year End Values
The following table sets forth the options exercised by each of the Named
Executive Officers during fiscal year 1999 and the number and value of the
securities underlying unexercised options held by each Named Executive Officer
as of December 31, 1999. The value of the unexercised in-the-money options at
December 31, 1999 is based on the closing sales price per share of $51.00 of the
Company's Class A
14
<PAGE>
Common Stock on the Nasdaq National Market on December 31, 1999, less the option
exercise price payable per share.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at December 31, 1999 at December 31, 1999
-------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ross A. Cooley............. 200,000 $5,650,000 525,000 150,000 $25,200,000 $ 7,200,000
Christina C. Jones......... 85,000 $4,070,000 474,450 265,650 $22,773,600 $12,301,200
James J. Luttenbacher...... 36,500 $ 532,875 19,750 93,750 $ 948,000 $ 4,500,000
Richard Friedman........... -- -- -- 75,000 -- $ 1,200,000
</TABLE>
Employment Contracts, Termination of Employment and Change in Control
Arrangements
We have entered into employment agreements with Ross A. Cooley, our Chairman
and Chief Executive Officer, Christina C. Jones, our President and Chief
Operating Officer, and Richard Friedman, our Vice President, Secretary and
General Counsel. The Cooley and Jones employment agreements are each for a
period of four years. Each of the three executives is eligible to participate in
any management incentive compensation plan, which we may have from time to time.
We also had an employment agreement with our former Chief Financial Officer
James J. Luttenbacher.
The Cooley and Friedman agreements may each be terminated by us or the
executive at any time. The Jones agreement may be terminated by us at any time
and by Ms. Jones for "good reason." The definition of good reason includes any
"change of control" of pcOrder. If we terminate any of the three employment
agreements for "cause" or if Messrs. Cooley or Friedman terminate for reasons
other than as a result of a "change in control," no further rights to
compensation or benefits will accrue to that executive. During employment and
for two years following our termination of the employment, each of the three
executives is not permitted to solicit any of our customers, induce or attempt
to induce any customer to withdraw, curtail or cancel its business with us or in
any manner modify or fail to enter into any actual or potential business
relationship with us, recruit or solicit any employee or vendor of ours, or of
Trilogy in the case of Ms. Jones, to cease his, her or its relationship with us,
or with Trilogy in the case of Ms. Jones, or permit his or her name to be used
by or engage in any business competing with our business.
Cooley Employment Agreement. Mr. Cooley's employment agreement, dated
November 1, 1996 and amended effective November 1, 1997, provides for an annual
salary of not less than $1.00. Mr. Cooley currently performs various executive
and leadership functions, including development of our strategic and operational
plans, strategic planning, executive management of new customer and new account
relationship activities and recruitment of senior management personnel. In
connection with the Cooley agreement, Mr. Cooley was granted a stock option of
875,000 shares of our Class A Common Stock at an exercise price of $3.00 per
share, of which 425,000 shares became exercisable at the time the Cooley
agreement was entered into, 100,000 of those shares became exercisable on
November 1, 1998, 100,000 shares became exercisable on November 1, 1999, and
100,000 shares will become exercisable on November 1, 2000. The remaining
150,000 shares under the stock option grant were to become exercisable on
November 1, 2003, provided that the Cooley agreement is in effect on that date.
However, in February 1999, the Compensation Committee accelerated the exercise
date for these 150,000 shares so that 50,000 shares became exercisable in
February 1999, 50,000 shares became exercisable on November 1, 1999, and 50,000
shares will become exercisable on November 1, 2000.
If the Cooley agreement is terminated by us without cause or by Mr. Cooley as
a result of a change of control of pcOrder, Mr. Cooley will not be entitled to
any additional compensation under the terms of the Cooley agreement, but will
have these rights relating to the exercise of then unexercised stock options as
are provided in his stock option agreement.
Jones Employment Agreement. Ms. Jones' employment agreement, dated November
1, 1996, provides for an annual salary of not less than $100,000. Under the
Jones agreement, Ms. Jones has been granted a stock option to purchase up to
650,000 shares of our Class A Common Stock at an exercise price of $3.00
15
<PAGE>
per share. As a condition to the grant of this option, Ms. Jones entered into an
option cancellation agreement with Trilogy which terminated a stock option
agreement dated February 10, 1994 between Trilogy and Ms. Jones in connection
with which Ms. Jones had been granted a stock option to purchase shares of
Trilogy Class B Common Stock at an exercise price of $1.50 per share.
If we terminate the Jones agreement without cause or if Ms. Jones terminates
the Jones agreement for good reason, including upon a change of control, Ms.
Jones will continue to receive employee benefits and monthly payments equal to
one-twelfth of her then-current annual salary for 12 months following the
effective date of the termination.
Luttenbacher Employment Agreement. Mr. Luttenbacher's employment agreement,
dated February 12, 1998, provided for an annual salary of not less than
$175,000. Mr. Luttenbacher received a bonus of $5,000 upon commencement of his
employment with us. Under this agreement, Mr. Luttenbacher has been granted a
stock option to purchase up to 150,000 shares of our Class A Common Stock at an
exercise price of $3.00 per share. Mr. Luttenbacher voluntarily terminated his
employment with us effective March 31, 2000.
Friedman Employment Agreement. Mr. Friedman's employment agreement, dated
July 9, 1999, provides for an annual salary of not less than $175,000. Under
this agreement, Mr. Friedman has been granted a stock option to purchase up to
75,000 shares of our Class A Common Stock at an exercise price of $35.00 per
share. If we terminate the Friedman agreement without cause, Mr. Friedman will
continue to receive employee benefits and monthly payments equal to one-twelfth
of his then-current annual salary for six months following the effective date of
the termination.
The exercisability of the options held by the executives are subject to
acceleration in whole or in part in connection with certain changes in control
of pcOrder. The accelerated vesting in certain cases is conditioned on
termination of employment following the change in control event.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee of the board serves or has
served as one of our officers or employees, except for Mr. Liemandt who served
as our President from July 1994 to June 1996. None of our executive officers
serve as a member of the board or Compensation Committee of any entity, which
has one or more executive officers serving as a member of our board or
Compensation Committee. The current members of the Compensation Committee are
Messrs. Barris and Liemandt. Mr. Liemandt, a member of our Compensation
Committee, is the Chairman, Chief Executive Officer and a substantial
stockholder of Trilogy. Through his relationship with Trilogy, Mr. Liemandt
beneficially owns more than 5% of the Class B Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to review and determine the
salaries and bonuses of executive officers of the Company, including the Chief
Executive Officer, and to establish the general compensation policies for such
individuals. The Compensation Committee believes that the compensation programs
for the executive officers should reflect the Company's performance and the
value created for our stockholders. In addition, the compensation programs
should support the short-term and long-term strategic goals and values of the
Company and should reward individual contributions to the Company's success. The
Company is engaged in a very competitive industry, and its success depends upon
its ability to attract and retain qualified executives through the competitive
compensation packages it offers to such individuals.
General Compensation Policy. The objective of the Company's executive
compensation program is to align the executive compensation with the Company's
long and short-term business objectives and performance. Additionally, it is
imperative that executive compensation enables the Company to attract, retain,
and motivate qualified executives who are able to contribute to the long-term
success of the
16
<PAGE>
company. Each executive officer's compensation package is comprised of three
elements: (i) base salary, (ii) cash-based incentive compensation and (iii)
long-term stock-based incentive awards.
Base Salary. The base salaries are established for each executive officer
based on competitive market prices derived from comparisons with companies of
similar size in similar industries. Additionally, each executive's base pay is
positioned relative to the total compensation package, including cash incentives
and equity-based incentives.
Cash-based Incentives. Cash bonuses are awarded on a discretionary basis to
executive officers on the basis of their success in achieving individual goals
and the Company's success in achieving company-wide goals.
Long-term Incentives. Stock options are designed to align the interests of
each executive with those of the stockholders. The Committee believes that
stock options provide added incentive for executives to influence the strategic
direction of the Company and to create and grow value for customers,
stockholders, and employees. Generally, the size of each grant is set at a
level that the Committee deems appropriate to create a meaningful opportunity
for stock ownership based upon the individual's position within the Company, the
individual's potential for future responsibility and promotion, the individual's
performance in the recent period, and the number of options held by the
individuals at the time of the new grant. Options are granted at fair market
value and typically have four year vesting periods, contingent upon the
executives continued employment with the Company.
CEO Compensation. The annual base salary for Mr. Cooley, the Company's Chief
Executive Officer and Chairman of the Board, was established in 1997 in
connection with his commencement of employment. The base salary level is a
nominal amount due to the substantial equity award that was given to Mr. Cooley.
The Committee believes that the equity award provides incentive for long-term
growth and alignment with the Company's and stockholder's goals.
Tax Limitation. Section 162(m) of the Internal Revenue Code allows a tax
deduction to publicly held companies for compensation paid to certain of their
executive officers to the extent that such compensation exceeds $1.0 million per
covered officer in any fiscal year. The limitation applies only to compensation
that is not considered to be performance-based. Non-performance-based
compensation paid to the Company's executive officers for the 1999 fiscal year
did not exceed the $1.0 million limit per officer, and the Compensation
Committee plans to keep the non-performance-based compensation to be paid to the
Company's executive officers for the 2000 fiscal year within that limit. The
1999 Plan, after giving effect to the amendments set forth in Proposal 3, will
be structured so that any compensation deemed paid in connection with the
exercise of option grants made under that plan with an exercise price equal to
the fair market value of the option shares on the grant date will qualify as
performance-based compensation that will not be subject to the $1.0 million
limitation. Because it is unlikely that the cash compensation payable to any of
the Company's executive officers in the foreseeable future will approach the
$1.0 million limit, the Compensation Committee does not expect to take any
action to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Compensation Committee will reconsider this
decision should the individual cash compensation of any executive officer ever
approach the $1.0 million level.
It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align the interests of each executive officer and the interests of
the Company's stockholders through the use of competitive and equitable
executive compensation in a balanced and reasonable manner, for both the short
and long-term.
Submitted by the Compensation Committee of the Company's Board:
Peter J. Barris
Joseph A. Liemandt
17
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CERTAIN RELATIONSHIPS
Since January 1, 1999 there has not been any transaction or series of similar
transactions to which the Company was or is a party in which the amount involved
exceeded or exceeds $60,000 and in which any director, executive officer, holder
of more than 5% of any class of the Company's voting securities, or any member
of the immediate family of any of the foregoing persons had or will have a
direct or indirect material interest, other than the transactions described
below.
Relationship with Trilogy
Trilogy is our controlling stockholder. It established pcOrder as a separate
business unit within Trilogy and then incorporated pcOrder as a Delaware
corporation. Trilogy is a leading provider of sales, marketing and business-to-
business e-commerce applications. Trilogy's software solutions are designed to
integrate each function in a customer's sales and marketing operation, including
pricing management, product management, sales, commissions, promotions, contract
management and channel management. In addition, Trilogy's software solutions are
designed to enable companies to engage in e-commerce as well as improve channel
management processes.
We have a non-exclusive license from Trilogy to use Trilogy's front office and
e-commerce software applications in our business. To help industry sales
representatives and end users quickly and accurately build customer-configured
computer systems using components from multiple vendors, we have customized and
extended the software licensed from Trilogy to support the specific
configuration and pricing rules of the computer industry. Although Trilogy does
not currently compete directly with us, Trilogy has the right to compete
directly or indirectly with us.
Mr. Liemandt, one of our directors, is Chairman, Chief Executive Officer and a
substantial stockholder of Trilogy.
We also lease our Austin facilities from Trilogy pursuant to an arm's length
lease arrangement.
Agreements with Trilogy
In June 1996, we entered into a series of agreements with Trilogy to clarify
our ongoing relationship with Trilogy. Because these agreements were entered
into at a time when we were a wholly-owned subsidiary of Trilogy, they may not
be the result of arms' length negotiations between the parties.
Asset Purchase Agreement. In August 1996, we entered into an asset transfer
agreement with Trilogy, which was amended in August 1998 and June 1999. Under
the asset transfer agreement, Trilogy transferred the assets and liabilities of
its pcOrder.com division to us. In exchange for these transferred assets, we
issued to Trilogy 900 shares of our common stock, which established us as a
wholly-owned subsidiary of Trilogy. These shares were subsequently split into
11,520,000 shares of common stock.
Trilogy has the right, on no more than four more occasions, to require us to
register the shares of common stock that it holds within 180 days of the
request. In addition, Trilogy and its transferees have the right under some
circumstances to include shares held by Trilogy and its transferees in a
registration statement registering other shares of our common stock. These
registration rights are subject to some conditions and limitations, including
our right not to affect a requested registration under some conditions. We have
agreed to indemnify Trilogy against, and provide contribution for, some
liabilities under the Securities Act in connection with any registration. These
registration rights expire eight years after the effective date of the asset
transfer agreement.
Technology, Services and License Agreement. In September 1998, we entered
into a technology, services and license agreement with Trilogy, which replaced
an earlier agreement we had with Trilogy. Under this agreement we each provide
the other with access to specified intellectual property and products owned by
each party or jointly owned by the parties and existing as of September 1, 1998.
The agreement
18
<PAGE>
also requires each party to provide to the other any updates, changes to, and
new releases of the material until 5 years after a "trigger event" but no sooner
than September 1, 2008. However, after a trigger event Trilogy must only provide
updates, changes to, and new releases of Trilogy products that are the same,
similar to, replacements of or equivalent to Trilogy products provided to us
before such an event. A "trigger event" is the date there is a change in control
of Trilogy or the date Trilogy is no longer required by generally accepted
accounting principles to be consolidated with us for financial reporting
purposes.
In granting each other access to the material, each party allowed the other
party to use the other's intellectual property in creating, marketing,
distributing and licensing products to customers upon payment of royalties to
the owner of the material. Additionally, either party may sublicense their right
to conduct these activities to third parties, provided the other party's
intellectual property continues to be treated as confidential information.
Similarly, Trilogy also granted us a license to access Trilogy's network based
e-commerce products (except for market analysis data) beginning on the date of a
trigger event and extending for 5 years after this date, or at least until
September 1, 2008. During that period, we may use the material in creating,
marketing, distributing and licensing products to customers upon payment of
royalties to Trilogy.
The parties also agreed to provide to each other consulting services upon the
request of the other. Either party may make a request between September 1, 1998
and the later of the date of a trigger event or September 1, 2010. However,
neither party has any obligation to request these services.
In connection with the technology agreement, neither party is restricted from
entering into or having similar agreements with third parties or from engaging
in any activity relating to competitive products and services.
The technology agreement also provides that where at least one of our
employees or contractors and at least one Trilogy employee or contractor
cooperate toward jointly creating, inventing or discovering new material
qualifying for either patent or copyright protection, the parties will negotiate
in good faith on a project-by-project basis to determine to what extent this
newly developed material should be jointly owned. In the event of joint
ownership, the parties will have an equal, undivided interest in that patent,
copyright or other intellectual property.
Each party is obligated to pay to the other monthly royalties based on a
percentage of:
. license fees derived from sales of products that incorporate, or data
maintenance services related to, the other party's intellectual property;
. software maintenance fees other than data maintenance services in connection
with products that incorporate the other party's intellectual property; and
. online subscription service fees from products that incorporate the other
party's intellectual property.
The technology agreement provides that each party will defend, indemnify and
hold the other party harmless for any claim against the other party by any third
party to the extent based on specific circumstances enumerated in the agreement.
This agreement has a perpetual term, unless terminated earlier by either party
upon 31 days prior notice of an uncured breach by the other party, subject to
extension for special circumstances, or the bankruptcy of either of the parties.
Management Services Agreement. We entered into a management services
agreement with Trilogy, effective as of July 1, 1998. Under this agreement,
Trilogy agreed to provide us with some administrative and corporate support
services. Some of these services are mandatory services, including tax
administration, payroll, payroll accounting, banking, corporate finance,
recruiting and employee training services. In addition, Trilogy has agreed to
provide some optional services to us, including hardware purchasing, shipping
and receiving, purchase order database administration, network administration,
audit
19
<PAGE>
services, human resources administration, legal services and customer training.
The provision of mandatory services may not be unilaterally terminated by either
party during the effectiveness of the management services agreement. The
provision of optional services may be terminated by either party upon 90 days
notice.
The management services agreement provides that Trilogy will use the same
level of care in rendering services to us that Trilogy uses in rendering
services to itself or any of its other subsidiaries. This level of care must be
at least equal to the care that Trilogy used in rendering the services to us in
the past. However, the selection of personnel to perform the various services
will be within the sole control of Trilogy. Specifically, Trilogy may, without
our consent or approval, subcontract any service to be provided under this
agreement.
This agreement terminated on June 30, 1999. Both parties, however, agreed to
renew the agreement for a one-year term. Successive renewals can occur. This
agreement may be terminated if there is an uncured material breach by the other
party or Trilogy ceases to own a majority of our common stock.
Tax Allocation Agreement. From our incorporation until August 25, 1999, we
were a member of the Trilogy consolidated federal income tax group. As a result,
our federal taxable income (loss) was included in Trilogy's consolidated federal
income tax return. Under a tax allocation agreement between us and Trilogy, for
these tax periods payments are required to be made between us based on the
federal income taxes we would have paid if we filed separate federal, state and
local income taxes. The amount of taxes to be paid or received by us includes,
except as provided below, any amounts to be due as a result of a redetermination
of the tax liability of Trilogy arising from an audit or otherwise.
Under the terms of the tax allocation agreement, in computing our stand-alone
tax liability or tax refund, we are able to utilize some tax items, such as net
operating losses, foreign tax credits and other tax credits. In addition, for
our tax attributes that come into existence after the execution of the tax
allocation agreement, and under the terms of the tax allocation agreement,
Trilogy will be required to make any payment to us as such of our tax attributes
are utilized by the Trilogy consolidated federal income tax group. In connection
with this agreement, Trilogy's obligation to make any payment to us relating to
the our tax attributes will apply only to tax periods during which we, or our
affiliated subsidiaries, are a member of Trilogy's consolidated federal income
tax group.
Trilogy will continue to have all the rights of a parent of a consolidated
group (and similar rights provided for by applicable state and local law
regarding a parent of a combined, consolidated or unitary group) for tax periods
prior to August 25, 1999. Further, Trilogy will be the sole and exclusive agent
for us in any and all matters relating to our income, franchise and similar
liabilities, will have sole and exclusive responsibility for the preparation and
filing of consolidated federal and consolidated or combined state and local
income tax returns (or amended returns), and will have the power, in its sole
discretion, to contest or compromise any asserted tax adjustment or deficiency
and to file, litigate or compromise any claim for refund on behalf of us for any
tax periods ending prior to August 26, 1999.
The tax allocation agreement remains in effect until the expiration of any
open years for which we have filed as a member of the Trilogy consolidated
group. Each member of a consolidated group is jointly and severally liable for
the federal income tax liability of each other member of the consolidated group.
Accordingly, although this agreement allocates tax liabilities between us and
Trilogy, during the period in which we are included in Trilogy's consolidated
group, we could be liable if any federal tax liability is incurred, but not
discharged, by any other member of Trilogy's consolidated group. In connection
with this agreement, however, Trilogy is obligated to indemnify us for any tax
liabilities, provided that we have paid our allocated share of those liabilities
to Trilogy.
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return on
the Company's Class A Common Stock between February 25, 1999 (the date the
Company's Class A Common Stock commenced
20
<PAGE>
public trading) and December 31, 1999 with the cumulative total return of (i)
the Chase Hambrecht & Quist Internet 100 Index and (ii) the Nasdaq Stock Market-
U.S. Index, over the same period. This graph assumes the investment of $100.00
on February 25, 1999 in the Company's Class A Common Stock, the Chase H&Q
Internet 100 Index and the Nasdaq U.S. Index.
The comparisons shown in the graph below are based upon historical data. The
Company cautions that the stock price performance shown in the graph below is
not indicative of, nor intended to forecast, the potential future performance of
the Company's Class A Common Stock.
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C>
2/25/99 12/31/99
pcOrder.com, Inc. 100.00 242.86
Nasdaq Stock Market - U.S. Index 100.00 174.89
Chase H&Q Internet 100 Index 100.00 261.27
</TABLE>
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Annual Report to Stockholders of the Company for the 1999 fiscal
year has been mailed concurrently with this Proxy Statement to all stockholders
entitled to notice of and to vote at the Annual Meeting. The Annual Report is
not incorporated into this Proxy Statement and is not considered proxy
solicitation material.
STOCKHOLDER PROPOSALS
Proposals by stockholders for which consideration is desired at the year 2001
annual meeting of stockholders must be submitted to the Company's Secretary at
5001 Plaza on the Lake, Austin, Texas 78746 by February 9, 2001 to be considered
for inclusion in proxy materials for the 2001 annual meeting.
By order of the Board of Directors,
/s/ Richard Friedman
Richard Friedman
Secretary
Austin, Texas
June 9, 2000
21
<PAGE>
As amended through May 22, 2000
pcOrder.com Inc
1999 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
--------------------
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of the Committees
-------------
appointed to administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective
--------- ---------
to such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) "Applicable Laws" means the legal requirements relating to
---------------
the administration of stock incentive plans, if any, under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
(d) "Award" means the grant of an Option, SAR, Dividend
-----
Equivalent Right, Restricted Stock, Performance Unit, Performance Share, or
other right or benefit under the Plan.
(e) "Award Agreement" means the written agreement evidencing the
---------------
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(f) "Board" means the Board of Directors of the Company.
-----
(g) "Cause" means, with respect to the termination by the Company
-----
or a Related Entity of the Grantee's Continuous Service, that such termination
is for "Cause" as such term is expressly defined in a then-effective written
agreement between the Grantee and the Company or such Related Entity, or in the
absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantee's: (i) refusal or failure to
act in accordance with any specific, lawful direction or order of the Company or
a Related Entity; (ii) unfitness or unavailability for service or unsatisfactory
performance (other than as a result of Disability); (iii) performance of any act
or failure to perform any act in bad faith and to the detriment of the Company
or a Related Entity; (iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related Entity; or (v) commission of a
crime involving dishonesty, breach of trust, or physical or emotional harm to
any person. At least 30 days prior to the termination of the Grantee's
Continuous Service pursuant to (i) or (ii) above, the Administrator shall
provide the Grantee with notice of the Company's or such Related Entity's intent
to terminate, the reason therefor, and an opportunity for the Grantee to cure
such defects in his or her service to the Company's or such Related Entity's
satisfaction. During this 30 day (or longer) period, no Award issued to the
Grantee under the Plan may be exercised or purchased.
(h) "Change in Control" means a change in ownership or control of
-----------------
the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person
or related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
1
<PAGE>
(ii) a change in the composition of the Board over a period
of thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors.
(i) "Class A Common Stock" means the class A common stock of the
--------------------
Company.
(j) "Code" means the Internal Revenue Code of 1986, as amended.
----
(k) "Committee" means any committee appointed by the Board to
---------
administer the Plan.
(l) "Company" means pcOrder.com, Inc., a Delaware corporation.
-------
(m) "Consultant" means any person (other than an Employee or, solely
----------
with respect to rendering services in such person's capacity as a Director) who
is engaged by the Company or any Related Entity to render consulting or advisory
services to the Company or such Related Entity.
(n) "Continuing Directors" means members of the Board who either (i)
--------------------
have been Board members continuously for a period of at least thirty-six (36)
months or (ii) have been Board members for less than thirty-six (36) months and
were elected or nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in office at the
time such election or nomination was approved by the Board.
(o) "Continuous Service" means that the provision of services to the
------------------
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor, in any capacity of Employee, Director or Consultant, or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee, Director or Consultant (except
as otherwise provided in the Award Agreement). An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave. For purposes of Incentive Stock Options, no such leave may exceed ninety
(90) days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract.
(p) "Corporate Transaction" means any of the following transactions:
---------------------
(i) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of which is
to change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or
(iv) an acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities (whether or not in a
transaction also constituting a Change in Control), but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.
(q) "Director" means a member of the Board or the board of directors
--------
of any Related Entity.
2
<PAGE>
(r) "Disability" means that a Grantee is permanently unable to carry
----------
out the responsibilities and functions of the position held by the Grantee by
reason of any medically determinable physical or mental impairment. A Grantee
will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its
discretion.
(s) "Dividend Equivalent Right" means a right entitling the Grantee to
-------------------------
compensation measured by dividends paid with respect to Class A Common Stock.
(t) "Effective Termination" means the occurrence after a Corporate
---------------------
Transaction, Change in Control or a Related Entity Disposition of any of the
following events or conditions:
(i) (A) a change in the Grantee's status, title, position
or responsibilities which represents an adverse change from the Grantee's
status, title, position or responsibilities as in effect at any time within six
(6) months preceding the date of a Corporate Transaction, Change in Control or
Related Entity Disposition or at any time thereafter or (B) the assignment to
the Grantee of any duties or responsibilities which are inconsistent with the
Optionee's status, title, position or responsibilities as in effect at any time
within six (6) months preceding the date of a Corporate Transaction, Change in
Control or Related Entity Disposition or at any time thereafter;
(ii) reduction in the Grantee's base salary to a level
below that in effect at any time within six (6) months preceding the date of a
Corporate Transaction, Change in Control or Related Entity Disposition or at any
time thereafter; or
(iii) requiring the Grantee to be based at any place
outside a 50-mile radius from the Grantee's job location or residence prior to
the Corporate Transaction, Change in Control or Related Entity Disposition,
except for reasonably required travel on business which is not materially
greater than such travel requirements prior to the Corporate Transaction, Change
in Control or Related Entity Disposition.
(u) "Employee" means any person, including an Officer or Director,
--------
who is an employee of the Company or any Related Entity. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(w) "Fair Market Value" means, as of any date, the value of Class A
-----------------
Common Stock determined as follows:
(i) Where there exists a public market for the Class A
Common Stock, the Fair Market Value shall be (A) the closing price for a Share
for the last market trading day prior to the time of the determination (or, if
no closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the
Administrator to be the primary market for the Class A Common Stock or the
Nasdaq National Market, whichever is applicable or (B) if the Class A Common
Stock is not traded on any such exchange or national market system, the average
of the closing bid and asked prices of a Share on the Nasdaq Small Cap Market
for the day prior to the time of the determination (or, if no such prices were
reported on that date, on the last date on which such prices were reported), in
each case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(ii) In the absence of an established market for the Class
A Common Stock of the type described in (i), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.
(x) "Grantee" means an Employee, Director or Consultant who
-------
receives an Award pursuant to an Award Agreement under the Plan.
(y) "Incentive Stock Option" means an Option intended to qualify
----------------------
as an incentive stock option within the meaning of Section 422 of the Code.
3
<PAGE>
(z) "Non-Qualified Stock Option" means an Option not intended to
--------------------------
qualify as an Incentive Stock Option.
(aa) "Officer" means a person who is an officer of the Company or
-------
a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(bb) "Option" means an option to purchase Shares pursuant to an
------
Award Agreement granted under the Plan.
(cc) "Parent" means a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(dd) "Performance Shares" means Shares or an Award denominated in
------------------
Shares which may be earned in whole or in part upon attainment of performance
criteria established by the Administrator.
(ee) "Performance Units" means an Award which may be earned in
-----------------
whole or in part upon attainment of performance criteria established by the
Administrator and which may be settled for cash, Shares or other securities or a
combination of cash, Shares or other securities as established by the
Administrator.
(ff) "Plan" means this 1999 Stock Incentive Plan.
----
(gg) "Registration Date" means the first to occur of (i) the
-----------------
closing of the first sale to the general public of (A) the Class A Common Stock
or (B) the same class of securities of a successor corporation (or its Parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution of
the Class A Common Stock, pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended; and (ii) in the event of a Corporate
Transaction, the date of the consummation of the Corporate Transaction if the
same class of securities of the successor corporation (or its Parent) issuable
in such Corporate Transaction shall have been sold to the general public
pursuant to a registration statement filed with and declared effective by, on or
prior to the date of consummation of such Corporate Transaction, the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
(hh) "Related Entity" means any Parent, Subsidiary and any
--------------
business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
(ii) "Related Entity Disposition" means the sale, distribution or
--------------------------
other disposition by the Company, a Parent or a Subsidiary of all or
substantially all of the interests of the Company, a Parent or a Subsidiary in
any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially
all of the assets of that Related Entity.
(jj) "Restricted Stock" means Shares issued under the Plan to the
----------------
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.
(kk) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
----------
Act or any successor thereto.
(ll) "SAR" means a stock appreciation right entitling the Grantee
---
to Shares or cash compensation, as established by the Administrator, measured by
appreciation in the value of Class A Common Stock.
(mm) "Share" means a share of the Class A Common Stock.
-----
(nn) "Subsidiary" means a "subsidiary corporation," whether now
----------
or hereafter existing, as defined in Section 424(f) of the Code.
4
<PAGE>
3. Stock Subject to the Plan.
-------------------------
(a) Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 3,000,000 Shares, plus an annual increase to be
added on the first day of the Company's fiscal year beginning in 2000 of the
number of Shares equal to five (5%) of the number of shares of all classes of
common stock of the Company outstanding as of such date or a lesser number of
Shares determined by the Administrator. Notwithstanding the foregoing, subject
to the provisions of Section 10, below, of the number of Shares specified above,
the maximum aggregate number of Shares available for grant of Incentive Stock
Options shall be 1,500,000 Shares, plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 2000 of the number of Shares
equal to the lesser of (i) 500,000 Shares, (ii) two percent (2%) of the number
of shares of all classes of common stock of the Company outstanding as of such
date, or (iii) a lesser number of Shares determined by the Administrator. The
Shares to be issued pursuant to Awards may be authorized, but unissued, or
reacquired Class A Common Stock.
(b) Any Shares covered by an Award (or portion of an Award)
which is forfeited or canceled, expires or is settled in cash, shall be deemed
not to have been issued for purposes of determining the maximum aggregate number
of Shares which may be issued under the Plan. If any unissued Shares are
retained by the Company upon exercise of an Award in order to satisfy the
exercise price for such Award or any withholding taxes due with respect to such
Award, such retained Shares subject to such Award shall become available for
future issuance under the Plan (unless the Plan has terminated). Shares that
actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Plan Administrator.
------------------
(i) Administration with Respect to Directors and
--------------------------------------------
Officers. With respect to grants of Awards to Directors or Employees who are
--------
also Officers or Directors of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from Section
16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.
(ii) Administration With Respect to Consultants
------------------------------------------
and Other Employees. With respect to grants of Awards to Employees or
-------------------
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. The Board may
authorize one or more Officers to grant such Awards and may limit such authority
as the Board determines from time to time.
(iii) Administration Errors. In the event an Award
---------------------
is granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
---------------------------
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and
Consultants to whom Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards
are granted hereunder;
5
<PAGE>
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the
Plan;
(v) to determine the terms and conditions of any Award granted
hereunder;
(vi) to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;
(vii) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan, including without limitation, any notice of Award
or Award Agreement, granted pursuant to the Plan;
(viii) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and
(ix) to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be conclusive and binding on all
persons.
5. Eligibility. Awards other than Incentive Stock Options may be granted to
-----------
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
------------------------------
(a) Type of Awards. The Administrator is authorized under the Plan to
--------------
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right
with a fixed or variable price related to the Fair Market Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any other security with the value derived from the
value of the Shares. Such awards include, without limitation, Options, SARs,
sales or bonuses of Restricted Stock, Dividend Equivalent Rights, Performance
Units or Performance Shares, and an Award may consist of one such security or
benefit, or two (2) or more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the Award
--------------------
Agreement. In the case of an Option, the Option shall be designated as either
an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the date the Option with respect to such Shares is granted.
(c) Conditions of Award. Subject to the terms of the Plan, the
-------------------
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule,
6
<PAGE>
repurchase provisions, rights of first refusal, forfeiture provisions, form of
payment (cash, Shares, or other consideration) upon settlement of the Award,
payment contingencies, and satisfaction of any performance criteria. The
performance criteria established by the Administrator may be based on any one
of, or combination of, increase in share price, earnings per share, total
stockholder return, return on equity, return on assets, return on investment,
net operating income, cash flow, revenue, economic value added, personal
management objectives, or other measure of performance selected by the
Administrator. Partial achievement of the specified criteria may result in a
payment or vesting corresponding to the degree of achievement as specified in
the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue
-----------------------------------
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator may establish one or
-------------------------
more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
(f) Award Exchange Programs. The Administrator may establish one or
-----------------------
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more
-----------------
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.
(h) Early Exercise. The Award Agreement may, but need not, include a
--------------
provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a repurchase right in favor of the Company or a Related Entity or to any
other restriction the Administrator determines to be appropriate.
(i) Term of Award. The term of each Award shall be the term stated in
-------------
the Award Agreement, provided, however, that the term of an Incentive Stock
Option shall be no more than ten (10) years from the date of grant thereof.
However, in the case of an Incentive Stock Option granted to a Grantee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Award Agreement.
(j) Transferability of Awards. Incentive Stock Options may not be
-------------------------
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee's Incentive
Stock Option in the event of the Grantee's death on a beneficiary designation
form provided by the Administrator. Other Awards shall be transferable to the
extent provided in the Award Agreement.
(k) Time of Granting Awards. The date of grant of an Award shall for
-----------------------
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
7. Award Exercise or Purchase Price, Consideration, Taxes and Reload
-----------------------------------------------------------------
Options.
-------
7
<PAGE>
(a) Exercise or Purchase Price. The exercise or purchase price, if
any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant; or
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of other Awards, such price as is
determined by the Administrator.
(iii) Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Laws, the consideration to
-------------
be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);
(v) with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any Grantee
-----
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign,
8
<PAGE>
federal, state, or local income and employment tax withholding obligations,
including, without limitation, obligations incident to the receipt of Shares or
the disqualifying disposition of Shares received on exercise of an Incentive
Stock Option. Upon exercise of an Award, the Company shall withhold or collect
from Grantee an amount sufficient to satisfy such tax obligations.
(d) Reload Options. In the event the exercise price or tax
--------------
withholding of an Option is satisfied by the Company or the Grantee's employer
withholding Shares otherwise deliverable to the Grantee, the Administrator may
issue the Grantee an additional Option, with terms identical to the Award
Agreement under which the Option was exercised, but at an exercise price as
determined by the Administrator in accordance with the Plan.
8. Exercise of Award.
-----------------
(a) Procedure for Exercise; Rights as a Stockholder.
-----------------------------------------------
(i) Any Award granted hereunder shall be exercisable
at such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.
(ii) Award shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure
to pay the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Award. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in the Award Agreement or Section 10, below.
(b) Exercise of Award Following Termination of Continuous
-----------------------------------------------------
Service.
-------
(i) An Award may not be exercised after the
termination date of such Award set forth in the Award Agreement and may be
exercised following the termination of a Grantee's Continuous Service only to
the extent provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on
the last day of the specified period or the last day of the original term of the
Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock
Option to the extent not exercised within the time permitted by law for the
exercise of Incentive Stock Options following the termination of a Grantee's
Continuous Service shall convert automatically to a Non-Qualified Stock Option
and thereafter shall be exercisable as such to the extent exercisable by its
terms for the period specified in the Award Agreement.
(c) Buyout Provisions. The Administrator may at any time offer
-----------------
to buy out for a payment in cash or Shares, an Award previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Grantee at the time that such offer is made.
9. Conditions Upon Issuance of Shares.
----------------------------------
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
9
<PAGE>
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required
------------------------------------------
action by the shareholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for (i) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
any similar transaction affecting the Shares, (ii) any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Class A Common Stock to which
Section 424(a) of the Code applies or a similar transaction; provided, however
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.
11. Corporate Transactions/Changes in Control/Related Entity Dispositions.
---------------------------------------------------------------------
Except as may be provided in an Award Agreement:
In the event of any Corporate Transaction, each Award which is at the time
outstanding under the Plan automatically shall become vested and
exercisable and be released from any restrictions on transfer
(other than transfer restrictions applicable to Incentive Stock
Options) and repurchase or forfeiture rights, immediately prior
to the specified effective date of such Corporate Transaction, as
to one half ( 1/2) of the then unvested Shares at the time
represented by such Award. Effective upon the consummation of the
Corporate Transaction, all outstanding Awards under the Plan
shall terminate. However, all such Awards shall not terminate if
the Awards are, in connection with the Corporate Transaction,
assumed by the successor corporation or Parent thereof. In
addition, an outstanding Award under the Plan shall not so
partially vest and be exercisable and released from such
limitations if and to the extent: (i) such Award is, in
connection with the Corporate Transaction, either assumed by the
successor corporation or Parent thereof or replaced with a
comparable Award with respect to shares of the capital stock of
the successor corporation or Parent thereof or (ii) such Award is
to be replaced with a cash incentive program of the successor
corporation which preserves the compensation element of such
Award existing at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award; provided, however,
that such Award (if assumed), the replacement Award (if
replaced), or the cash incentive program automatically shall
become vested, exercisable and payable and be released from any
restrictions on transfer (other than transfer restrictions
applicable to Incentive Stock Options) and repurchase or
forfeiture rights as to one half (1/2) of the then unvested
shares (or cash payments) at the time represented by such Award
immediately upon the Grantee incurring an Effective Termination
or upon termination of the Grantee's Continuous Service
(substituting the successor employer corporation for "Company or
Related Entity" for the definition of "Continuous Service") if
such Continuous Service is terminated by the successor company
without Cause or the Grantee incurs such Effective Termination
within twelve (12) months of the Corporate Transaction. The
determination of Award comparability above shall be made by the
Administrator, and its determination shall be final, binding and
conclusive.
Following a Change in Control (other than a Change in Control which also is
a Corporate Transaction) and (i) upon the termination of the
Continuous Service of a Grantee if such Continuous Service is
terminated by the Company or Related Entity without Cause within
twelve (12) months of a
10
<PAGE>
Change in Control or (ii) upon the Grantee incurring an Effective
Termination within twelve (12) months of a Change in Control,
each Award of such Grantee which is at the time outstanding under
the Plan automatically shall become vested and exercisable and be
released from any restrictions on transfer (other than transfer
restrictions applicable to Incentive Stock Options) and
repurchase or forfeiture rights as to one half (1/2) of the then
unvested Shares at the time represented by such Award,
immediately upon the termination of such Continuous Service or
the date on which the Grantee incurs an Effective Termination.
Effective upon the consummation of a Related Entity Disposition, for
purposes of the Plan and all Awards, the Continuous Service of
each Grantee who is at the time engaged primarily in service to
the Related Entity involved in such Related Entity Disposition
shall be deemed to terminate and each Award of such Grantee which
is at the time outstanding under the Plan automatically shall
become vested and exercisable and be released from any
restrictions on transfer (other than transfer restrictions
applicable to Incentive Stock Options) and repurchase or
forfeiture rights as to one half (1/2) of the unvested Shares at
the time represented by such Award and be exercisable in
accordance with the terms of the Award Agreement evidencing such
Award. However, such Continuous Service shall be not be deemed to
terminate if such Award is, in connection with the Related Entity
Disposition, assumed by the successor entity or its Parent. In
addition, such Continuous Service shall not be deemed to
terminate and an outstanding Award under the Plan shall not so
partially vest and be exercisable and released from such
limitations if and to the extent: (i) such Award is, in
connection with the Related Entity Disposition, either to be
assumed by the successor entity or its parent or to be replaced
with a comparable Award with respect to interests in the
successor entity or its parent or (ii) such Award is to be
replaced with a cash incentive program of the successor entity
which preserves the compensation element of such Award existing
at the time of the Related Entity Disposition and provides for
subsequent payout in accordance with the same vesting schedule
applicable to such Award; provided, however, that such Award (if
assumed), the replacement Award (if replaced), or the cash
incentive program automatically shall become vested, exercisable
and payable and be released from any restrictions on transfer
(other than transfer restrictions applicable to Incentive Stock
Options) and repurchase or forfeiture rights as to one half (1/2)
of the then unvested shares (or cash payments) at the time
represented by such Award immediately upon the Grantee incurring
an Effective Termination or upon termination of the Grantee's
Continuous Service (substituting the successor employer entity
for "Company or Related Entity" for the definition of "Continuous
Service") if such Continuous Service is terminated by the
successor entity without Cause or the Grantee incurs such
Effective Termination within twelve (12) months of the Related
Entity Disposition. The determination of Award comparability
above shall be made by the Administrator, and its determination
shall be final, binding and conclusive.
The portion of any Incentive Stock Option accelerated under this Section 11
in connection with a Corporate Transaction, Change in Control or
Related Entity Disposition shall remain exercisable as an
Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not
exceeded. To the extent such dollar limitation is exceeded, the
accelerated excess portion of such Option shall be exercisable as
a Non-Qualified Stock Option.
12. Effective Date and Term of Plan. The Plan shall become effective upon
-------------------------------
the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan.
------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
11
<PAGE>
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 12, above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.
14. Reservation of Shares.
---------------------
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. No Effect on Terms of Employment/Consulting Relationship. The Plan
--------------------------------------------------------
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.
16. No Effect on Retirement and Other Benefit Plans. Except as
-----------------------------------------------
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
17. Stockholder Approval. The grant of Incentive Stock Options under the
--------------------
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is
not obtained within the twelve (12) month period provided above, all Incentive
Stock Options previously granted under the Plan shall be exercisable as Non-
Qualified Stock Options.
18. Limitation of Award Grants to Executive Officers. The Company may not
------------------------------------------------
in any one fiscal year grant Awards under the Plan for more than 750,000 shares
to any executive officer of the Company.
12
<PAGE>
pcOrder.com, Inc.
Employee Stock Purchase Plan
1. Purpose.
-------
This pcOrder.com, Inc. Employee Stock Purchase Plan (the "Plan") is
designed to encourage and assist employees of pcOrder.com, Inc. (the "Company")
and any Participating Subsidiary, as defined in Section 4, to acquire an equity
interest in the Company through the purchase of shares of Company common stock
(the "Common Stock").
2. Administration.
--------------
The Plan shall be administered by the Board of Directors of the Company (or
a committee thereof designated by the Board of Directors, which in either case
is referred to as the "Board"). The Board may from time to time select a
committee or persons (the "Administrator") to be responsible for any matters in
implementing the Plan. If no such committee or persons are selected, the Board
shall be the Administrator. Subject to the express provisions of the Plan, to
the overall supervision of the Board, and to the limitations of Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"), the Administrator
may administer and interpret the Plan in any manner it believes to be desirable,
and any such interpretation shall be conclusive and binding on the Company and
all persons, and the Administrator shall have all powers necessary to accomplish
the purposes of the Plan and discharge its duties hereunder.
3. Number of Shares.
----------------
(a) Share Limit. The total number of shares of Common Stock initially
-----------
reserved and available for issuance pursuant to this Plan shall be 250,000 (the
"Share Limit"). Notwithstanding the foregoing and subject to Section 3(b), the
Share Limit shall automatically increase on January 1, 2001 and January 1 each
year thereafter until and including January 1, 2009 (unless the Plan is
terminated earlier in accordance with the provisions hereof) by the "Annual
Increase" which shall consist of a number of shares equal to the least of (i)
150,000, (ii) three quarters of one percent (.75%) of the number of shares of
all classes of common stock of the Company outstanding on that date or (iii) a
lesser number determined by the Administrator prior to such date; provided that
the total number of shares available for issuance under the Plan shall not
exceed the initial Share Limit plus the maximum potential cumulative Annual
Increase. The Share Limit shall be reduced by the number of shares issued under
the pcOrder.com, Inc. Foreign Subsidiary Employee Stock Purchase Plan ("Foreign
Plan"). Shares issued under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares reacquired in private
transactions or open market purchases, but all shares issued under this Plan and
the Foreign Plan shall be counted against the Share Limit.
(b) Adjustments. In the event of any reorganization, recapitalization,
-----------
stock split, reverse stock split, stock dividend, combination of shares,
offering of rights, or other similar change in the capital structure of the
Company, the Board may make such adjustment, if any, as it deems
<PAGE>
appropriate in the number, kind, and purchase price of the shares available for
purchase under the Plan and in the maximum number of shares subject to any
option under the Plan.
4. Eligibility Requirements.
------------------------
(a) Eligible Employees. Each employee of the Company and each Participating
------------------
Subsidiary, except those described in the next paragraph, shall become eligible
to participate in the Plan in accordance with Section 5 on the first Enrollment
Date on or following commencement of his or her employment by the Company or the
Participating Subsidiary or following such period of employment, not to exceed
two years, as is designated by the Board from time to time. Participation in the
Plan is entirely voluntary.
(b) Non-Eligible Employees. The following employees are not eligible to
----------------------
participate in the Plan:
(i) employees who would, immediately upon enrollment in the Plan,
own directly or indirectly (including options or rights to acquire stock
possessing as provided in Section 423(b)(3) of the Code) five percent or
more of the total combined voting power or value of all classes of stock of
the Company or any subsidiary of the Company or any parent of the Company
(as defined in Section 424 of the Code); and
(ii) employees who are customarily employed by the Company less than
20 hours per week or less than five months in any calendar year.
(c) Definition of Employee. "Employee" shall mean any individual who is an
----------------------
employee of the Company or a Participating Subsidiary. Whether an individual
qualifies as an Employee shall be determined by the Administrator, in its sole
discretion. The Administrator shall be guided by the provisions of Treasury
Regulation Section 1.421-7 and Section 3401(c) of the Code and the Treasury
Regulations thereunder, with the intent that the Plan cover all "employees"
within the meaning of those provisions other than those who are not eligible to
participate in the Plan; provided, however, that any determinations regarding
whether an individual is an "employee" shall be prospective only, unless
otherwise determined by the Administrator. Unless the Administrator makes a
contrary determination, the Employees of the Company shall, for all purposes of
this Plan, be those individuals who are carried as employees of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to
participate in the Plan shall be directed to the Administrator, whose decision
will be final.
(d) Definition of Subsidiary. "Subsidiary" shall mean any corporation
------------------------
described in Section 424(e) or (f) of the Code. "Participating Subsidiary" shall
mean a subsidiary which has been designated by the Administrator as covered by
the Plan.
5. Enrollment.
----------
Any eligible employee may enroll or re-enroll in the Plan each year as of
the first trading day of (i) April 2000, (ii) November 2000, and (iii) each May
and November thereafter, or such
2
<PAGE>
other days as may be established by the Board from time to time (the "Enrollment
Dates"). In order to enroll, an eligible employee must complete and submit to
the Company an enrollment form. Any enrollment form received by the designee of
the Administrator by (a) the April 2000 Enrollment Date, (b) with respect to
each Enrollment Date thereafter, the 25th day of the month preceding such
Enrollment Date (or the Enrollment Date in the case of employees hired after
such 25th day), or (c) such other date established by the Administrator from
time to time, will be effective on that Enrollment Date. For purposes of the
Plan, a "trading day" is any day on which regular trading occurs on any
established stock exchange or market system on which the Common Stock is traded.
6. Grant of Option on Enrollment.
-----------------------------
(a) Grant of Option. Enrollment or re-enrollment by a participant
---------------
in the Plan on an Enrollment Date will constitute the grant by the Company to
the participant of an option to purchase shares of Common Stock from the Company
under the Plan. Any participant whose option expires and who has not withdrawn
from the Plan will automatically be re-enrolled in the Plan and granted a new
option on the Enrollment Date immediately following the date on which the option
expires. Furthermore, except as may otherwise be determined by the
Administrator, each participant who has not withdrawn from the Plan will
automatically be re-enrolled in the Plan and granted a new option on any
Enrollment Date on which the fair market value per share of the Company's Common
Stock is lower than the fair market value per share on the Enrollment Date for
such participant's existing option.
(b) Terms of Option. Each option granted under the Plan shall have the
---------------
following terms:
(i) each option granted under the Plan will have a term of not
more than 12 months or such shorter option period as may be established by
the Board from time to time, provided that the option period commencing
with the April 2000 Enrollment Date shall have a 13 month term;
notwithstanding the foregoing, however, whether or not all shares have been
purchased thereunder, the option will expire on the earlier to occur of (A)
the completion of the purchase of shares on the last Purchase Date
occurring within 12 months after the Enrollment Date for such option (or 13
months with respect to the April 2000 Enrollment Date), or such shorter
option period as may be established by the Board before an Enrollment Date
for all options to be granted on such date or (B) the date on which the
employee's participation in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will be made
only through payroll withholding in accordance with Section 7;
(iii) purchase of shares upon exercise of the option will be
effected only on the Purchase Dates established in accordance with Section
8;
(iv) the price per share under the option will be determined as
provided in Section 8;
3
<PAGE>
(v) the number of shares available for purchase under an
option will, unless otherwise established by the Board before an Enrollment
Date for all options to be granted on such date, be determined by dividing
$25,000 by the fair market value of a share of Common Stock on the
Enrollment Date and by multiplying the result by the number of calendar
years included in whole or in part in the period from grant to expiration
of the option;
(vi) the option (taken together with all other options then
outstanding under this and all other similar stock purchase plans of the
Company and any subsidiary of the Company, collectively "Options") will in
no event give the participant the right to purchase shares at a rate per
calendar year which accrues in excess of $25,000 of fair market value of
such shares, determined at the applicable Enrollment Date;
(vii) the option will in no event give the right to purchase
more than 500 shares on any Purchase Date; and
(viii) the option will in all respects be subject to the terms
and conditions of the Plan, as interpreted by the Administrator, in its
sole discretion, from time to time.
7. Payroll and Tax Withholding; Use by Company.
-------------------------------------------
(a) Payroll Deductions. Each participant shall elect to have amounts
------------------
withheld from his or her compensation paid by the Company during the option
period, at a rate equal to any whole percentage up to 15 percent, or such other
maximum percentage as the Board may establish from time to time before an
Enrollment Date. Compensation includes regular salary payments, bonuses,
overtime pay and any other compensation as may be determined from time to time
by the Administrator, but excludes all other payments including, without
limitation, long-term disability or workers compensation payments, car
allowances, employee referral bonuses, relocation payments, expense
reimbursements (including but not limited to travel, entertainment, and moving
expenses), salary gross-up payments, and non-cash recognition awards. The
participant shall designate a rate of withholding in his or her enrollment form
and may elect to increase or decrease the rate of contribution effective as of
any Enrollment Date, by delivery to the Company, not later than the 25th day of
the month preceding such Enrollment Date, of a written notice indicating the
revised withholding rate. The first payroll deduction will commence with the
first payment of compensation on or after the Enrollment Date.
(b) Use of Withholdings. Payroll withholdings shall be credited to an
-------------------
account maintained for purposes of the Plan on behalf of each participant, as
soon as administratively feasible after the withholding occurs. The Company
shall be entitled to use the withholdings for any corporate purpose, shall have
no obligation to pay interest on withholdings to any participant, and shall not
be obligated to segregate withholdings.
(c) Tax Withholdings. The participant shall pay, or make provision
----------------
adequate to the Company for payment of, all federal, state, and other tax (and
similar) withholdings that the Company determines, in its discretion, are
required due to the acquisition of shares under the Plan or the disposition of
such shares, including any such withholding that the Company
4
<PAGE>
determines in its discretion is necessary to allow the Company to claim tax
deductions or other benefits in connection with the disposition.
8. Purchase of Shares.
------------------
(a) Purchase Date. On the last trading day of each month immediately
-------------
preceding a month containing an Enrollment Date, or on such other days as may be
established by the Board from time to time prior to an Enrollment Date for all
options to be granted on an Enrollment Date (each a "Purchase Date"), the
Company shall apply the funds then credited to each participant's payroll
withholdings account to the purchase of whole shares of Common Stock.
(b) Purchase Price. The cost to the participant for the shares purchased
--------------
under any option shall be not less than 85 percent of the lower of:
(i) the fair market value of the Common Stock on the Enrollment
Date for such option; or
(ii) the fair market value of the Common Stock on that Purchase
Date.
The "fair market value" of the Common Stock on a date shall be the closing price
of the Common Stock on the Nasdaq National Market (or, if determined by the
Administrator to be the primary market on which the Common Stock is traded, a
stock exchange or other market system on which the Common Stock is traded), or
the fair market value on such date as determined by the Administrator if no such
price is reported.
(c) Funds Remaining After Purchase. Any funds in an amount less than the
------------------------------
cost of one share of Common Stock left in a participant's payroll withholdings
account on a Purchase Date shall be carried forward in such account for
application on the next Purchase Date.
(d) Insufficient Shares Available. If at any Purchase Date, the shares
-----------------------------
available under the Plan are less than the number all participants would
otherwise be entitled to purchase on such date, purchases shall be reduced
proportionately to eliminate the deficit. Any funds that cannot be applied to
the purchase of shares due to such a reduction shall be refunded to participants
as soon as administratively feasible, unless the Administrator, in its sole
discretion, determines that such excess funds shall be carried over to the next
Purchase Date under this Plan.
9. Withdrawal from the Plan.
------------------------
A participant may withdraw from the Plan in full (but not in part) at any
time, effective after written notice thereof is received by the Company. All
funds credited to a participant's payroll withholdings account shall be
distributed to him or her without interest within 60 days after notice of
withdrawal is received by the Company. Any eligible employee who has withdrawn
from the Plan may enroll in the Plan again on any subsequent Enrollment Date in
accordance with the provisions of Section 5.
10. Termination of Employment.
-------------------------
5
<PAGE>
Participation in the Plan terminates immediately when a participant ceases
to be employed by the Company for any reason whatsoever (including death or
disability) or otherwise becomes ineligible to participate in the Plan. As soon
as administratively feasible after termination, the Company shall pay to the
participant or his or her beneficiary or legal representative, all amounts
credited to the participant's payroll withholdings account; provided, however,
that if a participant ceases to be employed by the Company because of the
commencement of employment with a Subsidiary of the Company that is not a
Participating Subsidiary, funds then credited to such participant's payroll
withholdings account shall be applied to the purchase of whole shares of Common
Stock at the next Purchase Date, and any funds remaining after such purchase
shall be paid to the participant.
11. Beneficiaries.
-------------
(a) Designation of Beneficiary. Each participant may designate one
--------------------------
or more beneficiaries in the event of death and may, in his or her sole
discretion, change such designation at any time. Any such designation shall be
effective upon receipt in written form by the Company and shall control over any
disposition by will or otherwise.
(b) Payment to Beneficiary. As soon as administratively feasible
----------------------
after the death of a participant, amounts credited to his or her account shall
be paid in cash to the designated beneficiaries or, in the absence of a
designation, to the executor, administrator, or other legal representative of
the participant's estate. Such payment shall relieve the Company of further
liability with respect to the Plan on account of the deceased participant. If
more than one beneficiary is designated, each beneficiary shall receive an equal
portion of the account unless the participant has given express contrary written
instructions.
12. Assignment.
----------
(a) Assignment Prohibited. Except as provided in Section 11, the
---------------------
rights of a participant under the Plan shall not be assignable by such
participant, by operation of law or otherwise. No participant may create a lien
on any funds, securities, rights, or other property held by the Company for the
account of the participant under the Plan, except to the extent that there has
been a designation of beneficiaries in accordance with the Plan, and except to
the extent permitted by the laws of descent and distribution if beneficiaries
have not been designated.
(b) Rights Exercisable Only by Participant. A participant's right to
--------------------------------------
purchase shares under the Plan shall be exercisable only during the
participant's lifetime and only by him or her, except that a participant may
direct the Company in the enrollment form to issue share certificates to the
participant and his or her spouse in community property, to the participant
jointly with one or more other persons with right of survivorship, or to certain
forms of trusts approved by the Administrator; provided, that such direction may
not be terminated, except at the beginning of a new enrollment period or
pursuant to a "qualified domestic relations order" as defined under the Code.
13. Administrative Assistance.
-------------------------
6
<PAGE>
If the Administrator in its discretion so elects, it may engage a brokerage
firm, bank, or other financial institution to assist in the purchase of shares,
delivery of reports, or other administrative aspects of the Plan. If the
Administrator so elects, each participant shall be deemed upon enrollment in the
Plan to have authorized the establishment of an account on his or her behalf at
such institution. Shares purchased by a participant under the Plan shall be
held in the account in the name in which the share certificate would otherwise
be issued.
14. Costs.
------
All costs and expenses incurred in administering the Plan shall be
paid by the Company, except that any stamp duties or transfer taxes applicable
to participation in the Plan may be charged to the account of such participant
by the Company. Any brokerage fees for the purchase of shares by a participant
shall be paid by the Company, but brokerage fees for the resale of shares by a
participant shall be borne by the participant.
15. Equal Rights and Privileges.
---------------------------
All eligible employees shall have equal rights and privileges with
respect to the Plan so that the Plan qualifies as an "employee stock purchase
plan" within the meaning of Section 423 of the Code and the related Treasury
Regulations. Any provision of the Plan which is inconsistent with Section 423 of
the Code shall without further act or amendment by the Company or the Board be
reformed to comply with the requirements of Section 423. This Section 15 shall
take precedence over all other provisions of the Plan.
16. Applicable Law.
--------------
The Plan and options granted hereunder shall be governed by the
substantive laws (excluding the conflict of laws rules) of the State of Texas.
17. Modification and Termination.
----------------------------
(a) Modification and Termination of Plan. The Board may modify, amend,
------------------------------------
alter, or terminate the Plan at any time, including amendments to outstanding
options. No amendment to (i) increase the number of shares reserved for
purchase under the Plan or (ii) change the designation of the employees (or
class of employees) eligible for participation in the Plan, shall be effective
unless within 12 months after it is adopted by the Board, it is approved by the
stockholders of the Company.
(b) Termination of Options. In the event the Plan is terminated, the
----------------------
Board may elect to terminate all outstanding options either immediately or upon
completion of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior to
expiration, all funds contributed to the Plan that have not been used to
purchase shares shall be returned to the participants as soon as
administratively feasible.
7
<PAGE>
(c) Asset Sale, Merger, etc. In the event of the sale of all or
-----------------------
substantially all of the assets of the Company, or the merger or consolidation
of the Company with or into another corporation, or the dissolution or
liquidation of the Company, the Board shall provide for the assumption or
substitution of each option under the Plan by the successor or surviving
corporation, or a parent or subsidiary thereof, unless the Board decides to take
such other action as it deems appropriate, including, without limitation,
providing for the termination of the Plan and providing for a Purchase Date to
occur on the trading day immediately preceding the date of such termination.
18. Rights as an Employee.
---------------------
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of the Company or any Subsidiary or to affect the Company's
or any Subsidiary's right to terminate the employment of any person at any time
with or without cause.
19. Rights as a Shareholder; Delivery of Certificates.
-------------------------------------------------
Participants shall be treated as the owners of their shares effective as
of the Purchase Date. Certificates evidencing shares purchased on any Purchase
Date shall be delivered to participants as soon as administratively feasible,
unless the Administrator determines that the Company instead of delivery of
share certificates shall (i) deliver a certificate (or equivalent) to a broker
for crediting to the Participant's account, or (ii) make a notation in the
Participant's favor of non-certificated shares on the Company's stock records.
8
<PAGE>
pcOrder.com, Inc.
Foreign Subsidiary Employee Stock Purchase Plan
1. Purpose.
-------
This pcOrder.com, Inc. Foreign Subsidiary Employee Stock Purchase Plan
(the "Plan") is designed to encourage and assist employees of any Participating
Subsidiary of pcOrder.com, Inc. ("pcOrder"), as defined in Section 4, to acquire
an equity interest in pcOrder through the purchase of shares of pcOrder common
stock (the "Common Stock"). pcOrder and all of the Participating Subsidiaries
shall be collectively referred to herein as the "Company". The Plan is not
intended to qualify for treatment under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code").
2. Administration.
--------------
The Plan shall be administered by the Board of Directors of pcOrder (or a
committee thereof designated by the Board of Directors, which in either case is
referred to as the "Board"). The Board may from time to time select a committee
or persons (the "Administrator") to be responsible for any matters in
implementing the Plan. If no such committee or persons are selected, the Board
shall be the Administrator. Subject to the express provisions of the Plan and
to the overall supervision of the Board, the Administrator may administer and
interpret the Plan in any manner it believes to be desirable, and any such
interpretation shall be conclusive and binding on the Company and all persons,
and the Administrator shall have all powers necessary to accomplish the purposes
of the Plan and discharge its duties hereunder.
3. Number of Shares.
----------------
(a) Share Limit. The total number of shares of Common Stock initially
-----------
reserved and available for issuance pursuant to this Plan shall be 250,000 (the
"Share Limit"). Notwithstanding the foregoing and subject to Section 3(b), the
Share Limit shall automatically increase on January 1, 2001 and January 1 each
year thereafter until and including January 1, 2009 (unless the Plan is
terminated earlier in accordance with the provisions hereof) by the "Annual
Increase" which shall consist of a number of shares equal to the least of (i)
150,000, (ii) three quarters of one percent (.75%) of the number of shares of
all classes of common stock of the Company outstanding on that date or (iii) a
lesser number determined by the Administrator prior to such date; provided that
the total number of shares available for issuance under the Plan shall not
exceed the initial Share Limit plus the maximum potential cumulative Annual
Increase. The Share Limit shall be reduced by the number of shares issued under
the pcOrder.com, Inc. Employee Stock Purchase Plan ("Domestic Plan"). Shares
issued under the Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares reacquired in private transactions or open
market purchases, but all shares issued under this Plan and the Domestic Plan
shall be counted against the Share Limit.
(b) Adjustments. In the event of any reorganization, recapitalization,
-----------
stock split, reverse stock split, stock dividend, combination of shares,
offering of rights, or other similar change in
<PAGE>
the capital structure of pcOrder, the Board may make such adjustment, if any, as
it deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
4. Eligibility Requirements.
------------------------
(a) Eligible Employees. Each employee of each Participating Subsidiary,
------------------
except those described in the next paragraph, shall become eligible to
participate in the Plan in accordance with Section 5 on the first Enrollment
Date on or following commencement of his or her employment by the Company or the
Participating Subsidiary or following such period of employment, not to exceed
two years, as is designated by the Board from time to time. Participation in the
Plan is entirely voluntary.
(b) Non-Eligible Employees. The following employees are not eligible to
----------------------
participate in the Plan:
(i) employees who would, immediately upon enrollment in the Plan,
own directly or indirectly (including options or rights to acquire stock
possessing as provided in Section 423(b)(3) of the Code) five percent or
more of the total combined voting power or value of all classes of stock of
pcOrder or any subsidiary of pcOrder or any parent of the Company (as
defined in Section 424 of the Code); and
(ii) employees who are customarily employed by the Company less than
20 hours per week or less than five months in any calendar year.
(iii) employees who are prohibited by applicable law from
participating in the Plan.
(c) Definition of Employee. "Employee" shall mean any individual who is an
----------------------
employee of a Participating Subsidiary. Whether an individual qualifies as an
Employee shall be determined by the Administrator, in its sole discretion. The
Administrator shall be guided by the provisions of Treasury Regulation Section
1.421-7 and Section 3401(c) of the Code and the Treasury Regulations thereunder,
with the intent that the Plan cover all "employees" within the meaning of those
provisions other than those who are not eligible to participate in the Plan;
provided, however, that any determinations regarding whether an individual is an
"employee" shall be prospective only, unless otherwise determined by the
Administrator. Unless the Administrator makes a contrary determination, the
Employees of the Company shall, for all purposes of this Plan, be those
individuals who are carried as employees of a Participating Subsidiary for
regular payroll purposes or are on a leave of absence for not more than 90 days.
Any inquiries regarding eligibility to participate in the Plan shall be directed
to the Administrator, whose decision will be final.
(d) Definition of Subsidiary. "Subsidiary" shall mean any corporation
------------------------
described in Section 424(e) or (f) of the Code. "Participating Subsidiary" shall
mean a subsidiary which has been designated by the Administrator as covered by
the Plan; provided, however, that no subsidiary participating in the Domestic
Plan may be designated for participation in the Plan.
2
<PAGE>
5. Enrollment.
----------
Any eligible employee may enroll or re-enroll in the Plan each year as of
the first trading day of (i) April 2000, (ii) November 2000, and (iii) each May
and November thereafter, or such other days as may be established by the Board
from time to time (the "Enrollment Dates"). In order to enroll, an eligible
employee must complete and submit to the designee of the Administrator or the
Employee's Participating Subsidiary an enrollment form. Any enrollment form
received by pcOrder or the Employee's Participating Subsidiary by (a) the April
2000 Enrollment Date, (b) with respect to each Enrollment Date thereafter, the
25th day of the month preceding such Enrollment Date (or the Enrollment Date in
the case of employees hired after such 25th day), or (c) such other date
established by the Administrator from time to time, will be effective on that
Enrollment Date. For purposes of the Plan, a "trading day" is any day on which
regular trading occurs on any established stock exchange or market system on
which the Common Stock is traded.
6. Grant of Option on Enrollment.
-----------------------------
(a) Grant of Option. Enrollment or re-enrollment by a participant in the
---------------
Plan on an Enrollment Date will constitute the grant by pcOrder to the
participant of an option to purchase shares of Common Stock from pcOrder under
the Plan. Any participant whose option expires and who has not withdrawn from
the Plan will automatically be re-enrolled in the Plan and granted a new option
on the Enrollment Date immediately following the date on which the option
expires. Furthermore, except as may otherwise be determined by the
Administrator, each participant who has not withdrawn from the Plan will
automatically be re-enrolled in the Plan and granted a new option on any
Enrollment Date on which the fair market value per share of the Common Stock is
lower than the fair market value per share on the Enrollment Date for such
participant's existing option.
(b) Terms of Option. Each option granted under the Plan shall have the
---------------
following terms:
(i) each option granted under the Plan will have a term of not more
than 12 months or such shorter option period as may be established by the
Board from time to time, provided that the option period commencing with
the April 2000 Enrollment Date shall have a 13 month term; notwithstanding
the foregoing, however, whether or not all shares have been purchased
thereunder, the option will expire on the earlier to occur of (A) the
completion of the purchase of shares on the last Purchase Date occurring
within 12 months after the Enrollment Date for such option (or 13 months
with respect to the April 2000 Enrollment Date), or such shorter option
period as may be established by the Board before an Enrollment Date for all
options to be granted on such date or (B) the date on which the employee's
participation in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will be made only
through payroll withholding in accordance with Section 7;
3
<PAGE>
(iii) purchase of shares upon exercise of the option will be effected
only on the Purchase Dates established in accordance with Section 8;
(iv) the price per share under the option will be determined as
provided in Section 8;
(v) the number of shares available for purchase under an option will,
unless otherwise established by the Board before an Enrollment Date for all
options to be granted on such date, be determined by dividing $25,000 by
the fair market value of a share of Common Stock on the Enrollment Date and
by multiplying the result by the number of calendar years included in whole
or in part in the period from grant to expiration of the option;
(vi) the option (taken together with all other options then
outstanding under this and all other similar stock purchase plans of
pcOrder and any subsidiary of pcOrder, collectively "Options") will in no
event give the participant the right to purchase shares at a rate per
calendar year which accrues in excess of $25,000 of fair market value of
such shares, determined at the applicable Enrollment Date;
(vii) the option will in no event give the right to purchase more than
500 shares on any Purchase Date; and
(viii) the option will in all respects be subject to the terms and
conditions of the Plan, as interpreted by the Administrator, in its sole
discretion, from time to time.
7. Payroll and Tax Withholding; Use by Company.
-------------------------------------------
(a) Payroll Deductions. Each participant shall elect to have amounts
------------------
withheld from his or her compensation paid by the Company during the option
period, at a rate equal to any whole percentage up to 15 percent, or such other
maximum percentage as the Board may establish from time to time before an
Enrollment Date. Compensation includes regular salary payments, bonuses,
overtime pay and any other compensation as may be determined from time to time
by the Administrator, but excludes all other payments including, without
limitation, long-term disability or workers compensation payments, car
allowances, employee referral bonuses, relocation payments, expense
reimbursements (including but not limited to travel, entertainment, and moving
expenses), salary gross-up payments, and non-cash recognition awards. The
participant shall designate a rate of withholding in his or her enrollment form
and may elect to increase or decrease the rate of contribution effective as of
any Enrollment Date, by delivery to pcOrder or the Employee's Participating
Subsidiary, not later than the 25th day of the month preceding such Enrollment
Date, of a written notice indicating the revised withholding rate. The first
payroll deduction will commence with the first payment of compensation on or
after the Enrollment Date.
(b) Use of Withholdings. Payroll withholdings shall be credited to an
-------------------
account maintained for purposes of the Plan in local currency on behalf of each
participant, as soon as administratively feasible after the withholding occurs.
The Company shall be entitled to use the
4
<PAGE>
withholdings for any corporate purpose, shall have no obligation to pay interest
on withholdings to any participant, and shall not be obligated to segregate
withholdings.
(c) Tax Withholdings. Upon acquisition or disposition of shares acquired by
----------------
exercise of an option, the participant shall pay, or make provision adequate to
the Company for payment of, all federal, state, and other tax (and similar)
withholdings that the Company determines, in its discretion, are required due to
the disposition, including any such withholding that the Company determines in
its discretion is necessary to allow the Company to claim tax deductions or
other benefits in connection with the disposition. A participant shall make
such similar provisions for payment that the Company determines, in its
discretion, are required due to the exercise of an option, including such
provisions as are necessary to allow the Company to claim tax deductions or
other benefits in connection with the exercise of the option.
8. Purchase of Shares.
------------------
(a) Purchase Date. On the last trading day of each month immediately
-------------
preceding a month containing an Enrollment Date, or on such other days as may be
established by the Board from time to time prior to an Enrollment Date for all
options to be granted on an Enrollment Date (each a "Purchase Date"), the
Company shall convert each participant's account balance, including amounts
carried forward to U.S. Dollars, determined based on the spot rate applicable to
purchase of U.S. dollars for delivery on the Purchase Date, and shall apply the
funds then credited to each participant's payroll withholdings account to the
purchase of whole shares of Common Stock.
(b) Purchase Price. The cost to the participant for the shares purchased
--------------
under any option shall be not less than 85 percent of the lower of:
(i) the fair market value of the Common Stock on the Enrollment Date
for such option; or
(ii) the fair market value of the Common Stock on that Purchase Date.
The "fair market value" of the Common Stock on a date shall be the closing price
of the Common Stock on the Nasdaq National Market (or, if determined by the
Administrator to be the primary market on which the Common Stock is traded, a
stock exchange or other market system on which the Common Stock is traded), or
the fair market value on such date as determined by the Administrator if no such
price is reported.
(c) Funds Remaining After Purchase. Any funds in an amount less than the
------------------------------
cost of one share of Common Stock left in a participant's payroll withholdings
account on a Purchase Date shall be carried forward in such account for
application on the next Purchase Date.
(d) Insufficient Shares Available. If at any Purchase Date, the shares
-----------------------------
available under the Plan are less than the number all participants would
otherwise be entitled to purchase on such date, purchases shall be reduced
proportionately to eliminate the deficit. Any funds that cannot be applied to
the purchase of shares due to such a reduction shall be refunded to participants
as
5
<PAGE>
soon as administratively feasible, unless the Administrator, in its sole
discretion, determines that such excess funds shall be carried over to the next
Purchase Date under this Plan.
9. Withdrawal from the Plan.
------------------------
A participant may withdraw from the Plan in full (but not in part) at any
time, effective after written notice thereof is received by the Company. All
funds credited to a participant's payroll withholdings account shall be
distributed to him or her without interest within 60 days after notice of
withdrawal is received by the Company. Any eligible employee who has withdrawn
from the Plan may enroll in the Plan again on any subsequent Enrollment Date in
accordance with the provisions of Section 5.
10. Termination of Employment.
-------------------------
Participation in the Plan terminates immediately when a participant
ceases to be employed by the Company for any reason whatsoever (including death
or disability) or otherwise becomes ineligible to participate in the Plan. As
soon as administratively feasible after termination, the Company shall pay to
the participant or his or her beneficiary or legal representative, all amounts
credited to the participant's payroll withholdings account; provided, however,
that if a participant ceases to be employed by the Company because of the
commencement of employment with a Subsidiary of the Company that is not a
Participating Subsidiary, funds then credited to such participant's payroll
withholdings account shall be applied to the purchase of whole shares of Common
Stock at the next Purchase Date, and any funds remaining after such purchase
shall be paid to the participant.
11. Beneficiaries.
-------------
(a) Designation of Beneficiary. Each participant may designate one or
--------------------------
more beneficiaries in the event of death and may, in his or her sole discretion,
change such designation at any time. Any such designation shall be effective
upon receipt in written form by the Company and shall control over any
disposition by will or otherwise.
(b) Payment to Beneficiary. As soon as administratively feasible after the
----------------------
death of a participant, amounts credited to his or her account shall be paid in
cash to the designated beneficiaries or, in the absence of a designation, to the
executor, administrator, or other legal representative of the participant's
estate. Such payment shall relieve the Company of further liability with
respect to the Plan on account of the deceased participant. If more than one
beneficiary is designated, each beneficiary shall receive an equal portion of
the account unless the participant has given express contrary written
instructions.
12. Assignment.
----------
(a) Assignment Prohibited. Except as provided in Section 11, the rights
---------------------
of a participant under the Plan shall not be assignable by such participant, by
operation of law or otherwise. No participant may create a lien on any funds,
securities, rights, or other property held by the Company for the account of the
participant under the Plan, except to the extent that there has
6
<PAGE>
been a designation of beneficiaries in accordance with the Plan, and except to
the extent permitted by the laws of descent and distribution if beneficiaries
have not been designated.
(b) Rights Exercisable Only by Participant. A participant's right to
--------------------------------------
purchase shares under the Plan shall be exercisable only during the
participant's lifetime and only by him or her, except that a participant may
direct the Company in the enrollment form to issue share certificates to the
participant and his or her spouse in community property, to the participant
jointly with one or more other persons with right of survivorship, or to certain
forms of trusts approved by the Administrator; provided, that such direction may
not be terminated, except at the beginning of a new enrollment period or
pursuant to a "qualified domestic relations order" as defined under the Code.
13. Administrative Assistance.
-------------------------
If the Administrator in its discretion so elects, it may engage a
brokerage firm, bank, or other financial institution to assist in the purchase
of shares, delivery of reports, or other administrative aspects of the Plan. If
the Administrator so elects, each participant shall be deemed upon enrollment in
the Plan to have authorized the establishment of an account on his or her behalf
at such institution. Shares purchased by a participant under the Plan shall be
held in the account in the name in which the share certificate would otherwise
be issued.
14. Costs.
-----
All costs and expenses incurred in administering the Plan shall be paid by
the Company, except that any stamp duties or transfer taxes applicable to
participation in the Plan may be charged to the account of such participant by
the Company. Any brokerage fees for the purchase of shares by a participant
shall be paid by the Company, but brokerage fees for the resale of shares by a
participant shall be borne by the participant.
15. Equal Rights and Privileges.
---------------------------
All eligible employees shall have substantially equal rights and
privileges with respect to the Plan.
16. Applicable Law.
--------------
The Plan and options granted hereunder shall be governed by the
substantive laws (excluding the conflict of laws rules) of the State of Texas.
17. Modification and Termination.
----------------------------
(a) Modification and Termination of Plan. The Board may modify, amend,
------------------------------------
alter, or terminate the Plan at any time, including amendments to outstanding
options. No amendment to increase the number of shares reserved for purchase
under the Plan shall be effective unless within 12 months after it is adopted by
the Board, it is approved by the stockholders of pcOrder.
7
<PAGE>
(b) Termination of Options. In the event the Plan is terminated, the Board
----------------------
may elect to terminate all outstanding options either immediately or upon
completion of the purchase of shares on the next Purchase Date, or may elect to
permit options to expire in accordance with their terms (and participation to
continue through such expiration dates). If the options are terminated prior to
expiration, all funds contributed to the Plan that have not been used to
purchase shares shall be returned to the participants as soon as
administratively feasible.
(c) Asset Sale, Merger, etc. In the event of the sale of all or substantially
-----------------------
all of the assets of pcOrder, or the merger or consolidation of pcOrder with or
into another corporation, or the dissolution or liquidation of pcOrder, the
Board shall provide for the assumption or substitution of each option under the
Plan by the successor or surviving corporation, or a parent or subsidiary
thereof, unless the Board decides to take such other action as it deems
appropriate, including, without limitation, providing for the termination of the
Plan and providing for a Purchase Date to occur on the trading day immediately
preceding the date of such termination.
18. Rights as an Employee.
---------------------
Nothing in the Plan shall be construed to give any person the right to
remain in the employ of the Company or any Subsidiary or to affect the Company's
or any Subsidiary's right to terminate the employment of any person at any time
with or without cause.
19. Rights as a Shareholder; Delivery of Certificates.
-------------------------------------------------
Participants shall be treated as the owners of their shares effective as of
the Purchase Date. Certificates evidencing shares purchased on any Purchase Date
shall be delivered to participants as soon as administratively feasible, unless
the Administrator determines that pcOrder instead of delivery of share
certificates (i) deliver a certificate (or equivalent) to a broker for crediting
to the Participant's account, or (ii) make a notation in the Participant's favor
of non-certificated shares on the Company's stock records.
8
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
PCORDER.COM, INC.
July 6, 2000
<TABLE>
<CAPTION>
. Please Detach and Mail in the Envelope Provided .
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A Please mark your
[X] votes as in this
example.
FOR ALL
NOMINEES WITHHOLD
EXCEPT AS AUTHORITY
NOTED BELOW TO VOTE FOR AGAINST ABSTAIN
1. To elect five Nominees: Ross A. Cooley 2. To approve the [_] [_] [_]
directors to Joseph A. Liemandt pcOrder.com Employee
serve on the [_] [_] Peter J. Barris Stock Purchase Plan
Company's Board of Directors until the next Linwood A. Lacy and the pcOrder.com,
Annual Meeting of Stockholders or until Robert W. Stearns Inc. Foreign Subsidiary
their successors are duly elected and Employee Stock Purchase
qualified: Plan.
For, except vote withheld from the following nominee(s): 3. To approve amendments of [_] [_] [_]
________________________________________________________ the Company's 1999 Stock
Option Incentive Plan,
to (a) increase the
number of shares of
Class A Common Stock
reserved for issuance
under the plan by an
additional 1,500,000
shares and (b) imposes a
limit on the number of
shares with respect to
which awards may be made
to each executive officer
under that plan in any
one year.
4. To ratify the selection [_] [_] [_]
of Ernst & Young LLP as
the Company's independent
auditors for the fiscal
year ending December 31,
2000.
The Board of Directors recommends a vote FOR the
nominees listed above and a vote FOR each of the
listed proposals. This Proxy, when properly
executed, will be voted as specified above. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE DIRECTORS LISTED ABOVE AND FOR
THE OTHER PROPOSALS. THIS PROXY WILL BE VOTED IN
THE DISCRETION OF THOSE AUTHORIZED TO VOTE THIS
PROXY ON ANY OTHER BUSINESS.
(Authorized Signature(s)) ______________________________ (Print name(s) on certificate) _____________________ Date: _______________
NOTE: Please print the name(s) appearing on each share certificate(s) over which you have voting authority.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
PROXY
PCORDER.COM, INC.
5001 PLAZA ON THE LAKE
AUSTIN, TX 78746
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
FOR THE ANNUAL MEETING ON JULY 6, 2000.
The undersigned hereby appoints Ross A. Cooley and Christina C. Jones as
proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of pcOrder, Inc. Class A
Common Stock held of record by the undersigned on May 22, 2000, at the Annual
Meeting of Stockholders to be held on July 6, 2000, or any adjournment or
postponement thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
PLEASE SIGN ON THE OTHER SIDE AND RETURN PROMPTLY
IN THE RETURN ENVELOPE PROVIDED.
IF YOU DO NOT SIGN AND RETURN A PROXY CARD OR ATTEND THE ANNUAL
MEETING AND VOTE BY BALLOT, YOUR SHARES CANNOT BE VOTED.
--------------------------------------------------------------------------------
