EXPERTELLIGENCE, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 22, 2000
EXPERTELLIGENCE, INC.
25 EAST ORTEGA STREET
SANTA BARBARA, CALIFORNIA 93101
April 24, 2000
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
of ExperTelligence, Inc. on Monday, May 22, 2000 at 1:00 p.m. The
meeting will be held at The Holiday Inn, 5650 Calle Real, Goleta,
California.
We shall present a report on the Companys performance as well as an
outline of the Companys plans for the future. A question and answer
period will follow.
We look forward to your attendance at this meeting as it provides us
with the opportunity to hear your views as we discuss the progress of
ExperTelligence, Inc.
We respectfully ask that you sign, date and mail the enclosed proxy
card promptly or follow the Internet voting instructions, which have
been provided. By doing so, your shares will be voted if you are unable
to attend the meeting.
Thank you.
Sincerely yours,
Denison Bollay
President and CEO
Enclosures
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF EXPERTELLIGENCE, INC.
TO BE HELD May 22, 2000
TO THE SHAREHOLDERS OF EXPERTELLIGENCE, INC.:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its Board of
Directors, an annual Meeting of Shareholders (the "Meeting") of
ExperTelligence, Inc. (the "Company") will be held at The Holiday Inn,
5650 Calle Real, Goleta, California, on Monday, May 22, 2000, at 1:00
p.m., for the purposes of considering and voting on the following
matters:
1. Change the number of authorized Directors to not less than
Five (5) or more than Nine (9).
2. Elect Six (6) Directors: Denison Bollay, Robert Reali, Charles
House, William Van Beurden, Dr. Souhail Toubia, and Steve Ketchum.
3. Approve an increase of the number of shares allocated to the
1996 Equity Participation Plan, to 690,000 shares, along with other
amendments to the plan.
4. Approve the selection of McGowan Guntermann to serve as
independent certified public accountants for the Company for the 2000
fiscal year.
5. Transact such other business as may properly come before the
Meeting, and any adjournments thereof.
Shareholders who owned shares of our stock at the close of business on
April 21, 2000 are entitled to vote at the Annual Meeting.
You are urged to vote in favor of each of the proposals by so
indicating on the enclosed proxy card. Please sign and return the
enclosed proxy card or place your internet vote at
http://www.exgp.com/proxy as promptly as possible, whether or not you
plan to attend the Meeting in person. The Companys Board of Directors
solicits your vote. Any shareholder giving a proxy may revoke it prior
to the time it is voted by notifying the Secretary, in writing, to that
effect, by filing with him a later dated proxy, by changing your
internet vote or by voting in person at the Meeting.
By Order of the Board of Directors
Dated: April 24, 2000
PROXY STATEMENT
FOR AN
ANNUAL MEETING OF SHAREHOLDERS
OF
EXPERTELLIGENCE, INC.
TO BE HELD MAY 22, 2000
INTRODUCTION
The Board of Directors of EXPERTELLIGENCE, INC., a California
corporation (the "Company") furnishes this proxy statement in
connection with the solicitation of proxies, for use at the Annual
Meeting of Shareholders of the Company to be held on Monday, May 22,
2000 at 1:00 PM Pacific Time, at The Holiday Inn, 5650 Calle Real,
Goleta, California.
The matters to be considered and voted upon at the Meeting will
include:
1. Change the number of authorized Directors to not less than
Five (5) or more than Nine (9).
2. Election of Directors. Denison Bollay, Robert Reali, Charles
House, William Van Beurden, Dr. Souhail Toubia, and Steve Ketchum.
3. Approve an increase to the number of shares allocated to the
1996 Equity Participation Plan, to 690,000 shares, along with other
amendments to the plan.
4. Selection of Auditors.
5. Transact such other business as may properly come before the
Meeting and any adjournments thereof.
A form of proxy for the Annual Meeting is enclosed, which you may use
to indicate your vote as to each of the matters described in this proxy
statement. For this years annual meeting the Company is also
providing you the additional option of voting your proxy by the
Internet. You can vote by using the Internet or you can choose to mail
your signed proxy card to ExperTelligence. If you choose to vote
electronically, your voting instructions will be confirmed before your
Internet connection terminates. All proxies which are properly
completed, signed and returned to the Company prior to the Annual
Meeting, and which have not been revoked, will be voted. Any proxy
given by a shareholder may be revoked at any time before it is
exercised by filing with the Secretary of the Company an instrument
revoking it, by executing a proxy bearing a later date, or by voting in
person at the Annual Meeting. The proxy statement and the accompanying
form of proxy were mailed to security holders commencing April 24, 2000
together with the Company Annual Report.
April 21, 2000 has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof. As of that date, the Company had 2,343,840
outstanding shares of Common Stock. Each share of Common Stock
entitles the holder to one vote on each matter presented at the Annual
Meeting.
If any holder of Common Stock has given notice at the Annual Meeting,
prior to the voting for election of directors, that he intends to
cumulate his votes, each holder of Common Stock (or any proxy acting on
behalf of such shareholder) will be entitled to cumulate his votes and
give any candidate whose name has been placed in nomination prior to
the voting a number of votes equal to the number of directors to be
elected by such holders of Common Stock multiplied by the number of his
shares, or to distribute his votes among as many such candidates as he
sees fit. The candidates receiving the highest number of votes from
the holders of Common Stock, up to the number of directors to be
elected by such holders, shall be elected.
The entire cost of preparing, assembling, printing and mailing this
proxy statement and the enclosed form of proxy, and the cost of
soliciting proxies relating to the Annual Meeting will be borne by the
Company. The Company will request banks and brokers to solicit their
customers who own beneficially shares held of record in names of
nominees, and will reimburse such banks and brokers for the reasonable
out-of-pocket expenses of such solicitations. The original
solicitation of proxies by mail may be supplemented by telephone,
telegram and personal solicitation by officers and other regular
employees of the Company, but no additional compensation will be paid
to such individuals.
The executive offices of the Company are located at 25 East Ortega
Street, Santa Barbara, California 93101.
INCREASE AUTHORIZED NUMBER OF DIRECTORS
(PROPOSAL 1)
The authorized number of Directors of the Company currently is six.
The Company desires to increase the authorized number of Directors to
provide for the election, as Directors of additional persons who are
experienced in the Companys business sector and who can contribute
significantly to the Companys growth and performance. In order to
provide the maximum flexibility, the Company proposes to change the
authorized number of Directors from a fixed number to a variable number
and to increase the maximum authorized number of Directors to nine.
Under this Proposal the authorized number of Directors would be not
less than five (5) or more than nine (9) and the exact number of
Directors would be fixed within this range by the Board of Directors.
The Board of Directors could, from time to time, change the exact
number of Directors within this range without the need for shareholder
approval of this change. For example, the Board of Directors could
change the exact number of Directors from six to seven without
shareholder approval. The Board of Directors could not reduce the
authorized number of Directors to less than five nor increase it to
more than nine without shareholder approval.
This Proposal would be effected by amendment of Section 2 of Article
III of the Companys Bylaws to read as follows:
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized
number of Directors shall be not less than five (5) nor more than nine
(9). The exact number of Directors within these limits shall be fixed
and may be changed from time to time by the Board of Directors or
shareholders in the manner provided in these Bylaws. Until a different
number within the foregoing limits is specified in an amendment to this
Section duly adopted by the Board of Directors or the shareholders, the
exact number of authorized Directors shall be six (6). A change in the
minimum or maximum number of Directors who may be authorized to serve
on the Board of Directors, or a change from a variable to a fixed
Board, may be made only by amendment of the Articles of Incorporation
or by a Bylaw amending this Section 2 duly adopted by a majority of the
outstanding shares entitled to vote. The authorized minimum number of
Directors shall not be reduced to a number less than five (5) if the
votes cast against such reduction at a meeting, or the shares not
consenting in the case of action by written consent, are equal to more
than 16-2/3% of the outstanding shares entitled to vote.
Shareholder Approval
Approval of the foregoing amendment to the Companys Bylaws to increase
the authorized number of Directors and to change the number of Directors
from a fixed number to a variable number will require the affirmative
vote of a majority of the shares present (whether in person or by proxy)
and voting at the meeting.
The Board of Directors recommends a vote "For" approval of the
amendment to the Companys Bylaws.
ELECTION OF DIRECTORS
(PROPOSAL 2)
The Six (6) persons described in the following table are nominated by
Management for election as Directors of the Company, to hold office for
one year and until their respective successors are elected and
qualified. Unless instructed otherwise, the persons named in the
accompanying Proxy will vote FOR as many of such Management nominees as
possible so as to elect the maximum number of such Management nominees,
all within such proxy holders discretion.
COMMON
STOCK OWNED
BENEFICIALLY PERCENT
NAME AGE ON APRIL 24, 2000 OF CLASS
DENISON W. BOLLAY 47 383,663 16.37%
Mr. Bollay is the founder, President and CEO of ExperTelligence Inc. as
well as its Chief Technical Officer. Mr. Bollay is the visionary behind
ExperTelligence including its subsidiaries WebData.com,
3DstockCharts.com and ExperClick.com, as well as the chief architect of
these services. Mr. Bollay serves on the board of 3DStockCharts.com
Inc. and ExperClick.com Inc. Mr. Bollay first gained world wide
recognition for his vision in 1980 when he introduced thousands of
children all over the world to "Computer Camp".
Prior to forming ExperTelligence, Mr. Bollay provided consulting
service related to the development of submarine tracking software
(during 1979 and 1980) to the senior management and Board of Systems
Development Corporation. During 1975-1978 Mr. Bollay was a principal in
Moline/Bollay, Inc. where he was at the forefront in the development of
automated option hedging software. Mr. Bollay received his BS in
Engineering from Harvey Mudd College in 1974.
ROBERT REALI 39 54,650 2.46%
Robert Reali, Chief Operating Officer and Director. Mr. Reali directs
the day to day operations of ExperTelligence, an Internet incubator of
intelligent B2B hubs. He is the head of the WebData.com business unit.
Mr. Reali joined ExperTelligence in 1981 and was elected a Director of
the Company in 1988. Mr. Reali serves as a board member of
ExperClick.com. Mr. Reali attended the University of California-Santa
Barbara, Computer Science Engineering.
CHARLES HOUSE 59 22,000 .01%
Mr. House has served as Director since December 1999. Mr. House is the
Executive VP Communications Research for Intel's Converged Communication
Group. He is the Advisory Chairman for the Center for Information
Technology and Society (CITS) at the University of California Santa
Barbara. Mr. House earned a bachelor of science in engineering physics
from the California Institute of Technology, a master of science in
electrical engineering from Stanford University, a master of the arts in
the history of science from the University of Colorado and a master of
business administration from the Western Behavioral Sciences Institute.
WILLIAM VAN BEURDEN 58 250,000 10.67%
Mr. Van Beurden has served as Director since January 2000. Mr. Van
Beurden is President and Chairman of Van Beurden Insurance Services,
Inc., one of the top 50 insurance brokers in the U.S. Mr. Van Beurden
is also Chairman of KRM Risk Management, a wholesale insurance
brokerage head-quartered in Santa Ana, CA. and Chairman of TotalPay
Management, Inc. a payroll solutions provider.
SOUHAIL TOUBIA 46 16,667 .71%
Dr. Toubia has served as Director since February 2000. Dr. Toubia is
founder and co-owner of TMX Engineering & Manufacturing. TMX is a
Southern California leader in General Commercial, Computer, Aerospace
and Medical Manufacturing. In addition, Dr. Toubia has over ten years
experience funding a number of domestic and international companies.
STEVE KETCHUM 39
Mr. Ketchum is the president and CEO of OnView.com. Prior to starting
Onview.com Mr. Ketchum was Managing Director in Donaldson, Lufkin &
Jenrettes investment banking group. Mr. Ketchum serves on the Board
of Directors of Mail.com, a publicly-traded (MAIL: NASD) provider of
Internet messaging services; of Manufacturers Services Limited, a
privately-held contract manufacturing company; of Onview.com, an online
art portal and e-commerce provider. He also serves on the Board of
Advisors of Infopost, an online portal which facilitates the exchange
of digital information and content. Mr. Ketchum serves on the Board of
Trustees of the East Side House Settlement and is on the Board of the
Guggenheim Museum Circle Committee and Young Collectors Committee. Mr.
Ketchum received his B.A. from New England College in Finance and
Marketing summa cum laude and his M.B.A. from the Harvard Business
School.
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met on 10 occasions during fiscal year 1999.
All Directors attended at least 2/3 of the meetings of the Board
During fiscal 1999 the Board did not have a standing audit, nominating
or compensation committee.
MANAGEMENT REMUNERATION AND TRANSACTIONS
The following table shows with respect to the most highly paid
executive officer of the Company and with respect to all 7 directors
and officers as a group, the current aggregate annual cash and cash-
equivalent forms of remuneration received from the Company exceeding
$100,000 The following table shows with respect to the most highly paid
executive officer of the Company and with respect to all 7 directors
and officers as a group, the current aggregate annual cash and cash-
equivalent forms of remuneration received from the Company exceeding
$100,000 .
Salaries, Fees,
Commissions
Name Capacity And Bonuses Other Benefits
Denison Bollay President & Chairman
of the Board $151,200 Health Ins $4,836
Officer and Directors
as a Group $151,200 Health Ins $4,836
INFORMATION REGARDING STOCK OWNERSHIP
On April 24, 2000, no person owned beneficially more than five percent
(5%) of the 2,343,840 outstanding shares, of stock of the Company
except as set out below.
No of % of
Name and Address Shares Owned Shares
Denison Bollay, 383,663 16.37%
850 Rockbridge
Montecito, CA
William Van Beurden 250,000 10.67%
1600 Draper
Kingsburg, CA
BNP Venture, 150,000 6.40%
c/o Bank of the West,
50 W. San Fernando
San Jose, CA
All Officers and Directors
( Nine) 479,980 20.48%
INCREASE NUMBER OF SHARES ALLOCATED TO THE 1996 EQUITY PARTICIPATION
PLAN, ALONG WITH OTHER AMENDMENTS TO THE PLAN
(PROPOSAL 3)
Increase in Shares to 1996 Equity Participation Plan by 215,000 shares.
The current number of shares authorized by the 1996 Equity
Participation Plan (the Plan) is 475,000. A total number of 1,000
shares have been issued for exercises of stock options previously
granted under the Plan and a total of 412,000 shares are reserved for
outstanding option grants. As a result only 62,000 shares remain
available for option grants under the Plan.
We believe that it is important to grant options and other awards to
attract and retain qualified people who can contribute to our continued
growth and success. By increasing the number of authorized shares, we
can provide an adequate reserve of shares to permit option grants.
A description of the Plan, as amended by this proposal, is set forth in
Exhibit A. hereto.
OTHER AMENDMENTS
a. Grant of Reload Options. Whenever the holder of any
Option(the "Original Option" exercises the Original Option and makes
payment of the option price by tendering shares of the Common Stock of
the Company, then the holder of that Option shall be entitled to
receive and the Company shall grant a new Option (the "Reload Option")
for that number of additional shares of the Common Stock which is equal
to the number of shares tendered by the Optionee in payment of the
option price. All such Reload Options shall be on the following terms
and conditions.
Option Price. The option price per share shall be an amount equal to
the then current fair market value per share of the Common Stock, as of
the date of exercise of the Original Option.
Expiration Date. The option exercise period shall expire, and the
Reload Option shall no longer be exercisable, on the expiration of the
option period of the Original Option or five (5) years from the date of
the grant of the Reload Option, whichever is later.
Vesting Period. Any Reload Option shall "vest" and first become
exercisable one (1) year following the date of exercise of the Original
Option.
Other Terms. All other terms of Reload Options shall be identical to
the terms and conditions of the Original Option. Further, the
character of the Reload Option shall be the same as the character of
the Original Option, namely if the Original Option is an Incentive
Stock Option, the Reload Option shall be an Incentive Stock Option; and
if the Original Option is a Non-Qualified Stock Option, the Reload
Option shall also be a Non-Qualified Stock Option.
Restrictions on Reload Options. Reload Options shall be subject to the
following conditions and restrictions.
Holding Period of Shares Tendered. No Reload Option shall be granted
unless the shares tendered upon exercise of the Original Option in
payment therefore have been held by the Optionee for a period of more
than six (6) months prior to the exercise of the Original Option.
Holding Period of Original Option Shares. If the shares of Common
Stock of the Company which are issued upon exercise of the Original
Option are sold within one (1) year following the exercise of the
Original Option, then the Reload Option shall immediately terminate.
This holding period shall not apply to an Optionees (a) transfer of
shares of Common Stock to the Company in payment of all or any portion
of the purchase price upon exercise of an Option, whether an Original
Option or a Reload Option, or (b) satisfaction of his withholding
obligation, if any, by the withholding of shares that would otherwise
be issued as a result of the exercise of an Option.
b. Transferability of Options. The Plan shall permit an Optionee to
transfer all or a portion of any Non-Qualified Option to one or more of
the following: (a) the Optionees spouse, parents and lineal
descendants, including adopted children (the "Immediate Family
Members"); (b) a trust established by the Optionee and with respect to
which all beneficial interests are held by one or more of the Optionee,
the Immediate Family Members, and a tax-exempt charitable organization
which has only a contingent residual interest in the trust; (c) a
partnership or limited liability company established by the Optionee
and in which all beneficial interests are held by one or more of the
Optionee and the Immediate Family Members; (d) a tax-exempt
educational, religious or charitable organization, as those terms are
defined in Section 501(c)(3) of the Code; and (e) such other persons
and entities as the Company may specifically approve in writing after
written notice from the Optionee.
Permitted Transfers. Any transfer of an Option must be either a
donative transfer, a transfer to a partnership or limited liability
company, pursuant to which the Optionee receives only his or her
interest in the partnership or limited liability company, or a transfer
specifically approved in writing by the Company after written notice
from the Optionee.
A transferee of any Option shall not have the right to further
transfer all or any portion of the Option, other than (a) by will or
the laws of descent and distribution, or (b), if the transferee is a
trust, pursuant to the terms of the trust agreement by reason of the
death of any settlor.An Optionee may not transfer any Incentive Stock
Option other than by will or the laws of descent and distribution.
Votes Required
Shareholder Approval
Approval of the foregoing amendments to the 1996 Equity Participation
Plan will require the affirmative vote of a majority of the shares
present (whether in person or by proxy) and voting at the shareholders
meeting.
The Board of Directors recommends a vote "For" approval of the
amendments to the 1996 Equity Participation Plan.
RATIFICATION OF SELECTION OF AUDITORS
(PROPOSAL 4)
The Board of Directors has selected McGowan Guntermann to act as the
auditors and to audit the books of account and other records of the
Company for the fiscal year ended September 30, 2000.
The Board of Directors recommends that the shareholders of the Company
vote FOR the ratification of the appointment of McGowan Guntermann as
independent auditors for the purpose set forth above. Ratification
requires the affirmative vote of a majority of the shares represented
and voting at the Annual Meeting.
STOCKHOLDER PROPOSALS
At the time of the preparation of this proxy statement, the Board of
Directors of the Company had not been informed of any matters which
would be presented for action at the Annual Meeting other than the
proposals specifically set forth in the Notice of Annual Meeting and
referred to herein. If any other matters are properly presented for
action at the Annual Meeting, it is intended that the persons named in
the accompanying form of proxy will vote or refrain from voting in
accordance with their best judgment on such matters after consultation
with the Board of Directors.
Stockholders who wish to present proposals for action at the 2001
Annual Meeting should submit their proposals in writing to the
Secretary of the Company at the address set forth on the first page of
this proxy statement. The Secretary must receive proposals no later
than December 15, 2000, for inclusion in next years proxy statement
and proxy card.
By Order of the Board of Directors
Robert W. Reali
Secretary
Santa Barbara, California
April 24, 2000
Exhibit A
Description of 1996 Equity Participation Plan
The following discussion summarizes the significant features of the
1996 Equity Participation Plan, as amended and proposed for shareholder
approval.
Administration of the Plan
The Plan may be administered by either the Board of Directors or a
Committee of the Board consisting of not less than three members of the
Board who do not participate in the Plan. (The entity administering the
Plan is referred to as the Administrator.) The Administrator has full
authority to:
Construe and implement the Plan;
Select the individuals who will be eligible for awards;
Determine the number of shares covered by any award and the option price
or purchase price of any award;
Impose restrictions on the transferability of shares acquired under the
Plan; and
Prescribe all other terms and conditions of each award granted under the
Plan.
Eligibility
The Administrator may grant awards to key employees of the Company or a
subsidiary of the Company, including officers and Directors. The
selection of particular employees who will receive awards is at the
discretion of the Administrator.
Share Reserve
The Plan authorizes 475,000 shares of common stock. As of the date of
this Proxy Statement, 62,000 shares remain available for issuance. If
this Proposal is approved, additional 215,000 shares of common stock will
be available for issuance. The Plan provides that the foregoing number of
shares will be adjusted from time to time to reflect any stock splits,
stock dividends, reverse stock splits, combinations, reclassifications
and similar changes in the Companys common stock which occur hereafter.
Types of Awards
The Plan permits both the grant of stock options and the award of shares
of common stock (restricted stock). The Administrator determines the
number of shares covered by any award and the terms and conditions of any
award.
Grant and Exercise of Option
Options granted under the Plan may be incentive stock options or non-
qualified stock options for federal and state tax purposes. The terms of
any options granted under the Plan generally will be as follows.
The number of shares of common stock covered by the option is determined
by the Administrator as of the grant date of the option.
The exercise price of the option is set by the Administrator at the time
of grant. The exercise price may not be less than 100% of the fair
market value of common stock as of the date of grant.
The Optionee may pay the exercise price of an option in cash or through
the surrender of shares of common stock of the Company (valued at its
then fair market value).
The maximum term of any option is ten years.
Options generally become exercisable ("vest") at the rate of 20% per year
of employment following grant of the options. The Administrator may
establish other vesting schedules, as it deems appropriate in specific
cases, so long as the vesting is no longer than a five-year period.
Options may not vest prior to six months after the grant date of the
option.
All options shall immediately vest upon the occurrence of a change in
control. For purposes of the Plan, a change of control generally
includes only the acquisition by a third person who is not an affiliate
of the Company of 35% or more of the outstanding voting stock of the
Company.
An option terminates on the termination of the optionees employment with
the Company for any reason. If the termination is other than as a result
of the optionees death or disability, the option must be exercised
within 30 days following the termination of employment. If the
termination is by reason of the optionees death or disability, the
option must be exercised within twelve months after the date of
termination.
Generally options are not transferable, except in the event of the
optionees death, and may be exercised only within the period prescribed
by the Administrator. The Administrator may provide that a non-qualified
stock option may be transferred by the Optionee to any of the following
persons:
The optionees spouse, parents and lineal descendants, including adopted
children;
a trust, partnership or limited liability company established by the
Optionee for the Optionee and/or members of his immediate family;
tax-exempt educational, religious or charitable organizations; and
such other persons and entities as the Administrator may specifically
approve.
Reload Features of Options
The Plan provides for the issuance of "reload" options, which are
designed to encourage "stock-for-stock" exercises of options. In a stock-
for-stock exercise, the Optionee pays the purchase price by delivering
shares of Company stock owned rather than paying cash for the purchase
price of the option. The advantage for the Optionee is that an
expenditure of cash is not necessary at the time of exercise; however, it
also dilutes the optionees stock ownership position. The "reload"
features are designed to replenish this dilution. A reload option will
be granted to any Optionee who exercises an option by tendering shares of
common stock. The reload options will be on the following terms:
The number of shares covered by the reload option will be equal to the
number of shares tendered in the stock-for-stock exercise;
The exercise price of the reload option will be equal to the then fair
market value of the Companys common stock;
The exercise period of the reload option will be equal to the remaining
term of the underlying option, or five years, whichever is greater; and
The other terms of the reload option will be the same as those of the
underlying option.
The reload options will be subject to the following restrictions, which
are designed to prevent abuse of the reload options:
A reload option will be granted only if the shares of common stock
tendered on exercise of the underlying option were held by the Optionee
for a period of at least six months prior to the exercise of the
underlying option;
If the shares issued on exercise of the underlying option are sold or
transferred prior to one year following exercise of the option, the
reload option terminates; and
The reload option may not be exercised for one year following its grant.
Issuance of Restricted Stock
The terms of any shares of restricted stock or other stock incentives
issued under the Plan generally will be as follows:
The Administrator shall determine:
Employees to be awarded restricted stock;
The purchase price, if any, payable for the restricted stock;
The period over which the employees interest in the restricted stock
shall vest; provided that such period shall not be longer than five years
and at least 20% of the interest shall vest on each anniversary of the
date of issuance of the restricted stock; and
The other terms and conditions consistent with this Plan applicable to
the award of the restricted stock.
The Administrator may designate whether any grant of restricted stock
is intended to be "performance-based compensation" as that term is used
in Section 162(m) of the Code.
The employee may not sell or transfer any of the restricted stock prior
to six months after the date of the award of the restricted stock.
The Company shall have the right to repurchase the unvested restricted
stock upon the termination of the employees employment with the Company
at a price equal to the purchase price paid by the employee.
The Company may have the right to repurchase the vested restricted stock
upon the termination of the employees employment with the Company at a
price equal to the then fair market value of the common stock.
The employees interest in any restricted stock shall immediately vest
upon the occurrence of a change in control. For purposes of the Plan, a
change of control generally includes only the acquisition by a third
person who is not an affiliate of the Company of 35% or more of the
outstanding voting stock of the Company.
Restrictions on Stock Issued Under the Plan
The Administrator may impose restrictions on the transferability of any
shares of common stock issued pursuant to awards under the Plan. The
Administrator is not required to impose any such restrictions.
Amendment and Termination of the Plan
The Board of Directors may amend, modify or terminate the Plan at any
time without notice to or approval of the stockholders, provided that no
outstanding option or restricted stock award is adversely affected.
Approval is required only when applicable law requires approval. The
Plan will terminate on December 31, 2005, unless the Board of Directors
has previously terminated it. Options and restricted stock awards
granted before the termination of the Plan may be exercised and will vest
thereafter in accordance with the terms of the applicable agreement.
Federal Income Tax Consequences
Non-Qualified Stock Options
No taxable income results to an employee from the grant of a non-
qualified option, nor is the Company entitled to a deduction.
The exercise of a non-qualified option generally results in a taxable
event. An individual who purchases shares by exercising a non-qualified
option generally will realize ordinary income in the year of the
exercise. The amount of this income is equal to (i) the fair market value
of the shares of common stock on the date of exercise of the option,
minus (ii) the option exercise price. Where the stock issued upon
exercise of the options is subject to both a substantial risk of
forfeiture and a restriction on transfer, the participant will realize
income only upon the lapse of such risk of forfeiture or the expiration
of these restrictions. The amount of this income will be equal (a) to the
fair market value of the shares of common stock on the date of lapse of
the risk of forfeiture or restrictions, minus (b) the option exercise
price. Alternatively, the participant may make an election under Section
83(b) of the Internal Revenue Code to be taxed upon exercise of the
option, as though such risk of forfeiture or restrictions did not exist.
In either case, the Company is entitled to a corresponding deduction in
an amount equal to any ordinary income realized by the employee.
Upon the disposition of stock acquired upon exercise of a non-qualified
option, any gain or loss will be taxed as a capital gain or loss. This
gain would be treated as a short- or long-term capital gain (or loss),
depending upon how long the Optionee has held the stock after the
exercise of the option.
Incentive Stock Options
Neither the Optionee nor the Company incurs any tax consequence as the
result of the grant of an incentive stock option ("ISO"). Likewise, the
Optionee has no taxable income upon exercising an ISO (subject to the
alternative minimum tax rules discussed below), and the Company receives
no deduction at that time. Generally any gain realized by the Optionee
upon the disposition of stock acquired upon exercise of an ISO would be
taxed as a capital gain. The Company is not entitled to any deduction
under these circumstances.
If the Optionee sells the shares acquired on exercise of the ISO prior to
either two years after the date of grant of the ISO or one year after the
date of exercise of the ISO, the Optionee will be taxed on the difference
between the sales price and the option exercise price. This gain is
taxed as ordinary income to the extent of the difference between the
exercise price and the fair market value of the stock on the date of
exercise of the ISO, with any balance taxed as capital gains. In these
circumstances, the Company is entitled to a deduction equal to the amount
of ordinary income realized by the Optionee.
Alternative Minimum Tax
The "spread" under an ISO, (i.e., the difference between the fair market
value of the shares at exercise and the exercise price) is treated as an
adjustment to taxable income for alternative minimum tax ("AMT") purposes
for the year of exercise. The optionees alternative minimum taxable
income is increased by the amount of the spread, potentially subjecting
the holder to the AMT. This ISO AMT adjustment would be eliminated by a
disqualifying disposition of the ISO shares, provided the disposition
occurs in the taxable year in which the ISO is exercised. The AMT does
not affect the tax consequences of the Plan to the Company.
Issuance of Restricted Stock
The employee will have to report taxable income with respect to the
restricted stock, either upon issuance or upon the lapse of any
restrictions on transfer or risk of forfeiture. If the restricted stock
is subject to both a risk of forfeiture and a restriction on transfer,
the employee will have to report the taxable income on the date on which
such risk or restriction lapses, unless the employee elects (under
Section 83(b) of the Internal Revenue Code), to report such income in the
year in which the restricted stock is issued. If the restricted stock is
not subject to both a risk of forfeiture and a restriction on transfer,
the employee will have to report the taxable income on the date on which
the restricted stock is issued. The amount of taxable income that the
employee will have to report will be equal to the difference between the
fair market value of the stock on the date of issuance or of the lapse of
the risk or restriction, as appropriate, and the amount that the employee
paid for the restricted stock. The Company will be entitled to a
deduction equal to the amount of taxable income reported by the employee.
Any gain realized by the employee on his or her subsequent sale or
transfer of the restricted stock will be taxed as long-term or short-term
capital gain, depending on the period that the employee has held the
restricted stock. The Company will not be entitled to any deduction as a
result of the employees subsequent sale of the restricted stock.
Existing Option Awards
The Named Officers identified elsewhere in this Proxy Statement are
eligible to receive the grant of options or the award of restricted stock
under the Plan. The options that have previously been granted to these
persons are identified in the Compensation Table. The Company has no
present plans to grant options or to award restricted stock covering any
particular number of shares of common stock to these persons.
EXPERTELLIGENCE, INC
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 22, 2000
The undersigned, a shareholder of EXPERTELLIGENCE, Inc., (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement dated April 24, 2000, and appoints Denison W.
Bollay and Robert W. Reali, or any one of them, with full power of
substitution, as attorneys and proxies of the undersigned, and in the
undersigneds name, place and stead, to represent and vote all shares
of Common Stock of the Company owned by the undersigned at the close of
business on April 21, 2000, or with respect to which the undersigned
might be entitled to vote, at the Annual Meeting of the Shareholders of
the Company to be held on May 22, 2000, or at any adjournment or
adjournments thereof; and the undersigned hereby instructs said
attorneys and proxies to vote as follows:
***To Vote by Internet - see instructions***
PROPOSAL 1 - To change the number of authorized Directors to not less
than Five (5) or more than Nine (9).
FOR [ ] or AGAINST [ ] change of authorized number of of
authorized Directors to not less than Five (5) or more than Nine (9).
PROPOSAL 2 Election of Directors
FOR [ ] all nominees listed below (except as indicated to the
contrary below)
WITHHOLD AUTHORITY [ ] to vote for all nominees listed below
NOMINEES: Denison W. Bollay, Robert Reali, Charles House, Souhail
Toubia, William Van Beurden and Steve Ketchum.
To withhold authority to vote for any individual nominee print the
name(s) in the space provided below.
PROPOSAL 3 - Increase number
of Shares allocated to the 1996 Equity
Participation Plan, along with other amendments to the Plan
FOR [ ] or AGAINST [ ] the increase of Shares allocated to the
1996 Equity Participation Plan, along with other amendments to the Plan
PROPOSAL 4 - Ratification of Selection of Auditors
FOR [ ] or AGAINST [ ] or ABSTAIN [ ] from voting for
the approval of the appointment by the Board of Directors of McGowan
Guntermann, independent certified public accountants, as auditors of
the Company.
In accordance with the judgment of the persons named in this Proxy upon
any and all such other business for 1999 as may properly come before
the meeting.
UNLESS INSTRUCTED OTHERWISE, THE VOTE OF THE UNDERSIGNED WILL BE CAST
FOR THE INCREASE IN THE AUTHORIZED NUMBER OF DIRECTORS, FOR THE
ELECTION OF THE DIRECTORS, FOR THE AMENDMENT OF THE 1996 EQUITY
PARTICIPATION PLAN, AND FOR THE APPROVAL OF THE APPOINTMENT OF MCGOWAN
GUNTERMANN AS AUDITORS, AND IN THE MANNER TO BE DETERMINED AT THE
DISCRETION OF THE PROXY HOLDERS AS TO THE OTHER MATTERS PROPERLY
BROUGHT BEFORE THE MEETING.
Dated:_____________, 2000 Print Name:
IMPORTANT -- E-Mail Address:
Signature ______________________ Number of Voting Shares __________
VOTE BY INTERNET
Your internet vote authorizes the Proxy Committee to vote your shares
in the same manner as if you marked, signed and returned your Proxy
Card.
TO VOTE BY INTERNET - THE WEB ADDRESS IS : http://www.exgp.com/proxy
