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 Sec. 240.14a-11(c) or Sec. 240.14a-12
XIOX CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
XIOX CORPORATION
Airport Boulevard, Suite 700
Burlingame, California 94010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 1997
To the Stockholders of Xiox Corporation:
Notice is hereby given that the Annual Meeting of Stockholders
(the "Annual Meeting") of XIOX CORPORATION (the "Company") will be held at the
Company's principal executive offices located at 577 Airport Boulevard, Suite
700, Burlingame, California 94010 on Monday, May 19, 1997, at 11:00 a.m., local
time, for the following purposes:
1. To elect five directors of the Company to serve for the
ensuing year and until their successors are elected and
qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as
independent accountants for the Company for the fiscal year
ending December 31, 1997.
3. To consider and vote upon a proposal to amend the Company's
1994 Stock Plan to increase by 150,000 the number of shares of
the Company's Common Stock reserved for issuance thereunder.
4. To act upon such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice of Annual Meeting. The Board of
Directors has fixed the close of business on April 1, 1997 as the record date
for determining those stockholders who will be entitled to notice of and to vote
at the Annual Meeting or any adjournment of postponement thereof.
Representation of at least a majority of all outstanding
shares of common stock of the Company is required to constitute a quorum at the
Annual Meeting. Accordingly, it is important that your stock be represented at
the Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE. Your proxy may be revoked in writing by you at any time prior to the
time it is voted.
By Order of the Board of Directors,
XIOX CORPORATION
/s/ Melanie D. Reid
------------------------------------
Burlingame, California Melanie D. Reid
April 14, 1997 Secretary
<PAGE>
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS OF
XIOX CORPORATION
To Be Held May 19, 1997
This Proxy Statement is solicited on behalf of the Board of
Directors of Xiox Corporation ("Xiox" or the "Company") for use at the Company's
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Monday, May
19, 1997, at 11:00 a.m., local time, at the Company's principal executive
offices located at 577 Airport Boulevard, Suite 700, Burlingame, California
94010, or at any adjournments or postponements thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Stockholders.
These proxy solicitation materials were mailed on or about April 14, 1997 to all
stockholders entitled to vote at the Annual Meeting.
Shares represented by proxies in the accompanying form which
are properly executed and returned to Xiox will be voted at the Annual Meeting
in accordance with the stockholders' instructions contained therein. If no
instructions are given on an executed and returned proxy with respect to a
matter set forth in the Notice of Meeting accompanying this Proxy Statement,
shares so represented will be voted in favor thereof and for the nominated
directors. Any proxy given by a shareholder may be revoked by him at any time
prior to its exercise by his taking any one of the following actions:
1. filing a written instrument revoking the proxy with the
Secretary of the Company;
2. filing a duly executed proxy bearing a later date with the
Secretary of the Company; or
3. attending the meeting and electing to vote in person.
The Company's principal executive offices are located at 577 Airport
Boulevard, Suite 700, Burlingame, California 94010.
The cost of this solicitation will be borne by Xiox.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to the beneficial owners of
stock and such persons may be reimbursed for their expenses. Proxies may be
solicited by the Company's directors, officers or regular employees, without
additional compensation, in person or by telephone, or telegraph.
The close of business on April 1, 1997 was the record date
(the "Record Date") for stockholders entitled to notice of and to vote at the
Annual Meeting. As of that date, Xiox had 2,372,384 shares of common stock, $.01
par value (the "Common Stock"), issued and outstanding. Each share of Common
Stock outstanding on the Record Date is entitled to one vote on all matters set
forth in this Proxy Statement.
1
<PAGE>
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR 1998 ANNUAL MEETING
Proposals of stockholders of the Company intended to be
presented by such stockholders at the Company's 1998 Annual Meeting of
Stockholders must be received by Xiox no later than December 23, 1997 in order
to be considered for possible inclusion in the proxy statement and form of proxy
related to that meeting. The proposal must be mailed to the Company's principal
executive offices, 577 Airport Boulevard, Suite 700, Burlingame, California
94010, Attention: Melanie D. Reid. Such proposals must comply with certain rules
and regulations promulgated by the Securities and Exchange Commission.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of five directors is to be elected at the Annual
Meeting. Unless otherwise instructed, the proxy holders will vote all proxies
received by them for the nominees for directors listed below. In the event any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them for the nominees listed below. As of the date
of this Proxy Statement, the Company is not aware of any nominee who is unable
or unwilling to serve as a director. Notwithstanding the foregoing, if one or
more persons, other than those named below, are nominated as candidates for the
office of director, the enclosed proxy may be voted in favor of any one or more
of the nominees to the exclusion of others, and in such order of preference as
the proxies may determine in their discretion. The nominees for director to
serve for one year or until their successors are elected and qualified are set
forth below.
Name and Position(s) with the Company Director Since Age
William H. Welling 1989 63
Chairman, Chief Executive Officer
and Director
Mark A. Parrish, Jr. 1990 66
Director
Robert K. McAfee(1) 1985 66
Director
Bernard T. Marren(1) 1989 61
Director
Atam Lalchandani(1) 1996 53
Director
- ---------------------------
(1) Member of Audit and Compensation Committee.
The term of office of each person elected as a director will
continue until the next annual meeting of stockholders or until his successor
has been elected and qualified. There are no family relationships between any
directors or executive officers of the Company.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS (continued)
Business Experience of Directors
William H. Welling became a director of the Company and was
named Chairman of the Board of Directors and Chief Executive Officer in
September 1989. Since 1983 he has been Managing Partner of Venture Growth
Associates, an investment firm. Since April 1993 he has been director of Western
Micro Technology, Inc., a distributor of computer systems and products. Mr.
Welling also serves as a director on the boards of several private companies.
Mark A. Parrish, Jr. was appointed a director of the Company
in August 1990 and served as interim President and Chief Operating Officer from
January 1991 through July 1991. Since 1990, Mr. Parrish has worked as a
consultant. From 1987 until its sale in 1989, Mr. Parrish was President of the
Datachecker Systems Division, a $230 million point of sales systems subsidiary
of National Semiconductor Corporation. Between 1974 and 1987 Mr. Parrish held
various sales and marketing positions at National Semiconductor; starting as a
Major Accounts Manager in 1974, he was named Director of North American sales in
1980 and was appointed Vice President in 1982.
Robert K. McAfee became a director of the Company in September
1985. Mr. McAfee has been a management consultant for over 30 years serving both
major and small companies. In recent years he has worked extensively with the
World Bank and other regional development banks in introducing computer-based
systems and other modern management systems to railroads located throughout the
world.
Bernard T. Marren was appointed a director of the Company in
September 1989. Mr. Marren was a founder of Western Micro Technology, Inc.,
serving as President and Chief Operating Officer from 1977 to 1988. Mr. Marren
has been involved in the semiconductor industry since 1960. Mr. Marren was a
founder and first President of the Semiconductor Industry Association ("SIA").
He also served as President, Director and Chairman of the National Electronics
Distributor Association ("NEDA"). Currently he is Chairman of the Board and
Chief Executive Officer of Die Enhancements, Inc., a company that processes
silicon wafers to make die for the semiconductor industry.
Atam Lalchandani was appointed a director of the Company in
May 1996. He has been in the information technology business for the past 20
years. He was part of the financial management at National Semiconductor
Corporation, starting in 1977 and progressing to Chief Financial and
Administrative Officer for a subsidiary, National Advanced Systems from 1983 to
1989. During 1990 Mr. Lalchandani was the Chief Financial Officer of Oracle
Corporation's domestic operations. From 1990 to 1992 Mr. Lalchandani served
initially as Chief Financial Officer and later as Chief Executive Officer for
Objectivity, a database software company. Since 1992 Mr. Lalchandani has been a
financial and strategy consultant for various companies in the San Francisco Bay
Area. He is currently on the board of Harmony Foods in Santa Cruz, California,
as well as several high technology companies.
4
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS (continued)
Vote Required
The five nominees receiving the highest number of affirmative
votes of the shares entitled to vote shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under Delaware law.
Board Meetings and Committees
The Board of Directors of the Company held four meetings
during the fiscal year ended December 31, 1996 ("fiscal year"). The Board of
Directors has one standing Committee, the Audit and Compensation Committee. The
members of the Audit and Compensation Committee are Atam Lalchandani, Bernard T.
Marren and Robert K. McAfee. The Audit and Compensation Committee approves the
Company's compensation arrangements including stock option grants and employee
benefits for the Company's management and employees and recommends the
engagement of the Company's independent auditors. During the year ended December
31, 1996, the Audit and Compensation Committee held four meetings. There is no
nominating committee or any other committee performing the functions of a
nominating committee.
During fiscal 1996, no director attended fewer than 75% of the
aggregate number of meetings of the Board of Directors and meetings of its
committees on which he served.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the nominees
listed herein.
5
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP,
independent accountants, to audit the financial statements of the Company for
the fiscal year ending December 31, 1997. Representatives of KPMG Peat Marwick
LLP are expected to be present at the meeting, will have the opportunity to make
a statement if they desire to do so and are expected to be available to respond
to appropriate questions. If the stockholders do not ratify the appointment of
KPMG Peat Marwick LLP, the Board of Directors will reconsider the appointment.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the ratification
of the selection of KPMG Peat Marwick LLP as the Company's independent
accountants for the fiscal year ending December 31, 1997.
6
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE 1994 STOCK PLAN
1994 Stock Plan
The Board of Directors is recommending stockholder approval of
an amendment of the Company's 1994 Stock Plan (the "1994 Plan") to increase the
number of shares issueable under the 1994 Plan by 150,000 shares to an aggregate
of 350,000 shares. The amendment was adopted by the Board of Directors in March
1997, subject to stockholder approval at the Annual Meeting.
The Company's 1994 Plan was adopted by the Board of Directors
in April 1994 and approved by the shareholders in May 1994. The 1994 Plan
replaced the Company's 1984 Stock Option Plan (the "1984 Option Plan"), which
terminated by its own terms in April 1994. Options granted under the 1984 Option
Plan were not terminated at the time such 1984 Option Plan expired, but remain
outstanding until the term of such options expires or such options are exercised
in accordance with their terms. Any shares previously reserved for issuance
under the 1984 Option Plan which are not subject to outstanding options shall
have been returned to the authorized but unissued Common Stock of the Company.
An aggregate of 100,000 shares was reserved for issuance under the 1994 Plan at
the time of its adoption. In 1995, the Board of Directors increased the number
of shares reserved for issuance under the 1994 Plan to 200,000, and such
increase was approved by the shareholders in 1995. At the Record Date, options
to purchase an aggregate of 178,179 shares having an average exercise price of
$3.40 per share and expiring from May 2003 to December 2006 were outstanding and
21,821 shares remained available for future grant under the 1994 Plan.
In March 1997, the Board of Directors unanimously adopted,
subject to shareholder approval, an amendment to the 1994 Plan to reserve an
additional 150,000 shares for issuance under the 1994 Plan. At the Annual
Meeting, the shareholders are being asked to approve this amendment to the 1994
Plan.
The essential features of the 1994 Plan are outlined below.
Purpose
The purposes of the 1994 Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentives to employees and consultants of the Company and to promote
the success of the Company's business.
7
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE 1994 STOCK PLAN (continued)
Administration
The 1994 Plan provides for administration by the Board of
Directors of the Company or by a committee of the Board. The 1994 Plan is
currently being administered by the Board of Directors. The interpretation and
construction of any provision of the 1994 Plan by the Board shall be final and
binding. Members of the Board receive no compensation for their services in
connection with the administration of the 1994 Plan.
Eligibility
The 1994 Plan provides for grants to employees (including
officers) of "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and for grants of
nonstatutory stock options to employees and consultants. The Board of Directors
selects optionees and determines the number of shares to be subject to each
option. The 1994 Plan provides for a maximum of 200,000 option shares which may
be granted to any one employee. There is a limit of $100,000 on the aggregate
fair market value of shares subject to all incentive stock options which become
exercisable for the first time in any one calendar year.
Terms of Option
Each option is evidenced by a written stock option agreement
between the Company and the optionee and is generally subject to the terms and
conditions listed below, but specific terms may vary.
(a) Exercise of the Option. The Board of Directors or its
committee determines when options granted under the 1994 Plan may be exercised.
The current form of the option agreement generally used under the 1994 Plan
provides that options will be exercisable cumulatively to the extent of 25% of
the option shares on the date twelve months after the vesting commencement date
of the option and 1/48th of the option shares at the end of each month
thereafter. An option is exercised by giving written notice of exercise to the
Company, specifying the number of shares of Common Stock to be purchased and
tendering payment to the Company of the purchase price. Payment for shares
issued upon exercise of an option may consist of cash, check, exchange of shares
of the Company's Common Stock held for more than six months or such other
consideration as determined by the Board of Directors and as permitted by
applicable law. The current form of the option agreement only permits payment by
cash, check or exchange of shares.
(b) Option Price. The option price of the options granted
under the 1994 Plan is determined by the Board of Directors or its committee in
accordance with the 1994 Plan, but the option price of incentive stock options
and nonstatuatory stock options may not be less than 100% and 85%, respectively,
of the fair market value of the Company's Common Stock. The 1994 Plan provides
that because the Company's Common Stock is currently traded on the
8
<PAGE>
PROPOSAL
THREE AMENDMENT TO THE 1994 STOCK PLAN (continued)
NASDAQ, the fair market value per share shall be the mean between the high bid
and low asked prices the Common Stock on the last market trading day prior to
the day of the grant of the option. With respect to any participant who owns
stock representing more than 10% of the voting power of the Company's capital
stock, the exercise price of any incentive or nonstatuatory stock option must
equal at least 110% of the fair market value per share on the date of the grant.
(c) Termination of Employment. The 1994 Plan provides that if
an optionee's employment by the Company is terminated for any reason, other than
death or disability, options may be exercised not later than thirty days after
the date of such termination and may be exercised only to the extent the options
were exercisable on the date of termination.
(d) Disability. If an optionee terminates his employment with
the Company as a result of his total or permanent disability, options may be
exercised within twelve months after the date of such termination and may be
exercised only to the extent the options were exercisable on the date of
termination.
(e) Death. If an optionee should die while an employee or a
consultant of the Company or during the thirty day period following the
termination of the optionee's employment or consultancy, the optionee's estate
may exercise the options at any time within twelve months after the date of
death but only to the extent that the options were exercisable on the date of
death or termination of employment.
(f) Termination of Options. The terms of all options granted
under the 1994 Plan may not exceed ten years from the date of grant. However,
any option granted to any optionee who, immediately before the grant of such
option, owned more than 10% of the total combined voting power of all classes of
stock of the Company or a parent or subsidiary corporation, may not have a term
of more than five years. Under the current form of option agreement, each option
has a term of five years and three months from the date of grant. No option may
be exercised by any person after such expiration.
(g) Nontransferability of Options. All options are
nontransferable by the optionee, other than by will or the laws of descent and
distribution, and, during the lifetime of the optionee, may be exercised only by
the optionee.
9
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE 1994 STOCK PLAN (continued)
Adjustment Upon Changes in Capitalization
In the event any change, such as a stock split or dividend, is
made in the Company's capitalization which results in an increase or decrease in
the number of outstanding shares of Common Stock without receipt of
consideration by the Company, an appropriate adjustment shall be made in the
option price and in the number of shares subject to each option. In the event of
the proposed dissolution or liquidation of the Company, all outstanding options
automatically terminate. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding option shall be assumed or an equivalent option or
right shall be substituted by the successor corporation or a parent or
subsidiary of the successor corporation. The administrator may, in lieu of such
assumption or substitution, provide for the optionee to have the right to
exercise the option as to all or a portion of the optioned stock, including
shares as to which it would not otherwise be exerciseable. If, in such event,
the option is not assumed or substituted, the option shall terminate as of the
date of the closing of merger. For the purposes of this paragraph, the option
shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase, for each share of optioned stock
subject to the option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, of other securities or property) received in
the merger or sale of assets by holders of Common Stock for each share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the successor
corporation or its parent, the administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the option, for each share of optioned stock subject to the option,
to be solely common stock of the successor corporation or its parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
Amendment and Termination
The Board of Directors may at any time amend or terminate the
1994 Plan, but no amendment or termination shall be made which would impair the
rights of any participant under any grant theretofore made without his or her
consent. In addition, the Company shall obtain shareholder approval of any
amendment to the 1994 Plan in such a manner and to the extent necessary to
comply with applicable law or regulation. In any event, the 1994 Plan will
terminate in 2004.
Federal Income Tax Information
Options granted under the 1994 Plan may be either "incentive
stock options," as defined in the Code, or nonstatuatory options.
10
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE 1994 STOCK PLAN (continued)
An optionee who is granted an incentive stock option will not
recognize taxable income either at the time the options is granted or upon its
exercise, although the exercise may subject the optionee to the alternative
minimum tax. Upon the sale or exchange of the shares more than two years after
grant of the option and one year after exercising the option, any gain or loss
will be treated as long-term capital gain or loss. If these holding periods are
not satisfied, the optionee will recognize ordinary income at the time of sale
or exchange equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director or 10% stockholder of the Company. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain recognized on such a premature disposition of the shares
in excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain, depending on the holding period.
All other options which do not qualify as incentive stock
options are referred to as nonstatutory options. An optionee will not recognize
any taxable income at the time he is granted a nonstatutory option. However,
upon its exercise, the optionee will recognize taxable income generally measured
as the excess of the then fair market value of the shares purchased over the
purchase price. Any taxable income recognized in connection with an option
exercise by an optionee who is also an employee of the Company will be subject
to tax withholding by the Company. Upon resale of such shares by the optionee,
any difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal
income taxation upon the optionee and the Company with respect to the grant and
exercise of options under the 1994 Plan and does not purport to be complete.
Reference should be made to the applicable provisions of the Code. In addition,
this summary does not discuss the tax consequences of the optionee's death or
the income tax laws of any municipality, state or foreign country in which an
optionee may reside.
11
<PAGE>
PROPOSAL THREE
AMENDMENT TO THE 1994 STOCK PLAN (continued)
Vote Required
Approval of the 1994 Plan requires the affirmative vote of the
holders of a majority of the shares presented at the Annual Meeting in person or
by proxy and entitled to vote as of the Record Date and such affirmative votes
must also constitute at least a majority of the required quorum. Votes against
or withheld are counted for purposes of determining the presence or absence of a
quorum at the Annual Meeting.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the approval of
the increase in the number of shares authorized for issuance under the 1994
Plan.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the beneficial ownership of the
Common Stock of Xiox as of March 1, 1997 by (i) each director; (ii) the Chief
Executive Officer and each of the Company's other officers who received more
than $100,000 in total compensation for the year ended December 31, 1996 (such
officers, together with the Chief Executive Officer, are collectively referred
to as the "Named Executive Officers"); (iii) all directors and executive
officers as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of the Company's Common Stock at March 1, 1997.
All shares are subject to the named person's sole voting and investment power
except where otherwise indicated and subject to community property laws where
applicable.
Shares Percent
Beneficially of
Name Owned(1) Total
- ---- -------- -----
Edmund H. Shea 563,342 (2) 23.7 %
655 Brea Canyon Rd
Walnut, CA 91789
William H. Welling 1,027,416 (3) 43.3 %
Atam Lalchandani 11,000 0.5 % (4)
Bernard T. Marren 66,193 (5) 2.8 % (4)
Robert K. McAfee 43,034 (6) 1.8 % (4)
Mark A. Parrish, Jr. 10,274 (7) 0.4 % (4)
Anthony DiIulio 35,300 (8) 1.5 % (4)
Melanie D. Reid 9,199 (9) 0.4 % (4)
David Y. Schlossman 40,878 (10) 1.7 % (4)
All directors and officers
as a group (10 persons) 1,806,636 (11) 73.9 % (4)
- ------------------
(1) This table is based upon information supplied by officers, directors and
principal stockholders. Unless otherwise indicated, the business address of
each of the beneficial owners listed in this table is: 577 Airport Blvd,
Suite 700, Burlingame, CA 94010.
(2) Represents 563,342 shares of Common Stock beneficially owned by Edmund and
Mary Shea Real Property Trust.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT (continued)
(3) Represents 1,027,416 shares of Common Stock beneficially owned by Mr.
Welling including 104,678 shares owned directly and 922,738 shares owned
indirectly. Mr. Welling disclaims all beneficial ownership of 73,718 shares
held by family members and related trusts over which Mr. Welling exercises
no voting or dispositional power.
(4) Percentage of the sum of Common Stock outstanding and shares which may be
acquired by such individual or group upon exercise of outstanding options
which are exercisable within sixty (60) days.
(5) Includes 5,874 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(6) Includes 7,874 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(7) Includes 3,874 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(8) Includes 22,600 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(9) Includes 7,499 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(10) Includes 25,974 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
(11) Includes 73,695 shares of Common Stock which may be acquired upon exercise
of outstanding options which are exercisable within sixty (60) days.
14
<PAGE>
Executive Officers
In addition to Mr. Welling, the principal executive officers
of the Company and their ages as of April 1, 1997 are as follows:
Name Age Position
Wayne F. Benoit 48 Vice President of Business Development
Robert W. Boyd 34 Vice President of Operations
Anthony DiIulio 41 Vice President of Sales & Marketing
Melanie D. Reid 41 Vice President of Finance,
Chief Financial Officer & Secretary
David Schlossman 37 Vice President of Engineering
Wayne F. Benoit joined Xiox in December 1996 as Vice President
of Business Development. Prior to joining Xiox, Mr. Benoit was Chief Operating
Officer for ERS International from 1994 to 1996. From 1988 through 1993 Mr.
Benoit worked for Ungermann-Bass, most recently as Executive Vice President of
Product Operations from 1990 to 1993 and previously as Vice President and
Director of Engineering from 1988 through 1990. Prior to that Mr. Benoit was at
Linkware Corporation from 1984 to 1988, as President from 1986 to 1987 when it
was purchased by Ungermann Bass, and previously as Vice President of Marketing.
Formerly, Mr. Benoit held engineering roles at DTSS, Inc. and Epsilon Data
Management from 1973 to 1984. Mr. Benoit received his Bachelor of Arts degree in
Business and Experimental Psychology from Northeastern University and a Masters
in Personnel Services from University of New Hampshire.
Robert W. Boyd joined Xiox in July 1990 as a member of the
Sales Department. Mr. Boyd was promoted to Director of Sales in January 1994 and
to Vice President of Operations in March 1995. Prior to joining Xiox, Mr. Boyd
held sales and management positions at First Phone, Inc., a telecommunications
firm in Cambridge, Massachusetts. Mr. Boyd received his Bachelor of Science
degree in Business Administration at St. Michael's College.
Anthony DiIulio was appointed Vice-President of Sales and
Marketing in March 1995. Prior to that, Mr. DiIulio had held the position of
Vice President of Operations for Xiox Corporation since March 1991 when Xiox
acquired SFX, Inc. (then Summa Four Business Products, Inc.). Prior to the
acquisition, Mr. DiIulio was General Manager of Summa Four Business Products,
Inc. where he was responsible for sales, marketing and operations. From 1984 to
1987 Mr. DiIulio held several different positions with Wang Laboratories, Inc.
Mr. DiIulio received his Bachelor of Science degree from Northeastern University
and his Masters in Business Administration from New Hampshire College.
15
<PAGE>
Executive Officers (continued)
Melanie D. Reid became Vice President of Finance and Chief
Financial Officer of the Company in July 1995. Prior to joining the Company, Ms.
Reid served as Director of Product Delivery and Controller of Product Operations
at UB Networks (formerly Ungermann Bass). From 1987 to 1990 Ms. Reid was a
financial manager in the Intercontinental Division of UB's parent, Tandem
Computers. Ms. Reid also held various financial and managerial positions at
Honeywell Information Systems from 1977 to 1987. Ms. Reid received her Bachelor
of Science degree in Accounting from Boston College and her Masters in Business
Administration from the University of Texas at Arlington.
David Y. Schlossman rejoined the Company as Vice President of
Engineering in January 1990 following a six-month period during which Mr.
Schlossman was with Applied Voice Technology, a telecommunications
voice-processing company. Mr. Schlossman originally joined Xiox in early 1984 as
a software engineer. Mr. Schlossman was promoted to Chief Engineer in January
1988 and to Vice President of Engineering in September 1988. Prior to joining
Xiox, Mr. Schlossman held software engineering posts at Columbia and New York
Universities and at several U. S. Government agencies and independent software
vendors. Mr. Schlossman received his Bachelor of Arts degree in computer science
from Ohio State University.
16
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
Summary of Officer Compensation
The following table shows, for the last three fiscal years
ending December 31, 1996, 1995 and 1994 certain compensation paid by the
Company, including salary, bonuses, stock options and certain other
compensation, to the Named Executive Officers in fiscal 1996:
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------
Name and Salary Bonus Other Annual Options(2)
Principal Position Year ($) ($) ($)(1) (#)
- ------------------ ---- --- --- ------ ---
<S> <C> <C> <C> <C> <C>
William H. Welling 1996 158,450 (3) 13,631 (4) 4,800 --
President and Chief 1995 152,214 (3) -- 4,800 --
Executive Officer 1994 94,519 (3) -- 2,300 --
Anthony DiIulio 1996 105,754 (5) 34,650 (6) 4,200 15,000
Vice President of 1995 102,308 (5) 43,533 (6) 4,200 --
Sales & Marketing (7) 1994 102,308 (5) 28,065 4,200 15,000
Melanie D. Reid
Vice President of 1996 108,431 13,700 (9) 4,200 20,000
Finance, Chief Financial 1995 51,747 (8) -- 2,100 20,000
Officer & Secretary 1994 -- -- -- --
David Y. Schlossman 1996 101,364 (10) 19,549 (11) 4,200 5,000
Vice President of 1995 103,088 (10) 12,000 4,200 5,000
Engineering 1994 95,383 (10) 12,000 4,200 --
<FN>
- ----------
(1) Automobile allowances.
(2) The Company has no stock appreciation rights. Options granted in 1996 were
exchanged for old options under 7/12/96 Stock Repricing.
(3) Includes $1,159 of salary earned in 1996 but to be paid in 1997 and payout
of paid-time-off balances of $2,791 in 1996, $2,214 in 1995 and $2,019 in
1994.
(4) Includes $9,650 of bonus earned in 1996 but paid in 1997.
(5) Includes $773 of salary earned in 1996 but to be paid in 1997 and payout of
paid-time-off balances of $1981 in 1996, $2,308 in 1995 and $2,308 in 1994.
(6) Includes $6,750 of bonus earned in 1996 but paid in 1997. Also includes
$19,620 in 1996 and $19,620 in 1995 of reportable relocation expense
associated with the sale of Mr. DiIulio's east coast residence.
(7) Mr. DiIulio became a Vice President of Sales and Marketing in March 1995.
Prior to that he was Vice President of Operations.
(8) Ms. Reid joined Xiox in July 1995.
(9) Includes $5,700 of bonus earned in 1996 but paid in 1997.
(10) Includes $744 of salary earned in 1996 but to be paid in 1997 and payout of
paid-time-off balances of $1431 in 1996, $6,788 in 1995 and $1,783 in 1994.
(11) Includes $4,995 of bonus earned in 1996 but paid in 1997.
</FN>
</TABLE>
17
<PAGE>
<TABLE>
OPTIONS GRANTED DURING FISCAL 1996
The following table summarizes the grants of options to
purchase the Company's Common Stock made to the Named Executive Officers.
Option Grants in Last Fiscal Year
Individual Grants
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
% of Total Potential Realizable
Value
Options at Assumed Annual
Rates
Granted to of Stock Price
Employees Exercise Appreciation
Options in Fiscal Price Expiration for Option Term
Name Granted(1) Year(2) ($/Sh) Date 5%($) 10%($)
- ---- ---------- ------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William H. Welling -- -- -- -- -- --
Anthony DiIulio 15,000 9 % $3.4375 3/29/04 $11,112 $23,930
Melanie D. Reid 20,000 12 % $3.4375 8/13/05 $14,816 $31,907
David Y. Schlossman 5,000 3 % $3.4375 8/13/05 $3,704 $ 7,977
<FN>
- ----------
(1) Options under the Company's 1994 Plan vest over a four-year period at a
rate of 25% of the option shares twelve months after vesting commencement
date and 2.08% per month each month thereafter. Options under the 1984
Option plan vest over a four-year period at a rate of 25% of the option
shares per year.
(2) Based upon 166,400 options granted to employees in 1996. Options granted to
Named Executive Officers were exchanged for older options on July 12, 1996.
</FN>
</TABLE>
18
<PAGE>
<TABLE>
OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUES
The following table provides the specified information
concerning exercises of options to purchase the Company's Common Stock and the
fiscal year-end value of unexercised options held by the Named Executive
Officers.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<CAPTION>
Shares
Acquired on Value Number of Unexercised Value of Unexercised in-the
Exercise Realized Options at 12/31/96 (#) -Money Options at
-------- -------- ----------------------- -----------------
12/31/96($)(1)
--------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Welling -- -- -- -- -- --
Anthony DiIulio -- -- 15,100 15,000 $29,243 $ 938
Melanie D. Reid -- -- -- 20,000 -- $1,250
David Y. Schlossman -- -- 24,100 5,000 $51,188 $ 313
<FN>
- ----------
(1) Fair market value of the Company's Common Stock based upon the closing bid
price at December 31, 1996 ($3.50) minus the exercise price of the options.
</FN>
</TABLE>
19
<PAGE>
Audit and Compensation Committee Report
The Company applies a consistent philosophy to compensation
for all employees including senior management. The Company is based on the
premise that achievements of the Company result from the coordinated efforts of
all individuals working toward common objectives focused on meeting customer and
stockholder expectations.
The goals of the Company's compensation program are to align
compensation with business objectives and performance while enabling the Company
to attract, retain and reward employees who contribute to the long-term success
of the Company. In all cases attention is given to fairness in the
administration of pay and to ensure that all employees understand the related
performance evaluation and administration process.
The Company's compensation program for executive officers is
based on the principles described above. It is administered by the Audit and
Compensation Committee of the Board of Directors composed of the non-employee
directors listed at the end of this report. None of the non-employee directors
have any interlocking or other type of relationship that would call into
question their independence as a committee member.
The Company's executive compensation is intended to be
consistent with leading companies in the industry while being contingent upon
the Company's achievement of near and long-term objectives and goals. The
Company's executive philosophy is based on three components, each of which is
intended to serve the overall compensation philosophy.
Base Salary
Base salary is targeted at the competitive median for
competitors of similar size in the software industry. For the purposes of
establishing these levels, the Company compares itself to the American
Electronics Association sponsored salary surveys of software companies.
Salaries of executives are reviewed by the Audit and
Compensation Committee on an annual basis and may be increased at that time
based upon: (i) the Audit and Compensation Committee's agreement that the
individual's contributions to the Company have increased and (ii) increases in
median competitive pay levels.
In October 1996, the Board of Directors, on the recommendation
of the Audit and Compensation Committee, increased the base salaries paid to
each of the Named Executive Officers. Mr. Welling, President and Chief Executive
Officer, Mr. DiIulio, Vice President of Sales & Marketing and Mr. Schlossman,
Vice President of Engineering, received base salary increases of 6.1%. Ms. Reid,
Vice President of Finance, Chief Financial Officer and Secretary, received a
base salary increase of 5.5%.
Annual Incentives
Annual incentives for executives are intended to reflect the
Audit and Compensation Committee's belief that management's contribution to
stockholder returns comes from maximizing earnings and the quality of those
earnings. Incentive compensation is based
20
<PAGE>
Audit and Compensation Committee Report (continued)
upon the Company's 1990 Profit Sharing Plan that sets aside up to 10% of the
Company's operating earnings in which all eligible employees of the Company
share on a pro rata basis. In May 1996 an executive bonus plan ( "Executive
Compensation Plan") was approved by the Audit and Compensation Committee for
eligible senior management to replace their participation in the 1990 Profit
Sharing Plan. In fiscal 1996, the Executive Compensation Plan period covered the
second, third and fourth fiscal quarters. The key elements of the Executive
Compensation Plan included measurement of pre-tax profit, total revenue and
management by objectives ("MBOs") versus pre-established plans. Bonuses were
paid following the end of each fiscal half. Participants must be an employee at
the time of distribution to receive bonuses under the Executive Compensation
Plan.
Long-Term Incentives
The Audit and Compensation Committee also endorses the
position that stock ownership by management is beneficial in aligning management
and stockholder interests and in enhancing stockholder value. Stock options are
also used to retain and motivate executives to improve the Company's long-term
stock market performance. Stock options are granted at the prevailing market
value. Grants awarded vest over four years, at a rate of 25% of the option
shares twelve months after vesting commencement date and 2.08% per month each
month thereafter.
The Audit and Compensation Committee determines the number of
options to be granted based upon comparison within the competitive marketplace.
Outstanding historical performance by an individual is additionally recognized
through larger than normal option grants.
Report on Repricing of Options
- --------------------------------------------------------------------------------
On July 12, 1996, all employees of the Company, including the
Chief Executive Officer and the three other most highly compensated executive
officers, were given the opportunity to exchange existing, higher priced options
granted under the 1994 Plan for new options with an exercise price of $ 3.4375
per share, which price was equal to the mean between the high bid and low asked
prices for the Company's Common Stock on the last market trading day prior to
July 12, 1996.
The Company believes that given the disparity, on July 12,
1996, between the trading price of its Common Stock and the exercise price of
certain existing stock options, such repricing was desirable in order to provide
incentive to the Company's employees to work towards the future growth of the
Company and to retain key personnel.
Respectfully submitted,
Bernard T. Marren, Chairman
Robert K. McAfee
Atam Lalchandani
- --------------------------------------------------------------------------------
21
<PAGE>
TABLE OF TEN-YEAR OPTION REPRICINGS
<TABLE>
The following table sets forth option information concerning
options of Xiox Corporation's officers which were repriced during fiscal 1996.
<CAPTION>
Number of Market Price Length of Original
Securities of Stock at Exercise Price Option Term
Underlying Options Time of at Time of New Remaining at Date
Repriced or Repricing or Repricing or Excercise or Repricing or
Name Date Amended (#) Amendment ($) Amendment ($) Price($) Amendment (Yrs)
- ---- ---- ----------- ------------- ------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Boyd
Vice President 7/12/96 5,000 $3.4375 $5.000 $3.4375 7 years 8 months
Operations 7/12/96 13,000 $3.4375 $4.1250 $3.4375 9 years 1 month
Anthony DiIulio
Vice President
Sales & Marketing 7/12/96 15,000 $3.4375 $ 5.000 $3.4375 7 years 8 months
Melanie D. Reid
Vice President
Finance/ Chief
Financial Officer 7/12/96 20,000 $3.4375 $4.1250 $3.4375 9 years 1 month
David Y. Schlossman
Vice President
Engineering 7/12/96 5,000 $3.4375 $4.1250 $3.4375 9 years 1 month
</TABLE>
22
<PAGE>
Director Compensation
During the year ended December 31, 1996, Messrs. Lalchandani,
Marren, McAfee and Parrish were paid directors' fees of $300 for each of the
meetings of the Board they attended in 1996. Nonemployee directors participate
in the Company's 1994 Plan. The 1994 Plan provides for an automatic grant of a
nonstatutory stock option to purchase 1,000 shares of Common Stock to each
nonemployee director who is elected or re-elected to the Board of Directors at
each Annual Meeting of the Company's stockholders. The terms and conditions of
each option grant to any director shall be as set forth in the stock option
agreement entered into between the Company and the nonemployee director. None of
the directors held consulting contracts with the Company during 1996.
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 certain reports of ownership with the
Securities and Exchange Commission (the "Commission") and with the National
Association of Securities Dealers. Such officers, directors and shareholders are
also required by Commission rules to provide the Company with copies of all
Section 16(a) forms that they file. Based solely on its review of copies of such
forms received by the Company, or on written representations from certain
reporting persons, the Company believes that, during the period from January 1,
1996 to December 31, 1996, its executive officers, directors and ten percent
stockholders filed all required Section 16(a) reports on a timely basis.
23
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the
Annual Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
By Order of the
Board of Directors,
XIOX CORPORATION
/s/ Melanie D. Reid
-------------------------
Melanie D. Reid
Secretary
April 14, 1997
Burlingame, California
24
<PAGE>
APPENDIX A
PROXY XIOX CORPORATION PROXY
Annual Meeting of Stockholders to be Held on May 19, 1997
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints William H. Welling and Melanie D. Reid,
and each or either of them, as proxies of the undersigned, with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
on the other side, all of the shares of Common Stock of Xiox Corporation held of
record by the undersigned as of April 1, 1997 at the Annual Meeting of
Stockholders of Xiox Corporation to be held May 19, 1997, or at any adjournment
thereof.
(Continued, and to be signed on the other side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[X] Please mark
your votes
as this
WITHHOLD
1. ELECTION OF DIRECTORS FOR FOR ALL FOR AGAINST ABSTAIN
INSTRUCTION: if you wish to [ ] [ ] 2. Proposal to ratify the appointment of KPMG Peat [ ] [ ] [ ]
withhold authority to vote for Marwick LLP as independent accountants for the
any individual nominee, strike fiscal year ending December 31, 1997.
a line through that nominee's
name in the list below: 3. Proposal to amend the Company's 1994 Stock Plan to [ ] [ ] [ ]
increase by 150,000 the number of shares of the
William H. Welling, Mark A. Parrish, Jr., Company's Common Stock reserved for issuance thereunder.
Robert K. McAfee, Bernard T. Marren,
Atam Lalchandani
- ------------------------------------------------
I PLAN TO ATTEND THE MEETING [ ]
In their discretion, the Proxies are
authorized to vote upon such other
matter(s) which may properly come before
the meeting and at any adjournment(s)
thereof.
The shares covered by this proxy will be
voted in accordance with the
undersigned(s) instructions with respect
to any matter in which a choice is
specified. If this proxy is returned
without indicating specific
instructions, all shares represented
herein will be voted for the Director
nominees listed, and as recommended by
the Board of Directors on all other
proposals. Each of the proxies or their
substitutes as shall be present and
acting at the Annual Meeting shall have
and may exercise all of the powers of
all said proxies hereunder.
Signature(s)___________________________________________________________ Dated _______________________, 1997
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please five full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 10.1
XIOX CORPORATION
1994 STOCK PLAN
(as amended on May 22, 1995 and March 25, 1997)
1. Purposes of the Plan. The purposes of this Stock Option Plan are:
o to attract and retain the best available personnel for positions of
substantial responsibility,
o to provide additional incentive to Employees and Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Xiox Corporation, a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
<PAGE>
(i) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship with the Company or any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; provided, further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's Incentive Stock Option shall cease to be treated as an Incentive
Stock Option and will be treated for tax purposes as a Nonstatutory Stock
Option; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(n) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the Nasdaq National Market thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
-2-
<PAGE>
(o) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the
Plan.
(t) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(u) "Option Exchange Program" means a program whereby
outstanding options are surrendered in exchange for options with a lower
exercise price.
(v) "Optioned Stock" means the Common Stock subject to an
Option.
(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option.
(x) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1994 Stock Plan.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(aa) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(bb) "Subsidiary" means a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 350,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock. However,
-3-
<PAGE>
should the Company reacquire Shares which were issued pursuant to the exercise
of an Option, such Shares shall not become available for future grant under the
Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan, upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.
(ii) Administration With Respect to Directors and
Officers Subject to Section 16(b). With respect to Option grants made to
Employees who are also Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3, or (B) a committee designated
by the Board to administer the Plan, which committee shall be constituted to
comply with the rules governing a plan intended to qualify as a discretionary
plan under Rule 16b-3. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
rules governing a plan intended to qualify as a discretionary plan under Rule
16b-3.
(iii) Administration With Respect to Other Persons.
With respect to Option grants made 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 to satisfy Applicable Laws. Once appointed, such Committee shall
serve in its designated capacity until otherwise directed by the Board. The
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
-4-
<PAGE>
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom
Options may be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted;
(viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option (subject to
Section 14(c) of the Plan);
(xi) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to determine the terms and restrictions
applicable to Options; and
(xiv) to make all other determinations deemed
necessary or advisable for administering the Plan.
-5-
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(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Nonstatutory Stock Options may be granted to Employees,
Consultants and non-employee Directors of the Company who qualify for automatic
option grants in accordance with the provisions of paragraph 6(d) below.
Incentive Stock Options may be granted only to Employees. If otherwise eligible,
an Employee or Consultant who has been granted an Option may be granted
additional Options.
6. Limitations.
(a) Each Option shall be designated in the Notice of Grant as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value:
(i) of Shares subject to an Optionee's Incentive
Stock Options granted by the Company, any Parent or Subsidiary, which
(ii) become exercisable for the first time during any
calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), 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 time of grant.
(b) Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's employment or
consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options
to Employees:
(i) No Employee shall be granted, in any fiscal year
of the Company, Options to purchase more than 100,000 Shares.
(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12(a).
(iii) If an Option is cancelled (other than in
connection with a transaction described in Section 12), the cancelled Option
will be counted against the limit set forth in Section 6(c)(i). For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
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(d) Each individual who is elected to the Board at the 1994
Annual Meeting of stockholders of the Company and is not at the time of his
election to the office of director an employee of the Company or any subsidiary
shall automatically be granted a nonstatutory stock option to purchase 1,000
shares of the Company's Common Stock. Any individual who, subsequent to the 1994
Annual Meeting but prior to the 1995 Annual Meeting (i) is elected to the Board,
(ii) is not at the time of his assumption of office as a Director an employee of
the Company or any subsidiary, and (iii) has not previously received an
automatic option grant under this section shall upon assumption of such office
automatically be granted a nonstatutory stock option under this Plan to purchase
1,000 shares of the Company's Common Stock.
On the date of the 1995 Annual Meeting of the Company's
stockholders and on the date of each Annual Meeting of the Company's
stockholders held thereafter, each individual who (i) is elected or re-elected
to the Board at such Annual Meeting including any individual who may have
already received one or more automatic option grants under the Plan, (ii) is not
at the time of his assumption of office as such Director an employee of the
Company or any subsidiary, shall automatically be granted an option under the
Plan to purchase an additional 1,000 shares of the Company's Common Stock. The
terms and conditions of each option grant to any director shall be as set forth
in the stock option agreement.
Except for the automatic option grants under this Section
6(d), non-employee members of the Board shall not be eligible to receive any
additional option grants under this Plan.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years unless terminated
earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. Moreover, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock 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 or such shorter term as may be provided in the Notice of
Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
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(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
the Incentive Stock 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 per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the Administrator; provided that
the per share exercise price shall not be less than 85% of the fair market value
at the time of grant.
(b) Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied before
the Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(iv) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
(v) a reduction in the amount of any Company
liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation program
or arrangement;
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(vi) any combination of the foregoing methods of
payment; or
(vii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. 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 Section 12 of the
Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for 90 days following the Optionee's termination of Continuous
Status as an Employee or Consultant. In the case of an Incentive Stock Option,
such period of time shall not exceed ninety (90) days from the date of
termination. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
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<PAGE>
(c) Disability of Optionee. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Rule 16b-3. Options granted to individuals subject to
Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
11. Non-Transferability of Options. An Option 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 Optionee, only by the Optionee.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; 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
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<PAGE>
by the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, 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 thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option shall be assumed or an
equivalent option or right shall be substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. The Administrator may, in
lieu of such assumption or substitution, provide for the Optionee to have the
right to exercise the Option as to all or a portion of the Optioned Stock,
including Shares as to which it would not otherwise be exercisable. If the
Administrator makes an Option exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Administrator shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase, for each Share of Optioned Stock subject to
the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets was not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
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(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise
of an Option, the Company may require the person exercising such Option 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.
16. Liability of Company.
(a) Inability to Obtain Authority. 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.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional shareholder approval, such
Option shall be void with respect to such excess Optioned Stock, unless
shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 14(b)
of the Plan.
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17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
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