SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 ss. 240.14a-11(c) or ss. 240.14a-12
TELESCAN, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
TELESCAN, INC.
5959 CORPORATE DRIVE, SUITE 2000
HOUSTON, TEXAS 77036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 28, 1999
The annual meeting of stockholders of Telescan, Inc. (the "Company") will be
held July 28, 1999, at 10:00 a.m. (local time) at the offices of the Company,
5959 Corporate Drive, Suite 2000, Houston, Texas 77036, for the following
purposes:
1. To elect eleven directors of the Company to hold office until the
next annual meeting of shareholders;
2. To ratify the Board of Directors' appointment of Hein + Associates
LLP as the Company's independent auditors for the year ending
December 31, 1999;
3. To approve the amendment of the Amended Stock Option Plan; 4. To
approve the amendment of the 1995 Stock Option Plan; and 5. To
transact such other business as may properly come before the meeting
or any adjournments thereof.
Further information regarding the meeting and the above proposals is set forth
in the accompanying proxy statement. The Board of Directors has fixed the close
of business on June 18, 1999 as the record date for the meeting, and the only
holders of Telescan common stock of record at such time will be entitled to vote
at the meeting or any adjournments thereof.
Whether or not you plan to attend the meeting, we urge you to sign and return
the enclosed proxy so that your shares will be represented at the meeting.
By Order of the Board of Directors,
David L. Brown
Chairman of the Board and Chief
Executive Officer
June 18, 1999
<PAGE>
TELESCAN, INC.
5959 CORPORATE DRIVE, SUITE 2000
HOUSTON, TEXAS 77036
-----------
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
-----------
This Proxy Statement is being furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Telescan, Inc., a Delaware
corporation (the "Company"), for use at the 1999 Annual Meeting of Stockholders
of the Company to be held at 5959 Corporate Drive, Houston, Texas, 77036 at
10:00 A.M. (local time) on Wednesday, July 28, 1999, and at any adjournments
thereof, for the purpose of considering and voting upon the matters set forth in
the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement
and the accompanying form of Proxy are first being mailed to stockholders on or
about June 23, 1999.
The close of business on June 18, 1999 has been fixed as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournment thereof. As of the record date, there were
15,286,889 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), issued and outstanding. The presence, in person or by proxy, of
a majority of the outstanding shares of Common Stock on the record date is
necessary to constitute a quorum at the Annual Meeting. Each share is entitled
to one vote on all issues requiring a stockholder vote at the Annual Meeting.
Stockholders may not cumulate their votes for the election of Directors.
Directors shall be elected by a plurality of the votes of the shares present or
represented by proxy and entitled to vote at the Annual Meeting. The affirmative
vote of a majority of the shares of Common Stock present or represented by proxy
and entitled to vote at the Annual Meeting is required for the approval of Items
2, 3 and 4 set forth in the accompanying Notice. Shares represented by proxy
that reflect abstentions and broker non-votes will be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions will be counted in tabulations of the votes cast on Items 1,
2, 3 and 4 whereas broker non-votes will not be counted in tabulations of the
votes cast on Items 1, 2, 3 and 4.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (i) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, (ii) FOR THE
RATIFICATION OF HEIN + ASSOCIATES LLP AS THE COMPANY'S INDEPENDENT AUDITORS,
(iii) FOR THE AMENDMENT OF THE AMENDED STOCK OPTION PLAN and (iv) FOR THE
AMENDMENT OF THE 1995 STOCK OPTION PLAN. The enclosed Proxy, even though
executed and returned, may be revoked at any time prior to the voting of the
Proxy (i) by the execution and submission of a revised Proxy, (ii) by written
notice to the Secretary of the Company or (iii) by voting in person at the
Annual Meeting.
<PAGE>
(1) ELECTION OF DIRECTORS FOR THE ENSUING YEAR
NOMINEES FOR DIRECTORS
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as Proxies and will vote the shares represented by valid
proxies at the 1999 Annual Meeting of Stockholders and any adjournment thereof.
They have indicated that, unless otherwise specified in the Proxy, they intend
to elect as Directors the nominees listed below. All eleven (11) nominees are
presently members of the Board of Directors. Each duly elected Director will
hold office until the next annual meeting of stockholders or until his successor
shall have been elected and qualified. Although the Board of Directors of the
Company does not contemplate that any of the nominees will be unable to serve,
if such a situation arises prior to the Annual Meeting, the persons named in the
enclosed Proxy will vote for the election of such other person(s) as may be
nominated by the Board of Directors.
The Board of Directors unanimously recommends a vote FOR the election of each of
the nominees listed below.
DAVID L. BROWN, age 58, Chairman of the Board and Chief Executive Officer since
1990, has served as a Director of the Company since 1989. Mr. Brown is co-author
of CYBER-INVESTING: CRACKING WALL STREET WITH YOUR PERSONAL Computer, a best
seller on computerized investing, WALL STREET CITY, a guide to investing on the
Internet, and GETTING STARTED IN ONLINE INVESTING, the latest release in the
Getting Started series, all published by John Wiley and Sons, Inc. From 1978 to
1986, Mr. Brown was President, and from 1992 to 1993 a Director, of Time Energy
Systems, Inc., a public company now known as the ACR Group, Inc. He has served
as Chairman of the U.S. Science and Technology Commission for the Emerging
Leaders Summit Conference series with the USSR. For the past ten years, he has
served as a Director of the Alliance for Aging Research, based in Washington,
D.C. He has also served as Chairman of the New Millennium Committee of the
Planetary Society, a group based in Pasadena, California, which supports space
exploration. He has served as Chairman of the Advisory Board of the Southwest
Council of Public CEOs and on the boards of several banks and financial
institutions. Mr. Brown began his career in the space program at NASA, where he
headed the team of engineers who designed the landing gear for the first lunar
module. Mr. Brown holds a B.S. degree in mechanical engineering from the
University of Pittsburgh and a M.B.A. from the University of Houston.
DR. RICHARD K. CARLIN, age 43, Vice Chairman of the Board since 1993 and Chief
Technology Officer since 1997, was one of the founders of Telescan and has
served as a Director of the Company since 1989. From 1988 to April 1990, Dr.
Carlin served as the Director of Technology Information Center, a subsidiary of
Maxwell Communications, where he managed the development and maintenance of a
technology transfer online database. From 1983 to 1988, he was with D.B.
Technology, Inc., the predecessor to the Company. From 1981 to 1983, Dr. Carlin
was Assistant Professor at Rockefeller University. Dr. Carlin holds a B.S.
degree in biophysical sciences from the University of Houston and a Ph.D. in
biochemistry, also from the University of Houston. Dr. Carlin is co-inventor of
the technology for which the Company was awarded two patents.
ROGER C. WADSWORTH, age 51, Senior Vice President since 1990, has served as a
Director since 1989. From 1988 to 1990, Mr. Wadsworth served as President of the
Company. From 1983 to 1988, Mr. Wadsworth was employed as Vice President of
Information Management Services, Inc., in Houston, Texas, where he provided
management services to investment vehicles such as limited partnerships and
joint ventures. From 1979 to 1983, he served as co-owner of D. Russell Smith
Associates, a restaurant and tenant finish general contractor. Mr. Wadsworth is
Corporate Secretary of IMS Securities, Inc., a full service NASD broker/dealer
owned by his wife. Mr. Wadsworth holds a B.B.A. degree in finance from the
University of Houston.
LAIRD G. FOSHAY, age 40, Senior Vice President of Internet Marketing and
President of INVESTools, Inc., has served as a Director since the acquisition of
INVESTools by the Company in May 1999. Mr. Foshay founded INVESTools in 1994 to
serve individual investors with online access to advisory information from
proven investment letters and portfolio managers. Previously, Mr. Foshay was one
of the founders of M&T Publishing, where he served as President from 1983 to
1992, before selling the business to Miller Freeman/United News. Under Mr.
Foshay's leadership, M&T became the world's leading independent publisher of
software development information, including Dr. Dobb's Journal, Microsoft
Systems Journal and DBMS magazine. Mr. Foshay holds a bachelor's degree in
history with high honors from the University of California at Santa Barbara,
where he was a member of Phi Beta Kappa.
2
<PAGE>
CHRISTOPHER A. GLOWACKI, age 31, has worked in business development at NBC for
over five years. In his current role as Vice President of Business Development
for NBC Interactive, Mr. Glowacki oversees the development and implementation of
NBC's strategy in interactive media, including the Internet and Interactive
Television. Additionally, Mr. Glowacki is responsible for the development of new
business opportunities that arise from the network's conversion to digital
broadcasting. Mr. Glowacki, who reports to Martin Yudkovitz, President of NBC
Interactive, has a team of executives reporting to him who create opportunities
through internal development, joint ventures, mergers and acquisitions and
minority investment. In addition to such projects as MSNBC and SNAP, NBC has
minority investments in several high profile Interactive companies, including
the Company, CNET, TalkCity, iVillage, InterVu, Intertainer, Wink and U.S. Web,
as well as two venture capital funds, Media Technology Ventures and Media
Technology Equity Partners. Mr. Glowacki holds a M.B.A. from the University of
Michigan and a B.A. from Amherst College. Mr. Glowacki has been a director since
February 1999.
DR. RONALD W. HART, age 57, has been a Distinguished Scientist in Residence for
the Food and Drug Administration, Public Health Service, since 1992. From 1980
to 1992, he was the director for the National Center for Toxicological Research,
Food and Drug Administration, Public Health Service, Department of Health and
Human Services in Jefferson, Arkansas. From 1987 to 1993, Dr. Hart served on the
Board of Directors of First Commercial Bank Corporation of Little Rock,
Arkansas. Dr. Hart has received over 30 awards and recognition for his research
and administrative accomplishments and is an internationally recognized
scientist and science manager holding the position of Distinguished Professor at
a number of universities and colleges, including Cairo University, Cairo, Egypt;
Gangzou University, Gangzou, China; and Moscow State University, Moscow, Russia.
Dr. Hart also serves as a Professor at the University of Arkansas Center for
Medical Sciences and the University of Tennessee Center for Health Sciences. Dr.
Hart has published over 600 manuscripts on various topics, including research
management and administration and is a fellow of the American College of
Toxicology, American Association for the Advancement of Science, and the
Gerontology Society of America. Dr. Hart received his B.A. in 1967 from Syracuse
University, a M.S. in 1970 and a Ph.D. in 1971 at the University of Illinois,
Urbana. Dr. Hart has been a Director since 1990.
BURT H. KEENAN, age 60, is Chairman and Chief Executive Officer of Independent
Energy Holdings, plc, a London Stock Exchange and Nasdaq listed company, which
is the largest independent generator/supplier of electricity in the deregulated
markets of the United Kingdom. From 1969 to 1986, Mr. Keenan was the founder,
Chairman and Chief Executive Officer of Offshore Logistics, Inc., a Nasdaq
quoted marine and aviation oil and gas service company. Mr. Keenan is a Director
of Halter Marine, Inc., an American Stock Exchange listed company engaged in
U.S. shipbuilding. He has a Bachelors and Masters degree from Tulane University
and resides in London. Mr. Keenan has been a Director since 1988.
RUSSELL I. PILLAR, age 34, has served as President and Chief Executive Officer
of Virgin Entertainment Group, Inc., the North American operations of Richard
Branson's Virgin group of companies, since November 1998. Mr. Pillar served as
President and Chief Executive Officer of Prodigy Communications Corporation's
Prodigy Internet division from September 1997 through August 1998, having joined
Prodigy's Board of Directors as part of the group which purchased the company in
October 1996. Since October 1991, Mr. Pillar has also served as Managing Partner
of Critical Mass, a technology incubator/venture capital firm. From December
1993, through October 1996, he served as President, Chief Executive Officer and
Director of Precision Systems, Inc., a publicly traded international
telecommunications software provider. Mr. Pillar serves on a number of public
and private boards, including Prodigy Communications Corporation and is an
active member of the Young President's Organization and the Council on Foreign
Relations. Mr. Pillar graduated Phi Beta Kappa, cum laude from Brown University.
Mr. Pillar has been a Director since 1997.
ROY T. RIMMER, JR., age 58, was appointed to the Board of Directors in October
1998. Mr. Rimmer is Chairman and Chief Executive Officer of Producers Pipeline
Corporation, a growing independent oil and gas operator, primarily engaged in
the acquisition and construction of crude oil and natural gas gathering and
transportation systems. Prior to joining Producers Pipeline in 1986, Mr. Rimmer,
a veteran oil industry executive, was Chairman and Chief Executive Officer of
Republic Gas Gathering Systems, Inc. Mr. Rimmer has also held senior management
positions with Republic Aluminum Corporation, Capital Building Systems,
Universal Lancaster Corporation, and AGC Industries.
3
<PAGE>
WILLIAM D. SAVOY, age 34, currently serves as Vice President of Vulcan Ventures
Incorporated, a venture capital fund wholly-owned by Paul G. Allen, co-founder
of Microsoft Corporation. From 1987 until November 1990, Mr. Savoy was employed
by Layered, Inc., a company controlled by Mr. Allen, and became its President in
1988. From November 1990 until the present, Mr. Savoy has served as President
for Vulcan Northwest Inc., a company that manages the personal financial
activities of Mr. Allen. Mr. Savoy serves on the Advisory Board of Dream Works
SKG of Los Angeles, California and serves on the Board of Directors of CNET,
Inc. of San Francisco, California; Harbinger Corporation of Atlanta, Georgia;
Metricom, Inc. of Los Gatos, California; Ticketmaster Online-CitySearch, Inc.,
of Pasadena California; USA Networks, Inc., of St. Petersburg, Florida; and U.S.
Satellite Broadcasting of Minneapolis, Minnesota. Mr. Savoy also represents Mr.
Allen in a wide variety of other personal financial transactions. Mr. Savoy
holds a B.S. in computer science, accounting and finance from Atlantic Union
College. Mr. Savoy has been a Director since 1993.
STEPHEN C. WOOD, age 47, is currently President and Chief Executive Officer of
Wireless Services Corporation based in Bellevue, Washington. Until March 1996,
Mr. Wood was President and Chief Executive Officer of Notable Technologies,
Inc., which filed for bankruptcy in 1996. From 1993 through 1994, Mr. Wood
served as Vice President of Information Broadcasting for McCaw Development
Corporation located in Kirkland, Washington. Until February 1993, he was
President of Starwave Corporation, a company he formed in 1991 with Microsoft
Corporation co-founder Paul G. Allen to develop and market data and information
products. From 1986 through 1991, Mr. Wood served in several executive positions
at Asymetrix Corporation, a software development and marketing firm founded by
Mr. Allen. From 1980 until 1985, Mr. Wood was in charge of building a
microcomputer software development organization for Datapoint Corporation in
Austin, Texas, after serving in Research & Development and marketing positions.
Mr. Wood began his career in 1976 when he became the sixth employee of Microsoft
Corporation, where he was general manager from 1977 to 1980. Mr. Wood holds a
B.S. in computer engineering from Case Western Reserve University and a M.S. in
electrical engineering from Stanford University. Mr. Wood has been a Director
since 1992.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee and a Compensation Committee of the Board of
Directors. The Audit Committee and the Compensation Committee each currently
consist of all non-employee directors: Mr. Wood (Chairman), Mr. Glowacki, Dr.
Hart, Mr. Keenan, Mr. Pillar, Mr. Rimmer and Mr. Savoy. The Company does not
presently have a nominating committee of the Board of Directors.
The Audit Committee is responsible for overseeing the Company's financial
reporting process and recommending for approval by the Board of Directors an
independent firm of certified public accountants. The Audit Committee monitors
actual performance as compared to budgeted goals and reviews accounting
pronouncements that could significantly impact the financial position of the
Company. The Audit Committee has the opportunity to meet with independent
auditors to discuss audited results and audit management letter recommendations.
There was one Audit Committee meeting during fiscal year 1998.
The Compensation Committee is responsible for recommending to the Board of
Directors the cash and non-cash remuneration for corporate officers and
directors. The Compensation Committee further recommends and approves grants
from the Company's stock option plans to officers, directors and employees. The
Compensation Committee did not formally meet during 1999.
The Company held six meetings of its Board of Directors during the fiscal year
ended December 31, 1998. Mr. Pillar and Mr. Savoy attended 33% and 50%,
respectively, of the Board of Directors meetings. Dr. Hart was not present for
the Audit Committee meeting held in fiscal year 1998. Except as set forth in the
previous sentences, no director attended fewer than 75% of the aggregate of the
meetings of the Board of Directors and the meetings of any committee of the
Board of Directors on which he served.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS:
The following persons are the executive officers of the Company:
NAME POSITION
---- --------
David L. Brown Chairman of the Board and Chief Executive
Officer
Dr. Richard K. Carlin Vice Chairman of the Board and Chief
Technology Officer
Ronald Warren President and Chief Financial Officer
Roger C. Wadsworth Senior Vice President
Laird G. Foshay Senior Vice President
Edward C. Oliver Senior Vice President
Joseph F. Frantz II Vice President
Greg E. Gensemer Vice President
Danny E. Hoover Vice President
William T. Melton Vice President
Jerrold B. Smith Vice President
Neil S. Waldman Vice President
Alexander T. Wyche Vice President
Information concerning the business experience of Messrs. Brown, Carlin,
Wadsworth and Foshay is provided under the section entitled "Nominees for
Directors."
RONALD WARREN, age 52, was appointed to the additional position of President in
1999 after having served as Chief Financial Officer since 1996. From 1986 to
1996, Mr. Warren served as Vice President and Chief Financial Officer of
CogniSeis Development, Inc., a multinational company that developed and sold
computer software, hardware and systems to a worldwide customer base. From 1975
to 1985, Mr. Warren held various financial management positions at Sonat
Offshore Drilling, Inc., a large international drilling contractor, including
Treasurer and Controller. Mr. Warren holds M.B.A. and B.A. degrees from Hofstra
University and is a Certified Public Accountant.
EDWARD C. OLIVER, age 51, Senior Vice President, Sales and Marketing, who joined
the company in June 1999, previously served as Strategic Business Manager for
Altec Lansing Technologies, Inc. from 1997 to 1999. From 1989 to 1997 Mr. Oliver
was employed by Compaq Computer Corporation, where he helped develop and found
Compaq's Internet Solutions Division and was the Senior Manager for Relationship
Sales and Marketing in Europe, the Middle East and Africa. From 1986 to 1989 Mr.
Oliver was the Director of Electronics Engineering and Evening programs for the
New London School of Business in New London, Connecticut. Mr. Oliver holds a
B.S. in technical training Development from Southern Illinois University.
5
<PAGE>
JOSEPH F. FRANTZ II, age 35, Vice President of the Company since May 1995, was
appointed to the additional position of Chief Information Officer in February
1999. Mr. Frantz previously held the positions of Computer Operations Manger,
End-User Software Product Manager and Senior Programmer after joining the
Company in 1987 as a Technical Support Representative. Mr. Frantz holds a B.S.
in Applied Mathematics from the University of Houston and a M.S. in management
computing and systems from Houston Baptist University. Mr. Frantz is co-inventor
of the technology for which the Company was awarded two patents.
GREG E. GENSEMER, age 32, Vice President since rejoining the Company in April
1999. Prior to rejoining the Company, Mr. Gensemer was General Manager for
Paragon Software, a provider of streaming real-time quotes to individual
investors, money managers and brokers. When previously employed by the Company,
Mr. Gensemer held the positions of Director of Business Development, Project
Manager, Product Manager, Retail Sales Executive and Technical Support
Representative after originally joining the Company in 1990. Prior to joining
the Company, Mr. Gensemer was the Area Manager for Pilgrim Cleaners of Houston,
Texas from 1986 to 1990.
DANNY E. HOOVER, age 52, Vice President since September 1996, previously held
the positions of Manager of Development, Manager of Windows Development and
Senior Windows Programmer. Before joining the Company in 1992, Mr. Hoover was
employed as operations manager for Praxis Incorporated, a supervisory control
automation company in Houston, Texas. Mr. Hoover holds a B.S. in electrical
engineering from Texas A&M University.
WILLIAM T. MELTON, age 62, Vice President since January 1995, previously held
the position of Manager of Project Development. Before joining the Company in
October 1993, Mr. Melton served as a Project Manager with IBM, having previously
served in other sales positions as a 30-year employee of that company. Mr.
Melton holds both a B.S. in business administration and a M.B.A. from the
University of Arkansas.
JERROLD B. SMITH, age 46, Vice President since March 1998, previously held the
positions of Business Development Manager for the Company's Internet site, Wall
Street City, and Technical Support Supervisor after joining the Company in 1995.
Prior to joining the Company, Mr. Smith practiced financial planning and asset
management in Houston, Texas. From 1986 to 1988, Mr. Smith was national Sales
Manager for USOne Apparel of New York. From 1976 to 1986, Mr. Smith was a
salesman and ultimately regional Vice President of Donmoor, Inc., a wholesale
apparel manufacturer, also of New York. Mr. Smith holds a B.S. in business
administration from the University of Houston.
NEIL S. WALDMAN, age 42, Vice President since May 1995, previously held the
position of Director of Institutional Sales. Before joining the Company in 1993,
Mr. Waldman was employed as Manager of Business Development for IDD Information
Services, Inc., where he was instrumental in the introduction of three new
products for the investment management and brokerage communities. From 1989 to
1991, Mr. Waldman served as Vice President of sales and marketing for Vista
Computer, Inc., where he directed sales and marketing for the developer of
integrated software solutions targeted at international commodities traders. Mr.
Waldman holds a B.S. in business administration from Northeastern University.
ALEXANDER T. WYCHE, age 51, Vice President, who joined the Company in May 1999,
previously served as an attorney for Koch Industries, Inc., a privately held
international conglomerate with interests in the natural gas industry, from 1997
to 1999. Prior to 1997, Mr. Wyche held positions in the legal departments of
Enron Corp. and Tenneco, Inc., and served as a legal consultant to the natural
gas industry. Mr. Wyche holds a B.B.A. from Campbell University, a J.D. from
North Carolina Central University and is licensed to practice law in the states
of Texas and North Carolina.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to the
Company for the years ended December 31, 1998, 1997, and 1996, of the Chief
Executive Officer and the Company's four most highly compensated executive
officers who were serving the Company at the end of 1998 and who earned $100,000
or more that year. No other executive officers of the Company received
compensation exceeding $100,000 during 1998.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------- ------------------------
SECURITIES UNDERLYING
NAME YEAR SALARY BONUS OPTIONS
---- ---- ------ ----- -------
<S> <C> <C> <C>
David L. Brown 1998 $140,000 --- 28,800
CHIEF EXECUTIVE OFFICER 1997 $138,425 --- 31,443
1996 $124,906 --- 12,000
Richard K. Carlin 1998 $107,700 --- 17,400
CHIEF TECHNOLOGY OFFICER 1997 $101,598 $2,911 15,941
1996 $89,257 --- 7,500
Ronald Warren 1998 $100,000 --- 14,000
PRESIDENT AND CHIEF 1997 $95,333 --- 9,416
FINANCIAL OFFICER 1996 $16,731 --- 12,000
Luiz V. Alvim 1998 $116,205 --- 7,000
FORMER CHIEF OPERATING 1997 $105,404 --- 16,505
OFFICER 1996 $87,894 --- 22,000
Neil S. Waldman 1998 $112,575 --- 5,300
VICE PRESIDENT 1997 $111,755 $6,267 7,474
1996 $103,216 --- 2,500
</TABLE>
DIRECTOR COMPENSATION
The Company does not currently pay any Directors' fees in cash, but reimburses
expenses incurred by Directors to attend Board meetings. Directors who are not
officers of the Company were granted stock options (i) in February 1998 for
5,000 shares at an exercise price of $6.44 per share exercisable until January
31, 2008 and (ii) on December 30, 1998 for 6,000 shares at an exercise price of
$8.91 per share exercisable until December 30, 2008 for services provided to the
Company as directors.
STOCK OPTIONS
The following tables set forth information relating to the named executive
officers with respect to (i) stock options granted in 1998 and (ii) the total
number of exercised options through 1998 and the value of the unexercised
in-the-money options.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATE OF
NUMBER OF GRANTED STOCK PRICE
SECURITIES TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL PER EXPIRATION
NAME GRANTED YEAR SHARE DATE 5% 10%
- ---- ------- ---- ----- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
David L. Brown 12,000(1) 3.3% $6.44 1/31/2008 $48,601 $123,164
16,800(1) 4.6% $8.91 12/30/2008 $94,138 $238,564
Richard K. Carlin 7,400(1) 2.0% $6.44 1/31/2008 $29,971 $ 75,951
10,000(1) 2.7% $8.91 12/30/2008 $56,035 $142,002
Ronald Warren 6,000(1) 1.6% $6.44 1/31/2008 $24,300 $ 61,582
8,000(1) 2.2% $8.91 12/30/2008 $44,828 $113,602
Luiz V. Alvim 7,000(2) 1.9% $6.44 1/31/2008 $28,351 $ 71,846
Neil S. Waldman 2,300(1) 0.6% $6.44 1/31/2008 $ 9,315 $ 23,607
3,000(1) 0.8% $8.91 12/30/2008 $16,810 $ 42,601
</TABLE>
(1) Options vest 25% annually beginning 12 months after the date of grant.
(2) Options vest 33 1/3% annually beginning 12 months after the date of grant.
- --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT AT
FISCAL YEAR END FISCAL YEAR END
SHARES ------------- ---------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- -------------------- ------------- -------------
David L. Brown 0 0 26,000/50,735 $35,140/$115,735
Richard K. Carlin 59,000 $236,710 30,071/31,110 $79,177/$71,958
Ronald Warren 0 0 10,916/24,500 $31,349/$43,835
Luiz V. Alvim 5,130 $ 4,771 36,423/21,952 $105,293/$64,949
Neil S. Waldman 11,641 $34,116 6,250/12,383 $9,963/$34,358
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the Company's total stockholder return over the
last five years to the Standard & Poor's Computer Software and Service Index and
the Nasdaq Stock Market Index. Cumulative total return values are based on
annual total return values which assume reinvestment of dividends. The
stockholder return shown on the graph below is not necessarily indicative of
future performance.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
TELESCAN, INC. COMMON STOCK 100 48 89 60 78 100
NASDAQ STOCK MARKET INDEX (U.S.) 100 98 138 170 209 293
S & P COMPUTER SOFTWARE &
SERVICE INDEX 100 118 166 258 360 652
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
During 1998, the Compensation Committee of the Board of Directors consisted of
Dr. Ronald W. Hart, Mr. Burt H. Keenan, Mr. Russell I. Pillar, Mr. Roy T.
Rimmer, Jr. (appointed in October 1998), Mr. William D. Savoy and Mr. Stephen C.
Wood as Chairman.
The goal of the Compensation Committee is to develop compensation policies to
attract and retain highly qualified officers, directors and middle managers
whose skills are critical to the long-term success of the Company. Such policies
are intended to reward and motivate individual and team performance with the
common goal of maximizing total shareholder return.
Components of executive compensation include base salary, incentive bonus and
stock options. Salary levels for executive officer positions reflect the duties
and levels of responsibilities inherent in the position. Salaries of executive
officers are reviewed annually and the primary criteria influencing salary
adjustments is the individual's performance, experience, contribution to the
Company and the competitive market place for executive talent.
In 1996, the Company implemented a cash bonus plan based on a combination of
revenue and profit performance relative to budgeted goals. No bonuses were paid
in 1998.
Stock options are used by the Company as a long-term incentive and allow
executives the opportunity to acquire and build an ownership in the Company. In
February 1998 and December 1998, the executive officers and all active employees
were awarded stock options. The award level is based upon the position held and
the employee's ability to enhance the Company's long-term performance. Options
were granted with an exercise price of $6.44 and
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$8.91, respectively, and executive officers' options vest ratably over four
years beginning twelve months after the grant date. Mr. Alvim's options were
fully vested upon his retirement. The option price represents the market price
on the date of the grant and are exercisable for ten years from the date of
grant.
As one of the factors in determining executive compensation, the Compensation
Committee considers the anticipated tax treatment to the Company and to the
executive officers of various types of compensation and benefits. From time to
time, interpretations of and changes in the tax laws affect the deductibility of
compensation. The Compensation Committee currently does not anticipate that
compensation paid to the executive officers will exceed the amounts specified as
deductible pursuant to Section 162(m) of the Internal Revenue Code.
The compensation for the Chief Executive Officer is generally determined using
the same evaluation criteria used for other officers and managers of the
Company. The Chief Executive Officer received a base salary in fiscal 1997 of
$138,425. The Committee increased the Chief Executive Officer's base salary in
fiscal 1998 to $140,000. In addition, the Committee approved the grant of stock
options to acquire 28,800 shares to the Chief Executive Officer to provide him
an additional equity interest in the Company. The Chief Executive Officer has
fully met the Board of Directors and Compensation Committee expectations with
respect to the growth and development of the Company.
Stephen C. Wood, Chairman Burt H. Keenan
William D. Savoy Dr. Ronald W. Hart
Russell I. Pillar Roy T. Rimmer, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors of the Company
was, during fiscal 1998, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries or had any relationship requiring disclosure by the Company. During
1998, no executive officer of the Company served as (i) a member of the
Compensation Committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Board of Directors, (ii) a director of another
entity, one of whose executive officers served on the Compensation Committee of
the Board of Directors, or (iii) a member of the compensation committee (or
other board committee performing equivalent functions) of another entity, one of
whose executive officers served as a director of the Company.
EMPLOYMENT AGREEMENTS
The Chief Executive Officer has an employment agreement, which renews
automatically each year on March 10. Upon termination of the agreement, Mr.
Brown would be entitled to a continuation of his compensation and related
benefits for the remainder of the term or six months, which ever is longer.
In connection with the Merger Agreement between the Company and INVESTools, Inc.
dated April 25, 1999 (the "Merger Agreement"), the Company and Mr. Foshay
entered into a two (2) year employment agreement (the "Employment Agreement").
Under the Employment Agreement, Mr. Foshay will receive a predetermined annual
base salary with merit increases in accordance with the Company's customary
payroll practices. The Employment Agreement contains a provision for a
non-compete term of three (3) years from the date of the Employment Agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock (collectively, "Filing Persons") to file with the SEC
initial reports of ownership (Form 3), reports in changes of ownership (Form 4),
or annual report of ownership (Form 5). All Filing Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based on its review of the copies of such reports
furnished to the Company and upon certain other representations made by filing
persons, Roy T. Rimmer Jr., Greg E. Gensemer, and Alexander T. Wyche failed to
timely file one (1) Form 3, which form was subsequently filed. Burt H. Keenan
failed to timely file one (1) Form 4 and Dr. Ronald W. Hart failed to file two
(2) Forms 4, all of which were subsequently filed.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the normal course of business some members of the Board of Directors have
proposed business alliances with companies with which they are associated. In
the opinion of management, each of these transactions or arrangements were
entered into on terms as favorable to the Company as could have been obtained in
transactions or arrangements with unaffiliated third parties.
CYBERACTION LIMITED
The Company maintains a marketing license and revenue sharing agreement with
CyberAction Limited. Dr. Ronald W. Hart, a director of the Company, is on the
Board of Directors of CyberAction. No royalties were paid to CyberAction in 1998
and none are expected to be paid in 1999.
INVESTOOLS, INC.
Pursuant to the terms of the Merger Agreement between the Company and
INVESTools, Inc., Mr. Foshay and the Company entered into an Employment
Agreement whereby Mr. Foshay will serve as Senior Vice President, Internet
Marketing, for a period of two (2) years in addition to his current status as
President of INVESTools, Inc. Mr. Foshay will receive a predetermined annual
base salary with merit increases in accordance with the Company's customary
payroll practices. In accordance with the Employment Agreement, Mr. Foshay was
nominated and approved as a member of the Board of Directors of the Company.
Upon termination of his employment, Mr. Foshay will resign as a Director of the
Company.
KNOWLEDGE EXPRESS DATA SYSTEMS, L.C.
KE, of which the Company owns 55.58%, is 30% owned by GRF Interests, Inc.
("GRF"), a company controlled by G. Robert Friedman, a significant stockholder
and a former director of the Company. The Company provides computer hardware,
programming, systems maintenance, data loading, telecommunications and certain
administrative services to KE. The Company charges KE a fixed monthly fee for
the use of its systems operations plus 140% of the actual salaries for personnel
working on KE services. Non-personnel expenditures are billed at the Company's
actual cost. During 1998, the maximum indebtedness of KE to the Company was
approximately $119,000, representing the amount due under the service contract
and amounts loaned to KE for operating expenses. As of December 31, 1998 KE had
a balance owing to the Company of $66,000. For the year ended December 31, 1998,
KE had a net loss of $376,000, of which $233,000 was recognized by the Company.
The Company absorbed 100% of the impairment loss of $55,000 since the loss
caused the minority investment to be below zero.
NATIONAL BROADCASTING COMPANY, INC.
In a letter agreement dated February 22, 1999 between the National Broadcasting
Company, Inc. ("NBC") and the Company, NBC was granted the right to have an
individual designated by NBC (the "NBC Designee") included as a nominee for the
Board of Directors of the Company. NBC shall have this right until GE Capital
Equity Investments, Inc. ("GE Equity") owns less than 5% of the outstanding
common stock of the Company or the license agreement with NBC terminates or
expires, whichever event occurs earlier. Pursuant to this agreement, NBC has
designated and the Board of Directors has approved Mr.
Glowacki.
In addition, GE Equity has the right to designate an individual to be present at
all Board of Director meetings. Such individual will not be a participating or
voting member of the Board of Directors and may remain as a designee as long as
GE Equity owns at least 5% of the Company's outstanding common stock.
TELEBUILD, L.C.
Friedman Interests, Inc., a company controlled by G. Robert Friedman, owns
45.42% of TeleBuild, L.C. ("TeleBuild"). The Company and the Brown Family
Partnership own 15.834% and 25.44%, respectively, of TeleBuild. The Brown Family
Partnership is owned by David L. Brown, the Company's Chairman and Chief
Executive Officer and other members of the Brown family. The Company performs
services under contract for TeleBuild, which consist primarily of the
development, maintenance and operation of the TeleBuild database system and the
provision of office space, equipment and furniture. The Company charges
TeleBuild for its personnel at a stipulated rate, which reflects the full
absorption of overhead costs to the Company plus an appropriate profit margin
determined by management and
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<PAGE>
approved by the outside directors. Non-personnel expenditures under the
agreement are billed at actual cost. For the year ended December 31, 1998,
$1,152,000, or 7.4%, of the Company's total revenue was derived from services
provided to TeleBuild. TeleBuild made payments totaling $643,000 during 1998 on
the balance owed the Company. As of December 31, 1998, TeleBuild owed the
Company $729,000, which was the maximum indebtedness during the year.
VULCAN VENTURES, INCORPORATED
Pursuant to the terms of a May 20, 1992 stock purchase agreement between Vulcan
and the Company, Vulcan has the right to designate one nominee director to the
Company's Board of Directors for as long as Vulcan (or its affiliate) owns at
least 540,000 shares of Common Stock of the Company. In addition, the Company
has agreed not to take any corporate action to increase its number of directors
without the unanimous written consent of all directors for as long as Vulcan (or
its affiliate) owns at least 540,000 shares of Common Stock of the Company.
WIRELESS SERVICES CORPORATION
The Company maintains a service agreement with Wireless Services Corporation,
for which Stephen C. Wood serves as Chief Executive Officer and Dr. Ronald W.
Hart serves on the Board of Directors. The service became operational during
1997 and the Company paid Wireless Services Corporation $31,000 in 1998. The
Company does not expect to pay minimum fees or royalties in excess of $60,000 in
1999.
INDEBTEDNESS OF MANAGEMENT
Roy T. Rimmer, Jr. a member of the Company's Board of Directors, was indebted to
the Company for $71,250 at June 1, 1999. The non-interest bearing indebtedness
arises from license fees and contract personnel reimbursement. The maximum
indebtedness during 1998 was $101,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of June 14, 1999 unless otherwise
indicated, with respect to the number of shares of Common Stock beneficially
owned by (1) each director and/or named executive officer individually, (2) all
executive officers and directors of the Company as a group and (3) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock. The number of shares is exclusive of shares
allocated to the person's account through the Company's 401(k) plan. Except as
noted below, each stockholder has sole voting and investment power with respect
to the shares shown.
NUMBER OF SHARES
OWNERS BENEFICIALLY OWNED % OF CLASS
- ------ ------------------ ----------
David L. Brown 905,491(1) 5.9
Dr. Richard K. Carlin 230,469(2) 1.5
Ronald Warren 27,806(3) *
Roger C. Wadsworth 122,889(4) *
Neil S. Waldman 4,116(5) *
Dr. Ronald W. Hart 27,099 *
Burt H. Keenan 55,981 *
William D. Savoy 47,910(6) *
Stephen C. Wood 5,600 *
Russell I. Pillar 1,250(7) *
Roy T. Rimmer, Jr. 24,000 *
Lacy J. Harber 2,072,300 13.6
Route 2, Box 49Y
Denison, Texas 75020
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<PAGE>
Paul G. Allen 1,290,000(8) 8.4
Vulcan Ventures Incorporated
110 110th Avenue N.E., Suite 685
Bellevue, Washington 98004-5840
National Broadcasting Company and 1,220,237 8.0
GE Capital Equity Investment, Inc.
120 Long Ridge Road
Stamford, Connecticut 06927
G. Robert Friedman 1,053,919 6.9
Friedman & Associates
Five Post Oak Park, Suite 1800
Houston, Texas 77027
Laird G. Foshay 779,409(9) 5.1
INVESTools, Inc.
3698 Haven Avenue, Suite A
Redwood City, California 94063
All directors and executive officers 2,245,706 14.5
as a group (20 persons)
- --------------------------------------------------------------------------------
* Less than 1%.
(1) Includes 692,818 shares owned by the Brown Family Partnership. David L.
Brown has shared voting and investment power in the Brown Family
Partnership along with other family members who are not officers and/or
directors of the Company. Includes 171,238 shares owned by David L. Brown
personally. Also includes options to purchase 41,435 shares, which are
exercisable within the next sixty days.
(2) Includes options to purchase 39,693 shares, which are exercisable within
the next sixty days.
(3) Includes options to purchase 12,416 shares, which are exercisable within
the next sixty days.
(4) Includes options to purchase 18,821 shares, which are exercisable within
the next sixty days.
(5) Includes options to purchase 4,116 shares, which are exercisable within
the next sixty days.
(6) Includes options to purchase 17,910 shares, which are exercisable within
the next sixty days.
(7) Includes options to purchase 1,250 shares, which are exercisable within
the next sixty days.
(8) Vulcan is owned 100% by Paul G. Allen.
(9) Includes options to purchase 40,603 shares, which are exercisable within
the next sixty days.
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(2) RATIFICATION OF INDEPENDENT AUDITORS FOR 1999
The Board of Directors appointed the Company's existing certified public
accountant, Hein + Associates LLP, as the independent auditors of the Company
for the fiscal year ending December 31, 1999, and such appointment is hereby
submitted to the stockholders for ratification. Such ratification requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
In the event the appointment of Hein + Associates LLP, as independent auditors
for 1999 is not ratified by the stockholders, the adverse vote will be
considered as a direction to the Board of Directors to select other auditors for
the fiscal year ending December 31, 1999.
A representative of Hein + Associates LLP is expected to be present at the
Annual Meeting and will not make a statement, but will be available to respond
to appropriate stockholder questions.
The Board of Directors unanimously recommends a vote FOR ratification of the
Board's appointment of Hein + Associates LLP as the Company's auditors for 1999.
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(3) AMENDMENT TO AMENDED STOCK OPTION PLAN
The Board of Directors of the Company has unanimously adopted resolutions
approving and submitting to a vote of the stockholders amendments to the
Company's Amended Stock Option Plan, as amended (the "Amended Stock Option
Plan"), (i) to increase the number of shares of Common Stock subject to the
Amended Stock Option Plan from 1,000,000 to 1,500,000, and (ii) to give the
Compensation Committee of the Company's Board of Directors full discretion as to
the number of options to grant to non-employee directors. The full text of the
Amended Stock Option Plan as amended hereby is attached to this Proxy Statement
as Exhibit A.
Except for such amendments, if approved, the Amended Stock Option Plan will
remain unchanged. A summary of the material terms of the Amended Stock Option
Plan is set forth below, but is qualified in its entirety by reference to the
Amended Stock Option Plan, which is attached hereto.
STOCK OPTIONS
As of June 14, 1999, under the Amended Stock Option Plan, an aggregate of
917,207 shares of Common Stock have been issued pursuant to options. A total of
1,727,850 options have been granted, some of which were subsequently canceled
upon employee terminations. Canceled options are available to be re-granted in
the future. Neither the number nor value of future option awards to particular
participants or groups of participants is presently determinable. On June 14,
1999, the per share market value of the Common Stock was $22.13.
RECOMMENDATION AND REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote on this proposal is required for
approval of this proposal. The Board of Directors recommends a vote FOR approval
of the proposed amendment to the Amended Stock Option Plan.
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(4) AMENDMENT TO 1995 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously adopted resolutions
approving and submitting to a vote of the stockholders an amendment to the
Company's 1995 Stock Option Plan, as amended (the "1995 Stock Option Plan"), to
increase the number of shares of Common Stock subject to the 1995 Stock Option
Plan from 425,000 to 637,500. The full text of the 1995 Stock Option Plan as
amended hereby is attached to this Proxy Statement as Exhibit B.
Except for such amendment, if approved, the 1995 Stock Option Plan will remain
unchanged. A summary of the material terms of the 1995 Stock Option Plan is set
forth below, but is qualified in its entirety by reference to the 1995 Stock
Option Plan which is attached hereto.
STOCK OPTIONS
As of June 14, 1999, under the 1995 Stock Option Plan, an aggregate of 30,899
shares of Common Stock have been issued pursuant to options. A total of 203,160
have been granted, some of which were subsequently canceled upon employee
terminations. Canceled options are available to be re-granted in the future.
Neither the number nor value of future option awards to particular participants
or groups of participants is presently determinable. On June 14, 1999, the per
share market value of the Common Stock was $22.13.
RECOMMENDATION AND REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote on this proposal is required for
approval of this proposal. The Board of Directors recommends a vote FOR approval
of the proposed amendment to the 1995 Stock Option Plan.
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<PAGE>
SUMMARY OF AMENDED STOCK OPTION PLAN AND 1995 STOCK OPTION PLAN
The Company believes that equity ownership is an important factor in its ability
to attract and retain skilled personnel. In August 1990 the Board of Directors
adopted the Amended Stock Option Plan pursuant to which options to purchase
1,000,000 shares may be granted to employees and directors. The Amended Stock
Option Plan has twice been amended, once in August 1992 and again in January
1994. In March 1995 the Board of Directors adopted the Company's 1995 Stock
Option Plan pursuant to which options to purchase 425,000 shares may be granted
to employees and directors. The 1995 Stock Option Plan was amended in June 1997.
The purpose of the Amended Stock Option Plan and the 1995 Stock Option Plan
(collectively, the "Plans") is to further the interest of the Company, its
subsidiaries and its stockholders by providing incentives in the form of stock
options to key employees and directors who contribute materially to the success
and profitability of the Company. Grants pursuant to the Plans recognize and
reward outstanding individual performances and contributions and give such
persons a proprietary interest in the Company, thus enhancing their personal
interest in the Company's continued success and progress. The Plans also assist
the Company and its subsidiaries in attracting and retaining key employees and
directors. The options granted under the Plans may be either Incentive Stock
Options, as that term is defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or nonstatutory options taxed under Section 83 of
the Code. The Plans are administered by the Compensation Committee of the Board
of Directors, which has the exclusive power to select the participants in the
Plans, to establish the terms of the options granted to each participant, and to
make all determinants necessary or advisable under the Plans.
Options granted pursuant to the Plans generally are not subject to sale,
assignment or transfer other than by will or by the laws of descent and
distribution or, in the case of the 1995 Stock Option Plan, pursuant to a
qualified domestic relations order, and may be exercised during the optionee's
lifetime only by him, or following the optionee's death, by his beneficiaries.
The option price and number of shares subject to options granted under the Plans
are subject to adjustment upon a reorganization, merger, consolidation,
reclassification, recapitalization, stock split, stock dividend, and certain
other corporate transactions. In the event the optionee's employment is
terminated for any reason other than death, disability or retirement on or after
the age of 65, all options held by the optionee shall lapse immediately
following the last day of employment. In the event of the optionee's death, the
beneficiaries designated by the optionee shall have until the earlier of the end
of the option period or one year from the optionee's death to exercise the
option; provided, however, that the option may be exercised only for the number
of shares for which it could have been exercised at the time of the optionee's
death. In the event of the optionee's retirement on or after attaining age 65,
the option shall lapse at the earlier of the end of the option period or three
months after the date of retirement; provided, however, that the option may be
exercised only for the number of shares for which it could have been exercised
on the retirement date. In the event of termination of employment due to total
and permanent disability, the option shall lapse at the earlier of the end of
the option period or twelve months after the date of such termination of
employment; provided, however, that the option may be exercised only for the
number of shares for which it could have been exercised at the time the optionee
became disabled.
The exercise price of incentive stock options granted under the Plans may not be
less than 100% of the fair market value of the Common Stock of the Company on
the date of the grant. With respect to any optionee who owns more than 10% of
the Company's outstanding Common Stock, the exercise price of any incentive
stock option granted must be at least equal to 110% of fair market value on the
date of grant and the maximum term of the option may not exceed five (5) years.
The aggregate fair market value of the Common Stock (as determined on the grant
date) with respect to which incentive stock options are exercisable for the
first time by an optionee in any calendar year may not exceed $100,000. The
exercise price of non-qualified stock options granted under the Plans may be any
price determined by the Compensation Committee, except that such options must be
granted at any price at or above $1.50 per share.
Recipients of incentive stock options granted under the Plans will not realize
taxable gain for the federal income tax purposes on the date of grant or the
date of exercise of an option. However, the difference between the fair market
value of the stock acquired (on the date of exercise of an option) and the
option price will be an adjustment for purposes of calculating the alternative
minimum tax of the optionee in the year the option is exercised. Recipients of
incentive stock options will incur taxable gain for federal income tax purposes
on the difference between the sales proceeds received and the option price when
the shares acquired through the exercise of incentive stock options have been
sold. If the optionee does not dispose of the shares so acquired until the later
of two years after the date of grant and one year after the date of exercise of
the option, the gain from the sale will be taxed as a capital gain or loss, and
the Company will not be entitled to a tax deduction in connection with the
exercise of the option.
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<PAGE>
If the optionee disposes of the shares prior to the end of this holding period,
the optionee generally will recognize taxable gain in the year of the
disposition. An amount equal to the lesser of (i) the difference between the
fair market value of the stock (on the date of exercise) and the option price
and (ii) the amount of gain recognized upon disposition of the shares will be
recognized by the optionee as ordinary income. The excess of the sales proceeds
received upon the disposition over the fair market value of the stock (on the
date of exercise), if any will be taxed as capital gain. The Company will
receive a compensation deduction in the amount of ordinary income recognized by
the optionee in the year of the disposition.
For non-qualified stock options, the optionee will realize no income at the time
he is granted a non-qualified stock option. Ordinary income will be realized by
the optionee when the non-qualified stock option is exercised. The amount of
such income will be equal to the excess of the fair market value on the exercise
date of the shares of Common Stock issued to the optionee over the exercise
price of such shares. The optionee's holding period for federal income tax
purposes with respect to the shares acquired will begin on the date of exercise.
The tax basis of the stock acquired on the exercise of the option will be equal
to the sum of (i) the exercise price of such option and (ii) the amount included
in income with respect to the exercise of such option. Any gain or loss on the
subsequent sale of the stock will be either a long-term or short-term capital
gain or loss depending on the optionee's holding period for the Common Stock
disposed by the optionee. The optionee's holding period begins on the day after
the date on which the option is exercised. The Company will receive a
compensation deduction for its taxable year within which the employee recognizes
compensation with respect to the nonqualified stock option in an amount equal to
the difference between the fair market value of the stock and the exercise price
of the option.
Under the 1995 Stock Option Plan, the Compensation Committee has full discretion
to grant options to non-employee directors. The Amended Stock Option Plan
currently sets forth a formula pursuant to which options shall be awarded to
non-employee directors. This formula provision is proposed to be changed in the
amendment to the Amended Stock Option Plan.
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MATTERS TO BE PRESENTED
As of the date of this Proxy Statement, the only matters which management
intends to present, or is informed that others will present, for action at the
Annual Meeting, are (i) the election of the Board of Directors, (ii) the
ratification of Hein + Associates LLP as the Company's independent auditors for
1999, (iii) the amendment to Amended Stock Option Plan and (iv) the amendment to
the 1995 Stock Option Plan. If any other matters are presented at the Annual
Meeting, the accompanying Proxy will be voted in accordance with the best
judgment of the Proxy holders.
STOCKHOLDER PROPOSALS
Any proposal of an eligible stockholder intended to be presented at the
Company's 2000 Annual Meeting must be received in writing by the Secretary of
the Company on or before January 10, 2000 if the proposal is to be considered by
the Board of Directors for inclusion in the Company's Proxy material for that
meeting.
EXPENSES OF SOLICITATION
The Company will bear the expense of preparing and mailing this Proxy material,
as well as the cost of any required solicitation. In addition to this
solicitation of Proxies, the officers, directors and regular employees of the
Company, without receiving any additional compensation therefor, may solicit
Proxies by mail, telephone, or personal contact. The Company will also request
stockholders, banks and other fiduciaries to forward Proxy material to their
principals or customers who are the beneficial owners of shares and will
reimburse them for reasonable out-of-pocket expenses incurred.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Brown
Chairman of the Board and
Chief Executive Officer
June 18, 1999
Houston, Texas
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EXHIBIT A
AMENDED STOCK OPTION PLAN
<PAGE>
TELESCAN, INC.
AMENDED AND RESTATED
AMENDED STOCK OPTION PLAN
1. PURPOSE. The purpose of this Stock Option Plan (the "Plan") is to
further the interest of the company, its subsidiaries and its shareholders by
providing incentives in the form of stock options to key employees and directors
who contribute materially to the success and profitability of the Company. The
grants will recognize and reward outstanding individual performances and
contributions and will give such persons a proprietary interest in the Company,
thus enhancing their personal interest in the Company's continued success and
progress. This plan will also assist the Company and its subsidiaries in
attracting and retaining key employees and directors. The options granted under
this Plan may be either Incentive Stock Options, as that term is defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or nonstatutory
options taxed under Section 83 of the Internal Revenue Code of 1986, as amended.
2. DEFINITIONS. The following definitions shall apply to this Plan:
(1) "Board" means the board of directors of the Company.
(2) "Code means the Internal Revenue Code of 1986, as amended.
(3) "Committee" means the Compensation Committee of the Board
which shall consist of two or more directors of the Company
appointed by the Board.
(4) "Common Stock" means the Common Stock, par value $0.01 per
share of the Company or such other class of share or
securities as to which the Plan may be applicable, pursuant to
Section 12 herein.
(5) "Company" means Telescan, Inc., a Delaware corporation.
(6) "Continuous Service" means the absence of any interruption or
termination of employment with or service to the Company or
any parent or subsidiary of the Company that now exists or
hereafter is organized or acquired by or acquires the Company.
Continuous Service shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of
absence approved by the Company or in the case of transfers
between locations of the Company or between the Company, its
parent, its subsidiaries or its successors.
(7) "Date of Grant" means the date on which the Committee grants
an Option.
(8) "Disinterested Person" means a disinterested person as defined
in Rule 16b-3, initially effective as of May 1, 1991,
promulgated under the Exchange Act, or any successor
regulation or statute adopted under the federal securities
laws.
(9) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(10) "Employee" means that any person employed on an hourly or
salaried basis by the Company or any parent or subsidiary of
the Company that now exists or hereafter is organized or
acquired by or acquires the Company.
"Fair Market Value" means the fair market value of the Common Stock on the Date
of Grant. If the Common Stock is publicly traded on the Date of Grant, the fair
market value on that date is the mean between the closing bid and ask prices of
the Common Stock as reported by the National Association of Securities Dealer
Automated Quotations ("NASDAQ") on that date or, if the Common Stock is listed
in other listing services, the mean between the high and low sale prices of the
stock on that date, as reported in the Pink Sheets. If trading in the stock or a
price quotation does not occur on the Date of Grant, the next preceding date on
which the stock was traded or a price was quoted will determine the fair market
value.
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(11) "Incentive Stock Option" means a stock option, granted
pursuant to either this Plan or any other plan of the Company,
that satisfies the requirements of Section 422 of the Code and
that entitles the Optionee to purchase stock of the Company or
in a corporation that at the time of grant of the option was a
parent or subsidiary of the Company of or a predecessor
corporation of any such corporation.
(12) "Non-Employee Director" means any member of the Board who is
not an Employee.
(13) "Nonstatutory Option" shall have the meaning as used in
Section 9 herein.
(14) "Option" means a stock option granted pursuant to the Plan.
(15) "Option Period" means the period beginning on the Date of
Grant and ending on the day prior to the tenth anniversary of
the Date of Grant or such shorter termination date as set by
the Committee.
(16) "Optionee" means an Employee or Non-Employee Director who
receives an option.
(17) "Parent" means any corporation which owns 50% or more of the
voting securities of the Company.
(18) "Plan" means this Stock Option Plan.
(19) "Share" means the Common Stock, as adjusted in accordance with
Section 13 of the Plan.
(20) "Subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the
Company at any time during the existence of this Plan.
3. ADMINISTRATION. This plan will be administered by the Committee. A
majority of the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the Committee shall be made by
a majority of the members present at a meeting at which a quorum is present or
by the unanimous, written consent of the Committee.
Each member of the Committee must be a Disinterested Person. Accordingly,
a member of the Committee shall not be granted or awarded Options under the Plan
and shall not be granted or awarded options, grants, awards or other rights
pursuant to any other plan of the Company or any of its affiliates if a grant or
award under such plan would cause such person not to be or to lose his status as
a Disinterested Person. If a member of the Committee ceases to be a
Disinterested Person for any reason, such person shall immediately, without any
action by the Board, cease to be a member of the Committee.
The Committee has the exclusive power to select the Employee participants
in this Plan, to establish the terms of the Options granted to each Employee
participant, and to make all other determinations necessary or advisable under
the plan. The Committee has the sole and absolute discretion to determine
whether the performance of an eligible Employee warrants an award under this
Plan, and to determine the amount of the award. The Committee has full and
exclusive power to construe and interpret this Plan, to prescribe and rescind
rules and regulations relating to this plan, and take all actions necessary or
advisable for the Plan's administration. Any such determination made by the
Committee will be final and binding on all persons. A member of the Committee
will not be liable for performing any act or making any determination in good
faith.
4. SHARES SUBJECT TO OPTION. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan shall be 1,500,000. Such shares may be authorized but unissued,
or may be treasury shares. If an Option shall expire or become unexercisable for
any reason without having been exercised in full, the unpurchased Shares that
were subject to the Option shall, unless the plan has then terminated, be
available for other Options under the Plan.
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5. EMPLOYEE PARTICIPATION.
(1) ELIGIBLE EMPLOYEES. Every Employee, as the Committee in its
sole discretion designates, is eligible to participate in this
Plan. The Committee's award of an Option to an Employee in any
year does not require the Committee to award an Option to that
Employee in any other year. Furthermore, the Committee may
award different Options to different participants, the
Committee may consider such factors as it deems pertinent in
selecting participants and in determining the amount of their
Option, including, without limitation: (i) the financial
condition of the Company or its Subsidiaries; (ii) expected
profits for the current or future years; (iii) the
contributions of prospective employees to the profitability
and success of the Company or its Subsidiaries; and (iv) the
adequacy of the Employee's other compensation. Employees may
include persons to whom stock, stock options, or other
benefits previously were granted under this or another plan of
the Company or any Subsidiary, whether or not the previously
granted benefits have been fully exercised.
(2) NO RIGHT OF EMPLOYMENT. An Optionee's right, if any, to
continue to serve the Company and its Subsidiaries as an
Employee will not be enlarged or otherwise affected by his
designation as a participant under this Plan, and such
designation will not in any way restrict the right of the
Company or any Subsidiary, as the case may be, to terminate at
any time the employment of any participant.
6. NON-EMPLOYEE DIRECTOR PARTICIPATION.
(a) GRANTS OF AWARDS. The Compensation Committee shall have full
discretion to grant Options to Non-Employee Directors at such
times as it deems appropriate, to determine the number of
shares of Common Stock underlying such Options, and to
determine the other terms and provisions thereof subject to
the other terms of the Plan.
(b) NON-TRANSFERABILITY. Each Option granted to Non-Employee
Directors by its term shall not be transferable by the
Optionee otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of ERISA, or the rules
thereunder, and shall be exercised during the lifetime of the
Optionee only by him. Except as set forth herein, no Option
granted to Non-Employee Directors or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee
during his lifetime, whether by operation of law or otherwise,
or be made subject to execution, attachment or similar
process.
7. OPTION REQUIREMENTS. Each Option granted under this Plan shall satisfy
the following requirements.
(1) WRITTEN OPTION. An Option shall be evidenced by a written
instrument specifying (i) the number of Shares that may be
purchased by its exercise, (ii) the intent of the Committee as
to whether the Option is to be an Incentive Stock Option or a
Nonstatutory Option, and (iii) such terms and conditions
consistent with the Plan as the Committee shall determine.
(2) DURATION OF OPTION. Each Option may be exercised only during
the Option Period designated for the Option by the Committee.
At the end of the Option Period the Option shall expire.
(3) OPTION EXERCISABILITY. Unless otherwise provided by the
Committee on the grant of an Option, each Option shall be
exercisable only as to no more than one-fourth of the total
number of shares covered by the Option during each
twelve-month period commencing twelve months after the date
the Option is granted. Notwithstanding the foregoing, an
Option is exercisable only if the issuance of Shares pursuant
to the exercise would be in compliance with applicable
securities laws, as contemplated by Section 11 of this Plan.
To the extent an Option is either unexercisable or
unexercised, the unexercised portion
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shall accumulate until the Option both becomes exercisable and
is exercised but in no case beyond the date that is ten years
from the date the Option is granted.
(4) ACCELERATION OF VESTING. Subject to the provisions of Section
6 and 8(b), the Board may, in its discretion, provide for the
exercise of Options either as to an increased percentage of
shares per year or as to all remaining shares. Such
acceleration of vesting may be declared by the Board at any
time before the end of the Option Period, including, if
applicable, after termination of the Optionee's Continuous
Service by reason of death, disability, retirement or
termination of employment.
(5) OPTION PRICE. Except as provided in Section 8(a) and 9, the
Option price of each Share subject to the Option shall equal
the Fair Market Value of the Share on the Option's Date of
Grant. Notwithstanding the preceding sentence or any other
provision hereof, no Option granted hereunder shall be at an
Option price less that $1.50 per share.
(6) TERMINATION OF SERVICES. If the Optionee ceases Continuous
Service for any reason other than death, disability, or
retirement on or after age of 65 of the Optionee, all Options
held by the Optionee shall lapse immediately following the
last day that the Optionee is employed by the Company, of the
effective date of the termination of his services to the
Company. On the grant of an Option, the Committee may, in its
discretion, extend the time during which the Option may be
exercised after termination of services. Any such option shall
lapse at the end of the period established by the Committee
for exercise after termination of services. The Option may be
exercised on such termination date, subject to any adjustment
under Section 7(d) and 13.
(7) DEATH. In the case of death of the Optionee, the beneficiaries
designated by the Optionee shall have one year from the
Optionee's demise or to the end of the Option Period,
whichever is earlier, to exercise the Option, provided,
however, the Option may be exercised only for the number of
Shares for which it could have been exercised at the time the
Optionee died, subject to any adjustment under Section 7(b)
and 13.
(8) RETIREMENT. If the Optionee retires on or after attaining age
65, the Option shall lapse at the earlier of the end of the
Option Period or three months after the date of retirement;
provided, however, the Option can be exercised only for the
number of Shares for which it could have been exercised on the
retirement date, subject to any adjustment under Section 7(b)
and 13.
(9) DISABILITY. In the event of termination of Continuous Service
due to total and permanent disability (within the meaning of
Section 422 of the Code), the Option shall lapse at the
earlier of the end of the Option Period or twelve months after
the date of such termination, provided, however, the Option
can be exercised at the time the Optionee became disabled,
subject to any adjustment under Sections 7(b) and 13.
8. INCENTIVE STOCK OPTIONS. Any Options intended to qualify as an
Incentive Stock Option shall satisfy the following requirements in addition to
the other requirements of the Plan:
(1) TEN PERCENT SHAREHOLDERS. An Option intended to qualify as an
Incentive Stock Option granted to an individual who, on the
Date of Grant, owns stock possessing more than ten (10)
percent of the total combined voting power of all classes of
stock of either the Company or any parent or subsidiary, shall
be granted at a price of 110 percent of Fair Market Value on
the Date of Grant and shall be exercised only during the
five-year period immediately following the Date of Grant. In
calculating stock ownership of any person, the attribution
rules of Section 425(d) of the Code will apply. Furthermore,
in calculating stock ownership, any stock that the individual
may purchase under outstanding options will not be considered.
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(2) MAXIMUM OPTION GRANTS. The aggregate Fair Market Value,
determined on the Date of Grant, of stock in the Company
exercisable for the first time by an Optionee during any
calendar year, under the Plan and all other plans of the
Company or its parent or Subsidiaries (within the meaning of
Subsection (d) of Section 422 of the Code) in any calendar
year shall not exceed $100,000.00.
9. NONSTATUTORY OPTIONS. Any Option not intended to qualify as an
Incentive Stock Option shall be a Nonstatutory Option. Nonstatutory Options
shall satisfy each of the requirements of Section 6 of the Plan, except the
Nonstatutory Options may be granted at any price at or above $1.50 per Share
designated by the Committee.
10. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (i) delivers written
notice to the President of the Company of the decision to exercise, (ii)
concurrently tenders to the Company full payment for the Shares to be purchased
pursuant to the exercise, and (iii) complies with such other reasonable
requirements as the Committee establishes pursuant to paragraph 11 of the Plan.
During the lifetime of the Employee to whom an Option is granted, such Option
may be exercised only by him. Payment for Shares with respect to which an Option
is exercised may be in cash, or by certified check, or wholly or partially in
the form of Common Stock having a fair market value equal to the exercise price.
No Person will have the rights of a shareholder with respect to the Shares
subject to an Option granted under this Plan until a certificate or certificates
for the Shares have been delivered to him.
An Option granted under this Plan may be exercised in increments of not
less than 10% of the full number of Shares as to which it can be exercised. A
partial exercise of an Option will not effect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
11. TAXES, COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES. The
Company, if necessary or desirable, may pay or withhold the amount of any tax
attributable to any Shares deliverable or amounts payable under this plan, and
the Company may defer making delivery or payment until it is indemnified to its
satisfaction for the tax. Options are exercisable, and Shares can be delivered
and payments made under this plan, only in compliance with all applicable
federal and state laws and regulations, including, without limitation, state and
federal securities laws, and the rules of all stock exchanges on which the
Company's stock is listed at any time. An Option is exercisable only if it is
either (i) a registration statement pertaining to the Shares to be issued upon
exercise of the Option has been filed with and declared effective by the
Securities and Exchange Commission and remains effective on the date of
exercise, or (ii) an exemption from the registration requirements of applicable
securities laws is available. This plan does not require the Company, however,
to file such registration statement or to assure the availability of such
exemptions. Any certificate issued to evidence Shares issued under the Plan may
bear such legends and statements, and shall be subject to such transfer
restrictions, as the Committee deems advisable to assure compliance with federal
and state laws and regulations and with the requirements of Section 10 of the
Plan. Each Option may not be exercised, and Shares may not be issued under this
Plan, until the Company has obtained the consent or approval or every regulatory
body, federal or state, having jurisdiction over such matters as the Committee
deems advisable.
Each person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence to
ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and release of taxing
authorities as the Committee deems advisable.
12. ASSIGNABILITY. An Option granted under this Plan is not transferable
except by will or the laws of descent.
13. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
share, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Options are authorized to be granted under this Plan, and the
price per Share payable upon exercise of each Option outstanding under this Plan
shall be equitably adjusted by the Committee to reflect such changes. To the
extent deemed equitable and appropriate by the Board, subject to any required
action by shareholders, in any merger, consolidation, reorganization,
liquidation or dissolution, any Option granted under the Plan shall pertain to
the securities and other property to which a holder of the number of Shares of
stock covered by the Option would have been entitled to receive in connection
with such event.
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14. LIABILITY OF THE COMPANY. The Company, its parent and any Subsidiary
that is in existence or hereafter comes into existence shall not be liable to
any person for any tax consequences expected but not realized by an Optionee or
other person due to the exercise of an Option.
15. EXPENSES OF PLAN. The Company shall bear the expenses of administering
the Plan.
16. DURATION OF PLAN. Options may be granted under this Plan only within
10 years from the effective date of this Plan.
17. APPLICABLE LAW. The validity, interpretation, and enforcement of this
Plan are governed in all respects by the laws of Delaware and the United States
of America.
18. EFFECTIVE DATE. The effective date of this Plan shall be earlier of
(i) the date of which the Board adopts the Plan or (ii) the date on which the
Shareholders approve the Plan.
19. SECURITIES LAWS. The Plan and the administration of the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or any successor
regulation or statute adopted under the federal securities laws. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
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EXHIBIT B
1995 STOCK OPTION PLAN
<PAGE>
TELESCAN, INC.
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Stock Option Plan ("the Plan") is to
further the interest of the Company, its subsidiaries and its shareholders by
providing incentives in the form of stock options to key employees and directors
who contribute materially to the success and profitability of the Company. The
grants will recognize and reward outstanding individual performances and
contributions and will give such persons a proprietary interest in the Company,
thus enhancing their personal interest in the Company's continued success and
progress. This Plan will also assist the Company and its subsidiaries in
attracting and retaining key employees and directors. The options granted under
this Plan may be either Incentive Stock Options, as that term is defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or nonstatutory
options taxed under Section 83 of the Internal Revenue Code of 1986, as amended.
2. DEFINITIONS. The following definitions shall apply to this Plan:
(1) "Board " means the board of directors of the Company.
(2) "Code" means the Internal Revenue Code of 1986, as amended.
(3) "Committee" means the Compensation Committee of the Board
which shall consist of two or more directors of the Company
appointed by the Board.
(4) "Common Stock" means the Common Stock, par value $0.01 per
share, of the Company or such other class of share or
securities as to which the Plan may be applicable, pursuant to
Section 12 herein.
(5) "Company" means Telescan Inc., a Delaware corporation.
(6) "Continuous Service" means the absence of any interruption or
termination of employment with or service to the Company or
any parent or subsidiary of the Company that now exists or
hereafter is organized or acquired by or acquires the Company.
Continuous Service shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of
absence approved by the Company or in the case of transfers
between locations of the Company or between the Company, its
parent, its subsidiaries or its successors.
(7) "Date of Grant" means the date on which the Committee grants
an Option.
(8) "Disinterested Person" means a disinterested person as defined
in Rule 16b-3 of the Rules and Regulations promulgated under
the Exchange Act, or any successor regulation or statute
adopted under the federal securities laws.
(9) "ERISA" means the Employee Retirement Income Security Act, as
amended.
(10) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(11) "Employee" means any person employed on an hourly or salaried
basis by the Company or any parent or subsidiary of the
Company that now exists or hereafter is organized or acquired
by or acquires the Company.
(12) "Fair Market Value" means (i) if the Common Stock is not
listed or admitted to trade on a national securities exchange
and if bid and ask prices for the Common Stock are not
furnished through NASDAQ or a similar organization, the value
established by the Committee, in its sole discretion, for
purposes of the Plan; (ii) if the Common Stock is listed or
admitted to trade on a national securities exchange or a
national market system,
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the closing price of the Common Stock, as published in the
WALL STREET JOURNAL, so listed or admitted to trade on such
day or, if there is no trading of the Common Stock on such
date, then the closing price of the Common stock on the next
preceding date on which there was trading in such shares; or
(iii) if the Common Stock is not listed or admitted to trade
on a national securities exchange or a national market system,
the mean between the bid and asked price for the Common Stock
on such date, as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such
information.
(13) "Incentive Stock Option" means a stock option, granted
pursuant to either this Plan or any other plan of the Company,
that satisfies the requirements of Section 422 of the Code and
that entitles the Optionee to purchase stock of the Company or
in a corporation that at the time of grant of the option was a
parent or subsidiary of the Company or a predecessor
corporation of any such corporation.
(14) "Non-Employee Director" means any member of the Board who is
not an Employee.
(15) "Nonstatutory Option" shall have the meaning as used in
Section 9 herein.
(16) "Option" means a stock option granted pursuant to the Plan.
(17) "Option Period" means the period beginning on the Date of
Grant and ending on the day prior to the tenth anniversary of
the Date of Grant or such shorter termination date as set by
the Committee.
(18) "Optionee" means an Employee or Non-Employee Director who
receives an Option.
(19) "Parent" means any corporation which owns 50% or more of the
voting securities of the Company.
(20) "Plan" means this Stock Option Plan.
(21) "Share" means the Common Stock, as adjusted in accordance with
Section 13 of the Plan.
(22) "Subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the
Company at any time during the existence of this Plan.
3. ADMINISTRATION. This Plan will be administered by the Committee. A
majority of the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the Committee shall be made by
a majority of the members present at a meeting at which a quorum is present or
by the unanimous, written consent of the Committee.
Each member of the Committee must be a Disinterested Person. Accordingly,
a member of the Committee shall not be granted or awarded Options under the Plan
and shall not be granted or awarded options, grants, awards or other rights
pursuant to any other plan of the Company or any of its affiliates if a grant or
award under such plan would cause such person not to be or to lose his status as
a Disinterested Person. If a member of the Committee ceases to be a
Disinterested Person for any reason, such person shall immediately, without any
action by the Board, cease to be a member of the Committee.
The Committee has the exclusive power to select the Employee participants
in this Plan, to establish the terms of the Options granted to each Employee
participant, and to make all other determinations necessary or advisable under
the Plan. The Committee has the sole and absolute discretion to determine
whether the performance of an eligible Employee warrants an award under this
Plan, and to determine the amount of the award. The Committee has full and
exclusive power to construe and interpret this Plan, to prescribe and rescind
rules and
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regulations relating to this Plan, and take all actions necessary or advisable
for the Plan's administration. Any such determination made by the Committee will
be final and binding on all persons. A member of the Committee will not be
liable for performing any act or making any determination in good faith.
4. SHARES SUBJECT TO OPTION. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan shall be 637,500. Such shares may be authorized but unissued, or
may be treasury shares. If an Option shall expire or become unexercisable for
any reason without having been exercised in full, the unpurchased Shares that
were subject to the Option shall, unless the Plan has then terminated, be
available for other Options under the Plan.
5. EMPLOYEE PARTICIPATION.
(1) ELIGIBLE EMPLOYEES. Every Employee, as the Committee in its
sole discretion designates, is eligible to participate in this
Plan. The Committee's award of an Option to an Employee in any
year does not require the Committee to award an Option to that
Employee in any other year. Furthermore, the Committee may
award different Options to different participants. The
Committee may consider such factors as it deems pertinent in
selecting participants and in determining the amount of their
Option, including, without limitation: (i) the financial
condition of the Company or its Subsidiaries; (ii) expected
profits for the current or future years; (iii) the
contributions of prospective employees to the profitability
and success of the Company or its Subsidiaries ; and (iv) the
adequacy of the Employee's other compensation. Employees may
include persons to whom stock, stock options, or other
benefits previously were granted under this or another plan of
the Company or any Subsidiary, whether or not the previously
granted benefits have been fully exercised.
(2) NO RIGHT OF EMPLOYMENT. An Optionee's right, if any, to
continue to serve the Company and its Subsidiaries as an
Employee will not be enlarged or otherwise affected by his
designation as a participant under this Plan, and such
designation will not in any way restrict the right of the
Company or any Subsidiary, as the case may be, to terminate at
any time the employment of any participant.
6. NON-EMPLOYEE DIRECTOR PARTICIPATION.
(1) GRANTS OF AWARDS. The Compensation Committee shall have full
discretion to grant Options to Non-Employee Directors at such
times as it deems appropriate, to determine the number of
shares of Common Stock underlying such Options, and to
determine the other terms and provisions thereof subject to
the other terms of the Plan.
(2) NON-TRANSFERABILITY. Each Option granted to Non-Employee
Directors by its term shall not be transferable by the
Optionee otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of ERISA, or the rules
thereunder, and shall be exercised during the lifetime of the
Optionee only by him. Except as set forth herein, no Option
granted to Non-Employee Directors or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee
during his lifetime, whether by operation of law or otherwise,
or be made subject to execution, attachment or similar
process.
7. OPTION REQUIREMENTS. Each Option granted under this Plan shall satisfy
the following requirements.
(1) WRITTEN OPTION. An Option shall be evidenced by a written
instrument specifying (i) the number of Shares that may be
purchased by its exercise, (ii) the intent of the Committee as
to whether the Option is to be an Incentive Stock Option or a
Nonstatutory Option, and (iii) such terms and conditions
consistent with the Plan as the Committee shall determine.
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(2) DURATION OF OPTION. Each Option may be exercised only during
the Option Period designated for the Option by the Committee.
At the end of the Option Period the Option shall expire.
(3) OPTION EXERCISABILITY. Unless otherwise provided by the
Committee on the grant of an Option, each Option shall be
exercisable only as to no more than one-fourth (1/4) of the
total number of shares covered by the Option during each
twelve-month period commencing twelve months after the date
the Option is granted. Notwithstanding the foregoing, an
Option is exercisable only if the issuance of Shares pursuant
to the exercise would be in compliance with applicable
securities laws, as contemplated by Section 11 of this Plan.
To the extent an Option is either unexercisable or
unexercised, the unexercised portion shall accumulate until
the Option both becomes exercisable and is exercised but in no
case beyond the date that is ten years from the date the
Option is granted.
(4) ACCELERATION OF VESTING. Subject to the provisions of Section
6 and 8(b), the Board may, in its discretion, provide for the
exercise of Options either as to an increased percentage of
shares per year or as to all remaining shares. Such
acceleration of vesting may be declared by the Board at any
time before the end of the Option Period, including, if
applicable, after termination of the Optionee's Continuous
Service by reason of death, disability, retirement or
termination of employment.
(5) OPTION PRICE. Except as provided in Section 8(a) and 9, the
Option price of each Share subject to the Option shall equal
the Fair Market Value of the Share on the Option's Date of
Grant. Notwithstanding the preceding sentence or any other
provision hereof, no Option granted hereunder shall be at an
Option price less than $1.50 per share.
(6) TERMINATION OF SERVICES. If the Optionee ceases Continuous
Service for any reason other than death, disability, or
retirement on or after the age of 65 of the Optionee, all
Options held by the Optionee shall lapse immediately following
the last day that the Optionee is employed by the Company, or
the effective date of the termination of his services to the
Company. On the grant of an Option, the Committee may, in its
discretion, extend the time during which the Option may be
exercised after termination of services. Any such option shall
lapse at the end of the period established by the Committee
for exercise after termination of services. The Option may be
exercised on such termination date, subject to any adjustment
under Section 7(d) and 13.
(7) DEATH. In the case of death of the Optionee, the beneficiaries
designated by the Optionee shall have one year from the
Optionee's demise or to the end of the Option Period,
whichever is earlier, to exercise the Option; provided,
however, the Option may be exercised only for the number of
Shares for which it could have been exercised at the time the
Optionee died, subject to any adjustment under Section 7(b)
and 13.
(8) RETIREMENT. If the Optionee retires on or after attaining age
65, the Option shall lapse at the earlier of the end of the
Option Period or three months after the date of retirement;
provided, however, the Option may be exercised only for the
number of Shares for which it could have been exercised on the
retirement date, subject to any adjustment under Section 7(d)
and 13.
(9) DISABILITY. In the event of termination of Continuous Service
due to total and permanent disability (within the meaning of
Section 422 of the Code), the Option shall lapse at the
earlier of the end of the Option Period or twelve months after
the date of such termination; provided, however, the Option
may be exercised only for the number of Shares for which it
could have been exercised at the time the Optionee became
disabled, subject to any adjustment under Sections 7(d) and
13.
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8. INCENTIVE STOCK OPTIONS. Any Options intended to qualify as an
Incentive Stock Option shall satisfy the following requirements in addition to
the other requirements of the Plan:
(1) TEN PERCENT SHAREHOLDERS. An Option intended to qualify as an
Incentive Stock Option granted to an individual who, on the
Date of Grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of either
the Company or any parent or subsidiary, shall be granted at a
price of 110% of Fair Market Value on the Date of Grant and
shall be exercised only during the five-year period
immediately following the Date of Grant. In calculating stock
ownership of any person, the attribution rules of Section
425(d) of the Code will apply. Furthermore, in calculating
stock ownership, any stock that the individual may purchase
under outstanding options will not be considered.
(2) MAXIMUM OPTION GRANTS. The aggregate Fair Market Value,
determined on the Date of Grant, of stock in the Company
exercisable for the first time by any Optionee during any
calendar year, under the Plan and all other plans of the
Company or its parent or Subsidiaries (within the meaning of
Subsection (d) of Section 422 of the Code) in any calendar
year shall not exceed $100,000.00.
(3) EXERCISE OF INCENTIVE STOCK OPTIONS. No disposition of the
shares underlying an Incentive Stock Option may be made within
two years from the Date of Grant nor within one year after the
exercise of such Incentive Stock Option.
9. NONSTATUTORY OPTIONS. Any Option not intended to qualify as an
Incentive Stock Option shall be a Nonstatutory Option. Nonstatutory Options
shall satisfy each of the requirements of Section 6 of the Plan, except the
Nonstatutory Options may be granted at any price at or above $1.50 per Share.
10. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
exercised when the person entitled to exercise the Option (i) delivers written
notice to the President of the Company of the decision to exercise, (ii)
concurrently tenders to the Company full payment for the Shares to be purchased
pursuant to the exercise, and (iii) complies with such other reasonable
requirements as the Committee establishes pursuant to paragraph 11 of the Plan.
During the lifetime of the Employee to whom an Option is granted, such Option
may be exercised only by him. Payment for Shares with respect to which an Option
is exercised may be in cash, or by certified check, or wholly or partially in
the form of Common Stock having a Fair Market Value equal to the aggregate
Option price. No Person will have the rights of a shareholder with respect to
Shares subject to an Option granted under this Plan until a certificate or
certificates for the Shares have been delivered to him.
An Option granted under this Plan may be exercised in increments of not
less than 10% of the full number of Shares as to which it can be exercised. A
partial exercise of an Option will not effect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
11. TAXES, COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES. The
Company, if necessary or desirable, may pay or withhold the amount of any tax
attributable to any Shares deliverable or amounts payable under this Plan, and
the Company may defer making delivery or payment until it is indemnified to its
satisfaction for the tax. Options are exercisable, and Shares can be delivered
and payments made under this Plan, only in compliance with all applicable
federal and state laws and regulations, including, without limitation, state and
federal securities laws, and the rules of all stock exchanges on which the
Company's stock is listed at any time. An Option is exercisable only if either
(i) a registration statement pertaining to the Shares to be issued upon exercise
of the Option has been filed with and declared effective by the Securities and
Exchange Commission and remains effective on the date of exercise, or (ii) an
exemption from the registration requirements of applicable securities laws is
available. This Plan does not require the Company, however, to file such
registration statement or to assure the availability of such exemptions. Any
certificate issued to evidence Shares issued under the Plan may bear such
legends and statements, and shall be subject to such transfer restrictions, as
the Committee deems advisable to assure compliance with federal and state laws
and regulations and with the requirements of Section 11 of the Plan. Each Option
may not be exercised, and Shares may not be issued under this Plan, until the
Company has obtained
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<PAGE>
the consent or approval or every regulatory body, federal or state, having
jurisdiction over such matters as the Committee deems advisable.
Each person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence of
ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and release of taxing
authorities as the Committee deems advisable.
12. ASSIGNABILITY. An Option granted under this Plan is not transferable
otherwise than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of ERISA,
or the rules thereunder.
13. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
share, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Options are authorized to be granted under this Plan, the
number and class of Shares then subject to Options previously granted under this
Plan, and the price per Share payable upon exercise of each Option outstanding
under this Plan shall be equitably adjusted by the Committee to reflect such
changes. To the extent deemed equitable and appropriate by the Board, subject to
any required action by shareholders, in any merger, consolidation,
reorganization, liquidation or dissolution, any Option granted under the Plan
shall pertain to the securities and other property to which a holder of the
number of Shares of stock covered by the Option would have been entitled to
receive in connection with such event.
14. LIABILITY OF THE COMPANY. The Company, its parent and any Subsidiary
that is in existence or hereafter comes into existence shall not be liable to
any person for any tax consequences expected but not realized by an Optionee or
other person due to the exercise of an Option.
15. EXPENSES OF PLAN. The Company shall bear the expenses of administering
the Plan.
16. DURATION OF PLAN. Options may be granted under this Plan only within
10 years from the effective date of this Plan.
17. APPLICABLE LAW. The validity, interpretation, and enforcement of this
Plan are governed in all respects by the laws of Delaware and the United States
of America.
18. EFFECTIVE DATE. The effective date of this Plan shall be March 23,
1995.
19. SECURITIES LAWS. The Plan and the administration of the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or any successor
regulation or statute adopted under the federal securities laws. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
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<PAGE>
PROXY
TELESCAN, INC.
Solicited by the Board of Directors
The undersigned hereby appoint David L. Brown and Roger C. Wadsworth, each with
full power of substitution as proxies and authorizes them to vote as designated
below all the shares of Common Stock of Telescan, Inc., held of record by the
undersigned on June 18,1999, at the Annual Meeting of Stockholders to be held on
July 28, 1999, and at any adjournments thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the Stockholder, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, FOR ITEM 3, FOR ITEM 4, and IN THE
DISCRETION OF THE PROXIES FOR SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING. If more than one of the proxies designated hereby shall be present
in person at the Annual Meeting, or at any adjournment thereof, each of said
proxies present and voting, either in person or by substitution shall exercise
all the powers herein given.
ITEM 1. Election of Directors
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees below
NOMINEES: David L. Brown, Dr. Richard K. Carlin, Laird G. Foshay, Christopher A.
Glowacki, Dr. Ronald W. Hart, Burt H. Keenan, Russell I. Pillar, Roy T. Rimmer,
Jr., William D. Savoy, Roger C. Wadsworth and Stephen C. Wood
INSTRUCTION: To withhold authority for any individual nominee, strike a line
through the nominee's name above.
ITEM 2. Vote to ratify Hein + Associates LLP as the Company's independent
auditors for the year ending 1999.
___ FOR ___ AGAINST ___ ABSTAIN
(continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
(continued from other side)
ITEM 3. Vote to ratify the Amendment of the Amended Stock Option Plan.
___ FOR ___ AGAINST ___ ABSTAIN
ITEM 4. Vote to ratify the Amendment of the 1995 Stock Option Plan.
___ FOR ___ AGAINST ___ ABSTAIN
ITEM 5. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Date: ______________________________________1999
________________________________________________
Signature
________________________________________________
(Typed or Printed Name)
________________________________________________
(Signature (if held jointly)
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, administrator, trustee or
guardian, give full title as such. If a corporation, please sign as attorney,
administrator, trustee or guardian, give full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If
partnership, please sign in partnership name by authorized personnel.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED AT THE MEETING. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
