<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DATAWARE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
DATAWARE TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of Dataware Technologies, Inc. will
be held at the M.I.T. Faculty Club, Sloan School of Management, 50 Memorial
Drive, Cambridge, Massachusetts, at 10:00 a.m. on Friday, May 23, 1997 for the
following purposes:
1. To elect one director to hold office for a term of three years and until
his successor is elected and has qualified.
2. To vote on amending the Company's 1993 Equity Incentive Plan to increase
the number of shares of Common Stock issuable thereunder.
3. To vote on amending the Company's 1993 Director Stock Option Plan to
provide for amendments to outstanding options.
4. To transact such other business as may be in furtherance of or
incidental to the foregoing or as may otherwise properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 7, 1997 will
be entitled to vote at the meeting or any adjournment thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting for ten days before the meeting during ordinary
business hours at the offices of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR
PROXY WILL NOT BE USED.
By order of the Board of Directors,
STEPHEN H. BEACH, Secretary
Dated: April 16, 1997
<PAGE>
DATAWARE TECHNOLOGIES, INC.
222 THIRD STREET, CAMBRIDGE, MASSACHUSETTS 02142
TELEPHONE (617) 621-0820
----------------
PROXY STATEMENT
----------------
The enclosed proxy is solicited on behalf of the Board of Directors of
Dataware Technologies, Inc. (the "Company") for use at the 1997 Annual Meeting
of Stockholders to be held on Friday, May 23, 1997, and at any adjournments
thereof. The approximate date on which this proxy statement and accompanying
proxy are first being sent or given to security holders is April 23, 1997.
The principal business expected to be transacted at the meeting, as more
fully described below, will be the election of one director and votes on
proposed amendments to the Company's 1993 Equity Incentive Plan and 1993
Director Stock Option Plan.
The authority granted by an executed proxy may be revoked at any time before
its exercise by filing with the Secretary of the Company a written revocation
or a duly executed proxy bearing a later date or by voting in person at the
meeting.
The Company will bear the cost of the solicitation of proxies on behalf of
the Board of Directors, including the charges and expenses of brokerage firms
and others for forwarding solicitation material to beneficial owners of stock.
In addition to the use of mails, proxies may be solicited by officers and
employees of the Company in person or by telephone.
VOTING SECURITIES AND VOTES REQUIRED
Only stockholders of record at the close of business on April 7, 1997 will
be entitled to vote at the meeting. On that date, the Company had outstanding
6,676,279 shares of Common Stock, $0.01 par value (the "Common Stock"), each
of which is entitled to one vote. A majority in interest of the outstanding
Common Stock, represented at the meeting in person or by proxy, constitutes a
quorum for the transaction of business. A plurality of the votes cast is
required to elect the nominee for director, and affirmative votes of a
majority of the shares present or represented and entitled to vote are
required to approve the amendment to the 1993 Equity Incentive Plan and the
amendment to the 1993 Director Stock Option Plan. Broker non-votes will not be
counted in determining the shares entitled to vote on the plan amendments nor
treated as votes cast. (A "broker non-vote" occurs when a registered broker
holding a customer's shares in the name of the broker has not received voting
instructions on the matter from the customer, is barred by applicable rules
from exercising discretionary voting authority in the matter, and so indicates
on the proxy.) In voting on amending the plans, abstentions will be counted as
present and entitled to vote; accordingly, they will have the effect of votes
against approval of such amendments. In electing a director, abstentions and
votes withheld will not be treated as votes cast.
1
<PAGE>
ELECTION OF DIRECTORS
The number of directors is fixed at six for the coming year and is divided
into three classes. At the meeting, one director will be elected to hold
office for three years and until his successor is elected and qualified.
Jochen Tschunke, who is presently serving as a director, has been nominated
for re-election by the Board of Directors. Unless the enclosed proxy withholds
authority to vote for the nominee or is a broker non-vote, the shares
represented by such proxy will be voted for the election as director of Mr.
Tschunke. If he is unable to serve, which is not expected, the shares
represented by the enclosed proxy will be voted for such other candidate as
may be nominated by the Board of Directors.
The following table contains certain information about Mr. Tschunke and each
other person whose term of office as a director will continue after the
meeting.
<TABLE>
<CAPTION>
PRESENT
TERM
NAME AND AGE BOARD MEMBERSHIP, BUSINESS EXPERIENCE, AND OTHER DIRECTORSHIPS EXPIRES
- ------------ -------------------------------------------------------------- -------
<S> <C> <C>
Jochen Tschunke* Mr. Tschunke, who became a director of the Company in 1995, 1997
Age: 52 founded Computer 2000 AG, the Munich-based multinational
computer firm, which he managed from 1983 to 1993 and which
he continues to serve as supervisory board chairman. Before
founding Computer 2000 AG, Mr. Tschunke was General Manager
of Central Europe for Rockwell International and, before
that, served in various management positions with Texas
Instruments. Mr. Tschunke is a member or chairman of the
board of directors of a number of companies, including
Computer-Elektronik Dresden GmbH, MagnaMedia Verlag AG, SPEA
Software AG, Adolf Wurth GmbH & Co. KG, and FC Bayern
Munchen.
Kurt Mueller Mr. Mueller has served as Chief Executive Officer and 1998
Age: 40 Chairman of the Board of Directors since the inception of
the Company in 1988. He was President of the Company until
1993 and again assumed that office in April 1997. He
previously founded and served as General Manager of Dataware
2000 GmbH from 1986 to 1988. From 1984 to 1986 he started up
and was General Manager of Lotus Development GmbH and before
that was a consultant with Bain & Company in the United
States and Europe.
Jeffrey O. Mr. Nyweide served as President and Chief Operating Officer 1999
Nyweide of the Company from 1993 until April 1997 when he became
Age: 41 Vice Chairman of the Board and Senior Executive Vice
President of Business Development. He was Vice President of
Operations from the inception of the Company until 1989 and
Executive Vice President from 1989 to 1993. Mr. Nyweide has
also been a member of the Board of Directors since the
inception of the Company in 1988. From 1987 to 1988, Mr.
Nyweide was President of Dataware, Inc., a CD-ROM
distribution company, and from 1978 to 1987 he served in
various sales, marketing and management positions with The
Service Bureau Company, a subsidiary of Control Data
Corporation.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRESENT
TERM
NAME AND AGE BOARD MEMBERSHIP, BUSINESS EXPERIENCE, AND OTHER DIRECTORSHIPS EXPIRES
- ------------ -------------------------------------------------------------- -------
<S> <C> <C>
Stephen H. Beach Mr. Beach has been a director and Secretary of the Company 1998
Age: 81 since its inception in 1988. He practices law in
Connecticut, specializing in, among other fields, computer,
software and software licensing law. Mr. Beach served in
several capacities for Control Data Corporation from 1973 to
1985, most recently as Senior Vice President and Secretary.
Mr. Beach provided legal counsel to the Company during 1996.
Julie M. Donahue Ms. Donahue was elected to the Board of Directors in April 1999
Age: 38 1997. She has been a principal of The Chasm Group, a
marketing consultancy, since 1995. From 1993 to 1995 she was
Chief Executive Officer of BBN Hark Corporation and from
1991 to 1993 Chief Executive Officer of Voice Processing
Corporation. Ms. Donahue also is a director of NovaLink,
Inc.
William R. Mr. Lonergan has been a director of the Company since 1988. 1999
Lonergan From 1983 to 1994, Mr. Lonergan was a partner of Oxford
Age: 72 Partners, the general partner of several venture capital
partnerships, and he continues as a consultant to Oxford
Partners. Mr. Lonergan is a director of Zitel Corporation
and Kurzweil Applied Intelligence, Inc.
</TABLE>
- --------
* Nominee for election as director
COMMITTEES OF THE BOARD
The Audit Committee, which currently consists of Messrs. Beach and Lonergan,
is responsible for providing the Board of Directors with an independent review
of the financial health of the Company and its financial controls and
reporting. Its primary functions are to recommend independent auditors to the
Board of Directors, review the results of the annual audit and the auditors'
reports, and ensure the adequacy of the Company's financial controls and
procedures. The members of the Audit Committee during 1996 were Mr. Lonergan
and David Dominik and Barton L. Faber, who have since resigned from the Board.
The Audit Committee held one meeting in 1996. The Compensation Committee acts
for the Board of Directors with respect to the Company's compensation
practices and their implementation. It sets and implements the compensation of
the Company's officers and administers the 1993 Equity Incentive Plan and the
1993 Employee Stock Purchase Plan. The members of the Compensation Committee
during 1996 were Messrs. Lonergan, Dominik, and Faber. They held six meetings
in 1996. The composition of the Compensation Committee for the remainder of
1997 will be determined following the Annual Meeting. The entire Board of
Directors functions as a nominating committee, considering nominations
submitted to the Chairman of the Board. The Board of Directors held eleven
meetings during 1996. Mr. Tschunke, who lives in Germany, attended 36% of the
meetings of the Board during 1996. He has made significant contributions of
time to the Company in addition to the formal Board meetings, providing
insight and assistance to senior management. Mr. Faber, who also has made
valuable contributions to the management of the Company in addition to the
formal meetings, attended 56% of the meetings of the Board and Committees of
which he was a member during 1996.
DIRECTOR COMPENSATION
Under the 1993 Director Stock Option Plan (the "Director Plan"), each
director who is not an employee of the Company and who is in office following
the Annual Meeting of Stockholders receives an annual retainer in
3
<PAGE>
the form of nonstatutory options to purchase 6,000 shares of Common Stock, and
any director who is newly elected between Annual Meetings automatically
receives options for 1,500 shares for each calendar quarter beginning after
such election and before the next Annual Meeting. In each case, the options
become exercisable in increments of 1,500 shares at the beginning of each
calendar quarter following the grant date, so long as the director remains in
office, and expire ten years from the grant date. The exercise price of each
option is the fair market value of the Common Stock on the grant date. The
Board has approved the repricing of previously granted options under the
Director Plan, subject to stockholder approval of the proposed amendment to
the Director Plan, as described below. Non-employee directors also receive
$750 for each meeting of the Board of Directors that they attend and are
reimbursed for expenses incurred in attending meetings. Officers of the
Company who are directors do not receive additional compensation for their
service as directors.
PROPOSALS TO AMEND THE 1993 EQUITY INCENTIVE PLAN AND THE 1993 DIRECTOR STOCK
OPTION PLAN
The 1993 Equity Incentive Plan (the "Equity Plan") enables the Company to
offer competitive compensation so as to attract and retain top quality
personnel, to provide an incentive for them to achieve long-range performance
goals, and to enable them to participate in the long-term growth of the
Company. The purposes of the Director Plan are similar: to attract and retain
qualified persons to serve as directors of the Company and to encourage stock
ownership by directors so as to provide an additional incentive to promote the
Company's success. Stock options granted under the Director and Equity Plans
are a significant element of compensation for the Company, as they are in the
software industry generally. Indeed, the options granted under the Director
Plan comprise the whole of the annual retainer payable to Board members and,
thus, the bulk of their compensation for their services to the Company.
Options also benefit the Company in a number of other ways. For example,
they conserve cash and reduce fixed costs; they result in no charge to
reported earnings, either upon grant or exercise; they produce no dilution to
earnings per share without an increase in the stock price that benefits
stockholders generally; the exercise of options increases the Company's
capital; and the Company is entitled to a tax deduction upon the exercise of
nonstatutory options or the disqualifying disposition of incentive stock
options. The Board of Directors believes that it is important for the
Company's future competitiveness to continue to offer competitive equity
compensation to employees and directors as the Company has since inception.
PRINCIPAL TERMS OF THE EQUITY AND DIRECTOR PLANS
The Equity Plan permits the grant of incentive and nonstatutory stock
options, stock appreciation rights, performance shares, restricted stock and
stock units ("Awards") to employees, directors and consultants of the Company.
No stock appreciation rights or other rights to acquire stock other than stock
options have been granted to date. The Equity Plan is administered by the
Compensation Committee of the Board of Directors, which determines the persons
to whom, and the times at which, Awards are granted, the type of Award to be
granted and all other related terms, conditions and provisions of each Award.
The Compensation Committee may delegate to one or more officers the power to
make awards to employees who are not executive officers subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
The Equity Plan may be amended or terminated at any time by the Board of
Directors, subject to any necessary approval by the stockholders. In
particular, any Plan amendment that would increase the number of shares
issuable upon exercise of incentive stock options ("ISOs") would require
stockholder approval.
4
<PAGE>
Although the Compensation Committee has discretion in granting Awards, the
exercise price of any ISO may not be less than 100% of the fair market value
of the Company's Common Stock on the date of the grant (and all nonstatutory
options granted to date also have been at fair market value). The closing
price of the Company's Common Stock as reported by the Nasdaq National Market
on April 7, 1997 was $3.25. No ISO granted under the Equity Plan is
transferable by the optionee other than by will or the laws of descent and
distribution. Other Awards are transferable to the extent provided by the
Compensation Committee. The term of any ISO granted under the Equity Plan may
not exceed ten years, and no ISO may be granted under the Equity Plan more
than ten years from the Plan's adoption. Options are generally granted subject
to forfeiture restrictions that lapse over time during the optionee's
employment. Vested options are generally cancelled if not exercised within a
specified time after termination of the optionee's employment. The aggregate
number of shares issuable under the Equity Plan is subject to appropriate
adjustment in the event of a stock split or other recapitalization. Shares
also may be issued under the Equity Plan through the assumption or
substitution of outstanding grants from an acquired company without reducing
the total number of shares available under the Equity Plan.
The principal terms of the Director Plan are described above in "Election of
Directors--Director Compensation." As of April 7, 1997, 2,000 shares had been
issued upon exercise of options, options to purchase an aggregate of 68,000
shares were outstanding with exercise prices ranging from $6.96875 to $15.25,
and there remained 60,000 shares available for future grants under the
Director Plan. Proceeds from the exercise of stock options granted under both
plans are used for general corporate purposes.
PROPOSED AMENDMENTS
1. Increase in the Number of Shares Issuable under the Equity Plan. There
has been no increase in the number of shares issuable under the Equity Plan
since 1994, although the number of employees of the Company has more than
doubled in that time. As of April 7, 1997, options to purchase an aggregate of
1,531,498 shares were outstanding, and there remain only 317,659 shares
available for award. The Board of Directors believes strongly that, in its
highly competitive environment, the Company needs to provide meaningful stock
option grants to retain and motivate key employees. In order to ensure that
sufficient shares are available for options in 1997, the Board has voted,
subject to stockholder approval, to increase the number of shares issuable
under the Equity Plan by 500,000 shares.
2. Provide for Amendments to Outstanding Options under the Director
Plan. The Board of Directors has voted, subject to stockholder approval, to
provide specifically in the Director Plan that the Board may amend options
that have previously been granted under that Plan. The Board expects to
exercise this authority only in circumstances warranting special
consideration. The Plan currently permits the Board to amend or terminate the
Plan in any respect in its discretion. However, the Director Plan as
previously approved by the stockholders only provides for grants based on the
formula described above in "Election of Directors--Director Compensation," not
discretionary grants as permitted by the Equity Plan. Because option
amendments that would be permissible under the proposed Plan amendment could
alter the option terms set by the formula, the Board wished to present the
proposed amendment to the stockholders for their explicit approval.
The Board has voted that, if the proposed amendment is approved by the
stockholders, the options previously granted and outstanding under the
Director Plan would be amended to set their exercise prices at $3.00, the
market price of the Common Stock on December 9, 1996, when the Board acted.
The Company believes that such an amendment is appropriate and, indeed,
necessary to preserve fair compensation for the outside directors. The
Company's non-employee directors provide valuable services to the stockholders
and management for compensation that consists primarily of stock options
awarded under the Director Plan, subject
5
<PAGE>
to vesting requirements, under which the directors must pay the exercise price
to receive shares. The value of such director compensation thus depends
entirely on the performance of the Company's stock. During most of the last
two years, the Company's Common Stock has traded at levels below the exercise
price of the options previously granted to directors under the Director Plan.
As a result, the value of the compensation paid to directors for all the
services they have provided since the Company went public has been
considerably reduced, if not eliminated.
It should be noted that the formula now embodied in the Director Plan was
adopted in response to a Securities and Exchange Commission requirement
applicable only to members of the Company's Compensation Committee. The
Company adopted it in the Director Plan in order to maintain the same standard
for all non-employee director compensation. The Commission has since repealed
the formula requirement, having concluded that other safeguards make it
unnecessary. Nonetheless, the Company is not proposing to eliminate the
formula as the basis for determining the exercise price of future grants under
the Director Plan. The proposed amendment is intended only to give the Board
the flexibility to address special circumstances.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO STOCK OPTIONS
Incentive Stock Options. An optionee does not realize taxable income upon
the grant or exercise of an ISO under the Equity Plan. If the optionee does
not dispose of shares issued upon exercise of an ISO within two years from the
date of grant or within one year from the date of exercise, then, upon the
sale of such shares, any amount realized in excess of the exercise price is
taxed to the optionee as long-term capital gain, and any loss sustained will
be a long-term capital loss. No deduction would be allowed to the Company for
Federal income tax purposes. The exercise of ISOs gives rise to an adjustment
in computing alternative minimum taxable income that may result in alternative
minimum tax liability for the optionee. If shares of Common Stock acquired
upon the exercise of an ISO are disposed of before the expiration of the two-
year and one-year holding periods described above (a "disqualifying
disposition"), the optionee would realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value
of the shares at exercise (or, if less, the amount realized on a sale of such
shares) over the exercise price thereof, and the Company would be entitled to
deduct such amount. Any further gain realized would be taxed as a short-term
or long-term capital gain and would not result in any deduction to the
Company. A disqualifying disposition in the year of exercise will generally
avoid the alternative minimum tax consequences of the exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the optionee upon the
grant of a nonstatutory option. Upon exercise, the optionee realizes ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise, and the Company is
entitled to a tax deduction for the same amount. Upon disposition of the
shares, appreciation or depreciation after the date of exercise is treated as
a short-term or long-term capital gain or loss and will not result in any
deduction for the Company.
RECOMMENDATION OF THE BOARD
The Board of Directors considers the Company's ongoing program of granting
stock options broadly across the employee base and as the annual retainer for
its outside directors to be very important to the Company's ability to compete
for top talent and a significant incentive to promote the Company's success
and, therefore, in the best interests of the Company's stockholders. The Board
believes that the amendment to the Director Plan is important to ensure that
the nonemployee directors are compensated fairly. Accordingly, the Board
recommends votes FOR the increase in the total number of shares issuable under
the Equity Plan and FOR the amendment to provide explicitly that the Board may
amend outstanding options under the Director Plan. The enclosed proxy will be
so voted unless a contrary specification is made or it is a broker non-vote.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides summary information on the cash compensation and
certain other compensation paid, awarded, or accrued by the Company and its
subsidiaries to or for the Chief Executive Officer of the Company and each of
the other five most highly compensated executive officers for 1996, as measured
by their cash compensation and bonus.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#)(2)
- --------------------------- ---- --------- -------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Kurt Mueller............ 1996 $140,270 -- $11,351 160,892
Chairman of the Board,
President 1995 135,200 $27,625 11,657 70,000
and Chief Executive Of-
ficer 1994 129,999 12,210 11,531 23,214
Jeffrey O. Nyweide...... 1996 $129,480 -- $12,435 146,837
Vice Chairman; Senior
Executive Vice Presi-
dent, Business 1995 124,800 $26,563 11,670 63,333
Development 1994 120,000 11,740 11,646 22,321
Wolfgang P. Ruth........ 1996 $157,099 -- $18,837 73,177
Senior Vice President, 1995 163,687 $12,750 19,264 20,000
Eurasian Operations 1994 145,310 9,016 7,367 22,143
Sherwood J. Palasek..... 1996 $127,431(3) $32,000 $ 5,200 35,575
Senior Vice President, 1995 182,680(3) 638 -- --
American Operations 1994 146,450(3) -- -- --
Kenneth L. Coleman+..... 1996 $126,785 -- $ 7,800 65,957
Former Vice President, 1995 121,325 $24,514 7,800 11,667
Business Development 1994 120,062 -- 8,125 58,286
Edward W. Green+........ 1996 $128,379 -- $ 5,000 27,000
Former Vice President, 1995 120,675 $19,125 5,000 10,000
Development 1994 16,521 -- 625 --
</TABLE>
- --------
+ Messrs. Coleman and Green have resigned their positions with the Company.
(1) Includes (i) automobile allowances with a value of (a) $7,800 in each year
for Messrs. Mueller and Nyweide, (b) $18,837, $19,264 and $7,367 for Mr.
Ruth in 1996, 1995 and 1994, respectively, (c) $5,200 for Mr. Palasek in
1996, (d) $7,800, $7,800 and $8,125 for Mr. Coleman in 1996, 1995 and 1994,
respectively, and (e) $5,000, $5,000 and $625 for Mr. Green in 1996, 1995
and 1994, respectively, and (ii) reimbursement of $3,551, $3,857 and $3,731
for Mr. Mueller and $4,635, $3,870 and $3,846 for Mr. Nyweide of expenses
for preparation of tax returns in 1996, 1995 and 1994, respectively.
(2) The majority of these options were not newly granted during 1996, but were
granted in prior years and repriced during 1996 as described below in
"Stock Option Grants in Last Fiscal Year."
(3) Includes commissions of $30,732, $99,198 and $70,792 earned during 1996,
1995 and 1994, respectively.
7
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options issued during 1996
to the executive officers named in the Summary Compensation Table. The only
options newly granted are shown in the last line for each officer. The other
lines show options that were granted in prior years and as to which the
exercise price was adjusted during 1996, as described under "Compensation
Committee Report on Executive Compensation --Option Repricing" below.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF
SECURITIES STOCK PRICE APPRECIATION
UNDERLYING % OF TOTAL OPTIONS EXERCISE FOR OPTION TERM($)(1)
OPTIONS GRANTED TO PRICE EXPIRATION ----------------------------
NAME GRANTED(#) EMPLOYEES IN 1996 ($/SHARE) DATE 5% 10%
- ---- ---------- ------------------ --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Kurt Mueller............ 26,999(2) 1.72 6.96875 9/15/03 61,181 157,152
20,893(2) 1.33 6.96875 2/25/04 56,991 148,332
18,000(3) 1.14 6.96875 2/17/05 57,827 153,116
45,000(4) 2.86 6.96875 10/20/05 144,567 382,790
50,000(5) 3.18 3.14100 12/09/06 87,284 232,011
Jeffrey O. Nyweide...... 24,749(2) 1.57 6.96875 9/15/03 56,082 144,056
20,089(2) 1.28 6.96875 2/25/04 54,798 142,624
16,499(3) 1.05 6.96875 2/17/05 53,004 140,348
40,500(4) 2.58 6.96875 10/20/05 130,111 344,511
44,000(5) 2.80 3.14100 12/09/06 76,810 204,170
Wolfgang P. Ruth........ 20,249(6) 1.29 6.96875 9/15/03 45,885 117,862
15,428(2) 0.98 6.96875 2/25/04 42,084 109,532
4,500(4) 0.29 6.96875 12/12/04 14,456 38,279
13,500(3) 0.86 6.96875 2/17/95 43,370 114,837
4,500(4) 0.29 6.96875 10/20/05 14,456 38,279
15,000(5) 0.95 3.14100 12/09/06 26,185 69,603
Sherwood J. Palasek..... 6,750(3) 0.43 6.96875 12/15/03 15,295 39,289
1,800(4) 0.11 6.96875 12/12/04 4,910 12,779
2,025(7) 0.13 6.96875 12/11/05 6,505 17,225
10,000(5) 0.64 6.96875 5/23/06 32,126 85,064
15,000(5) 0.95 3.14100 12/09/06 26,185 69,603
Kenneth L. Coleman...... 24,249(8) 1.54 6.96875 2/25/04 54,949 141,145
15,351(2) 0.98 6.96875 2/25/04 34,768 89,353
12,857(2) 0.82 6.96875 2/25/04 29,134 74,836
6,000(3) 0.38 6.96875 2/17/05 16,366 42,597
1,125(9) 0.07 6.96875 10/20/05 3,068 7,987
3,375(3) 0.21 6.96875 10/20/05 10,842 28,709
3,000(2) 0.19 3.14100 12/09/06 5,237 13,920
Edward W. Green......... 18,000 1.14 6.96875 (10) -- --
9,000 0.57 6.96875 (10) -- --
</TABLE>
- --------
(1) Represents hypothetical gains that could be achieved for each option if
exercised at the end of the full ten-year option term, based on assumed
rates of stock price appreciation over the exercise price of 5% and 10%
compounded annually from the date the respective option was granted, and
does not forecast possible future appreciation in the Company's Common
Stock. The actual gain, if any, on the exercise of a stock option
8
<PAGE>
will depend on the future performance of the Common Stock and the date of
exercise. No gain to the optionees is possible without an increase in the
price of the Common Stock, which would, of course, benefit all stockholders
proportionately.
(2) Exercisable as to all such shares on 5/23/96.+
(3) Exercisable in increments of 33 1/3% of such shares on each of 5/23/96,
12/31/96 and 12/31/97.+
(4) Exercisable in increments of 25% of such shares on each of 5/23/96,
12/31/96, 12/31/97 and 12/31/98.+
(5) Exercisable in annual increments of 25% of such shares beginning
12/31/96.+
(6) Exercisable as to 15,001 of such shares on 5/23/96 and as to 5,248 of such
shares on 12/31/96.
(7) Exercisable as to 505 shares on each of 12/31/96, 12/31/97 and 12/31/98,
and 510 shares on 12/31/99.
(8) Exercisable as to 14,349 shares on 5/23/96 and 9,900 shares on 1/1/97.
(9) Exercisable as to 450 shares on 5/23/96 and 225 shares on each of
12/31/96, 12/31/97 and 12/31/98.
(10) These options expired unexercised on January 1, 1997.
+ Any unvested options granted to Messrs. Mueller and Nyweide would become
exercisable in full upon a change in control of the Company.
YEAR-END STOCK OPTION VALUES
The following table sets forth the total number of unexercised stock options
held at the end of 1996 by the executive officers named in the Summary
Compensation Table. None of such officers exercised options in 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT YEAR- IN-THE-MONEY OPTIONS
END 1996(#) AT YEAR-END 1996($)(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kurt Mueller................ 110,446 66,002 $34,668 0
Jeffrey O. Nyweide.......... 122,044 59,511 62,751 0
Wolfgang P. Ruth............ 62,011 16,500 11,801 0
Sherwood J. Palasek......... 14,805 21,170 720 0
Kenneth L. Coleman.......... 62,380 3,577 0 0
Edward W. Green............. 11,250 15,750 0 0
</TABLE>
- --------
(1) Based on the difference between the respective option exercise prices and
the closing market price of the Common Stock on December 31, 1996.
EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements with Messrs. Mueller and
Nyweide. These agreements have no stated term and may be terminated by the
Company at any time. Upon termination without cause, each such officer would
be entitled to continue to receive his base salary, as provided in such
agreement, for a period based on the length of his service, but not more than
twelve months. In addition, any unvested stock options held by Messrs. Mueller
and Nyweide would become exercisable in full upon a change in control of the
Company, as defined in the Equity Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy. The Company's executive compensation program is designed to
be linked closely to corporate performance and returns to stockholders. To
this end, the Company has developed an overall compensation strategy and
specific compensation plan that tie a very significant portion of executive
9
<PAGE>
compensation to the Company's success in meeting specified performance goals.
In addition, through the use of stock options, the company ensures that a part
of the executives' compensation is closely tied to appreciation in the
Company's stock price. The overall objectives of this strategy are to attract
and retain the best possible executive talent, to motivate these executives to
achieve the goals inherent in the Company's business strategy, to link
executive and stockholder interests through equity based plans and, finally,
to provide a compensation package that recognizes individual contributions as
well as overall business results.
The Compensation Committee determines the compensation of the senior
corporate executives, including the individuals named in the Summary
Compensation Table. The Compensation Committee takes into account the views of
Mr. Mueller, the Company's chief executive officer, in reviewing the
individual performance of the executives (other than Mr. Mueller) whose
compensation is detailed in this proxy statement.
The key elements of the Company's executive compensation consist of base
salary, annual bonus and stock options. The Compensation Committee's policies
with respect to each of these elements, including the bases for the
compensation awarded to Mr. Mueller, are discussed below. In addition, while
the elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package
afforded by the Company to the individual, including insurance and other
employee benefits, as well as the programs described below.
Base Salaries. Base salaries for new executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience of the individual. In making determinations regarding base
salaries, the Compensation Committee considers generally available information
regarding salaries prevailing in the industry, but does not utilize any
particular indices or peer groups.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, and also taking into account new
responsibilities. Corporate financial performance that is taken into account
includes annual revenues and net income. Contribution to net income is
assigned greater importance than revenues. The Compensation Committee, where
appropriate, also considers non-financial performance measures. These non-
financial performance measures may include such factors as increase in market
share, efficiency gains, quality improvements, and improvements in relations
with customers, suppliers and employees. No particular weighting is given to
any of these non-financial factors.
The determination of Mr. Mueller's base salary for 1996 was based in
particular on the Company's achievement in 1995 of $41.1 million in revenues,
21% above the 1994 amount of $33.9 million and $1.7 million in net income, 41%
above the 1994 amount of $1.2 million. Mr. Mueller was granted a base salary
of $141,284 for 1996, an increase of 4.5% over his $135,200 base salary for
1995.
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus, which is based primarily on achievement of Company performance
objectives that are established at the beginning of each year. The Company's
performance measure for bonus payments is based on annual revenues and
earnings per share ("eps"), of which revenues has a one third weight and eps
has a two thirds weight. Additionally, a business unit multiplier is applied
against Mr. Palasek's and Mr. Ruth's bonus amounts to arrive at their
respective annual cash bonuses. The business unit multiplier is based on the
achievement of their respective business unit's performance objectives,
relative to pre-established operating targets. Performance bonuses were not
paid out to the executive officers for the year ended December 31, 1996
because revenue and eps were significantly below targeted amounts. Mr. Palasek
received a bonus in connection with his promotion at mid-year.
10
<PAGE>
Stock Options. Under the Company's 1993 Equity Incentive Plan, which was
approved by stockholders, stock options are granted to the Company's executive
officers. Stock options are granted with an exercise price equal to the fair
market value of the Common Stock on the date of grant and vest over various
periods of time, normally four years. Stock option grants are designed to
incentivize the creation of stockholder value over the long term, since the
full benefit of the compensation package cannot be realized unless stock price
appreciation occurs over a number of years. In determining the amount of such
grants, the Compensation Committee evaluates the job level of the executive,
responsibilities to be assumed in the upcoming year, and responsibilities in
prior years, and also takes into account the size of the officer's awards in
the past. Based on these factors and on the level of his existing stock
ownership in 1996, Mr. Mueller received options to purchase 50,000 shares.
Option Repricing. The Company's 1993 Equity Incentive Plan provides a means
for the Company to offer competitive non-cash compensation to attract and
retain top quality personnel and to provide an incentive for them to achieve
long-range performance goals. Stock options granted under the Equity Plan are
a very important element of compensation for the Company, as they are in the
software industry generally; much more so than ever before. The Company is
continually working to hire and retain software developers and other top
talent, who frequently are presented with attractive opportunities with better
financed competitors. However, the value of stock options as an incentive to
stay with the Company, let alone as compensation, depends entirely on the
performance of the Company's stock. During most of the last two to three
years, the Company's Common Stock traded at levels below the exercise price of
the options previously granted to employees under the Equity Plan. As a
result, the incentive value largely disappeared from a significant portion of
each employee's compensation package.
In order to alleviate this situation and to regenerate the original
incentives, the Compensation Committee and the Board of Directors determined
in May 1996 that it would be appropriate to amend the exercise prices of the
outstanding "underwater" options to conform them to the current market.
Accordingly, the Board and the Committee approved a "repricing," under which
outstanding underwater options could be exchanged for options with exercise
prices at the then current market price, but representing only 90% of the
number of shares issuable on exercise of the option being surrendered. Vesting
provisions were unchanged. Most eligible employees exchanged their underwater
options in this manner; the exchanges made by the executive officers named in
the Summary Compensation Table are shown below. In each case, the "Number of
Securities Underlying Options Repriced" is 90% of the number of options held
by the officer before the Committee's action, and the other options were
cancelled.
11
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT EXERCISE PRICE NEW OPTION TERM
OPTIONS TIME AT TIME OF EXERCISE REMAINING AT DATE OF
NAME DATE REPRICED OF REPRICING REPRICING PRICE REPRICING
- ---- ------- ---------- ------------ -------------- -------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kurt Mueller............ 5/23/96 26,999 $6.96875 $19.75 $6.96875 7 yrs
Chairman, President and 20,893 10.375 7 yrs
Chief Executive Officer 18,000 11.75 8 yrs
45,000 11.00 9 yrs
Jeffrey O. Nyweide...... 5/23/96 24,749 $6.96875 $19.75 $6.96875 7 yrs
Vice Chairman and 20,089 10.375 7 yrs
Senior Executive Vice 16,499 11.75 8 yrs
President, Business 40,500 11.00 9 yrs
Development
Wolfgang Ruth........... 5/23/96 20,249 $6.96875 $19.75 $6.96875 7 yrs
Senior Vice President, 15,428 10.375 7 yrs
Eurasian Operations 4,500 10.00 8 yrs
13,500 11.75 8 yrs
4,500 11.00 9 yrs
Sherwood J. Palasek..... 5/23/96 6,750 $6.96875 $ 8.25 $6.96875 7 yrs
Senior Vice President, 1,800 10.00 8 yrs
American Operations 2,025 10.25 9 yrs
Kenneth L. Coleman...... 5/23/96 24,249 $6.96875 $10.375 $6.96875 7 yrs
Former Vice President, 15,351 10.375 7 yrs
Business Development 12,857 10.375 7 yrs
6,000 11.75 8 yrs
1,125 11.00 9 yrs
3,375 11.00 9 yrs
Edward W. Green......... 5/23/96 18,000 $6.96875 $12.50 $6.96875 8 yrs
Former Vice President, 9,000 11.00 9 yrs
Development
</TABLE>
Conclusion. Through the programs described above, a very significant portion
of the Company's executive compensation is linked directly to individual and
corporate performance and stock appreciation. In 1996, as in previous years, a
substantial portion of the Company's targeted executive compensation consists
of performance based variable elements. The Compensation Committee intends to
continue the policy of linking executives' compensation to Company performance
and returns to stockholders, recognizing that the ups and downs of the
business cycle from time to time may result in an imbalance for a particular
period.
By the Compensation Committee,
William R. Lonergan, Chairman
David Dominik
Barton L. Faber
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on the
Company's Common Stock over the period beginning July 20, 1993, when the
Company's Common Stock began trading publicly, and ending April 9, 1997, as
compared with that of the Nasdaq Market Index and an Industry Index, based on
an initial investment of $100 in each. Total stockholder return is measured by
dividing share price change plus dividends, if any, for each period by the
share price at the beginning of the respective period, and assumes reinvestment
of dividends. The Industry Index consists of 296 publicly traded computer
software companies reporting under the same Standard Industrial Classification
Code (SIC 7372) as the Company.
<TABLE>
<CAPTION>
7/20/93 12/31/93 12/30/94 12/29/95 12/31/96 4/9/97
<S> <C> <C> <C> <C> <C> <C>
Dataware Technologies, Inc. $100.00 $ 65.00 $ 88.46 $ 63.46 $ 23.08 $ 26.05
Industry Index $100.00 $110.73 $145.04 $218.07 $289.84 $273.11
Nasdaq Market Index $100.00 $105.26 $110.52 $143.35 $178.13 $169.07
</TABLE>
13
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of April 7, 1997 by (i) persons known by the
Company to be beneficial owners of more than 5% of its Common Stock, (ii) the
executive officers named in the Summary Compensation Table, (iii) the
directors and nominees for election as directors of the Company, and (iv) all
current executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
------------------------------
BENEFICIAL OWNER SHARES PERCENT OF CLASS
- ---------------- ------------- ----------------
<S> <C> <C>
Kurt Mueller................................... 567,726(2) 8.36%
222 Third Street, Suite 3300
Cambridge, MA 02142
Jeffrey O. Nyweide............................. 408,037(3) 6.00%
222 Third Street, Suite 3300
Cambridge, MA 02142
Sherwood J. Palasek............................ 15,288(4) *
Kenneth L. Coleman............................. 63,080(5) *
Edward W. Green................................ 10,000 *
Stephen H. Beach............................... 24,716(6) *
Julie M. Donahue............................... 7,500(7) *
Barton L. Faber................................ 19,000(8) *
William R. Lonergan............................ 14,000(9) *
Wolfgang P. Ruth............................... 74,511(10) 1.10%
Jochen Tschunke................................ 10,000(11) *
All current executive officers and directors as
a group (11 persons).......................... 1,205,505(12) 17.00%
</TABLE>
- --------
*Indicates less than 1%.
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to the shares listed in the
table.
(2) Includes 117,408 shares owned by Mr. Mueller's wife, as to which Mr.
Mueller disclaims beneficial ownership, and options to purchase 110,446
shares that are exercisable as of April 7, 1997 or within 60 days
thereafter. Also includes 48,412 shares that Mr. Mueller and his wife
have agreed to sell to the Company upon the exercise of options granted
to certain employees of the Company.
(3) Includes options to purchase 122,044 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter. Also includes 29,340 shares
that Mr. Nyweide has agreed to sell to the Company upon the exercise of
options granted to certain employees of the Company.
(4) Includes options to purchase 14,805 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(5) Includes options to purchase 62,380 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(6) Includes options to purchase 12,000 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(7) Consists of options to purchase 7,500 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
14
<PAGE>
(8) Includes options to purchase 14,000 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(9) Consists of options to purchase 14,000 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(10) Includes options to purchase 2,500 shares owned by Mr. Ruth's wife, as to
which Mr. Ruth disclaims beneficial ownership, and options to purchase
62,011 shares that are exercisable as of April 7, 1997 or within 60 days
thereafter.
(11) Includes options to purchase 10,000 shares that are exercisable as of
April 7, 1997 or within 60 days thereafter.
(12) Includes 119,908 shares owned by members of the immediate families of two
officers, who disclaim beneficial ownership thereof, and options to
purchase a total of 418,833 shares that are exercisable as of April 7,
1997 or within 60 days thereafter.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's principal officers, directors, and 10% stockholders are
required by Section 16(a) of the Securities Exchange Act of 1934 to file
reports of ownership of, and transactions in, the Company's equity securities
with the Securities and Exchange Commission. Two reports covering one
transaction by David Wilcox, a former executive officer of the Company, and
one transaction by Mr. Ruth were filed for 1996 and 1995, respectively, after
the time such filings were required.
INFORMATION CONCERNING AUDITORS
The firm of Coopers & Lybrand L.L.P., independent accountants, has audited
the Company's accounts for a number of years and will do so for 1997.
Representatives of Coopers & Lybrand L.L.P. are expected to attend the Annual
Meeting, to be available to respond to appropriate questions, and to have the
opportunity to make a statement if they so desire.
STOCKHOLDER PROPOSALS
The Company's Bylaws require a stockholder who wishes to bring business
before or propose director nominations at an annual meeting to give written
notice to the Secretary of the Company not less than 45 days nor more than 60
days before the meeting, unless less than 60 days' notice or public disclosure
of the meeting is given, in which case the stockholder's notice must be
received within 15 days after such notice or disclosure is given. The notice
must contain specified information about the proposed business or nominee and
the stockholder making the proposal or nomination. If any stockholder intends
to present a proposal at the 1998 Annual Meeting of stockholders and desires
that it be considered for inclusion in the Company's proxy statement and form
of proxy, it must be received by the Company at 222 Third Street, Cambridge,
Massachusetts 02142; Attention: Kurt Mueller, President and Chief Executive
Officer, no later than December 16, 1997.
15
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WAS INCLUDED IN
THE COMPANY'S ANNUAL REPORT, WHICH HAS BEEN MAILED TO STOCKHOLDERS. ANY HOLDER
OR BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK MAY OBTAIN ADDITIONAL COPIES
OF THE FORM 10-K UPON WRITTEN REQUEST ADDRESSED TO SUSAN WEINER, ASSISTANT
CONTROLLER, DATAWARE TECHNOLOGIES, INC., 222 THIRD STREET, CAMBRIDGE,
MASSACHUSETTS 02142.
16
<PAGE>
As amended through December 9, 1996.
DATAWARE TECHNOLOGIES, INC.
1993 Director Stock Option Plan
-------------------------------
The purpose of this 1993 Director Stock Option Plan (the "Plan") of
Dataware Technologies, Inc. (the "Company") is to attract and retain highly
qualified non-employee directors of the Company and to encourage ownership of
stock of the Company by such Directors so as to provide additional incentives to
promote the success of the Company.
1. Administration of the Plan.
Grants of stock options under the Plan shall be automatic as provided in
Section 6. However, all questions of interpretation with respect to the Plan
and options granted under it shall be determined by the Board of Directors of
the Company (the "Board") or by a committee consisting of one or more directors
appointed by the Board, and such determination shall be final and binding upon
all persons having an interest in the Plan.
2. Persons Eligible to Participate in the Plan.
All directors of the Company who are not employees of the Company or of
any subsidiary of the Company shall be eligible to participate in the Plan,
unless such director irrevocably elects not to participate.
3. Shares Subject to the Plan.
(a) The aggregate number of shares of the Company's Common Stock, $.01
par value (the "Common Stock"), that may be optioned under this Plan is 130,000
shares. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) In the event of a stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Company's Common Stock, the maximum aggregate number and kind of
shares or securities of the Company as to which options may be granted under
this Plan and as to which options then outstanding shall be exercisable, and the
option price of such options shall be appropriately adjusted so that the
proportionate number of shares or other securities as to which options may be
granted and the proportionate interest of holders of outstanding options shall
be maintained as before the occurrence of such event.
(c) In the event of a consolidation or merger of the Company with another
corporation following which the Company's stockholders do not own a majority in
interest of the surviving or resulting corporation, or the sale or exchange of
all or substantially all of the assets of the Company, or a reorganization or
liquidation of the Company, any deferred
1
<PAGE>
exercise period shall be automatically accelerated and each holder of an
outstanding option shall be entitled to receive upon exercise and payment in
accordance with the terms of the option the same shares, securities or property
as he would have been entitled to receive upon the occurrence of such event if
he had been, immediately prior to such event, the holder of the number of shares
of Common Stock purchasable under his or her option; provided, however, that in
lieu of the foregoing the Board may upon written notice to each holder of an
outstanding option or right under the Plan, provide that such option or right
shall terminate on a date not less than 20 days after the date of such notice
unless theretofore exercised.
(d) Whenever options under this Plan lapse or terminate or otherwise
become unexercisable the shares of Common Stock that were subject to such
options shall again be subjected to options under this Plan. The Company shall
at all times while this Plan is in force reserve such number of shares of Common
Stock as will be sufficient to satisfy the requirements of this Plan.
4. Non-Statutory Stock Options.
All options granted under this Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
5. Form of Options.
Options granted hereunder shall be in substantially the form of the
attached Exhibit A or in such other form as the Board or any committee appointed
---------
pursuant to Section 1 above may from time to time determine.
6. Grant of Options and Option Terms.
(a) Automatic Grant of Options. (i) Immediately following the annual
meeting of stockholders each year, each non-employee director of the Company
newly elected at or continuing in office after such meeting shall automatically
be granted options to purchase 6,000 shares of Common Stock. (ii) Immediately
following his or her election, each non-employee director of the Company newly
elected to the Board of Directors at any point during the year between annual
meetings of stockholders shall automatically be granted options to purchase
1,500 shares of Common Stock for each calendar quarter beginning before the date
of the next annual meeting of stockholders (for which purpose the next annual
meeting shall be deemed to be held on the same calendar date as the preceding
annual meeting). No options shall be granted hereunder after ten years from the
date on which this Plan was initially approved and adopted by the Board.
(b) Date of Grant. The "Date of Grant" for options granted under this
Plan shall be (i) the date of the respective annual meeting of stockholders, for
each grant pursuant to clause (i) of subsection (a) and (ii) the date of the
respective director's election, for each grant pursuant to clause (ii) of
subsection (a).
-2-
<PAGE>
(c) Option Price. The option price for each option granted under this
Plan shall be the current fair market value of a share of Common Stock of the
Company, which, for this purpose, shall be (i) the initial public offering price
of the Common Stock to be sold pursuant to the Registration Statement, for the
initial grants, and (ii) the last sale price for the Company's Common Stock as
reported by the National Association of Securities Dealers Automated Quotations
National Market System, or the principal exchange on which the Common Stock is
then traded, as the case may be, for the business day immediately preceding the
Date of Grant, for each subsequent grant.
(d) Term of Option. The term of each option granted under this Plan
shall be ten years from the Date of Grant.
(e) Exercisability of Options. Options granted under this Plan shall
become exercisable, during the optionholder's term in office, with respect to
1,500 shares at the beginning of each calendar quarter following the Date of
Grant.
(f) General Exercise Terms. Directors holding exercisable options under
this Plan who cease to serve as members of the Board may, during their lifetime,
exercise the rights they had under such options at the time they ceased being a
director for the full unexpired term of such option. Any rights that have not
yet become exercisable shall terminate upon cessation of membership on the
Board. Upon the death of a director, those entitled to do so shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights that were available to the director at the time of
his or her death. The rights of the option holder may be exercised by the
holder's guardian or legal representative in the case of disability and by the
beneficiary designated by the holder in writing delivered to the Company or, if
none has been designated, by the holder's estate or his or her transferee on
death in accordance with this Plan, in the case of death. Options granted under
the Plan shall terminate, and no rights thereunder may be exercised, after the
expiration of the applicable exercise period. Notwithstanding the foregoing
provisions of this section, no rights under any options may be exercised after
the expiration of ten years from their Date of Grant.
(g) Method of Exercise and Payment. Options may be exercised only by
written notice to the Company at its head office accompanied by payment of the
full option price for the shares of Common Stock as to which they are exercised.
The option price shall be paid in cash or by check or in shares of Common Stock
of the Company surrendered or withheld from the shares otherwise issuable upon
exercise, or in any combination thereof. Outstanding shares of Common Stock
surrendered in payment of the option price shall have been held by the person
exercising the option for at least six months, unless otherwise permitted by the
Board. The value of shares surrendered or withheld in payment of the option
price shall be their fair market value, as determined in accordance with Section
6(c) above, as of the date of exercise. Upon receipt of such notice and
payment, the Company shall promptly issue and deliver to the optionee (or other
person entitled to exercise the option) a certificate or certificates for the
number of shares as to which the exercise is made.
-3-
<PAGE>
(h) Transferability. An Option under this Plan may be transferred only
to the extent expressly permitted by the Board and subject to such conditions as
the Board may in its discretion impose.
7. Limitation of Rights.
(a) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option or any other action taken pursuant to the Plan, shall
constitute an agreement or understanding, express or implied, that the Company
will retain an option holder as a director for any period of time or at any
particular rate of compensation.
(b) No Stockholders' Rights for Options. A director shall have no rights
as a stockholder with respect to the shares covered by options until the date
the director exercises such options and pays the option price to the Company,
and no adjustment will be made for dividends or other rights for which the
record date is prior to the date such option is exercised and paid for.
8. Amendment or Termination.
The Board may amend or terminate this Plan at any time. The Board may
amend or modify any outstanding Option in any respect, provided that the
optionee's consent to such action shall be required unless the Board determines
that the action, taking into account any related action, would not materially
and adversely affect the optionee.
9. Stockholder Approval.
This Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company present, or represented and entitled to vote, at a meeting duly held
in accordance with the laws of the State of Delaware. In the event such
approval is not obtained, all options granted under this Plan shall be void and
without effect.
10. Governing Law.
This Plan shall be governed by and interpreted in accordance with the laws
of the State of Delaware.
- ------------------------
. Initially adopted by Board of Directors May 19, 1993.
. Initially approved by Shareholders May 19, 1993.
. Amendments adopted by the Board of Directors April 3, 1995 and approved by
the Shareholders May 17, 1995.
. Amendments adopted by the Board of Directors April 15, 1996 and approved by
the Shareholders May 23, 1996.
. Amendments adopted by the Board of Directors December 9, 1996.
-4-
<PAGE>
Amendment adopted by the Board of Directors December 9, 1996, subject to
stockholder approval:
VOTED: That the Company's 1993 Director Stock Option Plan is hereby amended,
effective immediately but subject to stockholder approval, by deleting
Section 8 in its entirety and substituting therefor the following new
Section 8:
"8. Amendment or Termination. The Board may amend or terminate this
Plan at any time. The Board may amend or modify any outstanding Option
in any respect, provided that the optionee's consent to such action
shall be required unless the Board determines that the action, taking
into account any related action, would not materially and adversely
affect the optionee."
and that the foregoing amendment be submitted for the approval of the
stockholders at the 1997 Annual Meeting.
-5-
<PAGE>
As amended through December 9, 1996
DATAWARE TECHNOLOGIES, INC.
1993 EQUITY INCENTIVE PLAN
Section 1. Purpose
-------
The purpose of the Dataware Technologies, Inc. 1993 Equity Incentive Plan
(the "Plan") is to attract and retain key employees and directors and
consultants of the Company and its Affiliates, to provide an incentive for them
to achieve long-range performance goals, and to enable them to participate in
the long-term growth of the Company.
The Plan constitutes an amendment and restatement of the Dataware
Technologies, Inc. 1988 Stock Option Plan (the "1988 Plan"), which is hereby
merged with and into the Plan, and the separate existence of the 1988 Plan shall
terminate on the Effective Date. The rights and privileges of holders of
outstanding options or rights under the 1988 Plan shall not be adversely
affected by the foregoing action.
Section 2. Definitions
-----------
"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock, Stock Unit or Other Stock-Based Award awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such Code.
"Committee" means a committee of not less than two members of the Board
appointed by the Board to administer the Plan, each of whom is a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 or any successor provision, as applicable to the Company at the time ("Rule
16b-3").
"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of the
Company.
"Company" means Dataware Technologies, Inc.
<PAGE>
"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, "Designated Beneficiary"
shall mean the Participant's estate.
"Effective Date" means May 19, 1993.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 that is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Other Stock-Based Award" means an Award, other than an Option, Stock
Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a
Common Stock element and awarded to a Participant under Section 11.
"Participant" means a person selected by the Committee to receive an Award
under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock, which may be earned by
the achievement of performance goals, awarded to a Participant under Section 8.
"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time during which an Award may be
forfeited to the Company pursuant to the terms and conditions of such Award.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
-2-
<PAGE>
"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
Section 3. Administration
--------------
The Plan shall be administered by the Committee, provided that the Board
may in any instance perform any of the functions of the Committee. The
Committee shall have authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, and to interpret the provisions of the
Plan. The Committee's decisions shall be final and binding. To the extent
permitted by applicable law, the Committee may delegate to one or more executive
officers of the Company the power to make Awards to Participants who are not
Reporting Persons and all determinations under the Plan with respect thereto,
provided that the Committee shall fix the maximum amount of such Awards for all
such Participants and a maximum for any one Participant.
Section 4. Eligibility
-----------
All employees and, in the case of Awards other than Incentive Stock
Options, directors and consultants of the Company or any Affiliate, capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan. Incentive Stock Options may be granted only to
persons eligible to receive such Options under the Code.
Section 5. Stock Available for Awards
--------------------------
(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 3,000,000 shares of Common Stock (after giving effect to the
3:1 reverse stock split approved by the Board on the Effective Date). If any
Award in respect of shares of Common Stock expires or is terminated unexercised
or is forfeited without the Participant having had the benefits of ownership
(other than voting rights), the shares subject to such Award, to the extent of
such expiration, termination or forfeiture, shall again be available for award
under the Plan. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee (subject, in the case of Incentive
Stock Options, to any limitation required under the Code) shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding
-3-
<PAGE>
Awards, and (iii) the award, exercise or conversion price with respect to any of
the foregoing, and if considered appropriate, the Committee may make provision
for a cash payment with respect to an outstanding Award, provided that the
number of shares subject to any Award shall always be a whole number.
Section 6. Stock Options
-------------
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code or any successor provision and any regulations
thereunder, and no Incentive Stock Option may be granted hereunder more than ten
years after the Effective Date.
(b) The Committee shall establish the option price at the time each
Option is awarded, which price shall not be less than 100% of the Fair Market
Value of the Common Stock on the date of award with respect to Incentive Stock
Options. Nonstatutory Stock Options may be granted at such prices as the
Committee may determine.
(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, or by
retaining shares otherwise issuable pursuant to the Option, in each case valued
at their Fair Market Value on the date of delivery or retention, or such other
lawful consideration as the Committee may determine.
(e) The Committee may provide that, subject to such conditions as it
considers appropriate, upon the delivery or retention of shares to the Company
in payment of an Option, the Participant automatically be awarded an Option for
up to the number of shares so delivered.
Section 7. Stock Appreciation Rights
-------------------------
(a) Subject to the provisions of the Plan, the Committee may award SARs
in tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs granted in
tandem with Options shall have an exercise price not less than the exercise
price of the related Option. SARs granted alone and unrelated to an Option may
be granted at such exercise prices as the Committee may determine.
-4-
<PAGE>
(b) An SAR related to an Option, which SAR can only be exercised upon or
during limited periods following a change in control of the Company, may entitle
the Participant to receive an amount based upon the highest price paid or
offered for Common Stock in any transaction relating to the change in control or
paid during the thirty-day period immediately preceding the occurrence of the
change in control in any transaction reported in the stock market in which the
Common Stock is normally traded.
Section 8. Performance Shares
------------------
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares
shall be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.
(b) The committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares that have been earned
on the basis of performance in relation to the established performance goals.
The payment values of earned Performance Shares shall be distributed to the
Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
Section 9. Restricted Stock
----------------
(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock may be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration
-5-
<PAGE>
of the Restricted Period, the Company shall deliver such certificates to the
Participant or if the Participant has died, to the Participant's Designated
Beneficiary.
Section 10. Stock Units
-----------
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.
Section 11. Other Stock-Based Awards
------------------------
(a) Subject to the provisions of the Plan, the Committee may make other
awards of Common Stock and other awards that are valued in whole or in part by
reference to, or are otherwise based on, Common Stock, including without
limitation convertible preferred stock, convertible debentures, exchangeable
securities and Common Stock awards or options. Other Stock-Based Awards may be
granted either alone or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan.
(b) The Committee may establish performance goals, which may be based on
performance goals related to book value, subsidiary performance or such other
criteria as the Committee may determine, Restricted Periods, Performance Cycles,
conversion prices, maturities and security, if any, for any Other Stock-Based
Award. Other Stock-Based Awards may be sold to Participants at the face value
thereof or any discount therefrom or awarded for no consideration or such
minimum consideration as may be required by applicable law.
Section 12. General Provisions Applicable to Awards
---------------------------------------
(a) Limitations on Grants of Options and SARs. Subject to adjustment
under Section 5(b), the number of shares subject to Options and SARs granted to
any one individual during any fiscal year may not exceed 250,000 shares of
Common Stock.
(b) Transferability. An Award under this Plan may be transferred only to
the extent expressly permitted by the Committee and subject to such conditions
as the Committee may in its discretion impose.
(c) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable tax and regulatory
laws and accounting principles.
(d) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type
of Award need not be
-6-
<PAGE>
identical, and the Committee need not treat Participants uniformly. Except as
otherwise provided by the Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of award or at any
time thereafter.
(e) Settlement. The Committee shall determine whether Awards are settled
in whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Committee may permit a Participant to defer all or
any portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(f) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(g) Termination of Employment. The Committee shall determine the effect
on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.
(h) Change in Control. In order to preserve a Participant's rights under
an Award in the event of a Change in Control (as defined below), the Committee
in its discretion may, at the time an Award is made or at any time thereafter,
take one or more of the following actions: (i) provide for the acceleration of
any time period relating to the exercise or realization of the Award, (ii)
provide for the purchase of the Award upon the Participant's request for an
amount of cash or other property that could have been received upon the exercise
or realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the Change in Control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.
As used herein, a "Change in Control" of the Company shall be deemed
to have occurred upon the occurrence of any of the following:
(A) Any transaction or series of transactions, as a result of which
any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder) (a "Person") is or becomes a "beneficial
owner" (as defined in Rule 13d-3 under such act), directly or
indirectly, of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the
Company's then outstanding voting securities (the "Company's
Outstanding Voting Securities"); provided, however, that a
Change in Control shall not be deemed to have occurred solely
because of the acquisition of securities of the Company by (1)
one or more employee benefit plans or related trusts established
for the benefit of the employees of the Company or any Affiliate
of the Company; or (2) any
-7-
<PAGE>
Person when such acquisition (a) is effected primarily to
prevent the Company from being declared insolvent and (b) is
approved by the Board of Directors of the Company (the "Board").
(B) Any change in the membership of the Board such that individuals
who are Incumbent Directors (as defined herein) cease for any
reason to constitute at least a majority of the Board. The
Incumbent Directors shall be (1) those members of the Board who
were Directors as of April 15, 1996 and who have served
continuously as Directors since such date, and (2) any other
member of the Board who subsequently became a Director and whose
election or nomination for election by the Company's
stockholders at the beginning of his or her current tenure was
approved by a vote of at least a majority of the Directors who
were then Incumbent Directors, except that no individual shall
be an Incumbent Director if such individual's initial assumption
of office as a Director occurred as a result of an actual or
threatened election contest with respect to the election or
removal of Directors, or other actual or threatened solicitation
of proxies or consents, by, or on behalf of, a Person other than
the Board.
(C) The consummation of a reorganization, merger, consolidation,
sale or other disposition of all or substantially all of the
assets of the Company, or similar transaction (a "Business
Combination"), unless all of the following conditions are met:
(1) the individuals and entities who are the beneficial owners
of the Company's Outstanding Voting Securities immediately
before the consummation of the Business Combination would
beneficially own, directly or indirectly, securities
representing more than 50% of the outstanding combined
voting power of the voting securities that would be
outstanding and entitled to vote generally in the election
of the governing body of the corporation or other entity
resulting from such Business Combination (including,
without limitation, a corporation or other entity that as a
result of such transaction would own the Company or all or
substantially all of the Company's assets, either directly
or through one or more subsidiaries) (the "Resulting
Entity"), and the securities of the Resulting Entity that
would be owned by such beneficial owners of the Company's
Outstanding Voting Securities would be owned by them in
substantially the same proportions as they own the
Company's Outstanding Voting Securities;
(2) no Person (excluding any corporation or other entity
resulting from such Business Combination, and excluding any
employee benefit plan or related trust of the Company or of
such corporation or other entity resulting from such
Business Combination) would beneficially own, directly or
indirectly, 30% or more of the combined voting power of the
outstanding voting securities of the
-8-
<PAGE>
Resulting Entity except to the extent that such ownership
existed before the Business Combination; and
(3) at least a majority of the members of the board of
directors of the Resulting Entity would be persons who were
Incumbent Directors at the time of the execution of the
initial agreement or of the action of the Board providing
for such Business Combination.
(D) Approval by the Company's stockholders of a liquidation or
dissolution of the Company (unless the liquidation or
dissolution is part of a Business Combination excepted from
clause (C) above).
(E) The close of business on the latest of the following dates:
(1) the date that a tender or exchange offer by any Person
(other than the Company, any Affiliate of the Company, or
any employee benefit plan or related trust established for
the benefit of the employees of the Company or any
Affiliate of the Company) that, if consummated, would
result in such Person becoming a "beneficial owner" (as
defined in clause (A) above), directly or indirectly, of
securities of the Company representing thirty percent (30%)
or more of the combined voting power of the Company's then
outstanding voting securities, is first published or sent
or given within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder;
(2) the date upon which all regulatory approvals required for
the acquisition of securities pursuant to the tender or
exchange offer referred to in clause (1) have been obtained
or waived; or
(3) the date upon which any approval of the security holders of
the Person publishing or sending or giving the tender or
exchange offer referred to in clause (1) required for the
acquisition of securities pursuant to such tender or
exchange offer is obtained or waived."
(i) Loans. The Committee may authorize the making of loans or cash
payments to Participants in connection with any Award under the Plan, which
loans may be secured by any security, including Common Stock, underlying or
related to such Award (provided that such Loan shall not exceed the Fair Market
Value of the security subject to such Award), and which may be forgiven upon
such terms and conditions as the Committee may establish at the time of such
loan or at any time thereafter.
(j) Withholding Taxes. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability.
-9-
<PAGE>
In the Committee's discretion, such tax obligations may be paid in whole or in
part in shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value on the date of
delivery. The Company and its Affiliates may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the Participant.
(k) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws.
(l) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 13. Miscellaneous
-------------
(a) No Right To Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving
a Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on the Effective Date. Before such
approval, Awards may be made under the Plan expressly subject to such approval.
(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any stockholder approval
that the Board determines to be necessary or advisable.
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Delaware.
-10-
<PAGE>
--------------------------------------------
. Plan adopted by the Board of Directors on May 19, 1993.
. Plan approved by the stockholders on May 19, 1993.
. Increase in shares approved by the Board of Directors April 15, 1994
and approved by the Shareholders May 25, 1994.
. Amendments adopted by the Board of Directors April 15, 1996 and
approved by the Shareholders May 23, 1996.
. Amendments adopted by the Board of Directors December 9, 1996.
. Increase in shares approved by the Board of Directors February 11,
1997.
-11-
<PAGE>
DATAWARE TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 23, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints Daniel M.
Clarke, Kurt Mueller and Jeffrey O. Nyweide, and each of them, with full power
of substitution to each, proxies to represent the undersigned at the Annual
Meeting of Stockholders of Dataware Technologies, Inc. to be held at the M.I.T.
Sloan School of Management, 50 Memorial Drive, Cambridge, Massachusetts at 10:00
A.M. on May 23, 1997, and at any adjournment thereof, and to vote as designated
on the reverse all shares of stock of Dataware Technologies, Inc. that the
undersigned would be entitled to vote at said meeting. A majority of said
proxies present and acting at the meeting (or, if only one shall be present and
acting, then that one) may exercise all the powers granted hereby. Said proxies
are authorized to vote in their discretion upon any other matters that may come
before the meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[X] Please mark votes as in
this example
1. ELECTION OF DIRECTORS
Nominee: Jochen Tschunke
FOR WITHHELD
[_] [_]
2. PROPOSAL TO AMEND THE COMPANY'S 1993 EQUITY INCENTIVE PLAN to increase the
number of shares of Common Stock issuable thereunder.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. PROPOSAL TO AMEND THE COMPANY'S 1993 DIRECTOR STOCK OPTION PLAN to provide
for amendments to outstanding options.
FOR AGAINST ABSTAIN
[_] [_] [_]
Signature: Date:
--------------------------------------------- --------------------
Note: Please sign, date, and return by May 23, 1997. If signing as attorney or
for an estate, trust or corporation, title or capacity should be stated.
Each stockholder should specify by a mark in the appropriate box how he wishes
his shares voted.
IF NO SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR THE ELECTION OF THE
---
NOMINEE FOR DIRECTOR, FOR THE PROPOSED AMENDMENT TO THE 1993 EQUITY INCENTIVE
---
PLAN, AND FOR THE PROPOSED AMENDMENT TO THE 1993 DIRECTOR STOCK OPTION PLAN.
---
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT
[_]
Signature: Date:
--------------------------------------------- --------------------
