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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 29, 1999
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INPUT SOFTWARE, INC.
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(EXACT NAME OF REGISTRATION AS SPECIFIED IN CHARTER)
DELAWARE 000-22292 77-0104275
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(STATE OR OTHER JURISDICTION OF (COMMISSION (IRS EMPLOYER
INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1299 PARKMOOR AVENUE, SAN JOSE, CALIFORNIA 95126
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 325-3800
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
On October 8, 1999, the Registrant's Board of Directors (the "Board") adopted
a Special Incentive Bonus Plan (the "Incentive Plan"). The Incentive Plan was
adjusted on December 29, 1999. The Incentive Plan was adopted to both retain
and motivate management of the Registrant to improve stockholder value.
Background
In an effort to improve stockholder value the Board of Directors of the
Registrant made the significant strategic decision in early 1998 to divest of
its hardware division and focus solely on its software business. As a result
the Registrant was renamed as Input Software, Inc in August, 1998 and
completed the previously announced sale to management of the hardware
division.
The Registrant continued to grow revenues and achieve profits throughout 1998
and early 1999 but was unable to realize any measurable increase to
stockholder value subsequent to the date of the announced divestiture of the
hardware division. During this time the Board became concerned that the
robust employment climate in the Silicon Valley, coupled with the
Registrant's poor stock price performance, would result in
management-retention issues. Consequently the Board began reviewing various
options that may help retain and motivate key management individuals of the
Registrant.
Coincidentally, early 1999 market research by the Registrant indicated a
potentially attractive extension of the Registrant's enterprise software
technology to provide XML-based data capture for the sale of complex products
via the internet. The Board reviewed management's preliminary product plans
at the July 1, 1999 regular board meeting and formally approved, at the
August 27, 1999 regular board meeting, the funds required to develop and
launch Dynamic Input. In parallel the Board continued to consider various
compensation and equity plans that were deemed necessary to retain and
motivate management to execute this new product strategy. The Board elected
to adopt the Incentive Plan at the October 8, 1999 regular board meeting.
The Board reconvened for a special meeting on December 29, 1999 to consider
some adjustments to the Incentive Plan. Specifically, the Incentive Plan was
adjusted to require a longer period of sustained share price level
improvement before any bonus would be earned and was adjusted to pay a
greater portion of any bonuses in the form of the Registrant's stock, thus
better preserving the Registrant's cash reserves. The Incentive Plan, as
adjusted on December 29, 1999, is attached to this summary as Exhibit 99.1.
Summary
In summary, the Incentive Plan will result in $2.65 million of bonus
payments, with $1.0 million in the form of cash and the remainder in the form
of the Registrant's common stock, to various executives of the Registrant if
certain increased stock price levels are reached within a three-year period
starting October 8, 1999 and sustained, on average, for forty-five calendar
days. The Board believes this Incentive Plan best serves the interests of
both stockholders and management,
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as payoffs from it will only be earned upon an increase of approximately 200%
to the October 8, 1999 share price.
The full description, terms and conditions of the payments are set forth in
the Incentive Plan attached as Exhibit 99.1 hereto.
ITEM 7. EXHIBITS
(c) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit
Number
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<S> <C>
99.1 Text of Incentive Plan dated December 29, 1999.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
INPUT SOFTWARE, INC.
(Registrant)
Date: January 13, 2000 By: /s/ John Finegan
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John Finegan
Vice President of Finance and Chief
Financial Officer
INPUT SOFTWARE, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
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<S> <C>
99.1 Text of Incentive Plan dated December 29, 1999.
</TABLE>
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EXHIBIT 99.1
INPUT SOFTWARE, INC.
SPECIAL INCENTIVE BONUS PLAN
HISTORY AND PURPOSE OF THE PLAN.
This Plan was adopted by the Board of Directors of Input Software, Inc. (the
"Company") on October 8, 1999. This Plan was amended and restated by the
Company's Board of Directors on December 29, 1999. The purpose of this Plan
is to create an additional incentive for the Company's management team to
increase stockholder value. To achieve this objective, this Plan provides for
the payment of cash and stock bonuses in the event that the value of the
Company's Common Stock attains certain levels over an extended period of time.
ADMINISTRATION.
This Plan will be administered by the Compensation Committee of the Company's
Board of Directors. The Compensation Committee has the discretion to
interpret this Plan and to modify its provisions to the extent necessary to
protect the interests of the Company and its stockholders.
ELIGIBILITY.
Eligibility for participation in this Plan is limited to officers and
director-level employees of the Company. Participants will be identified by
the Company's Chief Executive Officer and notified individually of their
eligibility.
BONUS POOL AND INDIVIDUAL BONUSES.
The aggregate amount of the bonuses paid under this Plan will not exceed
$2,650,000. The amount of each participant's individual bonus will be
determined by the Company's Chief Executive Officer and will be subject to
final approval by the Compensation Committee of the Company's Board of
Directors.
PERFORMANCE TARGET.
No bonuses will be paid under this Plan unless and until each of the
following requirements has been satisfied with respect to the same period
(the "Measurement Period"):
(a) The Measurement Period may start on any date that occurs (i) after
October 8, 1999, and (ii) on or after the first day following October
8, 1999, on which the closing price of the Company's Common Stock
equals or exceeds $12.50 per share.
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(b) The Measurement Period may be any period of 45 consecutive calendar
days during which the average closing price of the Company's Common
Stock equals or exceeds $12.50 per share.
(c) The closing price of the Company's Common Stock must equal or exceed
$11.00 per share on each of the last five trading days in the
Measurement Period.
(d) The Measurement Period must close on or before October 8, 2002.
Closing prices will be determined based on the amounts reported in the Western
Edition of THE WALL STREET JOURNAL.
FORM OF PAYMENT.
In the aggregate, $1,000,000 of the bonuses under this Plan will be paid in
cash and the balance will be distributed in the form of fully vested shares
of the Company's Common Stock. Each individual bonus will be paid in cash and
shares on a pro rata basis. For this purpose, the value of the Company's
Common Stock will be deemed to be equal to its closing price on the most
recent trading day prior to the date when the shares are issued to the
participants.
TIME OF PAYMENT.
The bonuses under this Plan will be paid within three business days after the
close of the Measurement Period, except as provided in the next sentence. If,
when the bonuses otherwise would be paid, any member of the Company's
management team is precluded by Rule 10b-5 of the Securities and Exchange
Commission or by the Company's policies from selling shares of the Company's
Common Stock in the open market, then payment of all bonuses under this Plan
will be deferred until all members of the Company's management team are
permitted to sell shares of the Company's Common Stock in the open market.
CORPORATE TRANSACTIONS.
Bonuses under this Plan may also be paid in the event that (a) the Company is
a party to a Corporate Transaction (as defined in the Company's 1993 Stock
Option/Stock Issuance Plan) that closes on or before October 8, 2001, and (b)
no other bonuses have been paid under this Plan when the Corporate
Transaction closes. The amount of the bonuses payable under this Plan in the
event of a Corporate Transaction is a percentage of the bonuses described
above, determined as follows:
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<TABLE>
<CAPTION>
VALUE PER SHARE RECEIVED BY COMPANY'S STOCK-
HOLDERS AS RESULT OF CORPORATE TRANSACTION PERCENTAGE OF BONUSES TO BE PAID
<S> <C>
Less than $6.00 0%
$6 25%
More than $6 but less than $10 25% plus 0.1875% for each $0.01 of value per share
received by the Company's stockholders in excess
of $6.00
$10 or more 100%
</TABLE>
All share values in the preceding table will be adjusted equitably to reflect
stock splits, stock dividends and similar changes in the Company's
capitalization.
Bonuses earned as a result of a Corporate Transaction will be paid at the
time of the closing of the Corporate Transaction. Payment will be made in
cash, in shares of the Company's Common Stock, in shares of the capital stock
of the surviving corporation or its parent, or in any combination of the
foregoing, as the Compensation Committee of the Company's Board of Directors
may determine at its sole discretion, except that the cash portion of the
payments may not be less than 40% of overall payments and must be 100% if the
surviving corporation's capital stock is not registered and publicly tradable
on a regulated stock exchange.
In no event will bonuses be paid as a result of a Corporate Transaction if
bonuses have already been paid at the close of a Measurement Period.
WITHHOLDING TAXES.
All payments and distributions under this Plan will be subject to reduction
to reflect applicable withholding taxes. In the case of distributions in the
form of shares of the Company's Common Stock, withholding taxes will be
deducted to the extent possible from the cash payments due under this Plan or
from any other compensation payable by the Company to the participant.
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