SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
USDATA CORPORATION
(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)(1)
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
[ ] 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:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-- June 18, 1999 --
Dear USDATA Stockholder:
The 1999 annual meeting of stockholders of USDATA Corporation will be held on
Friday, June 18, 1999, at 11:00 a.m. local time, at our headquarters located at
2435 North Central Expressway, Richardson, TX 75080-2722. You will find
directions to the meeting on our web site at www.usdata.com.
Only stockholders who owned stock at the close of business on April 19, 1999,
can vote at this meeting or any adjournments that may take place. At the
meeting, we will
o elect 7 directors,
o request adoption of an Employee Stock Purchase Plan,
o request approval of an amendment to our 1994 Equity compensation Plan to
increase the number of shares authorized for issuance under the plan, and
o attend to any other business properly presented at the meeting.
We also will report on USDATA's 1998 business results and other matters of
interest to our stockholders. You will have an opportunity at the meeting to ask
questions, make comments and meet our management team.
All stockholders are cordially invited to attend the meeting. No admission
tickets are required. Whether or not you expect to attend the meeting, please
fill in, date and sign the accompanying proxy card and mail it promptly in the
enclosed envelope.
USDATA's board of directors is a vital resource. No matter how many shares you
hold, we consider your vote important, and we encourage you to vote as soon as
possible.
We have rewritten and reformatted our proxy statement to make it easier to read.
We encourage you to read this document and we welcome your comments on the new
format.
This proxy statement, accompanying proxy card, and 1998 annual report are being
mailed to stockholders beginning on or about May 7, 1999, in connection with the
solicitation of proxies by the board of directors.
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Please contact Robert L. Drury, Secretary and Chief Financial Officer, at (972)
680-9700 with any questions or concerns.
Sincerely,
/s/ Robert A. Merry /s/ Robert L. Drury
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Robert A. Merry Robert L. Drury
Chief Executive Officer Secretary
May 7, 1999
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QUESTIONS AND ANSWERS
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Q: Who is entitled to vote?
A: Stockholders of record as of the close of business on April 19, 1999, may
vote at the annual meeting.
Q: How many shares can vote?
A: On April 19, 1999, there were 11,402,366 shares issued and outstanding.
Every stockholder may cast one vote for each share owned.
Q: What may I vote on?
A: You may vote on the election of 7 directors who have been nominated to
serve on our board of directors, on the adoption of an Employee Stock
Purchase Plan, and on the amendment to increase the number of shares in our
1994 Equity Compensation Plan.
Q: How does the board recommend I vote on the proposals?
A: The board recommends a vote FOR each board nominee, FOR the proposal to
adopt the Employee Stock Purchase Plan and FOR the proposal to amend the
1994 Equity Compensation Plan.
Q: How do I vote?
A: Sign and date each proxy card you receive, mark the boxes indicating how
you wish to vote, and return the proxy card in the prepaid envelope
provided.
If you sign your proxy card but do not mark any boxes showing how you wish
to vote, Robert A. Merry and Robert L. Drury will vote your shares as
recommended by the board of directors.
Q: What if I hold my USDATA shares in a brokerage account?
A: If you hold your USDATA shares through a broker, bank or other nominee, you
will receive a voting instruction form directly from them describing how to
vote your shares. This form will, in most cases, offer you three ways to
vote:
1. by telephone,
2. via the Internet, or
3. by returning the form to your broker.
Q: What if I want to change my vote?
A: You may change your vote at any time before the meeting in any of the
following three ways:
1. notifying our corporate secretary, Robert L. Drury, in writing,
2. voting in person at the meeting, or
3. submitting a proxy card with a later date.
If you hold your shares through a broker, bank or other nominee and wish to
vote at the meeting, you must obtain a legal proxy from that nominee
authorizing you to vote at the meeting. We will be unable to accept a vote
from you at the meeting without that form. If you hold your shares directly
and wish to vote at the meeting, no additional forms will be required.
Q: How will directors be elected?
A: The 7 nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted will be elected as
directors.
Q: What vote is required to adopt the other proposals on the agenda?
A: On the proposals to adopt an employee stock purchase plan and to amend the
1994 Equity Compensation Plan, a quorum must be present and voting on each
proposal, and a majority of the votes cast must be in favor of each
proposal.
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QUESTIONS AND ANSWERS (cont.)
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Q: Who will count the votes?
A: A representative of USDATA will count the votes and act as the judge of
elections.
Q: What does it mean if I get more than one proxy card?
A: Your shares may be registered differently or may be in more than one
account. We encourage you to have all accounts registered in the same name
and address (whenever possible). You may obtain information about how to do
this by contacting our transfer agent at:
ChaseMellon Stockholder Services
85 Challenger Road
Ridgefield Park, NJ 07660
(toll-free telephone 800-526-0801)
If you provide ChaseMellon with photocopies of the proxy cards that you
receive or with the account numbers that appear on each proxy card, it will
be easier for ChaseMellon to combine your accounts.
You also can find information on transferring shares and other useful
stockholder information on their web site at www.chasemellon.com.
Q: What is a quorum?
A: A quorum is a majority of the outstanding shares. The shares may be
represented at the meeting either in person or by proxy. To hold the
meeting, there must be a quorum present.
Q: What is the effect if I abstain or fail to give instructions to my broker?
A: If you submit a properly executed proxy, your shares will be counted as
part of the quorum even if you abstain from voting or withhold your vote
for a particular director.
Broker non-votes also are counted as part of the quorum. A broker non-vote
occurs when banks, brokers or other nominees holding shares on behalf of a
stockholder do not receive voting instructions from the stockholder by a
specified date before the meeting. In this event, banks, brokers and other
nominees may vote those shares on matters deemed routine. The election of
directors is considered a routine matter. The adoption of the Employee
Stock Purchase Plan and the amendment to the 1994 Equity Compensation Plan
are considered non-routine matters. Therefore, brokers, banks or other
nominees will not be able to vote on the adoption of the Employee Stock
Purchase Plan or the amendment to the 1994 Equity Compensation Plan without
instructions from the stockholder. This will result in a "broker non-vote"
on these matters equal to the number of shares for which the brokers do not
receive specific voting instructions.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders and have the effect of negative votes. A
"withheld" vote is treated the same as an abstention. Broker non-votes are
not counted for purposes of determining whether a proposal has been
approved.
Q: Who can attend the meeting?
A: All stockholders are encouraged to attend the meeting. Admission tickets
are not required.
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QUESTIONS AND ANSWERS (cont.)
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Q: Are there any expenses associated with collecting the stockholder votes?
A: We will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and other materials to our stockholders. We do not anticipate hiring
an agency to solicit votes at this time.
Q: What is a stockholder proposal?
A: A stockholder proposal is your recommendation or requirement that USDATA or
our board of directors take action on a matter that you intend to present
at a meeting of stockholders. However, under the proxy rules we have the
ability to exclude certain matters proposed, including those that deal with
matters relating to our ordinary business operations.
Q: Can anyone submit a stockholder proposal?
A: To be eligible to submit a proposal, you must have continuously held at
least $2,000 in market value, or 1%, of our common stock for at least one
year by the date you submit your proposal. You also must continue to hold
those securities through the date of the meeting.
Q: If I wish to submit a stockholder proposal for the annual meeting in 2000,
what action must I take?
A: If you wish us to consider including a stockholder proposal in the proxy
statement for the annual meeting in 2000, you must submit the proposal, in
writing, so that we receive it no later than January 8, 2000. The proposal
must meet the requirements established by the SEC. Send your proposal to:
Robert L. Drury
Secretary
USDATA Corporation
2435 North Central Expressway
Richardson, TX 75080-2722
As to any proposal presented by a stockholder at the annual meeting that
has not been included in the proxy statement, management proxies will be
allowed to use their discretionary voting authority unless we receive
notice of such proposal no later than March 23, 2000.
Q: Who are USDATA's largest stockholders?
A: Safeguard Scientifics, Inc., beneficially owns 30.3%, Technology Leaders I
beneficially owns 14.5%, Technology Leaders II beneficially owns 14.5%, and
other directors and executive officers, as a group, beneficially own an
additional 3.1%, of USDATA's common stock. At December 31, 1998, Bob B.
Midyett owned 10.8% of USDATA's common stock and no other stockholder owned
more than 5%.
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ELECTION OF DIRECTORS
Item 1 on the Proxy Card
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Directors are elected annually and serve a one-year term. There are 7 nominees
for election this year. Each nominee is currently serving as a director and has
consented to serve until the next annual meeting if elected, and until his
successor is elected and qualified. You will find detailed information on each
nominee below. If any director is unable to stand for re-election, the Board may
reduce its size or designate a substitute. If the Board designates a substitute,
proxies voting on the original director candidate will be cast for the
substituted candidate.
The Board recommends a vote FOR each nominee. The 7 nominees who receive the
highest number of affirmative votes will be elected as directors.
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GARY J. ANDERSON, M.D. Director since 1994
Age 59
Dr. Anderson has served as a managing director of TL Ventures LLC, a venture
capital management company, since 1997. Dr. Anderson has served as a managing
director since 1991, and a general partner since 1995 of Technology Leaders
Management, L. P., and as a managing director and general partner of Technology
Leaders II Management, L. P. since 1994. Dr. Anderson is a director of Quadrant
Healthcare Inc.
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STEPHEN J. ANDRIOLE Director since 1998
Age 49
Mr. Andriole is the senior technology officer of Safeguard Scientifics, inc., a
company that develops and operates rapidly growing information technology
businesses. Mr. Andriole was chief technology officer and senior vice president
for technology strategy at CIGNA Corporation prior to coming to Safeguard in
1997.
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JAMES W. DIXON Director since 1994
Age 52
Mr. Dixon has served as chief executive officer of Broadreach Consulting, Inc.,
an information technology staffing and consulting company, since October 1997.
Mr. Dixon served as president and chief executive officer of Information
Technology Consulting, Inc. from September 1996 to October 1997. From March 1996
until August 1996, Mr. Dixon served as chairman and chief executive officer of
ClientLink, Inc., a software development company. From June 1988 through
February 1996, Mr. Dixon served as an officer of CompuCom Systems, Inc., most
recently as chairman of the board. Mr. Dixon is a director of AER Energy, Inc.
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MAX D. HOPPER Director since 1995
Age 64
Mr. Hopper has served as chairman of the board of USDATA since April 1998. He
has served as principal and chief executive officer of Max D. Hopper Associates,
Inc., an information systems consulting firm since 1995. Prior to that time, Mr.
Hopper served as a senior vice president, Information Systems, of American
Airlines, Inc. Mr. Hopper served as chairman of The SABRE Group, the airline
reservation system unit of American Airlines, from April 1994 to January 1995.
Mr. Hopper serves as a director of the Gartner Group, Inc., VTEL Corporation,
Worldtalk Corporation, Payless Cashways, Inc., Metrocall, Inc., Exodus
Communications, Inc. and United Stationers, Inc.
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ELECTION OF DIRECTORS (cont.)
Item 1 on the Proxy Card
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ROBERT A. MERRY Director since 1997
Age 49
Mr. Merry has served as president and chief executive officer of USDATA since
July 1997. From June 1995 to July 1997, Mr. Merry served as president of the
process manufacturing strategic business unit of Electronic Data Systems (EDS).
From March 1992 to June 1995, Mr. Merry served as vice president of
manufacturing and Gulf Atlantic sales manager for EDS.
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JACK L. MESSMAN Director since 1994
Age 59
Mr. Messman has served as chairman and chief executive officer of Union Pacific
Resources Group Inc., an energy company, since April 1991. Mr. Messman is a
director of Cambridge Technology Partners (Massachusetts), Inc., Metallurg,
Inc., Novell, Inc., Tandy Corp., Union Pacific Resources Group Inc. and
Safeguard Scientifics, Inc.
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ARTHUR R. SPECTOR Director since 1994
Age 58
Mr. Spector is a managing director of the general partner and of the management
company of Safeguard International Fund, L. P., an international private equity
fund. From January 1997 to March 1998, Mr. Spector served as a managing director
of TL Ventures LLC, a venture capital management company organized to manage
day-to-day operations of TL Ventures III L.P. and TL Ventures III Offshore L.P.
From January 1995 to December 1996, Mr. Spector served as director of
acquisitions for Safeguard Scientifics, Inc. From July 1992 to May 1995, Mr.
Spector was vice chairman and secretary of Casino & Credit Services, Inc. From
October 1991 to December 1994, Mr. Spector was chief executive officer and
director of Perpetual Capital Corporation, a merchant banking organization. Mr.
Spector is chairman of the board of directors of Neoware systems, Inc. and a
director of DocuCorp International, Inc. and Metallurg, Inc.
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BOARD OF DIRECTORS -- ADDITIONAL INFORMATION
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Board Meetings: The board of directors held five meetings in 1998. Each director
attended at least 75% of the total number of meetings of the board and
committees of which he was a member.
Annual and Meeting Attendance Fees: Directors who are not executive officers of
Safeguard Scientifics, Inc. or employees of USDATA are reimbursed for travel
expenses incurred in connection with attending board meetings or other company
business but do not receive compensation for serving as directors.
Stock Options: Directors who are not executive officers of Safeguard
Scientifics, Inc. or any wholly owned subsidiary or employees of USDATA or any
subsidiary receive:
o a stock option to purchase 15,000 shares of USDATA's common stock upon
initial election to the board, and
o bi-annual service grants of 3,000 shares of USDATA's common stock.
Directors' options have an eight-year term and vest 25% each year starting on
the first anniversary of the grant date. The exercise price is equal to the
closing price of a share of USDATA common stock on the grant date.
In March 1998, Mr. Hopper received an option for 40,000 shares at an exercise
price of $6.25 per share upon his appointment as chairman of the board. No
annual service grants were made in 1998.
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BOARD COMMITTEE MEMBERSHIP ROSTER
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Audit Compensation Executive
Meetings held in 1998 1 4 0
Max D. Hopper X* X*
james W. Dixon X*
Robert A. Merry X
Jack L. Messman X X
Arthur R. Spector X X
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* Chairperson
Audit: recommends our independent certified public accountants, discusses the
scope and results of our audit with the independent certified public
accountants, reviews with management and the independent certified public
accountants our interim and year-end operating results, considers the adequacy
of our internal accounting controls and audit procedures, and reviews the
non-audit services to be performed by the independent certified public
accountants.
Compensation: reviews and recommends compensation arrangements for senior
management including salaries, cash incentives and option grants, and
administers our equity compensation plan.
Executive: approves transactions that do not exceed one million dollars in the
aggregate, except where the approval of the board of directors is required by
law.
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PROPOSAL TO ADOPT AN EMPLOYEE STOCK PURCHASE PLAN
Item 2 on the Proxy Card
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The board unanimously recommends a vote FOR approval of this proposal. Proxies
received by the board will be so voted unless stockholders specify otherwise on
their proxy cards.
Background
USDATA's stockholders are being asked to approve the adoption of the USDATA
Corporation Employee Stock Purchase Plan (Purchase Plan). The Purchase Plan was
approved by the board of directors on April 22, 1999, with a total of 200,000
shares reserved for issuance thereunder. The purpose of the Purchase Plan is to
provide employees of USDATA, and any majority owned subsidiaries that adopt the
Purchase Plan, with an opportunity to purchase common stock from USDATA through
payroll deductions and to provide USDATA with the ability to attract, retain,
and motivate the best people available for the successful conduct of its
business. The essential features of the Purchase Plan are outlined below. The
description that follows, however, is only a summary and is qualified in its
entirety by reference to the full text of the Purchase Plan, which is attached
as Appendix A to this proxy statement.
Offering Period
Offerings under the Purchase Plan have a duration of six months. The first
offering will begin on July 1, 1999, and end on December 31, 1999. A new
offering period shall begin on the first day of each six calendar month period
beginning on each January 1 and July 1 of a calendar year, and ending at the end
of such six month period, unless changed by the committee of the board of
directors that administers the Purchase Plan.
Grant and Exercise of Option
On the first day of an offering period (Enrollment Date), the participant is
granted an option to purchase on the last day of the offering period (Exercise
Date) up to a number of whole shares of the common stock determined by dividing
15% of the participant's compensation (as defined in the "Payroll Deduction"
section, below) by the exercise price, which shall not be less than the lower of
(i) 85% of the fair market value of a share of the common stock on the
Enrollment Date or (ii) 85% of the fair market value of a share of common stock
on the Exercise Date. The exercise price shall be determined by the committee.
The number of shares subject to such option shall be reduced, if necessary, to
maintain the limitations with respect to a participant's ownership of stock
and/or options to purchase stock possessing 5% or more of the total combined
voting power or value of all classes of stock of USDATA or any majority owned
subsidiary, and to restrict a participant's right to purchase stock under the
Purchase Plan to $25,000 in fair market value of such stock (determined at the
time the option is granted) for each calendar year in which such option is
outstanding at any time. Unless the employee has withdrawn, his or her option
for the purchase of shares will be exercised automatically on the Exercise Date
at the applicable price. To the extent an employee's payroll deductions exceed
the amount required to purchase the shares subject to option, such excess amount
shall be held in such participant's account for the next period.
Shares Available under the Purchase Plan
The total number of shares of common stock that are issuable under the Purchase
Plan is 200,000 shares.
Eligibility and Participation
Any employee who is customarily employed for at least 20 hours per week and more
than five months per calendar year by USDATA is eligible to participate in
offerings under the Purchase Plan.
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Employees of subsidiaries that adopt the Purchase Plan will be eligible on the
same basis. Employees become participants in the Purchase Plan by delivering to
USDATA a subscription agreement authorizing payroll deductions within the
specified period of time prior to the Enrollment Date.
No employee is permitted to purchase shares under the Purchase Plan if such
employee owns 5% or more of the total combined voting power or value of all
classes of shares of stock of USDATA (including shares that may be purchased
under the Purchase Plan or pursuant to any other options). In addition, no
employee is entitled to purchase more than $25,000 worth of shares (based on the
fair market value of the shares at the time the option is granted) in any
calendar year.
Purchase Price
The committee will set the price at which shares are sold under the Purchase
Plan, which will not be less than 85% of the fair market value per share of
common stock at either the Enrollment Date or at the Exercise Date, whichever is
lower.
Payroll Deductions
The purchase price of the shares is accumulated by payroll deduction over each
offering period. The deductions may not be greater than 15% of a participant's
compensation. "Compensation" for purposes of the Purchase Plan shall mean all
base straight-time gross earnings and sales commissions, overtime pay and cash
bonuses.
All payroll deductions of a participant are credited to his or her account under
the Purchase Plan and are deposited with the general funds of USDATA. Such funds
may be used for any corporate purpose pending the purchase of shares.
Administration
The Purchase Plan is administered by the committee, which shall have all powers
with respect to the Purchase Plan, except for amending or terminating the
Purchase Plan.
Withdrawal from the Purchase Plan
A participant may terminate his or her interest in a given offering by
withdrawing all, but not less than all, of the accumulated payroll deductions
credited to such participant's account at any time prior to the end of the
offering period. The withdrawal of accumulated payroll deductions automatically
terminates the employee's interest in that offering as the case may be. As soon
as practicable after such withdrawal, the payroll deductions credited to a
participant's account are returned to the participant without interest.
A participant's withdrawal from an offering does not have any effect upon such
participant's eligibility to participate in subsequent offerings under the
Purchase Plan.
Termination of Employment
Termination of a participant's employment for any reason, including retirement
or death or the failure to remain in the continuous employ of USDATA for at
least 20 hours per week (except for certain leaves of absence), cancels his or
her participation in the Purchase Plan immediately. In such event, the payroll
deductions credited to the participant's account will be returned to the
participant, or in the case of death, to the person or persons entitled thereto,
without interest.
Capital Changes
In the event of changes in the common stock of USDATA due to a stock split or
other changes in capitalization, or in the event of any merger, sale,
reclassification, or any other reorganization, appropriate adjustments will be
made by USDATA to the shares subject to purchase and to the price per share.
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Nonassignability
No rights or accumulated payroll deductions of a participant under the Purchase
Plan may be pledged, assigned or transferred for any reason, and any such
attempt may be treated by the committee as an election to withdraw from the
Purchase Plan.
Amendment and Termination of the Purchase Plan
The board of directors of USDATA may at any time amend or terminate the Purchase
Plan; however, such termination cannot affect options previously granted nor may
any amendment make any change in an existing option that adversely affects the
rights of any participant, except as necessary to comply with tax or securities
laws. No amendment may be made to the Purchase Plan without prior approval of
the stockholders of USDATA if such amendment would increase the number of shares
that may be issued under the Purchase Plan, permit payroll deductions at a rate
in excess of 15% of a participant's compensation, change the designation of the
employees eligible for participation in the Purchase Plan or constitute an
amendment for which stockholder approval is required in order to comply with
Rule 16b-3, or any successor rule.
Tax Information
The Purchase Plan, and the right of participants to make purchases thereunder,
is intended to qualify under the provisions of section 423 of the Internal
Revenue Code (Code), which incorporates by reference the tax treatment
provisions of section 421 of the Code. Under these provisions, no income will be
taxable to a participant at the time of grant of the option or purchase of
shares. Upon disposition of the shares, the participant generally will be
subject to tax and the amount of the tax will depend upon the holding period. If
the shares have been held by the participant for more than two years after the
Enrollment Date and one year from the Exercise Date, the amount of ordinary
income will be the lesser of (a) the excess of the fair market value of the
shares at the time of disposition over the purchase price, or (b) the excess of
the fair market value of the shares at the time the option was granted over the
purchase price (which purchase price will be computed as of the Enrollment
Date), and any further gain will be treated as long-term capital gain. If the
shares are disposed of before the expiration of these holding periods, the
excess of the fair market value of the shares on the Exercise Date over the
purchase price will be treated as ordinary income. USDATA is not entitled to a
deduction for amounts taxed as ordinary income or capital gain to a participant
except to the extent of ordinary income reported by participants upon
disposition of shares prior to the expiration of the holding period described
above.
The foregoing is only a summary of the effect of federal income taxation upon
the participant and USDATA with respect to the shares purchased under the
Purchase Plan. Reference should be made to the applicable provisions of the
Code. In addition, this summary does not discuss the tax consequences of a
participant's death or the income tax laws of any state or foreign country in
which the participant may reside.
Required Vote
Approval of the Purchase Plan requires the affirmative vote of a majority of the
votes cast by the holders of USDATA's outstanding shares of common stock
entitled to vote thereon. If not so approved by the stockholders, the Purchase
Plan will be terminated.
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PROPOSAL TO AMEND THE 1994 EQUITY COMPENSATION PLAN
Item 3 on the Proxy Card
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Background and Proposed Amendment
Our current stock option plan (1994 Plan) was adopted in 1994. Since less than
140,000 shares remain available for issuance under that plan, on April 22, 1999,
our board adopted, subject to stockholder approval, an amendment authorizing an
additional 500,000 shares for issuance.
The board recommends a vote FOR approval of the amendment to the 1994 Plan.
Approval of this amendment requires a majority of the votes cast at a meeting at
which a quorum representing a majority of all outstanding voting stock is
present, either in person or by proxy, and voting on the amendment. If the
stockholders do not approve the amendment, then the number of shares that may be
issued under the 1994 Plan may not exceed 2,000,000 shares.
Purpose of the 1994 Plan
The 1994 Plan provides participants with an opportunity to receive grants of
incentive stock options, non-qualified stock options, stock appreciation rights
and restricted stock awards with an exercise price generally equal to or greater
than the fair market value on the grant date.
We believe the plan enables us to attract, retain and motivate our employees,
encourage participants to contribute materially to our growth, thus benefiting
our stockholders, and align the economic interests of the participants with
those of our stockholders.
The plan is not qualified under section 401(a) of the Internal Revenue Code and
is not subject to the provisions of the Employee Retirement Income Security Act.
Shares Subject to the 1994 Plan
The 1994 Plan, as amended by this proposal, authorizes the issuance of 2,500,000
shares of USDATA common stock. The maximum number of shares that may be granted
to any individual during any calendar year is 500,000. Shares issued under the
1994 Plan may be authorized but unissued shares or may be reacquired shares. If
options granted under the 1994 Plan terminate, expire or are canceled,
forfeited, exchanged or surrendered without being exercised, or if any shares of
restricted stock are forfeited, those shares will again be available for
purposes of the 1994 Plan.
No grants have been made and there are no current plans to authorize any
specific grants under this amendment to the 1994 Plan. The closing price of a
share of our common stock on April 19, 1999, was $3.313 per share.
Administration of the 1994 Plan
The 1994 Plan is administered by a compensation committee, which is currently
composed of Messrs. Messman, Hopper and Andriole.
The committee has the authority to administer and interpret the 1994 Plan.
Specifically, it is authorized to:
o determine the individuals to whom grants shall be made,
o determine the type, size and terms of grants,
o determine the time when grants will be made and the duration of any
applicable exercise period or restriction period, including the criteria
for exercisability and acceleration of exercisability,
o amend the terms of any outstanding award (with the consent of the
participant) to reflect terms not otherwise inconsistent with the 1994
Plan,
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o make factual determinations and adopt or amend appropriate rules,
regulations, agreements and instruments for implementing the 1994 Plan, and
o deal with any other matter arising under the 1994 Plan.
Eligibility for Participation and Grants
Those eligible to receive grants are employees (including officers and members
of the board), non-employee directors and certain eligible independent
contractors of USDATA or any subsidiary. There are approximately 123 employees,
6 non-employee directors and no independent contractors currently eligible to
receive grants.
Grants may be incentive stock options, nonqualified stock options, stock
appreciation rights or restricted stock awards. All grants are subject to the
terms and conditions of the 1994 Plan.
All committee decisions are final and binding on all persons having any
interests in the 1994 Plan or in any grants made under the 1994 Plan. The
committee will execute its powers in the best interest of USDATA, not as a
fiduciary, and in keeping with the objectives of the 1994 Plan. Decisions of the
committee need not be uniform among participants.
Stock Options
Grant of Stock Options. The committee may grant options qualifying as incentive
stock options to employees. The committee may grant nonqualified stock options
to any participant. Grants to employees may be made in any combination of
incentive stock options and nonqualified stock options.
Option Price. The option price is determined by the committee at the time of
grant. To qualify as an incentive stock option, the exercise price may not be
less than 100% of the fair market value of common stock on the date of grant.
Also, the value (determined as of the grant date) of any incentive stock options
held by a participant that become exercisable for the first time during any
calendar year cannot exceed $100,000. If a grantee owns stock having more than
10% of the voting power of USDATA or any subsidiary, the exercise price of an
incentive stock option may not be less than 110% of the fair market value of the
common stock on the date of grant.
Term and Exercisability of Stock Options. The committee determines the term of
stock options granted under the 1994 Plan, although the term may not exceed 10
years. If a grantee owns stock having more than 10% of the voting power of
USDATA or any subsidiary, the term of an incentive stock option may not exceed
five years. No stock option may be exercised by any person after expiration of
the term of the option. The committee determines how stock options become
exercisable and may accelerate vesting at any time for any reason.
Manner of Exercise of Stock Options. To exercise a stock option, a grantee must
deliver a written exercise notice specifying the number of shares to be
purchased together with payment of the option exercise price. The exercise price
may be paid in any of the following ways:
o in cash or check,
o by delivering shares of unrestricted common stock of USDATA already owned
by the participant, subject to certain restrictions, having a fair market
value equal to the exercise price,
o in a combination of cash and shares, or
o any other method of payment as the committee may approve, including a
"cashless exercise" of a stock option, effected by delivering a notice of
exercise to USDATA and a securities broker, with instructions to the broker
to deliver to USDATA out of the sale proceeds the amount necessary to pay
the exercise price.
The committee may determine to grant a replacement option at the time of
exercise for a number of shares up to the number of shares subject to the option
being exercised. The terms of the replacement option are determined by the
committee but the exercise price must be equal to the fair market value of a
share on the date of exercise.
For a non-qualified stock option, we also are required to withhold taxes. If
approved by the committee, the income tax withholding
[USDATA LOGO] 11
<PAGE>
obligation may be satisfied by withholding shares of an equivalent market value.
Shares of common stock tendered in payment of the exercise price must have been
held by the participant long enough to avoid adverse accounting consequences to
USDATA.
Termination of Stock Options as a Result of Termination of Employment,
Disability or Death. Generally, vested stock options will remain exercisable for
a period of time following termination of service as follows:
o one year following termination of service if an individual dies or is
disabled, or
o three months following termination of service for any other reason.
The committee, either at or after grant, may provide for different termination
provisions. The committee may extend the exercise period for a non-qualified
stock option after termination of service. Options which are not exercisable at
termination of service are terminated as of that date.
If service is terminated for cause, the committee may terminate all stock
options held by the participant at the date of termination. The committee may,
upon refund of the exercise price, require the participant to forfeit all shares
underlying any exercised portion of an option for which we have not yet
delivered the share certificates. Termination for cause means a finding by the
committee that the participant has:
o breached his or her employment contract, non-competition agreement or other
obligation to USDATA,
o been engaged in fraud, embezzlement, theft, commission of a felony or
proven disloyalty in the course of his or her service, or
o disclosed trade secrets or confidential information.
Transferability of Stock Options. Generally, only a participant may exercise
rights under a stock option during his or her lifetime, and those rights may not
be transferred except by will or by laws of descent and distribution. When a
participant dies, the personal representative or other person entitled to
succeed to his or her rights may exercise those rights upon furnishing
satisfactory proof of that person's right to receive the stock option. The
committee may nevertheless choose to provide with respect to non-qualified stock
options that a participant may transfer those options to family members or other
persons or entities.
Restricted Stock Grants
The committee may provide a participant with an opportunity to acquire shares of
our common stock contingent upon his or her continued service or the
satisfaction of other criteria. Restricted stock differs from a stock option in
that a participant must make an immediate decision whether to make an investment
in the stock. The committee determines the amount to be paid for the stock or
may decide to grant the stock for no consideration. The committee may specify
that the restrictions will lapse over a period of time or according to any other
factors or criteria. If a participant's service terminates during the period of
any restrictions, the restricted stock grant will terminate with respect to all
shares as to which the restrictions on transfer have not lapsed unless the
committee provides for an exception to this requirement. Until the restrictions
on transfer have lapsed, a participant may not in any way dispose of the shares
of common stock to which the restriction applies. All restrictions lapse upon
the expiration of the applicable restriction period. Unless the committee
determines otherwise, however, during the restriction period the participant has
the right to vote restricted shares and receive any dividends or other
distributions paid on them, subject to any restrictions specified by the
committee.
Stock Appreciation Rights
The committee may provide a participant with the right to receive a benefit
measured by the appreciation in a specified number of shares of our common stock
over a period of time. The amount of this benefit is equal to the difference
between the fair market value of the stock on the exercise date and the base
amount of the stock appreciation right (SAR). Generally, the base amount of a
SAR is equal to the per share exercise
[USDATA LOGO] 12
<PAGE>
price of the related stock option or, if there is no related option, the fair
market value of a share of common stock on the date the SAR is granted. The
committee may pay this benefit in cash, in stock, or any combination of the two.
The committee may grant a SAR either separately or in tandem with all or a
portion of a stock option. SARs may be granted when the stock option is granted
or later while it remains outstanding, although in the case of an incentive
stock option, SARs may be granted only at the time the option is granted. Tandem
SARs may not exceed the number of shares of common stock that the participant
may purchase upon the exercise of the related stock option during the period.
Upon the exercise of a stock option, the SARs relating to the common stock
covered by the stock option terminate. Upon the exercise of SARs, the related
stock option terminates to the extent of an equal number of shares of common
stock.
SARs are subject to the same termination provisions on death, disability or
termination of service as stock options. The committee may accelerate the
exercisability of any or all outstanding SARs.
Adjustments Provisions
The committee will adjust:
o the maximum number and class of shares issuable under the 1994 Plan,
o the number and class of shares subject to an outstanding grant, or
o the purchase prices of outstanding options or stock appreciation rights,
to appropriately reflect any of the following events:
o a reorganization, recapitalization or change of shares,
o a stock split, spin-off, stock dividend or reclassification,
o a subdivision or combination of shares,
o a merger, consolidation, rights offering, or
o any other change in corporate structure or shares.
If any event should occur, each outstanding option shall be assumed by the
surviving or successor corporation except if the committee should determine to
terminate the option. In that case, the committee may allow the participant to
exercise the vested portion of the option before the termination.
Federal Income Tax Consequences
The current federal income tax treatment of grants under the 1994 Plan is
described below. Local and state tax authorities also may tax incentive
compensation awarded under the 1994 Plan. Because of the complexities involved
in the application of tax laws to specific circumstances and the uncertainties
as to possible future changes in those laws, we urge participants to consult
their own tax advisors concerning the application of the general principles
discussed below to their own situations and the application of state and local
tax laws.
Incentive Stock Options. A participant will not recognize taxable income for the
purpose of the regular income tax upon either the grant or exercise of an
incentive stock option. However, for purposes of the alternative minimum tax
imposed under the Internal Revenue Code, in the year in which an incentive stock
option is exercised, the amount by which the fair market value of the shares
acquired upon exercise exceeds the exercise price will be treated as an item of
adjustment.
If a participant disposes of the shares acquired under an incentive stock option
after at least two years following the date of grant and at least one year
following the date of exercise, the participant will recognize a long-term
capital gain or loss equal to the difference between the amount realized upon
the disposition and the exercise price. We will not be entitled to any tax
deduction by reason of the grant or exercise of the incentive stock option.
If a participant disposes of shares acquired upon exercise of an incentive stock
option before satisfying both holding period requirements (known as a
disqualifying disposition), the gain recognized on disposition will be taxed as
ordinary income
[USDATA LOGO] 13
<PAGE>
to the extent of the difference between the lesser of the sale price or the fair
market value of the shares on the date of exercise and the exercise price. We
will be entitled to a federal income tax deduction in the same amount. The gain,
if any, in excess of the amount recognized as ordinary income on a disqualifying
disposition will be long-term or short-term capital gain, depending upon the
length of time the participant held the shares before the disposition.
If a participant tenders shares of common stock received upon the exercise of an
incentive stock option to pay the exercise price within either the two-year or
one-year holding periods described above, the disqualifying disposition of the
shares used to pay the exercise cost will result in income (or loss) to the
participant and, to the extent of a recognized gain, a tax deduction to USDATA.
If, however, the holding period requirements are met and the number of shares
received on the exercise does not exceed the number of shares surrendered, the
participant will recognize no gain or loss with respect to the surrendered
shares, and will have the same basis and holding period with respect to the
newly acquired shares as with respect to the surrendered shares. To the extent
that the number of shares received exceeds the number surrendered, the
participant's basis in the excess shares will equal the amount of cash paid by
the participant upon the original exercise of the stock option, and the
participant's holding period with respect to the excess shares will begin on the
date the shares are transferred to the participant. The tax treatment described
above for shares newly received upon exercise is not affected by using shares to
pay the exercise price.
Non-qualified Stock Options. There are no federal income tax consequences to a
participant or USDATA upon the grant of a non-qualified stock option. Upon the
exercise of a non-qualified stock option, a participant will generally recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares at the time of exercise over the exercise price, and we will be entitled
to a corresponding federal income tax deduction. If a participant surrenders
shares to pay the exercise price, and the number of shares received on the
exercise does not exceed the number of shares surrendered, the participant will
recognize no gain or loss with respect to the surrendered shares, and will have
the same basis and holding period with respect to the newly acquired shares as
with respect to the surrendered shares. To the extent that the number of shares
received exceeds the number surrendered, the fair market value of the excess
shares on the date of exercise, reduced by any cash paid by the participant upon
the exercise, will be includible in the gross income of the participant. The
participant's basis in the excess shares will equal the sum of the cash paid by
the participant upon the exercise of the stock option plus any amount included
in the participant's gross income as a result of the exercise of the stock
option.
The committee may permit the participant to elect to surrender or deliver shares
otherwise issuable upon exercise, or previously acquired shares, in order to
satisfy the federal income tax withholding, subject to certain restrictions
described in the 1994 Plan. Such an election will result in a disposition of the
shares which are surrendered or delivered, and an amount will be included in the
participant's income equal to the excess of the fair market value of the shares
over the participant's basis in the shares.
Upon the sale of the shares acquired by the exercise of a non-qualified stock
option, a participant will have a capital gain or loss (long-term or short-term
depending upon the length of time the shares were held) in an amount equal to
the difference between the amount realized upon the sale and the participant's
adjusted tax basis in the shares (the exercise price plus the amount of ordinary
income recognized by the participant at the time of exercise of the
non-qualified stock options).
Restricted Stock. A participant normally will not recognize taxable income upon
the award of a restricted stock grant, and USDATA will not be entitled to a
deduction, until the stock is transferable by the
[USDATA LOGO] 14
<PAGE>
participant or no longer subject to a substantial risk of forfeiture for federal
tax purposes, whichever occurs earlier. When the common stock is either
transferable or is no longer subject to a substantial risk of forfeiture, the
participant will recognize ordinary compensation income in an amount equal to
the fair market value of the common stock at that time, less any consideration
paid by the participant for the shares, and USDATA will be entitled to a federal
income tax deduction in the same amount. A participant may, however, elect to
recognize ordinary compensation income in the year the restricted stock grant is
awarded in an amount equal to the fair market value of the common stock at that
time less any consideration paid by the participant for the shares, determined
without regard to the restrictions. In such event, USDATA generally will be
entitled to a corresponding federal income tax deduction in the same year. Any
gain or loss recognized by the participant upon a subsequent disposition of the
shares will be capital gain or loss. If, after making the election, any shares
subject to a restricted stock grant are forfeited, or if the market value
declines during the restriction period, the participant is not entitled to any
tax deduction or tax refund if the participant does not recover any
consideration paid by the participant for the restricted stock.
Stock Appreciation Rights. There are no federal income tax consequences to a
participant or to USDATA upon the grant of a SAR. Upon the exercise of a SAR, a
participant will recognize ordinary compensation income in an amount equal to
the cash and the fair market value of the shares of common stock received upon
exercise. USDATA generally will be entitled to a corresponding federal income
tax deduction at the time of exercise. Upon the sale of any shares acquired by
the exercise of a SAR, a participant will have a capital gain or loss (long-term
or short-term depending upon the length of time the shares were held) in an
amount equal to the difference between the amount realized upon the sale and the
participant's adjusted tax basis in the shares (the amount of ordinary income
recognized by the participant at the time of exercise of the SAR).
Tax Withholding. All grants under the 1994 Plan are subject to applicable tax
withholding requirements. We shall have the right to deduct from all grants paid
in cash, or from other wages paid to a participant, any taxes required by law to
be withheld with respect to the grant. If grants are paid in shares of common
stock, we may require a participant to pay the amount of the taxes that we are
required to withhold or may deduct the amount of the withholding taxes from
other wages paid to the participant. If approved by the committee, the income
tax withholding obligation with respect to grants paid in common stock may be
satisfied by having shares withheld up to an amount that does not exceed the
participant's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. Our obligations under the 1994 Plan are conditional upon
the payment or arrangement for payment of any required withholding.
Section 162(m). Under section 162(m) of the Internal Revenue code, we may be
precluded from claiming a federal income tax deduction for total remuneration in
excess of $1,000,000 paid to the chief executive officer or to any of the other
four most highly compensated employees in any one year. Total remuneration may
include amounts received upon the exercise of options granted under the 1994
Plan. An exception does exist, however, for "performance-based compensation."
[USDATA LOGO] 15
<PAGE>
- --------------------------------------------------------------------------------
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND GREATER THAN 5% STOCKHOLDERS
as of APRIL 19, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares
Beneficially
Options Owned
Shares Exercisable Assuming Percent
Beneficially Within 60 Exercise of of
Name Owned Days Options Shares
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Safeguard Scientifics, Inc. 2,967,348 698,238 12,100,644 30.3%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders I L.P. 1,654,356 0 1,654,356 14.5%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders II L.P. 1,654,356 0 1,654,356 14.5%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Bob B. Midyett 1,228,224 0 1,228,224 10.8%
Max D. Hopper 0 25,000 25,000 *
Gary J. Anderson, M D 12,148 0 12,148 *
Stephen J. Andriole, Ph.D. 0 0 0 *
James W. Dixon 12,450 16,500 28,950 *
Robert A. Merry 0 87,500 87,500 *
Jack L. Messman 69,225 16,500 85,725 *
Arthur R. Spector 0 77,582 94,082 *
Robert L. Drury 0 25,000 25,000 *
Executive officers and directors as a
group (8 persons)
93,823 264,582 358,405 3.1%
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1% of USDATA's outstanding shares of common stock
Each individual has the sole power to vote and to dispose of the shares (other
than shares held jointly with spouse) except as follows:
<TABLE>
<S> <C>
Safeguard Scientifics, Inc. Includes shares held by Safeguard Scientifics (Delaware), Inc., a wholly-owned
subsidiary of Safeguard Scientifics, Inc. Includes 698,238 shares that may be
acquired pursuant to currently exercisable warrants. All of the shares
beneficially owned by Safeguard have been pledged by Safeguard as collateral
under its line of credit. Does not include shares beneficially owned by each
of Technology Leaders I and Technology Leaders II, venture capital
partnerships in which Safeguard has a beneficial interest. Safeguard
disclaims beneficial ownership of the shares beneficially owned by each of
Technology Leaders I and Technology Leaders II.
Technology Leaders I Consists of Technology Leaders L. P. and Technology Leaders Offshore C.V.
Technology Leaders Management L. P., the sole general partner of Technology
Leaders L. P. and the co-general partner of Technology Leaders Offshore C.V.,
exercises, through its executive committee, sole investment and voting power
with respect to the Shares owned by such entities. Of the 1,654,356 Shares
owned by Technology Leaders I, 772,418 Shares are owned by Technology Leaders
L. P. and 881,938 Shares are owned by Technology Leaders Offshore C.V.
Technology Leaders L. P., Technology Leaders Offshore C.V., Technology Leaders
Management L. P., Technology Leaders II L. P., Technology Leaders II Offshore
[USDATA LOGO] 16
<PAGE>
<CAPTION>
<S> <C>
C.V. and Technology Leaders II Management L. P. are members of a group for
purposes of Sections 13(d) and 13(g) of the Securities Exchange Act of 1934.
Technology Leaders I disclaims beneficial ownership of the Shares beneficially
owned by Technology Leaders II.
Technology Leaders II Consists of Technology Leaders II L. P. and Technology Leaders II Offshore
C.V. Technology Leaders II Management L. P., the sole general partner of
Technology Leaders II L. P. and the co-general partner of Technology Leaders
II Offshore C.V., exercises, through its executive committee, sole investment
and voting power with respect to the Shares owned by such entities. Of the
1,654,356 Shares owned by Technology Leaders II, 921,972 Shares are owned by
Technology Leaders II L. P. and 732,384 Shares are owned by Technology Leaders
II Offshore C.V. Technology Leaders L. P., Technology Leaders Offshore C.V.,
Technology Leaders Management L. P., Technology Leaders II L. P., Technology
Leaders II Offshore C.V. and Technology Leaders II Management L. P. are
members of a group for purposes of Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934. Technology Leaders II disclaims beneficial ownership of
the Shares beneficially owned by Technology Leaders I.
Bob B. Midyett Includes 335,000 shares held in a family partnership and 893,224 shares held
in a family trust.
Gary J. Anderson Excludes 1,654,356 shares beneficially owned by Technology Leaders I
and 1,654,356 shares beneficially owned by Technology Leaders II, of which Dr.
Anderson disclaims beneficial ownership.
Jack L. Messman Includes 6,620 shares held in trust for Mr. Messman's daughter, and 6,620
shares held in trust for Mr. Messman's son. Mr. Messman disclaims beneficial
ownership of the securities held in trust for his children.
Arthur R. Spector Includes 77,582 shares that may be acquired pursuant to currently
exercisable warrants.
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance: The rules of the
Securities and Exchange Commission require that we disclose late filings of
reports of stock ownership by our directors and executive officers. To the best
of our knowledge, the only late filing during 1998 was a Form 4 by James W.
Dixon.
[USDATA LOGO] 17
<PAGE>
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total return on USDATA's common
stock for the period from June 16, 1995, through December 31, 1998, with the
cumulative total return on the Nasdaq Index and the peer group index for the
same period.
In the printed version there appears a line graph
with the following plot points depicted:
<TABLE>
<CAPTION>
16-Jun-95 Dec-95 Dec-96 Dec-97 Dec-98
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USDATA 100 290 113 93 38
Nasdaq 100 113 139 171 240
Peer Group 100 117 149 183 309
</TABLE>
1. The peer group consists of SIC Code 737--computer programming and data
processing services.
2. USDATA has historically reinvested earnings in the growth of its business
and has not paid cash dividends on its common stock.
3. Assumes an investment of $100 on June 16, 1995.
[USDATA LOGO] 18
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
COMPENSATION PHILOSOPHY
USDATA's mission is to succeed in a highly competitive business and achieve
maximum returns for our stockholders by providing manufacturing and process
control knowledge through software products and services.
Our philosophy is to align the compensation of senior management and other
employees with that mission and the long-term interests of our stockholders.
This philosophy also helps us to:
o attract and retain outstanding executives,
o promote among our executives the economic benefits of stock ownership, and
o motivate and reward executives who, by their hard work, loyalty and
exceptional service, make contributions of special importance to the
success of our business.
COMPENSATION STRUCTURE
The compensation of USDATA's executives consists of:
o base salary,
o annual cash incentives, and
o stock options.
Base Pay
Base pay is established initially on the basis of a combination of subjective
factors, including experience and achievements of the individual and the level
of responsibility assumed at USDATA. Salary increases for 1998 were based on:
o level of achievement of financial and strategic objectives,
o levels of individual responsibility and performance, and
o general levels of inflation.
Mr. Merry's 1998 base pay. Mr. Merry's annual base salary for 1998 was $225,000.
Since Mr. Merry joined USDATA in the latter half of 1997, his annual salary in
1998 was not increased over 1997.
Other highly compensated executives' 1998 base pay. Based on the guidelines
discussed above, Mr. Drury's annual base salary for 1998 was $150,000.
Annual Cash Incentives
Annual cash incentives are intended to create an incentive for executives who
significantly contribute to and influence USDATA's strategic plans and are
responsible for USDATA's performance. Our primary objectives are to:
o focus executives' attention on profitability and asset management,
o encourage teamwork,
o tie executives' pay to corporate performance goals consistent with
long-term goals of our stockholders.
Incentives are awarded based on achievement of annual financial and strategic
goals approved by the compensation committee at the beginning of the year, which
goals may include target ranges of:
o pretax earnings,
o earnings per share,
o return on equity,
o cash management, or
o some other objective measurement consistent with long-term goals of our
stockholders.
The committee approves a target range for specific and/or strategic goals and a
range of potential incentive amounts for each executive, stated as a percentage
of base salary, and based upon the executive's ability to impact USDATA's
performance. Incentives are awarded at year-end based on the level achievement
of the goals compared to the target ranges established.
[USDATA LOGO] 19
<PAGE>
Mr. Merry's 1998 cash incentive. Mr. Merry was eligible for a cash incentive of
67% of his base salary. 75% of the cash incentive was based on his achievement
of financial performance objectives and 25% was based on achievement of personal
strategic goals. Mr. Merry was awarded a cash incentive of $78,837 in 1998.
Other highly compensated executives' 1998 cash incentives. The committee
approved cash incentives based 75% on the achievement of specific financial
goals and 25% on the achievement of specific personal goals determined by the
committee. Mr. Drury was awarded a cash incentive of $31,538 in 1998.
Stock Options
Stock options are intended to align the interests of executives and key
employees with the long-term interests of our stockholders and other investors
and to encourage executives and key employees to remain in our employ. Grants
are not made in every year, but are awarded subjectively based on the following
factors including:
o individual's level of responsibility,
o amount and term of options already held by the individual,
o individual's achievement of financial and strategic objectives, which may
include in addition to the goals described above:
o developing strategic alliances,
o identifying and expanding markets,
o developing new products,
o expanding existing market share and penetration,
o expanding operating capabilities, and
o improving net operating margins and return on equity.
1998 Stock Option Awards. In 1998, the committee did not grant stock options to
executive officers.
Submitted by the compensation committee:
Max D. Hopper, Chairman
Jack L. Messman
Arthur R. Spector
IRS Limits on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code provides that publicly held companies may not deduct in any taxable
year compensation in excess of $1,000,000 paid to any of the individuals named
in the Summary Compensation Table that is not "performance-based." To qualify as
"performance-based" compensation, the compensation committee's discretion to
grant incentive awards must be strictly limited. The compensation committee
believes that the benefit of retaining the ability to exercise discretion under
USDATA's incentive compensation plans outweighs the limited risk of loss of tax
deductions under section 162(m). Therefore, the compensation committee does not
currently plan to qualify its incentive compensation plans under section 162(m).
[USDATA LOGO] 20
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION & OTHER ARRANGEMENTS
- --------------------------------------------------------------------------------
1998 Annual Compensation for the Top Two Officers
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
----------------------------------------------- --------------------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options/SARS Compensation
Position Year Salary ($) Bonus ($) ($)(1) (#) ($)(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Merry, 1998 $ 225,000 $ 78,837 -- -- $2,500
President and Chief
Executive Officer(3) 1997 $ 96,346 $ 63,000 -- 450,000 --
- --------------------------------------------------------------------------------------------------------------------------
Robert L. Drury, 1998 $ 150,000 $ 31,535 -- -- $2,250
Vice President, Chief
Financial Officer and 1997 9,375 22,500 -- 100,000 --
Secretary (3)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Annual Compensation Table:
(1) For 1998, personal benefits did not exceed $50,000 or 10% of the total
annual salary and bonus for any executive.
(2) For 1998, all other compensation includes USDATA's contributions to the
401(k) Matched Savings Plan:
(3) Mr. Merry and Mr. Drury joined USDATA on August 1997, and December 1997,
respectively.
[USDATA LOGO] 21
<PAGE>
- --------------------------------------------------------------------------------
1998 STOCK OPTION GRANTS
- --------------------------------------------------------------------------------
The 1998 Stock Option Grant table has been excluded since there were no
grants made to executive officers in 1998.
- --------------------------------------------------------------------------------
1998 STOCK OPTION EXERCISES AND
YEAR-END STOCK OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Of Securities
Underlying Unexercised Value Of Unexercised
Options/SARs In-The-Money Options/SARs
Shares At Fiscal Year-End (#) At Fiscal Year-End ($)(1)
Acquired On Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Robert A. Merry -- -- 87,500 362,500 $ 0 $ 0
Robert L. Drury -- -- 25,000 75,000 $ 0 $ 0
</TABLE>
(1) Value is calculated using the difference between the option exercise price
and the year-end stock price, multiplied by the number of shares subject to
an option. The year-end stock price used was $1.875 for each share of
USDATA common stock.
Employment Contracts; Severance and Change-in-Control Arrangements
Mr. Drury is an "at will" employee. USDATA has an arrangement with Mr. Drury
that if he is terminated, other than for gross negligence, he will be entitled
to payment of his salary and certain benefits for a period of one year. In
addition, if Mr. Drury's employment is terminated within nine months after any
one investor, excluding Safeguard Scientifics, Inc. and TL Ventures, accumulates
30% or more of USDATA's common stock, all of his stock options will immediately
vest. Mr. Drury's options will also immediately vest upon a change of control.
Relationships and Related Transactions with Management and Others
USDATA pays Safeguard Scientifics, Inc. (Safeguard)an administrative support
services fee of $30,000 monthly. The administrative support services include
consultation regarding USDATA's general management, investor relations,
financial management, certain legal services, insurance programs administration,
audit administration, and tax research and planning, but does not cover
extraordinary services or services that are contracted out. The agreement is
subject to termination by USDATA or Safeguard upon notice 90 days' prior to the
end of any fiscal year. USDATA paid $360,000 to Safeguard during 1998. Safeguard
received an additional $75,000 for services rendered in connection with the
operation and sale of USDATA's hardware division.
On November 8, 1994, Safeguard and certain other investors acquired 6,198,808
shares of common stock from USDATA's then majority stockholders for an aggregate
purchase price of approximately $18 million. USDATA granted Safeguard a warrant
to purchase 698,238 shares of common stock and granted to Arthur R. Spector, a
director of the USDATA, a warrant to purchase 77,582 shares of common stock. The
exercise price of the shares subject to each warrant is $3.02 per share.
USDATA and Bob B. Midyett, Jr. were parties to an Employment Agreement under
which Mr. Midyett initially served as chief
[USDATA LOGO] 22
<PAGE>
executive officer and served as senior advisor to USDATA. Effective November 8,
1997, the Employment Agreement expired and was not renewed. However, for as long
as he owns at least 5% of the outstanding common stock of USDATA, Mr. Midyett is
entitled to serve on the board of directors of USDATA.
Independent Public Accountants
Since 1992, we have retained PriceWaterhouseCoopers LLP as our independent
public accountants, and we intend to retain PriceWaterhouseCoopers LLP for the
current year ending December 31, 1999. A representative of
PriceWaterhouseCoopers LLP is expected to be present at the annual meeting and
will have an opportunity at the meeting to make a statement if he or she desires
to do so, and will be available to respond to appropriate questions.
[USDATA LOGO] 23
<PAGE>
Appendix A
USDATA Corporation
Employee Stock Purchase Plan
The following constitute the provisions of the Employee Stock Purchase Plan
of USDATA Corporation
1. Purpose. The purpose of the Plan is to provide Employees of the Company
and its Subsidiaries with an opportunity to purchase Common Stock of the Company
through accumulated payroll deductions. It is the intention of the Company to
have the Plan qualify as an "Employee Stock Purchase Plan" under section 423 of
the Code (as defined below). The provisions of the Plan shall be construed
accordingly, so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Act" shall mean the Securities Exchange Act of 1934, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the common stock, $.01 par value per
share, of the Company.
(e) "Committee" shall mean the committee appointed pursuant to
Paragraph 11.
(f) "Company" shall mean USDATA Corporation, a Delaware corporation,
or any successor which adopts this Plan.
(g) "Compensation" shall mean all base straight-time gross earnings
and sales commissions, overtime pay and cash bonuses.
(h) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of a leave of
absence that meets the requirements of Paragraph 9(b).
(i) "Designated Subsidiary" shall mean any Subsidiary that has adopted
the Plan in accordance with Paragraph 29.
(j) "Eligible Employee" shall have the meaning defined in Paragraph
3(a).
(k) "Employee" shall mean any person, including an officer, who is
customarily employed for at least 20 hours per week and for more than five
months in the calendar year by an Employer, provided, however, that no
individual shall be considered an Employee for purposes of this Plan if a
country's law prohibits the granting of options under this Plan to
individuals who are citizens of that country. The determination of whether
an individual is an Employee for purposes of this Plan shall be made in
accordance with the rules under Section 3401(c) of the Code and the
Treasury Regulations thereunder.
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(l) "Employer" shall mean the Company and each of its Designated
Subsidiaries.
(m) "Enrollment Date" shall mean the first day of each Offering
Period.
(n) "Exercise Date" shall mean the last day of each Offering Period.
(o) "Exercise Price" shall have the meaning as defined in Paragraph
6(b).
(p) "Offering Period" shall mean that period to be determined by the
Committee beginning on the date Eligible Employees are offered the
opportunity to purchase Shares hereunder. The first Offering Period shall
begin on July 1, 1999 and shall end on December 31, 1999. Until changed by
the Committee, in its sole and absolute discretion, a new Offering Period
shall begin on the first day of each six calendar month period beginning on
each January 1 and July 1 of a calendar year, and shall end on the end of
such six month period.
(q) "Participant" shall mean an Eligible Employee who has elected to
participate herein by authorizing payroll deductions pursuant to Paragraph
4.
(r) "Payroll Deduction Account" shall mean the separate account
maintained hereunder to record the amount of a Participant's Compensation
that has been withheld pursuant to Paragraph 5.
(s) "Plan" shall mean the USDATA Corporation Employee Stock Purchase
Plan.
(t) "Share" shall mean a share of Common Stock.
(u) "Subscription Agreement" shall have the meaning as defined in
Paragraph 4(a).
(v) "Subsidiary" shall mean a corporation, domestic or foreign, of
which at the time of the granting of the option pursuant to Paragraph 6,
not less than 50% of the total combined voting power of all classes of
stock are held by the Company or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or acquired by the Company
or a Subsidiary.
3. Eligibility.
(a) General Rule. Any Employee on an Enrollment Date shall be eligible to
participate as an "Eligible Employee" during the Offering Period beginning on
such Enrollment Date, subject to the requirements of Paragraph 4(a) and the
limitations imposed by section 423(b) of the Code.
(b) Exceptions. Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be an Eligible Employee if:
(i) Immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to section 424(d)
of the Code) would own stock (including for purposes of this Paragraph 3(b)
any stock he may acquire upon exercise of outstanding options) possessing
5% or more of the total combined voting power or value of all classes of
stock of the Company or of any Subsidiary computed in accordance with
section 423(b)(3) of the Code; or
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<PAGE>
(ii) Such option would permit such Employee's right to purchase stock
under all employee stock purchase plans (described in section 423 of the
Code) of the Company and its Subsidiaries to accrue at a rate which exceeds
$25,000 of the fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is
outstanding at any time, in accordance with the provisions of section
423(b)(8) of the Code.
4. Participation.
(a) An Eligible Employee may become a Participant in the Plan by completing
a Subscription Agreement authorizing payroll deductions, in a form substantially
similar to Exhibit A attached to this Plan ("Subscription Agreement"), and
filing it with the Company's Human Resources Department prior to the applicable
Enrollment Date, unless a later time for filing the Subscription Agreement is
set by the Committee for all Eligible Employees with respect to a given Offering
Period.
(b) Payroll deductions for a Participant shall commence with the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Paragraph 9.
(c) An Eligible Employee may waive his right to participate for any
Offering Period by declining to authorize a payroll deduction. Such declination
must be filed in writing in the time and manner specified thereby. The filing of
a written declination shall result in the Employee's waiver of participation for
only the Offering Period to which it relates and shall be irrevocable with
respect to such Offering Period. Except as otherwise provided in this Paragraph,
an Employee's waiver of participation for a specified Offering Period shall not,
in and of itself, adversely impact the right of such Employee to participate in
the Plan during any subsequent Offering Periods except those Offering Periods
with respect to which he files additional written declinations in accordance
with the provisions of this Paragraph.
5. Payroll Deductions.
(a) At the time a Participant files his or her Subscription Agreement, such
Participant shall elect to have payroll deductions (in whole percentage
increments) made on each pay date during the Offering Period in an amount of not
less than 1% nor more than 15% of the Compensation which he or she receives on
each pay date during the Offering Period.
(b) All payroll deductions made by a Participant shall be credited to his
or her Payroll Deduction Account under the Plan. No interest shall accrue on the
payroll deductions in a Participant's Payroll Deduction Account in the Plan.
(c) No changes in the rate of payroll deductions other than a withdrawal
pursuant to Paragraph 9 are permitted.
6. Grant of Option.
(a) On the Enrollment Date of each Offering Period during the term of the
Plan each Participant in such Offering Period shall be granted an option to
purchase up to a number of whole Shares determined by dividing 15% of the
Participant's
[USDATA LOGO] 26
<PAGE>
Compensation by the Exercise Price; provided, however, that the number of
shares subject to such option shall be reduced, if necessary, to a number of
shares which would not exceed the limitations described in Paragraph 3(b) or
Paragraph 10(a) hereof. The fair market value of a Share shall be determined as
provided in Paragraph 6(b).
(b) The "Exercise Price" per Share offered in a given Offering Period shall
be determined by the Committee but shall not be less than the lower of: (i) 85%
of the fair market value of a Share on the Enrollment Date, or (ii) 85% of the
fair market value of a Share on the Exercise Date. The fair market value of a
Share on a given date shall be the closing price of such Share as reported by
the Nasdaq National Market or reported on such other national exchange as it
may, from time to time, be reported on, on such date (or if there shall be no
trading on such date, then on the first previous date on which there is such
trading), unless the Shares cease to be traded on a national exchange. If the
Shares cease to be traded on a national exchange, fair market value shall be
determined by the Committee in its discretion consistent with section 423 of the
Code or the regulations thereunder.
(c) All grants made hereunder shall be deemed to have been made on the
applicable Enrollment Date.
7. Exercise of Option. The Participant's option for the purchase of
Shares will be exercised automatically on the Exercise Date of each Offering
Period, and the maximum number of full shares subject to such option will be
purchased for such Participant at the applicable Exercise Price with the payroll
deductions accumulated in his or her Payroll Deduction Account, unless prior to
such Exercise Date the Participant has withdrawn from the Offering Period as
provided in Paragraph 9. During a Participant's lifetime a Participant's option
to purchase shares hereunder is exercisable only by such Participant. Any amount
remaining in the Participant's Payroll Deduction Account after the Offering
Period shall be held in the Payroll Deduction Account until the next Offering
Period, unless the Offering Period has been oversubscribed or has terminated, in
which case such amount shall be refunded to the Participant.
8. Delivery. As soon as practicable after the Exercise Date, the Committee
shall arrange the delivery to each Participant, or to his account at a brokerage
firm, of a certificate representing the shares purchased upon exercise of his or
her option.
9. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all, but not less than all, of the
payroll deductions credited to his or her Payroll Deduction Account and not
yet used toward the exercise of his or her option under the Plan at any
time by giving written notice to the Committee on a form substantially
similar to Exhibit B attached to this Plan. All of the Participant's
payroll deductions credited to his or her Payroll Deduction Account that
have not yet been used to purchase Shares will be paid to such Participant
as soon as practicable after receipt of his or her notice of withdrawal. A
withdrawal of a Participant's Payroll Deduction Account shall terminate the
Participant's participation for the Offering Period in which the withdrawal
occurs. No further payroll deductions for the purchase of shares will be
made during the Offering Period.
(b) Upon termination of the Participant's Continuous Status as an
Employee of the Company for any reason, he or she will be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to
his or her Payroll Deduction Account will be returned to such Participant
and his or her option will be canceled; provided, however, a Participant
who goes on a leave of absence shall be permitted to
[USDATA LOGO] 27
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remain in the Plan with respect to an Offering Period which commenced prior
to the beginning of such leave of absence. If such Participant is not
guaranteed reemployment by contract or statute and the leave of absence
exceeds 90 days, such Participant shall be deemed to have terminated
employment on the 91st day of such leave of absence. Payroll deductions for
a Participant who has been on a leave of absence will resume upon return to
work at the same rate as in effect prior to such leave unless the leave of
absence begins in one Offering Period and ends in a subsequent Offering
Period, in which case the Participant shall not be permitted to re-enter
the Plan until a new Subscription Agreement is filed with respect to an
Offering Period which commences after such Participant has returned to work
from the leave of absence.
(c) A Participant's withdrawal from one Offering Period will not have
any effect upon his or her eligibility to participate in a different
Offering Period or in any similar plan which may hereafter be adopted by
the Company.
10. Shares.
(a) The maximum number of Shares which shall be made available for sale
under the Plan shall be 200,000 Shares, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 16. Either authorized and
unissued Shares or issued Shares heretofore or hereafter reacquired by the
Employer may be made subject to purchase under the Plan, in the sole and
absolute discretion of the Committee. Further, if for any reason any purchase of
any Shares under the Plan is not consummated, Shares subject to such purchase
agreement may be subjected to a new Subscription Agreement under the Plan. If,
on the Exercise Date, the number of Shares with respect to which options are to
be exercised exceeds the number of Shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable. In such event, the Company shall give written notice
of such reduction of the Shares which each Employee shall be allowed to
purchase. Notwithstanding anything to the contrary herein, the Company shall not
be obligated to issue Shares hereunder if, in the opinion of counsel for the
Company, such issuance would constitute a violation of federal or state
securities laws.
(b) The Participant will have no interest or voting right in Shares covered
by his or her option until such option has been exercised and the Shares have
been issued or transferred to the Participant.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or, at the prior written request of
the Participant, in the names of the Participant and his or her spouse.
11. Administration. The Plan shall be administered by a Committee appointed
by the Board. Such Committee shall have all powers with respect to the Plan,
except for amending or terminating the Plan as set forth in Paragraph 17 hereof.
(a) Each member of the Committee shall serve until his successor is
appointed. Any member of the Committee may be removed at any time by the Board,
with or without cause, which shall have the power to fill any vacancy which may
occur. A Committee member may resign by giving 30 days written notice to the
Company.
(b) The members of the Committee shall serve without compensation for
services as such, but the Company shall pay all expenses of the Committee.
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(c) The Committee shall have the following powers and duties:
(1) To direct the administration of the Plan in accordance with the
provisions herein set forth;
(2) To adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not inconsistent with the
terms of the Plan;
(3) To determine all questions with regard to rights of Employees and
Participants under the Plan, including, but not limited to, the eligibility
of an Employee to participate in the Plan;
(4) To enforce the terms of the Plan and the rules and regulations it
adopts;
(5) To direct the distribution of the Shares purchased hereunder;
(6) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(7) To engage the service of counsel (who may, if appropriate, be
counsel for an Employer) and agents whom it may deem advisable to assist it
with the performance of its duties;
(8) To prescribe procedures to be followed by Participants in electing
to participate herein;
(9) To receive from each Employer and from Employees such information
as shall be necessary for the proper administration of the Plan;
(10) To maintain, or cause to be maintained, separate accounts in the
name of each Participant to reflect the Participant's Payroll Deduction
Account under the Plan; and
(11) To interpret and construe the Plan.
12. Designation of Beneficiary.
(a) A Participant may file a written designation of a beneficiary (as
indicated in the Subscription Agreement or otherwise) who is to receive any
Shares under the Plan in the event of such Participant's death subsequent to the
Exercise Date on which an option is exercised but prior to the issuance of such
shares. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's Payroll Deduction
Account under the Plan in the event of such Participant's death prior to the
Exercise Date of the option.
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan, the Committee
shall deliver such shares and/or cash to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company or Committee), the Committee, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no
[USDATA LOGO] 29
<PAGE>
spouse, dependent or relative is known to the Committee, then to such other
person as the Committee may designate.
13. Transferability. Neither payroll deductions credited to Participant's
Payroll Deduction Account nor any rights with regard to the exercise of an
option to receive Shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Paragraph 12 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Committee may treat such act as an election to withdraw
funds in accordance with Paragraph 9.
14. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
15. Reports. Individual Payroll Deduction Accounts will be maintained for
each Participant in the Plan. Statements of Payroll Deduction Account will be
given to Participants as soon as practicable following an Exercise Date, such
statements will set forth the amounts of payroll deductions, the per share
purchase price, the number of shares purchased and the remaining cash balance,
if any.
16. Adjustments Upon Changes in Capitalization. If an option under this
Plan is exercised subsequent to any stock split, spinoff, recapitalization,
reorganization, reclassification, merger, consolidation, exchange of shares, or
the like occurring after such option was granted, as a result of which shares of
any class of stock shall be issued in respect of the outstanding shares, or
shares shall be changed into a different number of the same or another class or
classes, the number of Shares to which such option shall be applicable and the
option price for such Shares shall be appropriately adjusted by the Company. Any
such adjustment, however, in the Shares shall be made without change in the
total price applicable to the portion of the Shares purchased hereunder which
has not been fully paid for, but with a corresponding adjustment, if
appropriate, in the price for the Shares.
In the event of the proposed dissolution or liquidation of the Company or
upon a proposed reorganization, merger, or consolidation of the Company with one
or more corporations as a result of which the Company is not the surviving
corporation, or upon a proposed sale of substantially all of the property or
stock of the Company to another corporation, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board, and the holder of each option then outstanding under the
Plan will thereafter be entitled to receive, upon the exercise of such option,
as nearly as reasonably may be determined, the cash, securities, and/or property
which a holder of one Share was entitled to receive upon and at the time of such
transaction for each Share to which such option shall be exercised. The Board
shall take such steps in connection with such transactions as the Board shall
deem necessary to assure that the provisions of this Paragraph shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities, and/or property as to which such holder of such option
might thereafter be entitled to receive.
17. Amendment or Termination. The Board may at any time and for any reason
terminate or amend the Plan. Except as specifically provided in the Plan, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board on any Exercise Date if the Board
determines that the termination of the Plan is in the best interest of the
Company and its stockholders. Except as specifically provided in the Plan or as
required to obtain a favorable ruling from the Internal Revenue Service or to
comply with tax or securities law, no amendment may make any change in any
option theretofore
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granted which adversely affects the rights of any Participant. To the
extent necessary to comply with Rule 16b-3 under the Act or section 423 of the
Code (or any successor rule or provision or any other applicable law or
regulation), the Company shall obtain stockholder approval in such manner and to
such a degree as required.
18. Notices. All notices or other communications by a Participant to the
Company or Committee under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt thereof.
19. Stockholder Approval. Commencement of the Plan shall be subject to
approval by the stockholders of the Company within 12 months before or after the
date the Plan is adopted. Notwithstanding any provision to the contrary, failure
to obtain such stockholder approval shall void the Plan, any options granted
under the Plan, any Share purchases pursuant to the Plan, and all rights of all
Participants.
20. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
21. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company
as described in Paragraph 19. It shall continue in effect for a term of ten
years unless sooner terminated under Paragraph 17.
22. No Rights Implied. Nothing contained in this Plan or any modification
or amendment to the Plan or in the creation of any Payroll Deduction Account, or
the execution of any participation election form, or the issuance of any Shares,
shall give any Employee or Participant any right to continue employment, any
legal or equitable right against the Employer or Company or any officer,
director, or Employee of an Employer or Company, except as expressly provided by
the Plan.
23. Severability. In the event any provision of the Plan shall be held to
be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan, but shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein.
24. Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
25. Successors and Assigns. The Plan shall be binding upon all persons
entitled to purchase Shares under the Plan, their respective heirs, legatees,
and legal representatives and upon the Employer, its successors and assigns.
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26. Headings. The titles and headings of the Paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
27. Governing Law. All questions arising with respect to the provisions of
this Plan shall be determined by application of the laws of the State of
Delaware except to the extent Delaware law is preempted by federal statute. The
obligation of the Employer to sell and deliver Shares under the Plan is subject
to applicable laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale or delivery of such Shares.
28. No Liability for Good Faith Determinations. Neither the members of the
Board nor any member of the Committee (nor their delegates) shall be liable for
any act, omission, or determination taken or made in good faith with respect to
the Plan or any right to purchase Shares granted under it, and members of the
Board and the Committee (and their delegates) shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage, or expense (including attorneys' fees, the costs of settling any suit,
provided such settlement is approved by independent legal counsel selected by
the Company, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect.
29. Participating Employers. This Plan shall constitute the employee stock
purchase plan of the Company and each Designated Subsidiary. A Designated
Subsidiary may adopt and participate in this Plan beginning as of the next
Enrollment Date, provided the Board has consented to such Designated
Subsidiary's participation. A Designated Subsidiary may withdraw from the Plan
as of any Enrollment Date by giving written notice to the Board, and such notice
must be received by the Board at least 30 days prior to such Enrollment Date.
30. No Guarantee of Interests or Tax Treatment. Neither the Committee nor
the Company guarantees the Common Stock from loss or depreciation. Neither the
Committee nor the Company guarantees favorable tax treatment for the purchase of
Shares hereunder.
31. Payment of Expenses. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Company.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been executed
effective this day of ____________, ____________ 1999.
USDATA CORPORATION
ATTEST: By:
------------------------------------
- --------------------------------- Its
Secretary ---------------------------------
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EXHIBIT A
USDATA Corporation
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
I, __________________, have read the attached prospectus explanation of the
USDATA Corporation Employee Stock Purchase Plan (the "Plan"). I have decided
(check one):
_____ NOT to participate.
_____ TO PARTICIPATE. I wish to purchase that number of
shares of USDATA Corporation Common Stock, $.01 par
value (the "Shares"), that can be purchased with
______% of my Compensation1 (select the percentage of
your compensation from 1 to 15, in increments of 1,
that you elect to contribute).
In order to pay for the Shares that I have elected to purchase, I hereby
authorize my Employer to deduct the percentage of my Compensation that I
specified above from my pay each pay period while this election is in effect.
I understand that said payroll deductions shall be accumulated for the
purchase of the Shares at the applicable purchase price determined in accordance
with the Plan. I further understand that, except as otherwise set forth in the
Plan, Shares will be purchased for me automatically on the Exercise Date of the
Offering Period unless I otherwise withdraw from the Offering Period or the
Plan.
I have received a copy of USDATA Corporation's most recent prospectus that
describes the Plan and a copy of the complete Plan. I understand that my
participation in the Plan is in all respects subject to the terms of the Plan.
I hereby agree to be bound by the terms of the Plan. The effectiveness of
this Subscription Agreement is dependent upon my eligibility to participate in
the Plan.
Beneficiary Designation. In the event of my death, I hereby designate the
following as my beneficiary to receive all payments and Shares due me and not
yet paid or issued under the Plan, pursuant to Paragraph 12 of the Plan:
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Name and Address of Participant:
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Signature:
-----------------------------------
Date:
-----------------------------------
- ----------
1 Please refer to the Plan document for definitions of capitalized words
that are not defined in this Subscription Agreement.
[USDATA LOGO] 33
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PROXY
USDATA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please sign and date this proxy, and indicate how you wish to vote, on the
back of this card. Please return this card promptly in the enclosed envelope.
Your vote is important.
When you sign and return this proxy card, you
o appoint Robert A. Merry and Robert L. Drury, and each of them (or any
substitutes they may appoint), as proxies to vote your shares, as you have
instructed, at the annual meeting on June 18, 1999, and at any adjournments
of that meeting,
o authorize the proxies to vote, in their discretion, upon any other business
properly presented at the meeting, and
o revoke any previous proxies you may have signed.
IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE FOR ALL
NOMINEES TO THE BOARD OF DIRECTORS, FOR THE ADOPTION OF THE EMPLOYEE STOCK
PURCHASE PLAN, FOR THE AMENDMENT TO THE 1994 EQUITY COMPENSATION PLAN, AND AS
THEY MAY DETERMINE, IN THEIR DISCRETION, WITH REGARD TO ANY OTHER MATTER
PROPERLY PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as
indicated in this example |X|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. ELECTION OF DIRECTORS
Nominees: WITHHELD
FOR FOR ALL
Gary J. Anderson, M.D. Robert A. Merry |_| |_|
Stephen J. Andriole, Ph.D. Jack L. Messman
James W. Dixon Arthur R. Spector
Max D. Hopper
2. ADOPTION OF THE EMPLOYEE STOCK FOR AGAINST ABSTAIN
PURCHASE PLAN |_| |_| |_|
3. AMENDMENT TO 1994 EQUITY FOR AGAINST ABSTAIN
COMPENSATION PLAN TO INCREASE |_| |_| |_|
THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WHILE VOTING FOR THE
REMAINDER, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST.
Signature(s) Date: , 1999
------------------ ------------------ ------------
YOU MUST SIGN EXACTLY AS YOUR NAME APPEARS ON THIS CARD. IF SHARES ARE
JOINTLY OWNED, YOU MUST BOTH SIGN. INCLUDE YOUR FULL TITLE IF YOU ARE SIGNING AS
AN ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, OR ON BEHALF OF A
CORPORATION OR PARTNERSHIP.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
(USDATA LOGO)
Your Proxy vote is important,
regardless of the number of shares you own.
Whether or not you plan to attend the
meeting in person, please complete, date
and sign the above Proxy card and return it
without delay in the enclosed envelope.
<PAGE>
USDATA CORPORATION
AMENDED AND RESTATED 1994 EQUITY COMPENSATION PLAN
SECTION 1. Purpose; Definitions
The purpose of the USDATA Corporation 1994 Equity Compensation Plan (the
"Plan") is to provide employees (including employees who are also officers or
directors), non-employee directors, and Eligible Independent Contractors (as
hereinafter defined) of USDATA Corporation (the "Company") with the opportunity
to receive grants of incentive stock options, nonqualified stock options, stock
appreciation rights and restricted stock awards. The Company believes that the
Plan will enable the Company to attract, retain and motivate its employees,
non-employee directors and Eligible Independent Contractors, will encourage Plan
participants to contribute materially to the growth of the Company for the
benefit of the Company's stockholders, and will align the economic interests of
the Plan participants with those of the stockholders.
For the purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company.
b. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
c. "Committee" means the Committee designated by the Board to administer
the Plan.
d. "Company" means USDATA Corporation, its subsidiaries or any successor
organization.
e. "Disability" means permanent and total disability within the meaning of
Section 22(e)(3) of the Code.
f. "Eligible Independent Contractor" means an independent consultant or
advisor hired by the Company to provide bona fide services for the Company that
are not in connection with the offer or sale of securities in a capital-raising
transaction.
g. "Employed by the Company" shall mean employment as an employee or
Eligible Independent Contractor or member of the Board, so that for purposes of
exercising Stock Options and Stock Appreciation Rights and satisfying conditions
with respect to Restricted Stock Grants, a Participant shall not be considered
to have terminated employment until the Participant ceases to be an employee,
Eligible Independent Contractor or member of the Board, provided, however, that
the Committee may determine otherwise as may be specified in an individual
Participant's Grant Letter.
h. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
<PAGE>
i. "Fair Market Value" means the fair market value of the Stock as
determined by the Committee in good faith based on the best available facts and
circumstances at the time; provided, however, that where there is a public
market for the Stock and the Stock is registered under the Exchange Act, Fair
Market Value shall mean the per share or aggregate value of the Stock as of any
given date, determined as follows: (i) if the principal trading market for the
Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or, if there were no trades on
that date, the latest preceding date upon which a sale was reported, or (ii) if
the Stock is not principally traded on such exchange or market, the mean between
the last reported "bid" and "asked" prices of Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
services, as applicable and as the Committee determines.
j. "Grant" means any Stock Option, Stock Appreciation Right or Restricted
Stock award granted pursuant to the Plan.
k. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
l. "Insider" means a Participant who is subject to Section 16 of the
Exchange Act.
m. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
n. "Participant" means an employee, non-employee director or Eligible
Independent Contractor to whom an award is granted pursuant to the Plan.
o. "Plan" means the USDATA Corporation 1994 Equity Compensation Plan, as
hereinafter amended from time to time.
p. "Restricted Stock" means an award of shares of Stock that is subject to
restrictions pursuant to Section 7 below.
q. "Securities Act" shall mean the Securities Act of 1933, as amended.
r. "Securities Broker" means the registered securities broker acceptable to
the Company who agrees to effect the cashless exercise of an Option pursuant to
Section 5(d) hereof.
s. "Stock" means the Common Stock of the Company, par value $.01 per share.
t. "Stock Appreciation Right" means the right, pursuant to an award granted
under Section 6 below, to surrender to the Company all (or a portion) of a Stock
Option in exchange for an amount in cash and/or shares of Stock equal in value
to the excess of (i) the Fair Market Value, as of the date such right is
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<PAGE>
exercised and the related Stock Option (or such portion thereof) is surrendered,
of the shares of Stock covered by such Stock Option (or such portion thereof),
over (ii) the aggregate exercise price of such Stock Appreciation Right (or such
portion thereof).
u. "Stock Option" or "Option" means any option to purchase shares of Stock
(including Restricted Stock, if the Committee so determines) granted pursuant to
Section 5 below.
v. "Termination for Cause" shall mean, except to the extent specified
otherwise by the Committee, a finding by the Committee that the Participant has
breached his or her employment or service contract, non-competition agreement or
other obligation with the Company, or has been engaged in disloyalty to the
Company, including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment or
service, or has disclosed trade secrets or confidential information of the
Company to persons not entitled to receive such information.
SECTION 2. Administration
The Plan shall be administered by a Committee which shall consist of two or
more non-employee directors appointed by the Board. In the absence of the
designation of a Committee to administer the Plan, the Plan shall be
administered by the full Board.
The Committee shall have the authority to:
(a) select the Participants to whom Grants may from time to time be made
hereunder;
(b) determine the type, size and terms of the Grants to be made to each
such Participant;
(c) determine the time when the Grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability;
(d) amend the terms of any outstanding award (with the consent of the
Participant) to reflect terms not otherwise inconsistent with the Plan,
including, but not limited to, amendments concerning vesting acceleration or
forfeiture waiver regarding any award or the extension of a Participant's right
with respect to Grants under the Plan as a result of termination of employment
or service or otherwise, based on such factors as the Committee shall determine,
in its sole discretion, or substitution of new Stock Options for previously
granted Stock Options, including previously granted Stock Options having high
option prices;
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<PAGE>
(e) establish from time to time any policy or program to encourage or
require Participants to achieve or maintain equity ownership in the Company
through the use of the Plan upon such terms and conditions as the Committee may
determine in its sole discretion, and thereafter to amend, modify or terminate
such policy or program as the Committee may from time to time deem appropriate;
and
(f) deal with any other matters arising under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan and any Grant made under the Plan, to make factual
determinations and to adopt, alter and repeal such administrative rules,
guidelines, practices, agreements and instruments for implementing the Plan and
for the conduct of its business as it deems necessary or advisable, in its sole
discretion. All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons having any interest in the
Plan or in any Grants made hereunder. All power of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant made
under it. Nothing herein shall be deemed to expand the personal liability of a
member of the Board or Committee beyond that which may arise under any
applicable standards set forth in the Company's Certificate of Incorporation,
by-laws and Delaware law, nor shall anything herein limit any rights to
indemnification or advancement of expenses to which any member of the Board or
the Committee may be entitled under any applicable law, the Company's
Certificate of Incorporation or by-laws, agreement, vote of the stockholders or
directors, or otherwise.
SECTION 3. Stock Subject to the Plan
(a) The aggregate number of shares of Stock that may be issued or
transferred under the Plan is 2,500,000, subject to adjustment pursuant to
Section 3(b) below. Such shares may be authorized but unissued shares or
reacquired shares of Stock, including shares purchased by the Company on the
open market for purposes of the Plan. In the event the number of shares of Stock
issued under the Plan and the number of shares of Stock subject to outstanding
awards equals the maximum number of shares of Stock authorized under the Plan,
no further awards shall be made unless the Plan is amended to increase the
number of shares of Stock issuable and transferable hereunder or additional
shares of Stock become available for further awards under the Plan. If and to
the extent that Options or Stock Appreciation Rights granted under the Plan
terminate, expire or are canceled, forfeited, exchanged or surrendered without
having been exercised, or if any shares of Restricted Stock are forfeited, the
shares subject to such Grants shall again be available for subsequent awards
under the Plan.
(b) If there is any change in the number or kind of shares of Company Stock
outstanding (i) by reason of a stock dividend, spin off, recapitalization, stock
split, or combination or exchange of shares, (ii) by reason of a merger,
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<PAGE>
reorganization or consolidation in which the Company is the surviving
corporation, (iii) by reason of a reclassification or change in par value, or
(iv) by reason of any other extraordinary or unusual event affecting the
outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spin off or the Company's payment of an
extraordinary dividend or distribution, then unless such event or change results
in the termination of all outstanding awards under the Plan, the Committee shall
preserve the value of the outstanding awards by adjusting the maximum number and
class of shares issuable under the Plan to reflect the effect of such event or
change in the Company's capital structure, and by making appropriate adjustments
to the number and class of shares subject to an outstanding award and/or the
option price of each outstanding Option and Stock Appreciation Right, except
that any fractional shares resulting from such adjustments shall be eliminated
by rounding any portion of a share equal to .5 or greater up, and any portion of
a share equal to less than .5 down, in each case to the nearest whole number.
SECTION 4. Eligibility; Participant Limitations Concerning Issuances
All employees, non-employee directors and Eligible Independent Contractors
are eligible to participate in the Plan. The maximum aggregate number of shares
of Stock that shall be subject to Grants made under the Plan to any Participant
shall not exceed 500,000. The terms and provisions of Grants made under the Plan
may vary between Participants or as to the same Participant to whom more than
one Grant may be awarded.
SECTION 5. Stock Options
Stock Options may be granted alone, in addition to, or in tandem with other
awards granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve. Stock Options
granted under the Plan may be of two types: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options.
The Committee shall have the authority to grant Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options (in each case with or
without Stock Appreciation Rights). To the extent that any Stock Option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the Participant affected, to disqualify any Incentive Stock Option under
Section 422.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:
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<PAGE>
(a) Option Price. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant,
provided, however, that the option price per share for any Incentive Stock
Option shall be not less than 100% of the Fair Market Value of the Stock at the
time of grant.
Any Incentive Stock Option granted to any Participant who, at the time
the Option is granted, owns more than 10% of the voting power of all classes of
stock of the Company or of a Parent or Subsidiary corporation (within the
meaning of Section 424 of the Code), shall have an exercise price no less than
110% of the Fair Market Value per share on the date of the grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Stock Option is granted. However, any Incentive Stock Option
granted to any Participant who, at the time the Option is granted, owns more
than 10% of the voting power of all classes of stock of the Company or of a
Parent or Subsidiary corporation may not have a term of more than five years. No
Stock Option may be exercised by any person after expiration of the term of the
Stock Option.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant. If the Committee provides, in its discretion, that
any Stock Option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time at or after grant in whole or
in part, based on such factors as the Committee shall determine, in its sole
discretion.
(d) Method of Exercise. Subject to whatever installment exercise provisions
apply under Section 5(c), Stock Options may be exercised, in whole or in part at
any time and from time to time during the Option period, by giving written
notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by cash, check, or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the Participant (including Company Stock acquired in
connection with the exercise of an Option, subject to such restrictions as the
Committee deems appropriate); provided, however, that (i) in the case of an
Incentive Stock Option, the right to make a payment in the form of unrestricted
Stock already owned by the Participant may be authorized only at the time the
Option is granted and (ii) the Company may require that the Stock has been owned
by the Participant for the requisite period of time necessary to avoid a charge
to the Company's earnings for financial reporting purposes and adverse
accounting consequences to the Company with respect to the Option.
If specified by the Committee in the agreement governing a Stock Option
at the time of grant, the Committee may, in its sole discretion, upon receipt of
such Participant's written notice to exercise, elect to cash out all or part of
the portion of the Stock Option to be exercised by paying the Participant an
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<PAGE>
amount, in cash or Stock, equal to the excess of the Fair Market Value of the
Stock over the option price on the effective date of such cash-out.
To the extent permitted under the applicable laws and regulations, at
the request of the Participant and if authorized by the Committee, in its sole
discretion, at or after grant, the Company agrees to cooperate in a "cashless
exercise" of a Stock Option. The cashless exercise shall be effected by the
Participant delivering to the Securities Broker instructions to sell a
sufficient number of shares of Stock to cover the cost and expenses associated
therewith.
No shares of Stock shall be issued until full payment therefor has been
made. A Participant shall not have any right to dividends or other rights of a
stockholder with respect to shares subject to the Option until such time as
Stock is issued in the name of the Participant following exercise of the Option
in accordance with the Plan.
(e) Stock Option Agreement. Each Option granted under this Plan shall be
evidenced by an appropriate Stock Option agreement, which agreement shall
expressly specify whether such Option is an Incentive Stock Option or a
Non-Qualified Stock Option and shall be executed by the Company and the
Participant. The agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the Committee.
(f) Replacement Options. If an Option granted pursuant to the Plan may be
exercised by an optionee by means of a stock-for-stock swap method of exercise
as provided in 5(d) above, then the Committee may, in its sole discretion and at
the time of the original option grant, authorize the Participant to
automatically receive a replacement Option pursuant to this part of the Plan.
This replacement option shall cover a number of shares determined by the
Committee, but in no event more than the number of shares equal to the
difference between the number of shares of the original option exercised and the
net shares received by the Participant from such exercise. The per share
exercise price of the replacement option shall equal the then current Fair
Market Value of a share of Stock, and shall have a term extending to the
expiration date of the original Option.
The Committee shall have the right, in its sole discretion and at any
time, to discontinue the automatic grant of replacement options if it determines
the continuance of such grants to no longer be in the best interest of the
Company.
(g) Non-transferability of Options. Except as provided below, no Stock
Option shall be transferable by the Participant other than by will or by the
laws of descent and distribution, and all Stock Options shall be exercisable,
during the Participant's lifetime, only by the Participant. When a Participant
dies, the representative or other person entitled to succeed to the rights of
the Grantee may exercise such rights, subject to the Company receiving
satisfactory proof of his or her right to receive the Grant under the
Participant's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Participant may transfer Nonqualified Stock Options pursuant to a
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<PAGE>
domestic relations order or to family members or other persons or entities
according to such terms as the Committee may determine.
(h) Termination of Employment; Disability; Death
(i) Unless otherwise determined by the Committee at or after grant, in
the event of a Participant's termination of employment (voluntary or
involuntary) for any reason other than as provided below, any Stock Option
held by such Participant may thereafter be exercised by the Participant, to
the extent it was exercisable at the time of such termination or on such
accelerated basis as the Committee may determine at or after grant, for a
period of three months (or such shorter period as the Committee may specify
at grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is
shorter.
(ii) Unless otherwise determined by the Committee at or after grant,
if any Participant ceases to be employed by the Company on account of a
Termination for Cause by the Company, any Stock Option held by such
Participant shall terminate as of the date the Participant ceases to be
employed by the Company, and the Participant shall automatically forfeit
all Stock underlying any exercised portion of an Option for which the
Company has not yet delivered the share certificates, upon refund by the
Company of the Exercise Price paid by the Participant for such Stock.
(iii) Unless otherwise determined by the Committee at or after grant,
if a Participant's employment by the Company terminates by reason of
Disability, any Stock Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time
of termination, or on such accelerated basis as the Committee may determine
at or after grant, for a period of one year (or such shorter period as the
Committee may specify at grant) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is shorter.
(iv) Unless otherwise determined by the Committee at or after grant,
if any Participant dies while employed by the Company or within three
months after the date on which the Participant ceases to be employed by the
Company on account of termination of employment specified in Section
5(h)(i) above (or within such other period of time as may be specified by
the Committee), any Stock Option held by such Participant may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as
the Committee may determine at or after grant, by the legal representative
of the estate or by the legatee of the Participant under the will of the
Participant, for a period of one year (or such shorter period as the
Committee may specify at grant) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is shorter.
(i) Incentive Stock Option Limitation. The aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which
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<PAGE>
Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year under the Plan and/or any other stock option plan of
the Company shall not exceed $100,000. An Incentive Stock Option shall not be
granted to any person who is not an employee of the Company or a parent or
subsidiary (within the meaning of section 424(f) of the Code).
(j) Issuance of Shares. Within a reasonable time after exercise of an
Option, the Company shall cause to be delivered to the Participant a certificate
for the Stock purchased pursuant to the exercise of the Option.
SECTION 6. Stock Appreciation Rights
(a) Grant and Exercise. Stock Appreciation Rights may be granted either
separately or in tandem with all or part of any Stock Option granted under the
Plan. The provisions of Stock Appreciation Rights awarded under the Plan need
not be the same with respect to each Participant. In the case of a Non-Qualified
Stock Option, such rights may be granted either at the grant of such Stock
Option or at any time thereafter while the Option remains outstanding. In the
case of an Incentive Stock Option, such rights may be granted only at the time
of the grant of such Stock Option. The Committee shall establish the base amount
of the Stock Appreciation Rights at the time the Stock Appreciation Right is
granted. Unless the Committee determines otherwise, the base amount of each
Stock Appreciation Right shall be equal to the per share option price of the
related Stock Option or, if there is no related Stock Option, the Fair Market
Value of a share of Stock as of the date of grant of such Stock Appreciation
Right.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that,
unless otherwise determined by the Committee, in its sole discretion, at the
time of grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall not be reduced
until the number of shares covered by an exercise or termination of the related
Stock Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by a Participant, in
accordance with Section 6(b), by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the Participant shall be
entitled to receive an amount determined in the manner prescribed in Section
6(b). Stock Options which have been so surrendered, in whole or in part, shall
no longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate, if
any, shall be exercisable in accordance with the provisions of Section 5
and this Section 6 of the Plan.
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<PAGE>
(ii) Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive up to, but not more than, an amount in cash
and/or shares of Stock equal in value to the excess of the Fair Market
Value of one share of Stock (as of the date the Stock Appreciation Right is
exercised and the related Stock Option is surrendered) over the exercise
price of the Stock Appreciation Right, multiplied by the number of shares
of Stock in respect of which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of
payment.
(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable under
Section 5(g) of the Plan.
(iv) A Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the market price
of the Stock subject to the Incentive Stock Option exceeds the exercise
price of such Stock Option.
SECTION 7. Restricted Stock
(a) Administration. Shares of Restricted Stock may be issued either alone
or in addition to other awards granted under the Plan. The Committee shall
determine the employees, non-employee directors or Eligible Independent
Contractors to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares to be awarded, the price (if any) to be paid
by the recipient of Restricted Stock (subject to Section 7(b)), the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals or such other factors
as the Committee may determine, in its sole discretion. The provisions of
Restricted Stock awards need not be the same with respect to each Participant.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
established by the Committee and may be zero.
(ii) Awards of Restricted Stock may be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after
the grant date, by executing a Restricted Stock award agreement and paying
whatever price (if any) is required under Section 7(b)(i).
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<PAGE>
(iii) Each Participant receiving a Restricted Stock award shall be
issued a certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the USDATA Corporation 1994 Equity
Compensation Plan and an Agreement entered into between the
registered owner and USDATA Corporation. Copies of such Plan and
Agreement are on file at the offices of USDATA Corporation."
(iv) The Committee shall require that the certificates evidencing such
Restricted Stock be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the Participant shall have delivered a stock power, endorsed in
blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the Restricted Stock
award agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the Participant shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee, at its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions
in whole or in part, based on service, performance and/or such other
factors or criteria as the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the Participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a stockholder of the Company, including the right to
vote the shares and the right to receive any cash dividends. The Committee,
in its sole discretion, as determined at the time of award, may permit or
require the payment of cash dividends to be deferred and, if the Committee
so determines, reinvested in additional Restricted Stock to the extent
shares are available under Section 3.
(iii) Subject to the applicable provisions of the Restricted Stock
award agreement and this Section 7, upon termination of a Participant's
employment with the Company for any reason during the Restriction Period,
all shares still subject to restriction shall be forfeited by the
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Participant, subject to any payments for such shares as may be provided in
the Restricted Stock award agreement.
(iv) The Committee may, in its sole discretion, waive in whole or in
part any or all remaining restrictions with respect to such Participant's
shares of Restricted Stock, based on such factors as the Committee may deem
appropriate.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period, the
certificates for such shares shall be delivered to the Participant
promptly.
SECTION 8. Withholding and Use of Shares to Satisfy Tax Obligations
(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local withholding requirements.
The Company shall have the right to deduct from all Grants paid in cash, or from
other wages paid to the Participant, any federal, state or local taxes required
by law to be withheld with respect to such Grants. In the case of Grants paid in
Company Stock, the Company may require the Participant or other person receiving
such Stock to pay to the Company the amount of any such taxes that the Company
is required to withhold with respect to such Grants, or the Company may deduct
from other wages paid by the Company the amount of any withholding taxes due
with respect to such Grants.
(b) Election to Withhold Shares. If the Committee so permits, a Participant
may elect to satisfy the Company's income tax withholding obligation with
respect to a Grant paid in Company Stock by having shares withheld up to an
amount that does not exceed the Participant's maximum marginal tax rate for
federal (including FICA), state and local tax liabilities. The election must be
in a form and manner prescribed by the Committee and shall be subject to the
prior approval of the Committee.
SECTION 9. Amendments and Termination
The Board may amend or terminate the Plan at any time and from time to
time, but no amendment or termination shall be made which would impair the
rights of a Participant under a Grant theretofore awarded without the
Participant's consent; and provided, further, that the Board shall not amend the
Plan without stockholder approval if such approval is required pursuant to the
Code or the rules of any national securities exchange or over-the-counter market
on which the Company's Stock is then listed or included. Subject to the above
provisions, the Board shall have broad authority to amend the Plan to take into
account changes in applicable tax laws, securities laws and accounting rules, as
well as other developments.
SECTION 10. Unfunded Status of Plan
The Plan is intended to constitute an "unfunded" plan. The Company shall
not be required to establish any special or separate fund or to make any other
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segregation of assets to assure the payment of any Grants under this Plan. In no
event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.
SECTION 11. General Provisions
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or receiving Stock upon the expiration of any Restriction Period
under the Plan to represent to and agree with the Company in writing that the
Participant is acquiring the shares for investment and not with a view to
distribution thereof and that such Participant will not dispose of such Stock in
any manner that would involve a violation of applicable securities laws. In such
event no Stock shall be issued to such Participant unless and until the Company
is satisfied with such representation. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer under the Securities Act or any state securities law.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities Act, the Exchange Act, any stock
exchange or over-the-counter market upon which the Stock is then listed or
included, and any applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any Participant any
right to continued employment with the Company nor shall it interfere in any way
with the right of the Company to terminate its relationship with any of its
employees, directors or independent contractors at any time.
(d) At the time of grant, the Committee may provide in connection with any
grant made under this Plan that (i) the shares of Stock received as a result of
such grant shall be subject to a right of first refusal, pursuant to which the
Participant shall be required to offer to the Company any shares that the
Participant wishes to sell, with the price being the then Fair Market Value of
the Stock, subject to such other terms and conditions as the Committee may
specify at the time of grant; and (ii) the shares of Stock received or to be
received as a result of such grant shall be subject to repurchase by the Company
upon termination of employment, subject to a repurchase price and such other
terms and conditions as the Committee may specify at the time of grant.
(e) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Stock are available under Section 3 for such reinvestment.
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(d) The Committee shall establish such procedures as it deems appropriate
for a Participant to designate a beneficiary to whom any amounts payable in the
event of the Participant's death are to be paid.
(e) The Plan shall be governed by and subject to all applicable laws and to
the approvals by any governmental or regulatory agency as may be required.
SECTION 12. Effective Date and Term of Plan
The Plan shall be effective as of November 8, 1994, subject to the consent
or approval of the Company's stockholders. No Stock Option, Stock Appreciation
Right or Restricted Stock award shall be granted pursuant to the Plan on or
after November 8, 2004, but awards granted prior to such tenth anniversary may
extend beyond that date; provided, however, that if the Plan is not approved by
the unanimous consent of all stockholders or by a majority of the votes cast at
a duly held meeting at which a quorum representing a majority of all outstanding
voting stock of the Company is, either in person or by proxy, present and voting
on the Plan, within 12 months after said date, the Plan and all Grants awarded
hereunder shall be null and void and no additional Grants shall be awarded
hereunder.
SECTION 13. Interpretation
A determination of the Committee as to any question which may arise with
respect to the interpretation of the provisions of this Plan or any Grants
awarded thereunder shall be final and conclusive, and nothing in this Plan, or
in any regulation hereunder, shall be deemed to give any Participant, his legal
representatives, assigns or any other person any right to participate herein
except to such extent, if any, as the Committee may have determined or approved
pursuant to this Plan. The Committee may consult with legal counsel who may be
counsel to the Company and shall not incur any liability for any action taken in
good faith in reliance upon the advice of such counsel.
SECTION 14. Governing Law.
With respect to any Incentive Stock Options granted pursuant to the Plan
and the agreements thereunder, the Plan, such agreements and any Incentive Stock
Options granted pursuant thereto shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
Delaware shall govern the operation of, and the rights of Participants under,
the Plan, the agreements and any Grants awarded thereunder.
SECTION 15. Compliance With Section 16b of the Exchange Act.
Unless an Insider could otherwise transfer shares of Stock issued hereunder
without incurring liability under Section 16b of the Exchange Act, at least six
months must elapse from the date of grant of an Option, Stock Appreciation Right
or Restricted Stock award to the date of disposition of the Stock issued upon
exercise of such Option or Stock Appreciation Right or grant of such Restricted
Stock award.
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