<PAGE> 1
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
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.
Spyglass, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
SPYGLASS, INC.
Naperville Corporate Center
1240 East Diehl Road
Naperville, Illinois 60563
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON MONDAY, FEBRUARY 7, 2000
To the Stockholders of Spyglass, Inc.
The Annual Meeting of Stockholders of Spyglass, Inc. (the "Company") will
be held at the Holiday Inn, 1801 Naper Boulevard, Naperville, Illinois 60563, on
Monday, February 7, 2000 at 10:00 a.m., central standard time, to consider and
act upon the following matters:
1. To elect two Class II directors to serve for a three-year term.
2. To approve (i) an amendment to the Company's 1995 Stock Incentive
Plan (the "1995 Plan") increasing the number of shares issuable under
the 1995 Plan from 4,250,000 to 5,050,000 and (ii) the continuance of
the 1995 Plan, as amended.
3. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on December 17, 1999 will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
GARY L. VILCHICK, Secretary
Naperville, Illinois
December 30, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
<PAGE> 3
SPYGLASS, INC.
Naperville Corporate Center
1240 East Diehl Road
Naperville, Illinois 60563
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 7, 2000
INTRODUCTION
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Spyglass, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on February 7, 2000, and at any
adjournment of that meeting. All proxies will be voted in accordance with the
stockholders' instructions, and if no choice is specified, the proxies will be
voted in favor of the matters set forth in the accompanying Notice of Meeting.
Any proxy may be revoked by a stockholder at any time before its exercise by
delivery of written revocation or a subsequently dated proxy to the Secretary of
the Company, or by voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended September 30, 1999
("Fiscal 1999") was mailed to stockholders, along with these proxy materials, on
or about December 30, 1999.
QUORUM REQUIREMENT
At the close of business on December 17, 1999, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 16,991,842
shares of Common Stock of the Company, constituting all of the outstanding
voting stock of the Company. Holders of Common Stock are entitled to one vote
per share.
The holders of a majority of the shares of Common Stock outstanding and
entitled to vote at the Annual Meeting shall constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares which abstain or otherwise
do not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
VOTES REQUIRED
The affirmative vote of the holders of shares of Common Stock representing
a plurality of the votes cast by the holders of Common Stock is required for the
election of the directors. The affirmative vote of the holders of shares of
Common Stock representing a majority of the votes cast is required for the
approval of the proposed amendment to, and the continuance of, the Company's
1995 Stock Incentive Plan and the ratification of the selection of Ernst & Young
LLP as the Company's independent auditors for the current fiscal year.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by a broker or nominee who indicates on a proxy that it does
not have discretionary authority to vote as to a particular matter, will not be
voted in favor of such matter, and also will not be counted as votes cast on
such matter. Accordingly, abstentions and "broker non-votes" will have no effect
on the voting on a matter that requires the affirmative vote of a certain
percentage of the votes cast on that matter (such as the election of the Class
II directors, the approval of the proposed amendment to, and continuance of, the
Company's 1995 Stock Incentive Plan and the ratification of the selection of
independent auditors).
1
<PAGE> 4
BENEFICIAL OWNERSHIP OF VOTING STOCK
The following table sets forth the beneficial ownership of the Company's
Common Stock as of November 2, 1999, (i) by each person who is known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) by each director, (iii) by each of the executive officers named in
the Summary Compensation Table set forth under the caption "Executive
Compensation" below, and (iv) by all current directors and executive officers as
a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK(2)
---------------- --------------------- ---------------
<S> <C> <C>
5% STOCKHOLDER
Gilder Gagnon Howe & Co. LLC (3).......................... 1,007,850 6.05%
1775 Broadway, 26(th) Floor
New York, NY 10019
DIRECTORS
Charles T. Brumback(4).................................... 8,800 *
Douglas P. Colbeth(5)..................................... 289,743 1.74%
Brian J. Jackman(6)....................................... 16,100 *
Martin J. Leamy........................................... 50,000 *
John Shackleton(7)........................................ 11,500 *
NAMED EXECUTIVES
Daryl J. Dahlberg(8)...................................... 18,284 *
Randall T. Littleson(9)................................... 87,900 *
Christian T. Nall......................................... 0 *
Gary L. Vilchick(10)...................................... 73,960 *
Ivan W. Yurtin(11)........................................ 35,103 *
All current directors and executive officers as a group
(9 persons)(12).......................................... 576,287 3.46%
</TABLE>
- -------------------------
* Less than 1%
(1) Each stockholder possesses sole voting and investment power with respect to
the shares listed, except as otherwise indicated. In accordance with the
rules of the Securities and Exchange Commission, each stockholder is deemed
to beneficially own any shares subject to stock options which are currently
exercisable or which become exercisable within 60 days after November 2,
1999, and any reference in these footnotes to shares subject to stock
options held by the person or entity in question refers only to such stock
options. The inclusion herein of shares listed as beneficially owned does
not constitute an admission of beneficial ownership.
(2) Number of shares deemed outstanding includes 16,667,178 shares outstanding
as of November 2, 1999 and any shares subject to stock options held by the
person in question.
(3) Gilder Gagnon Howe & Co. LLC has shares dispositive power over 1,007,850
shares. Share ownership information is taken from a Schedule 13G, dated
November 30, 1999.
(4) Includes 6,800 shares issuable upon the exercise of outstanding options.
(5) Includes 188,400 shares issuable upon the exercise of outstanding options.
(6) Includes 15,100 shares issuable upon the exercise of outstanding options.
(7) Consists of 11,500 shares issuable upon the exercise of outstanding options.
(8) Includes 7,300 shares issuable upon the exercise of outstanding options.
(9) Includes 47,900 shares issuable upon the exercise of outstanding options.
(10) Includes 28,960 shares issuable upon the exercise of outstanding options.
(11) Includes 22,500 shares issuable upon the exercise of outstanding options
and 1,150 shares issuable upon the exercise of outstanding options held by
his spouse.
(12) Includes 305,960 shares issuable upon the exercise of outstanding options.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. Currently
there are two Class II directors, whose terms expire at this Annual Meeting of
Stockholders, one Class III director, whose term expires at the Annual Meeting
of Stockholders following the fiscal year ending September 30, 2000 ("Fiscal
2000"), and two Class I directors, whose terms expire at the Annual Meeting of
Stockholders following the fiscal year ending September 30, 2001 ("Fiscal 2001")
(in all cases subject to the election and qualification of their successors or
to their earlier death, resignation or removal).
The persons named in the enclosed proxy will vote to elect Martin J. Leamy
and John Shackleton as Class II directors, unless authority to vote for the
election of the nominees is withheld by marking the proxy to that effect. Mr.
Shackleton and Mr. Leamy are currently Class II directors of the Company. They
have indicated their willingness to serve, if elected, but if they should be
unable or unwilling to stand for election, proxies may be voted for substitute
nominees designated by the Board of Directors.
DIRECTORS OF THE COMPANY
Set forth below are the names and certain information with respect to each
director of the Company, including the nominees for Class II directors.
NOMINEES FOR CLASS II DIRECTORS (HOLDING OFFICE FOR TERM EXPIRING AT THIS
ANNUAL MEETING; NOMINATED FOR THE TERM EXPIRING AT THE ANNUAL MEETING FOR
THE FISCAL YEAR ENDING SEPTEMBER 30, 2002):
MR. SHACKLETON, age 55, has been a director of the Company since January
1998. Mr. Shackleton has been the President and Chief Operating Officer of Open
Text Corporation, a provider of Internet application software, since November
1998. Mr. Shackleton was the President and Chief Operating Officer of PLATINUM
Technology Solutions, Inc. a provider of software and services for managing and
improving information technology infrastructures, from July 1996 to November
1998. Mr. Shackleton was the Vice President of Professional Services for the
Central United States and South America for Sybase, Inc., an independent
software company, from October 1993 to July 1996.
MR. LEAMY, age 42, has been a director of the Company since October 1999
and has served as President and Chief Operating Officer of the Company since
August 1999. Prior to joining the Company, Mr. Leamy spent eight years with
PLATINUM Technology Solutions, Inc. a provider of software and services for
managing and improving information technology infrastructures, most recently as
Senior Vice President, Systems Management Solutions.
CLASS III DIRECTOR (HOLDING OFFICE FOR TERM EXPIRING AT THE ANNUAL MEETING
FOR FISCAL 2000):
MR. JACKMAN, age 58, has been a director of the Company since April 1997.
Mr. Jackman has been President, Tellabs Global Systems & Technologies of
Tellabs, Inc. a voice and data communications equipment company, since 1998, and
served as President, Tellabs Operations of Tellabs, Inc. since 1992. Mr. Jackman
is also a member of the Board of Directors of Tellabs, Inc. and Catholic
Charities Board of Advisors.
CLASS I DIRECTORS (HOLDING OFFICE FOR TERM EXPIRING AT THE ANNUAL MEETING
FISCAL 2001):
MR. BRUMBACK, age 71, has been a director of the Company since July 1998.
Mr. Brumback served as Chairman of the Tribune Company, a media company, from
1993 until his retirement in 1997 and as President and CEO from 1990 to 1993.
Mr. Brumback is also a member of the Board of Directors of Avid Technology, Inc.
MR. COLBETH, age 44, has been Chairman of the Board of Directors of the
Company since August 1999, and has served as Chief Executive Officer and a
director of the Company since he joined the Company in April 1991. Mr. Colbeth
was also President of the Company from April 1991 until August 1999. Prior to
joining the Company, Mr. Colbeth spent four years at Stellar/Stardent Computer
Corp., a high-end graphics
3
<PAGE> 6
workstation supplier, in various management positions, most recently as Vice
President/General Manager of its AVS software business unit.
There are no family relationships among any of the executive officers or
directors of the Company.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
meets with the Company's auditors to review and evaluate the Company's audit
procedures and to recommend and implement any desired changes to the Company's
audit procedures. The members of the Audit Committee are Messrs. Brumback,
Jackman and Shackleton. The Audit Committee met four times during Fiscal 1999.
The Company has a standing Compensation Committee which establishes (a) the
compensation of each of the Company's executive officers, (b) compensation
policies applicable to the Company's executive officers and (c) the basis for
the compensation of the Company's Chief Executive Officer, including the facts
and criteria on which it is based. The members of the Compensation Committee are
Messrs. Brumback, Jackman and Shackleton. The Compensation Committee met once
during Fiscal 1999.
The Board of Directors met four times and acted by written consent on three
occasions during Fiscal 1999. Each incumbent director attended at least 75% of
the number of meetings of the Board and of the committees on which he then
served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is comprised of Messrs. Brumback,
Jackman and Shackleton, the Company's non-employee directors.
COMPENSATION OF DIRECTORS
Directors of the Company are reimbursed for expenses incurred in connection
with their attendance at Board and committee meetings. Directors receive no
other cash compensation for serving as directors.
Under the Company's 1995 Director Stock Option Plan (the "Director Option
Plan"), each non-employee director initially elected to the Board of Directors
is granted an option, upon his or her initial election as a director, to
purchase 20,000 shares of Common Stock. Each non-employee director is also
entitled to receive an option for 5,000 shares on the date of each Annual
Meeting of Stockholders. On February 9, 1999, the date of the last Annual
Meeting of Shareholders, each of Messrs. Brumback, Jackman and Shackleton were
granted an option to purchase 5,000 shares of Common Stock at an exercise price
of $11.375 per share. All options granted under the Director Option Plan have or
will have an exercise price equal to the fair market value of the Common Stock
on the date of grant, vest or will vest over a four-year period, provided the
optionholder continues to serve as a director of the Company, and expire or will
expire ten years from the date of grant (subject to earlier termination in the
event the optionee ceases to serve as a director of the Company). The total
number of shares of Common Stock that may be issued under the Director Option
Plan is 200,000 shares.
4
<PAGE> 7
EXECUTIVE COMPENSATION
Summary Compensation
The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of (i) the
Company's Chief Executive Officer, (ii) the four most highly compensated
executive officers who were serving as executive officers at the end of Fiscal
1999, and (iii) one other person who served as an executive officer during
Fiscal 1999, but was not so serving at the end of Fiscal 1999 (collectively, the
"Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(2)
ANNUAL --------------------------
COMPENSATION(1) RESTRICTED SECURITIES
NAME AND FISCAL ----------------------- STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(3) OPTIONS COMPENSATION(4)
------------------ ------ -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Douglas P. Colbeth........ 1999 $204,750 $ 18,428 $259,208 72,000 $ 3,000
Chairman and Chief 1998 190,000 0 252,650 50,000 3,000
Executive Officer 1997 190,352 22,800 0 20,000 2,850
Gary L. Vilchick.......... 1999 157,500 76,726 171,413 47,500 4,319
Executive Vice President, 1998 150,000 0 151,590 40,000 6,500
Finance, Administration 1997 150,351 18,000 0 116,000 65,393
and Operations and Chief
Financial Officer
Randall T. Littleson...... 1999 149,167 43,208 171,413 47,500 3,750
Vice President and 1998 140,000 68,689 101,060 20,000 2,300
General Manager 1997 140,250 16,800 0 120,000 3,108
Daryl J. Dahlberg (5)..... 1999 118,542 20,094 96,150 40,000 3,936
Controller and Vice
President of Finance and
Information Systems
Services
Christian T. Nall (6)..... 1999 136,385 91,523(7) 171,413 47,500 1,997
Former Vice President, 1998 116,250 149,791(7) 151,590 20,000 2,000
Business Development
and Sales
Ivan W. Yurtin(8)......... 1999 148,333 20,880 74,997 40,000 2,000
Former Vice President,
General Manager,
Professional Services
</TABLE>
- -------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total of annual salary and bonus for the executive officer for the fiscal
year.
(2) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payouts during the years ended September 30, 1997,
1998 and 1999 ("Fiscal 1997", "Fiscal 1998" and "Fiscal 1999",
respectively).
(3) As of September 30, 1999, 215,100 shares of restricted stock were held by
the Named Executives with a value of $2,686,599 as of such date. During
Fiscal 1999, 85,800 shares of restricted stock were issued to the Named
Executives with a value of $1,071,642 as of September 30, 1999. Both of the
above valuations were based on the fair market value of the Company's Common
Stock on such date of $12.50 per share.
5
<PAGE> 8
These shares generally vest in equal annual installments over four years
commencing on the one-year anniversary of the date of grant, subject to
accelerated vesting in the event certain performance objectives of the
Company are met. Dividends will be paid on the shares of restricted stock to
the extent dividends are declared and paid on the Company's Common Stock.
(4) Represents the value of the Company's contribution to the 401(k) accounts of
the Named Executives and, with respect to Mr. Vilchick, includes $2,300 and
$60,940 in 1998 and 1997, respectively, which represents reimbursement for
moving expenses.
(5) Mr. Dahlberg joined the Company in January 1998 and become an executive
officer in July 1999.
(6) Mr. Nall's employment with the Company terminated on September 6, 1999.
(7) Represents bonus and sales commissions.
(8) Mr. Yurtin joined the Company in November 1997 and become an executive
officer in July 1999. Mr. Yurtin's employment with the Company terminated on
October 6, 1999.
Option Grants
The following table sets forth certain information concerning grants of
stock options during Fiscal 1999 to each of the Named Executives.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS EXERCISE PRICE APPRECIATION FOR
SHARES GRANTED TO PRICE OPTION TERM(2)
UNDERLYING EMPLOYEES IN PER EXPIRATION -----------------------
NAME OPTIONS GRANTED FISCAL YEAR SHARE(1) DATE 5% 10%
---- --------------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas P. Colbeth......... 30,000 1.82% $9.625 10/8/08 $181,593 $460,193
42,000 2.55% 13.25 4/19/09 349,980 886,918
Gary L. Vilchick........... 17,500 1.06% 9.625 10/8/08 105,929 268,446
30,000 1.82% 13.25 4/19/09 249,986 633,513
Randall T. Littleson....... 17,500 1.06% 9.625 10/8/08 105,929 268,446
30,000 1.82% 13.25 4/19/09 249,986 633,513
Daryl J. Dahlberg.......... 17,500 1.06% 9.625 10/8/08 105,929 268,446
22,500 1.37% 9.25 3/26/09 130,889 331,698
Christian T. Nall.......... 17,500 1.06% 9.625 10/8/08 105,929 268,446
30,000 1.82% 13.25 4/19/09 249,986 633,513
Ivan W. Yurtin............. 40,000 2.43% 9.25 3/26/09 232,691 589,685
</TABLE>
- -------------------------
(1) Options are incentive stock options or nonstatutory stock options, become
exercisable over a four-year period and generally terminate three months
following termination of the executive officer's employment with the Company
or the expiration date, whichever occurs earlier. The exercise price of each
option was determined to be equal to the fair market value per share of the
Common Stock on the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise of the option or the sale of the underlying shares. The actual
gains, if any, on the exercises of stock options will depend on the future
performance of the Common Stock, the optionholder's continued employment
through the option period, and the date on which the options are exercised.
6
<PAGE> 9
Option Exercises and Holdings
The following table sets forth certain information concerning the aggregate
number of shares of Common Stock acquired upon option exercises by the Named
Executives during Fiscal 1999 and the value realized upon exercise as well as
the number and value of unexercised options held by each of the Named Executives
on September 30, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END (2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas P. Colbeth......... 75,000 $1,462,064 175,800 106,200 $1,922,425 $315,375
Gary L. Vilchick........... 56,000 808,787 30,100 94,900 197,313 355,188
Randall T. Littleson....... 20,880 307,940 37,000 89,620 208,425 298,188
Daryl J. Dahlberg.......... 8,400 98,700 3,600 58,000 25,200 249,438
Christian T. Nall.......... 53,480 628,917 5,520 0 32,700 0
Ivan W. Yurtin............. 21,250 310,781 0 81,250 0 465,156
</TABLE>
- -------------------------
(1) Based on the fair market value of the Common Stock on the date of exercise
less the option exercise price.
(2) Based on a value of $12.50 per share, the fair market value of the Common
Stock on September 30, 1999, less the option exercise price.
EMPLOYMENT AGREEMENTS
In April 1991, the Company entered into an Employment and Confidentiality
Agreement with Mr. Colbeth, pursuant to which the Company agreed to employ Mr.
Colbeth as its Chief Executive Officer. Under the terms of this Agreement, which
has no stated term, the Company issued 331,590 shares of Common Stock to Mr.
Colbeth in the form of a bonus; the Company had certain repurchase rights with
respect to some or all of such shares in the event of the termination of Mr.
Colbeth's employment on or before March 31, 1995. This Agreement also includes a
covenant by Mr. Colbeth not to compete with the business of the Company, or to
solicit any employees of the Company, during the two-year period following his
employment termination, and contains customary confidentiality and invention
assignment provisions.
In August 1999, the Company entered into an Employment and Confidentiality
Agreement with Mr. Leamy, pursuant to which the Company agreed to employ Mr.
Leamy as its President and Chief Operating Officer. Under the terms of this
Agreement, which has no stated term, Mr. Leamy's initial annual salary shall be
$240,000. The Company issued Mr. Leamy options to purchase a total of 150,000
shares of Common Stock, which vest as to 28% of the shares on the first
anniversary of the date of grant and vest as to an additional 6% of the shares
at the end of each subsequent calendar quarter until September 30, 2003. The
Company also issued Mr. Leamy 50,000 shares of Common Stock at a purchase price
of $.01 per share, which vest in four equal annual installments. The shares are
subject to repurchase by the Company with respect to some or all of such shares
in the event of the termination of Mr. Leamy's employment on or before October
8, 2003. The repurchase rights of the Company with respect to such shares can be
terminated prior to such date if the Company achieves certain revenue and
operating profit goals during or before the fiscal year ending September 30,
2002. This agreement also includes a covenant by Mr. Leamy not to compete with
the business of the Company, or to solicit any employees of the Company, during
the two-year period following his employment termination, and contains customary
confidentiality and invention assignment provisions.
The Company is party to senior management retention agreements providing
contingent severance payments ("Retention Agreements") with five executive
officers (including Messrs. Colbeth, Dahlberg, Leamy, Littleson and Vilchick)
which would become operative following a "change in control" of the
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<PAGE> 10
Company, as defined in the Retention Agreements. The Company believes that these
agreements will better ensure the retention of those officers and enable them to
devote their full attention and energies to the Company's business without the
distractions that might arise in the circumstances addressed in the agreements.
The Retention Agreements continue in effect while the executive is employed by
the Company until December 31, 1999, automatically renew for additional one year
terms unless specified advance written notice is given by the Company and remain
in effect for 24 months following a change in control. If the executive's
employment is terminated within 24 months following a change in control, the
executive would become entitled to various benefits under the Retention
Agreements, including (i) the executive's annual base salary through the date of
the termination, (ii) a bonus for the current fiscal year through the date of
termination equal to a prorated fraction of the executive's bonus for the most
recently completed fiscal year, (iii) one year's salary and bonus equal to the
highest salary and bonus received by the executive in the five year period prior
to the change in control and (iv) continued employee benefits for 12 months
after the date of termination. If, within 24 months following a change in
control, an executive voluntarily terminates his or her employment without "good
reason," as defined in the Retention Agreements, or the executive's employment
is terminated because of death or disability, the executive is entitled only to
items (i) and (ii) described above. If, within 24 months following a change in
control, the executive is terminated by the Company for "cause" as defined in
the Retention Agreements, he or she is only entitled to receive the payment
described in item (i) above.
The Retention Agreements provide that the above payments would be subject
to reduction to the extent that any payment was subject to the excise tax
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, if
such reduction would result in a greater after tax payment to the executive.
REPORT OF COMPENSATION COMMITTEE
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), which is
comprised of Messrs. Brumback, Jackman and Shackleton, the Company's
non-employee directors. The Committee is responsible for determining the
salaries of, establishing bonus programs for, and granting stock options to, the
Company's executive officers. In making decisions regarding executive
compensation, the Committee receives and considers input from the Company's
Chief Executive Officer (the "CEO"). The Company's executive compensation plan
is comprised of several elements designed to attract and retain key personnel,
reward outstanding performance, link executive pay to long-term Company
performance and to align executive interests with stockholder interests. These
elements consist of a base salary, annual bonuses and long-term incentive stock
awards.
The base salaries of the Company's executive officers are determined by the
Committee and, for executive officers other than the CEO, are based upon
recommendations from Mr. Colbeth. In establishing base salaries for executive
officers the Committee considers numerous factors such as: a review of salaries
in comparable software companies, the executive's responsibilities, the
executive's importance to the Company, the executive's performance in the prior
year, historical salary levels of the executive and relative salary levels
within the Company. Increases in base salary are generally based upon enhanced
individual performance and/or increases in an executive's responsibilities.
The Committee believes that it is important to tie a significant portion of
the compensation of executive officers to the attainment of corporate success,
thus aligning the objectives and rewards of Company executives with those of the
stockholders of the Company. The Committee awards executive bonuses based upon a
review of the bonuses given by comparable software companies, and, for executive
officers other than the CEO, based upon recommendations from Mr. Colbeth.
Individual bonuses are paid as a percentage of salary and are based upon the
Company meeting certain financial goals, in addition to the attainment of
individual achievement goals. The Company financial goals are established by the
Board of Directors at the beginning of the fiscal year, in the form of gross
revenue and net income benchmarks. If the specified gross revenue and net income
benchmarks are achieved, the Committee has discretion to distribute bonuses to
the Company's executives based upon their individual contributions to the
achievement of the Company's financial benchmarks. Individual achievement goals
are established for each executive by Mr. Colbeth and an executive's performance
in meeting his or her specified individual achievement goals, coupled with
attainment
8
<PAGE> 11
of the Company's gross revenue and net income goals, determines the total bonus
for each executive in any given year.
The criteria used in determining the CEO's annual bonus are also
established by the Compensation Committee at the beginning of the fiscal year.
In Fiscal 1999, Mr. Colbeth's bonus was based upon the attainment of specified
earnings per share goals and the enhancement of the Company's management team.
The Company's 1995 Stock Incentive Plan (the "1995 Plan") authorizes the
Committee to grant incentive or non-qualified stock options to employees of the
Company. The Committee determines the prices and terms at which such options are
granted. The Committee uses stock options as a significant element of the
compensation package of executive officers, because it believes options provide
an incentive to executives to maximize stockholder value and because they
compensate executives only to the extent that the Company's stockholders receive
a return on their investment. Moreover, because options granted to executive
officers become exercisable over a four-year period and terminate upon or
shortly after the termination of the executive's employment with the Company,
stock options serve as a means of retaining these executives. In determining the
total number of shares of Common Stock to be covered by option grants to
executive officers in a given year, the Committee takes into account the number
of outstanding shares of Common Stock, the number of shares reserved for
issuance under the Company's 1995 Plan, recommendations of management concerning
option grants to employees below executive level, and the Company's projected
hiring needs for the coming year. In making individual stock option grants to
executives, the Committee considers the same factors considered in the
determination of base salary levels, as well as the stock and option holdings of
each executive and the remaining vesting schedule of such executive's options.
Furthermore, the 1995 Plan authorizes the Committee to grant awards of
restricted stock entitling recipients to purchase common stock from the Company.
The Committee determines the prices and terms at which such awards are granted.
As part of the Committee's long-term compensation plan for 1999, restricted
stock awards for an aggregate of 85,800 shares of Common Stock were issued to
executives, including the CEO. Such awards generally vest over four years in
equal annual installments commencing on the one-year anniversary of the date of
grant, subject to accelerated vesting in the event certain performance
objectives of the Company are met. The unvested portion of the Common Stock
subject to the award is subject to a right of repurchase in favor of the Company
upon the termination of the recipient's employment or other relationship with
the Company.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended,
certain executive compensation in excess of $1 million paid to the five most
highly paid executives of the Company will not be deductible by the Company for
federal income tax purposes unless the compensation is awarded under a
performance-based plan approved by the stockholders of the Company. The Company
has structured the 1995 Plan and the grants of options thereunder such that
gains realized by executives upon the exercise of such stock options generally
should be deductible under Section 162(m). The Committee intends to periodically
review the potential effect of Section 162(m) and may in the future decide to
structure certain other executive compensation programs so that they comply with
the performance-based requirements of Section 162(m).
Compensation Committee
Charles T. Brumback
Brian J. Jackman
John Shackleton
9
<PAGE> 12
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from June 27, 1995 (the date the Common Stock of the
Company commenced public trading) through September 30, 1999 (the end of Fiscal
1999) with the cumulative total return during this period of (i) the Nasdaq
Composite Index and (ii) the Inter@ctive Week Internet Index. This graph assumes
the investment of $100 on June 27, 1995 in the Company's Common Stock, the
Nasdaq Composite Index and the Inter@ctive Week Internet Index, and assumes
dividends are reinvested.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
June 27, September 30, September 30, September 30, September 30, September 30,
1995 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Spyglass, Inc. $100.00 $168.66 $139.17 $ 71.89 $ 94.01 $ 92.17
- ----------------------------------------------------------------------------------------------------------------------
Nasdaq Composite Index $100.00 $113.48 $133.42 $183.31 $184.20 $298.64
- ----------------------------------------------------------------------------------------------------------------------
Inter@ctive Week
Internet Index $100.00 $119.30 $141.45 $160.66 $208.03 $179.77
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
APPROVAL OF AMENDMENT TO THE 1995 STOCK INCENTIVE PLAN
On October 13, 1999, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Company's 1995 Stock Incentive Plan (the "1995
Plan") increasing the number of shares of Common Stock authorized for issuance
pursuant to the 1995 Plan from 4,250,000 to 5,050,000, in the aggregate. The
amendment was adopted because the Company believes that available shares under
the 1995 Plan will not be sufficient to satisfy the Company's compensation and
hiring needs through Fiscal 2000. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's chief
executive officers and four other most highly compensated executive officers.
Qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are met.
In order for options and restricted stock awarded under the 1995 Plan, as
amended by the amendment, to comply with Section 162(m) after the Annual
Meeting, the continuance of the 1995 Plan must be approved by stockholders. If
the stockholders do not vote to continue the 1995 Plan, the Company will not
grant any further options or make any further awards of restricted stock under
the 1995 Plan.
The Board of Directors believes that awards under the 1995 Plan, including
stock options, have been and will continue to be, an important compensation
element in attracting and retaining key employees who are expected to contribute
to the Company's growth and success. ACCORDINGLY, THE BOARD OF DIRECTORS
BELIEVES THAT THE APPROVAL OF THE AMENDMENT IS IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
SUMMARY OF THE 1995 PLAN
The Company's 1995 Plan took effect upon the closing of the Company's
initial public offering of Common Stock on June 27, 1995. The 1995 Plan enables
the Company to grant options (including options intended to qualify as incentive
stock options under Section 422 of the Code and nonstatutory stock options) to
make awards of restricted Common Stock, and to issue certain other
equity-related securities of the Company to employees and directors of and
consultants to the Company. Under present law, however, incentive stock options
only many be granted to employees. Stock options entitle the optionee to
purchase Common Stock from the Company for a specified exercise price during a
period specified in the applicable option agreement. Restricted stock awards
entitle the recipient to purchase Common Stock from the Company under terms
which provide for vesting over a period of time and a right of repurchase in
favor of the Company of the unvested portion of the Common Stock subject to the
award upon the termination of the recipient's employment or other relationship
with the Company. The 1995 Plan is administered by the Compensation Committee of
the Board of Directors, which selects the persons to whom stock options and
restricted stock awards are granted and determines the number of shares of
Common Stock covered by the option or award, its exercise price or purchase
price, its vesting schedule and (in the case of stock options) its expiration
date. Stock options granted under the 1995 Plan are generally nontransferable,
and they generally become exercisable over a four-year period and expire ten
years after the date of grant (subject to earlier termination in the event of
the termination of the optionee's employment with the Company).
As option grants and the grants of other equity-related securities under
the 1995 Plan are discretionary, the Company cannot now determine the number of
any such securities to be granted to any particular executive officer, executive
officers as a group, non-employee directors or non-executive officers and
employees as a group. However, under the terms of the 1995 Plan, no employee may
be granted awards or options with respect to more than 300,000 shares during any
calendar year.
Options may be granted at an exercise price which may be less than, equal
to or greater than the fair market value of the Common Stock on the date of
grant. Under present law, however, incentive stock options and options intended
to qualify as performance-based compensation under Section 162(m) of the Code
may not be granted at an exercise price less than the fair market value of the
Common Stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding more than 10%
of the voting power of the Company). The 1995 Plan permits the Board to
determine the manner of payment of the exercise price of options, including
through payment by cash, check or in
11
<PAGE> 14
connection with a "cashless exercise" through a broker, by surrender to the
Company of shares of Common Stock, by delivery to the Company of a promissory
note, or by any other lawful means.
As of November 30, 1999, the Company had granted options under the 1995
Plan to purchase an aggregate of 5,487,762 shares of Common Stock. Of these
options 1,134,500 were granted to the current executive officers of the Company
and none were granted to non-employee directors of the Company. As of November
30, 1999, the Company has granted 238,000 shares of restricted stock to current
executive officers of the Company. As of November 30, 1999, the Company had not
granted any stock appreciation rights, performance shares, or unrestricted stock
under the 1995 Plan. As of November 30, 1999, there were 162 employees and
directors of and consultants to the Company who were eligible to receive awards
under the 1995 Plan. As of November 30, 1999, 320,348 shares remained available
for future issuance under the 1995 Plan.
The 1995 Plan will remain in effect until May 7, 2005 (except that it will
continue in effect as to equity-related securities outstanding on that date),
unless terminated earlier by the Board of Directors. The Board of Directors may
amend, suspend or terminate the 1995 Plan or any portion thereof at any time,
provided that no amendment shall be made without stockholder approval if such
approval is necessary to comply with any applicable tax or regulatory
requirement.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to stock option and
restricted stock awards granted under the 1995 Plan and with respect to the sale
of Common Stock acquired under the 1995 Plan.
Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
Nonstatutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock
12
<PAGE> 15
and the participant's tax basis in the NSO Stock. This capital gain or loss will
be a long-term capital gain or loss if the participant has held the NSO Stock
for more than one year prior to the date of the sale.
Restricted Stock. A participant will not recognize taxable income upon the
grant of a restricted stock award unless the participant makes an election under
Section 83(b) of the Code (a "Section 83(b) Election"). If the participant makes
a Section 83(b) Election within 30 days of the date of the grant, then the
participant will recognize ordinary compensation income, for the year in which
the award is granted, in an amount equal to the difference between the fair
market value of the Common Stock at the time the award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the Common Stock and the
participant's tax basis in the Common Stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year.
For this purpose, the holding period shall begin just after the date on which
the forfeiture provisions or restrictions lapse if a Section 83(b) Election is
not made, or just after the award is granted if a Section 83(b) Election is
made.
Tax Consequences to the Company. The grant of an award under the 1995 Plan
will have no tax consequences to the Company. Moreover, in general, neither the
exercise of an incentive stock option nor the sale of any Common Stock acquired
under the 1995 Plan will have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the 1995 Plan, including in connection with a restricted stock award or as a
result of the exercise of a nonstatutory stock option or a Disqualifying
Disposition. Any such deduction will be subject to the limitations of Section
162(m) of the Code.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP as the
Company's independent auditors for the current fiscal year. Ernst & Young LLP
has served as the Company's independent auditors since July 1997. Although
stockholder approval of the Board of Directors' selection of Ernst & Young LLP
is not required by law, the Board of Directors believes that it is advisable to
give stockholders an opportunity to ratify this selection. If this proposal is
not approved at the Annual Meeting, the Board of Directors may reconsider its
selection.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of reports filed by "reporting persons" of the
Company under Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), the Company believes that during Fiscal 1999 all filings
required to be made by reporting persons were timely made in accordance with the
requirements of Section 16(a), except as described below.
13
<PAGE> 16
Daryl J. Dahlberg, Controller and Vice President of Finance and Information
Systems, and Ivan W.Yurtin, Vice President, General Manager, Professional
Services, filed their Initial Statement of Beneficial Ownership of Securities on
Form 3 eighteen days after the required filing date.
MATTERS TO BE CONSIDERED AT THE MEETING
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile, email and personal interviews. Georgeson Shareholder
Communications, Inc. has been engaged by the Company to solicit proxies on
behalf of the Company. For these services, the Company will pay Georgeson
Shareholder Communications, Inc. a fee of $6,000 plus reimbursement of out-
of-pocket expenses. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their out-of-pocket expenses in this
connection.
STOCKHOLDER PROPOSALS
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934 (the "Exchange Act") to be presented at the
Annual Meeting of Stockholders for the fiscal year ending September 30, 2000
must be received by the Company at its principal executive offices no later than
September 2, 2000 in order to be considered for inclusion in the Company's proxy
materials for the meeting.
The Company's by-laws require that the Company be given advance written
notice of stockholder nominations for election to the Company's Board of
Directors and of other matters which stockholders wish to present for action at
an annual meeting of stockholders (other than matters included in the Company's
proxy materials in accordance with Rule 14a-8 under the Exchange Act). The
Secretary must receive such notice at the Company's principal executive offices
not less than 60 days nor more than 90 days prior to the date of the meeting;
provided, however, that if less than 70 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be delivered or mailed to the Secretary not later
than the close of business on the tenth day following the date on which the
notice of the meeting was mailed or public disclosure was made, whichever occurs
first. The Company's by-laws also specify requirements relating to the content
of the notice which stockholders must provide to the Secretary of the Company
for any matter, including a stockholder nomination for director, to be properly
presented at a stockholder meeting.
By Order of the Board of Directors,
GARY L. VILCHICK
Secretary
December 30, 1999
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
14
<PAGE> 17
SPYGLASS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 7, 2000
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Douglas P. Colbeth and Gary L. Vilchick, and each of them with full
power of substitution, as proxies for those signing on the reverse side to act
and vote at the Annual Meeting of Stockholders of Spyglass, Inc. to be held on
February 7, 2000 and at any adjournments thereof as indicated upon all matters
referred to on the reverse side and described in the Proxy Statement for the
Meeting, and, in their discretion, upon any other matters which may properly
come before the Meeting or any adjournment thereof. Attendance of the
undersigned at the meeting or at any adjourned session thereof will not be
deemed to revoke this proxy unless the undersigned shall affirmatively indicate
thereat the intention of the undersigned to vote said shares in person. If the
undersigned hold(s) any of the shares of the Company in a fiduciary, custodial
or joint capacity or capacities, this proxy is signed by the undersigned in
every such capacity as well as individually.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL
VOTE "FOR" PROPOSAL NUMBERS 1, 2 AND 3.
PLEASE VOTE, DATE, AND SIGN ON THE OTHER SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
<PAGE> 18
[X] Please mark your votes as in this example.
A vote FOR the director nominees and FOR proposal numbers 2 and 3 is
recommended by the Board of Directors.
<TABLE>
<S> <C>
With- FOR AGAINST ABSTAIN
For hold
1) Election of two Class II Directors, 2) Amendment to the
John Shackleton and [ ] [ ] Company's 1995 Stock
Martin J. Leamy Incentive Plan and the
continuance of the 1995
Stock Incentive Plan,
as amended. [ ] [ ] [ ]
IF YOU DO NOT WISH YOUR SHARES
VOTED "FOR" FOR A PARTICULAR 3) Ratification of appointment
NOMINEE, MARK THE "FOR" of independent auditors. [ ] [ ] [ ]
BOX AND STRIKE A LINE
THROUGH THE NOMINEE'S NAME.
YOUR SHARES WILL BE VOTED FOR
THE REMAINING NOMINEE.
MARKING THE "FOR" BOX
WITHOUT STRIKING A LINE THROUGH THE
NOMINEE'S NAME INDICATES A
VOTE FOR BOTH NOMINEES.
MARK BOX AT RIGHT IF
COMMENTS OR ADDRESS
HAVE BEEN NOTED ON THE [ ]
REVERSE SIDE OF THIS CARD
PLEASE BE SURE TO SIGN AND DATE THIS PROXY. PLEASE READ THE REVERSE SIDE OF THIS CARD.
SIGNATURE(S)___________________________________________________________________________________________
Stockholder sign here Co-owner sign here Date
</TABLE>
Please sign this proxy exactly as your name appears hereon. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign. If a corporation or partnership, this signature
should be that of an authorized officer who should state his or her title.
<PAGE> 19
APPENDIX
SPYGLASS, INC.
1995 STOCK INCENTIVE PLAN, AS AMENDED
1. Purpose
The purpose of this 1995 Stock Incentive Plan (the "Plan") of Spyglass,
Inc., a Delaware corporation (the "Company"), is to advance the interests of the
Company by enhancing its ability to attract and retain key employees,
consultants and others who are in a position to contribute to the Company's
future growth and success.
2. Definitions
"Award" means any Option, Stock Appreciation Right, Performance Shares,
Restricted Stock or Unrestricted Stock awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means a committee of not less than two members of the Board
appointed by the Board to administer the Plan, provided that if and when the
Common Stock is registered under Section 12 of the Exchange Act, each member of
the Committee shall be a "Non-Employee Director" within the meaning of Rule
16b-3 under the Exchange Act ("Rule 16b-3").
"Common Stock" means the Common Stock, $.01 par value per share, of the
Company.
"Company" means Spyglass, Inc. and, except where the context otherwise
requires, all present and future subsidiaries of Spyglass, Inc. as defined in
Section 424(f) of the Code.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Board, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Board in
good faith or in the manner established by the Board from time to time.
"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Board to receive an Award
under the Plan.
<PAGE> 20
"Performance Shares" mean shares of Common Stock which may be earned
by the achievement of performance goals established for a Participant under
Section 8.
"Reporting Person" means a person subject to Section 16 of the Exchange
Act or any successor provision.
"Restricted Period" means the period of time selected by the Board during
which shares subject to a Restricted Stock Award may be repurchased by or
forfeited to the Company.
"Restricted Stock" means shares of Common Stock awarded to a Participant
under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess
in Fair Market Value of shares of Common Stock over the exercise price awarded
to a Participant under Section 7.
"Unrestricted Stock" means shares of Common Stock awarded to a
Participant under Section 9(c).
3. Administration
The Plan will be administered by the Board. The Board shall have
authority to make Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable
from time to time, and to interpret the provisions of the Plan. The Board's
decisions shall be final and binding. No member of the Board shall be liable for
any action or determination relating to the Plan made in good faith. To the
extent permitted by applicable law, the Board may delegate to one or more
executive officers of the Company the power to make Awards to Participants who
are not Reporting Persons and all determinations under the Plan with respect
thereto, provided that the Board shall fix the maximum amount of such Awards to
be made by such executive officers and a maximum amount for any one Participant.
To the extent permitted by applicable law, the Board may appoint a Committee to
administer the Plan and, in such event, all references to the Board in the Plan
shall mean such Committee or the Board. All decisions by the Board or the
Committee pursuant to the Plan shall be final and binding on all persons having
or claiming any interest in the Plan or in any Award.
4. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors who are expected to contribute to the Company's future growth and
success, other than persons who have irrevocably elected not to be eligible, are
eligible to be Participants in the Plan. Incentive Stock Options may be awarded
only to persons eligible to receive Incentive Stock Options under the Code.
5. Stock Available for Awards
(a) Subject to adjustment under subsection (b) below, Awards may be made
under the Plan for up to 5,050,000 shares of Common Stock. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, the shares subject to such Award or so
surrendered, as the case may be, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the Plan,
subject, however, in the case of Incentive Stock Options, to any limitation
required under the Code and provided that shares made available pursuant to this
sentence shall be available for Awards to Reporting Persons only to the extent
consistent with Rule 16b-3. Shares issued under the Plan may consist in whole or
in part of authorized but unissued shares or treasury shares.
(b) In the event that the Board, in its sole discretion, determines that
any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or other
similar transaction affects the Common Stock such that an adjustment is required
in order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Board, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
<PAGE> 21
respect to any of the foregoing, and if considered appropriate, the Board may
make provision for a cash payment with respect to an outstanding Award, provided
that the number of shares subject to any Award shall always be a whole number.
(c) The Board may grant Awards under the Plan in substitution for stock
and stock based awards held by employees of another corporation who concurrently
become employees of the Company as a result of a merger or consolidation of the
employing corporation with the Company (or a subsidiary of the Company) or the
acquisition by the Company (or a subsidiary of the Company) of property or stock
of the employing corporation. The substitute Awards shall be granted on such
terms and conditions as the Board considers appropriate in the circumstances.
(d) Subject to adjustment under Section 5(b), the maximum number of
shares with respect to which an Award may be granted to any employee under the
Plan shall not exceed 300,000 per calendar year. For purposes of calculating
such maximum number, (a) an Award shall continue to be treated as outstanding
notwithstanding its repricing, cancellation or expiration and (b) the repricing
of an outstanding Award or issuance of a new Award in substitution for a
cancelled Award shall be deemed to constitute the grant of a new additional
Award separate from the original grant of the Award that is repriced or
cancelled.
6. Stock Options
(a) General
(i) Subject to the provisions of the Plan, the Board may award
Incentive Stock Options and Nonstatutory Stock Options, and determine the number
of shares of Common Stock to be covered by each Option, the option price of such
Option and the conditions and limitations applicable to the exercise of such
Option. The terms and conditions of Incentive Stock Options shall be subject to
and comply with Section 422 of the Code, or any successor provision, and any
regulations thereunder.
(ii) The Board shall establish the exercise price at the time each
Option is awarded. In the case of Incentive Stock Options, such price shall not
be less than 100% of the Fair Market Value of the Common Stock on the date of
award.
(iii) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Board may specify in the applicable Award or
thereafter. The Board may impose such conditions with respect to the exercise of
Options, including conditions relating to applicable federal or state securities
laws, as it considers necessary or advisable.
(iv) Options granted under the Plan may provide for the payment of
the exercise price by delivery of cash or check in an amount equal to the
exercise price of such Options or, to the extent permitted by the Board at or
after the award of the Option, by (A) delivery of shares of Common Stock owned
by the optionee for at least six months (or such shorter period as is approved
by the Board), valued at their Fair Market Value, (B) delivery of a promissory
note of the optionee to the Company on terms determined by the Board, (C)
delivery of an irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price or delivery of irrevocable
instructions to a broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price, (D) payment of such other lawful
consideration as the Board may determine, or (E) any combination of the
foregoing.
(v) The Board may provide for the automatic award of an Option upon
the delivery of shares to the Company in payment of the exercise price of an
Option for up to the number of shares so delivered.
(vi) The Board may at any time accelerate the time at which all or
any part of an Option may be exercised.
(b) Incentive Stock Options
<PAGE> 22
Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and conditions:
(i) All Incentive Stock Options granted under the Plan shall, at the
time of grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options. The Option exercise period shall not
exceed ten years from the date of grant.
(ii) If any employee to whom an Incentive Stock Option is to be
granted under the Plan is, at the time of the grant of such option, the owner of
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (after taking into account the attribution of stock
ownership rule of Section 424(b) and of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
(x) The purchase price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110% of the Fair
Market Value of one share of Common Stock at the time of grant; and
(y) The option exercise period shall not exceed five years from
the date of grant.
(iii) For so long as the Code shall so provide, options granted to
any employee under the Plan (and any other incentive stock option plans of the
Company) which are intended to constitute Incentive Stock Options shall not
constitute Incentive Stock Options to the extent that such options, in the
aggregate, become exercisable for the first time in any one calendar year for
shares of Common Stock with an aggregate Fair Market Value (determined as of the
respective date or dates of grant) of more than $100,000.
(iv) No Incentive Stock Option may be exercised unless, at the time
of such exercise, the Participant is, and has been continuously since the date
of grant of his or her Option, employed by the Company, except that:
(x) an Incentive Stock Option may be exercised within the
period of three months after the date the Participant ceases to be an
employee of the Company (or within such lesser period as may be specified
in the applicable option agreement), provided, that the agreement with
respect to such Option may designate a longer exercise period and that
the exercise after such three-month period shall be treated as the
exercise of a Nonstatutory Stock Option under the Plan;
(y) if the Participant dies while in the employ of the Company,
or within three months after the Participant ceases to be such an
employee, the Incentive Stock Option may be exercised by the
Participant's Designated Beneficiary within the period of one year after
the date of death (or within such lesser period as may be specified in
the applicable Option agreement); and
(z) if the Participant becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provision thereto) while in
the employ of the Company, the Incentive Stock Option may be exercised
within the period of one year after the date of death (or within such
lesser period as may be specified in the applicable Option agreement).
For all purposes of the Plan and any Option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
(v) Incentive Stock Options shall not be assignable or transferable
by the person to whom they are granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
life of the optionee, shall be exercisable only by the optionee.
7. Stock Appreciation Rights
<PAGE> 23
(a) The Board may grant SARs entitling recipients on exercise of the SAR
to receive an amount, in cash or Common Stock or a combination thereof (such
form to be determined by the Board), determined in whole or in part by reference
to appreciation in the Fair Market Value of the Common Stock between the date of
the Award and the exercise of the Award. A SAR shall entitle the Participant to
receive, with respect to each share of Common Stock as to which the SAR is
exercised, the excess of the share's Fair Market Value on the date of exercise
over its Fair Market Value on the date the SAR was granted. The Board may also
grant SARs that provide that, following a change in control of the Company (as
defined by the Board at the time of the Award), the holder of such SAR will be
entitled to receive, with respect to each share of Common Stock subject to the
SAR, an amount equal to the excess of a specified value (which may include an
average of values) for a share of Common Stock during a period preceding such
change in control over the Fair Market Value of a share of Common Stock on the
date the SAR was granted.
(b) SARs may be granted in tandem with, or independently of, Options
granted under the Plan. A SAR granted in tandem with an Option which is not an
Incentive Stock Option may be granted either at or after the time the Option is
granted. A SAR granted in tandem with an Incentive Stock Option may be granted
only at the time the Option is granted.
(c) When SARs are granted in tandem with Options, the following
provisions will apply:
(i) The SAR will be exercisable only at such time or times, and to
the extent, that the related Option is exercisable and will be exercisable in
accordance with the procedure required for exercise of the related Option.
(ii) The SAR will terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a SAR granted with
respect to less than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has been
exercised or has terminated exceeds the number of shares not covered by the SAR.
(iii) The Option will terminate and no longer be exercisable upon the
exercise of the related SAR.
(iv) The SAR will be transferable only with the related Option.
(v) A SAR granted in tandem with an Incentive Stock Option may be
exercised only when the market price of the Common Stock subject to the Option
exceeds the exercise price of such Option.
(d) A SAR not granted in tandem with an Option will become exercisable at
such time or times, and on such conditions, as the Board may specify.
(e) The Board may at any time accelerate the time at which all or any
part of the SAR may be exercised.
8. Performance Shares
(a) The Board may make Performance Share Awards entitling recipients to
acquire shares of Common Stock upon the attainment of specified performance
goals. The Board may make Performance Share Awards independent of or in
connection with the granting of any other Award under the Plan. The Board in its
sole discretion shall determine the performance goals applicable under each such
Award, the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Board may rely on the performance goals and other
standards applicable to other performance plans of the Company in setting the
standards for Performance Share Awards under the Plan.
(b) Performance Share Awards and all rights with respect to such Awards
may not be sold, assigned, transferred, pledged or otherwise encumbered.
<PAGE> 24
(c) A Participant receiving a Performance Share Award shall have the
rights of a stockholder only as to shares actually received by the Participant
under the Plan and not with respect to shares subject to an Award but not
actually received by the Participant. A Participant shall be entitled to receive
a stock certificate evidencing the acquisition of shares of Common Stock under a
Performance Share Award only upon satisfaction of all conditions specified in
the agreement evidencing the Performance Share Award.
(d) The Board may at any time accelerate or waive any or all of the
goals, restrictions or conditions imposed under any Performance Share Award.
9. Restricted and Unrestricted Stock
(a) The Board may grant Restricted Stock Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their purchase price (or to require
forfeiture of such shares if purchased at no cost) from the recipient in the
event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable Restricted Period or Restricted
Periods established by the Board for such Award. Conditions for repurchase (or
forfeiture) may be based on continuing employment or service or achievement of
pre-established performance or other goals and objectives.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Board, during the
applicable Restricted Period. Shares of Restricted Stock shall be evidenced in
such manner as the Board may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the Restricted Period, the Company (or such
designee) shall deliver such certificates to the Participant or if the
Participant has died, to the Participant's Designated Beneficiary.
(c) The Board may, in its sole discretion, grant (or sell at a purchase
price determined by the Board, which shall not be lower than 85% of Fair Market
Value on the date of sale) to Participants shares of Common Stock free of any
restrictions under the Plan ("Unrestricted Stock").
(d) The purchase price for each share of Restricted Stock and
Unrestricted Stock shall be determined by the Board of Directors and may not be
less than the par value of the Common Stock. Such purchase price may be paid in
the form of past services or such other lawful consideration as is determined by
the Board.
(e) The Board may at any time accelerate the expiration of the Restricted
Period applicable to all, or any particular, outstanding shares of Restricted
Stock.
10. General Provisions Applicable to Awards
(a) Applicability of Rule 16b-3. Those provisions of the Plan which make
an express reference to Rule 16b-3 shall apply to the Company only at such time
as the Company's Common Stock is registered under the Exchange Act, or any
successor provision, and then only to Reporting Persons.
(b) Reporting Person Limitations. Notwithstanding any other provision of
the Plan, to the extent required to qualify for the exemption provided by Rule
16b-3, (i) any Option, SAR, Performance Share Award or other similar right
related to an equity security issued under the Plan to a Reporting Person shall
not be transferable other than by will or the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code or
Title I or the Employee Retirement Income Security Act ("ERISA"), or the rules
thereunder, and shall be exercisable during the Participant's lifetime only by
the Participant or the Participant's guardian or legal representative, and (ii)
the selection of a Reporting Person as a Participant and the terms of his or her
Award shall be determined only in accordance with the applicable provisions of
Rule 16b-3.
(c) Documentation. Each Award under the Plan shall be evidenced by an
instrument delivered to the Participant specifying the terms and conditions
thereof and containing such other terms and conditions not inconsistent
<PAGE> 25
with the provisions of the Plan as the Board considers necessary or advisable.
Such instruments may be in the form of agreements to be executed by both the
Company and the Participant, or certificates, letters or similar documents,
acceptance of which will evidence agreement to the terms thereof and of this
Plan.
(d) Board Discretion. Except as otherwise provided by the Plan, each type
of Award may be made alone, in addition to or in relation to any other type of
Award. The terms of each type of Award need not be identical, and the Board need
not treat Participants uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award may be made by the
Board at the time of award or at any time thereafter.
(e) Termination of Status. Subject to the provisions of Section 6(b)(iv),
the Committee shall determine the effect on an Award of the disability, death,
retirement, authorized leave of absence or other termination of employment or
other status of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may exercise rights under such Award.
(f) Mergers, Etc. In the event of a consolidation, merger or other
reorganization in which all of the outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity (an "Acquisition") or in the event of a liquidation of the
Company, the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions as to outstanding Awards: (i)
provide that such Awards shall be assumed, or substantially equivalent Awards
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof) on such terms as the Board determines to be appropriate, (ii)
upon written notice to Participants, provide that all unexercised Options or
SARs will terminate immediately prior to the consummation of such transaction
unless exercised by the Participant within a specified period following the date
of such notice, (iii) in the event of an Acquisition under the terms of which
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the Acquisition (the
"Acquisition Price"), make or provide for a cash payment to Participants equal
to the difference between (A) the Acquisition Price times the number of shares
of Common Stock subject to outstanding Options or SARs (to the extent then
exercisable at prices not in excess of the Acquisition Price) and (B) the
aggregate exercise price of all such outstanding Options or SARs in exchange for
the termination of such Options and SARs, and (iv) provide that all or any
outstanding Awards shall become exercisable or realizable in full prior to the
effective date of such Acquisition.
(g) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. In the Board's discretion, and subject to such
conditions as the Board may establish, such tax obligations may be paid in whole
or in part in shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value. The Company may,
to the extent permitted by law, deduct any such tax obligations from any payment
of any kind otherwise due to the Participant.
(h) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Board considers necessary or
advisable to achieve the purposes of the Plan or comply with applicable laws.
(i) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
(j) Cancellation and New Grant of Options. The Board of Directors shall
have the authority to effect, at any time and from time to time, with the
consent of the affected optionees, (i) the cancellation of any or all
outstanding Options under the Plan and the grant in substitution therefor of new
Options under the Plan covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the cancelled Options or (ii) the
amendment of the terms of any and all
<PAGE> 26
outstanding Options under the Plan to provide an option exercise price per share
which is higher or lower than the then current exercise price per share of such
outstanding Options.
(k) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan (i) until all
conditions of the Award have been satisfied or removed, (ii) until, in the
opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with, (iii) if the outstanding Common Stock is at
the time listed on any stock exchange, until the shares to be delivered have
been listed or authorized to be listed on such exchange upon official notice of
notice of issuance, and (iv) until all other legal matters in connection with
the issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Common Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the Award, such representations or agreements as the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Common Stock bear an appropriate legend restricting
transfer.
11. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or service
for the Company. The Company expressly reserves the right at any time to dismiss
a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the record holder thereof.
(c) Exclusion from Benefit Computations. No amounts payable upon exercise
of Awards granted under the Plan shall be considered salary, wages or
compensation to Participants for purposes of determining the amount or nature of
benefits that Participants are entitled to under any insurance, retirement or
other benefit plans or programs of the Company.
(d) Effective Date and Term. The Plan shall become effective upon the
closing of the Company's initial public offering. No Award granted under the
Plan shall become effective until the Plan shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no Options
previously granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter. No Award may be made
under the Plan after May 7, 2005, but Awards previously granted may extend
beyond that date.
(e) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be made
without stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement. Amendments requiring stockholder
approval shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
Participant) unless and until such amendment shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular Participant.
(f) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
