PROXY STATEMENT
PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______)
Filed by the Registrant [x]
Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ACCELR8 TECHNOLOGY 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0- 11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ACCELR8 TECHNOLOGY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 12, 2002
Notice is hereby given that the Annual Meeting (the "Annual Meeting") of
the shareholders (the "Shareholders") of Accelr8 Technology Corporation, a
Colorado corporation (the "Company"), will be held at 2:00 p.m., local time, on
December 12, 2002, at the Warwick Hotel Denver, 1776 Grant Street, Denver,
Colorado 80203, and any adjournments or postponements thereof for the following
purposes:
1. To elect the following three (3) persons to serve as directors of the
Corporation until the next Annual Meeting of Shareholders and
thereafter until their successors shall have been elected and
qualified: Thomas V. Geimer, David C. Wilhelm and A. Alexander Arnold
III.
2. To approve certain amendments to the Company's 1996 Non-Qualified
Stock Option Plan.
3. To approve certain amendments to the Company's 1996 Incentive Stock
Option Plan.
4. To ratify the selection of Anton Collins Mitchell LLP as the
independent public accountants of the Company for the fiscal year
ending July 31, 2003.
5. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Only Shareholders of record at the close of business on October 31, 2002,
shall be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. All Shareholders are cordially invited to attend the
Annual Meeting in person.
By Order of the Board of Directors
/s/ Thomas V. Geimer
--------------------
Thomas V. Geimer, Chairman of the Board
November 6, 2002
Denver, Colorado
IF YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING AND WISH YOUR SHARES OF
COMMON STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR THAT PURPOSE.
ACCELR8 TECHNOLOGY CORPORATION
303 East Seventeenth Avenue, Suite 108
Denver, Colorado 80203
PROXY STATEMENT
Dated November 6, 2002
ANNUAL MEETING OF SHAREHOLDERS
FOR THE FISCAL YEAR ENDED JULY 31, 2002
TO BE HELD ON DECEMBER 12, 2002
GENERAL
-------
This Proxy Statement is being furnished to the shareholders of Accelr8
Technology Corporation, a Colorado corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") from holders (the "Shareholders") of outstanding shares of
common stock, no par value, of the Company (the "Common Stock"), for use at the
Annual Meeting of the Shareholders for the fiscal year ended July 31, 2002, to
be held at 2:00 p.m., local time, on December 12, 2002, at the Warwick Hotel
Denver, 1776 Grant Street, Denver, Colorado 80203, and any adjournments or
postponements thereof (the "Annual Meeting"). This Proxy Statement, Notice of
Annual Meeting of Shareholders and the accompanying Proxy Card are first being
mailed to shareholders on or about November 8, 2002.
VOTING SECURITIES AND VOTE REQUIRED
-----------------------------------
Only Shareholders of record at the close of business on October 31, 2002
(the "Record Date") are entitled to notice of and to vote the shares of Common
Stock, no par value, of the Company held by them on such date at the Annual
Meeting or any and all adjournments thereof. As of the Record Date, there were
9,411,210 shares of Common Stock issued and outstanding with 1,129,110 shares
held in a Rabbi Trust by the Company for the benefit of Thomas V. Geimer. As a
result, there are 8,282,100 shares entitled to vote at the Company's Annual
Meeting. There was no other class of voting securities outstanding as of the
Record Date.
Each share of Common Stock held by a Shareholder entitles such Shareholder
to one vote on each matter that is voted upon at the Annual Meeting or any
adjournments thereof.
The presence, in person or by proxy, of the holders of 33% of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Assuming that a quorum is present, the affirmative vote of the
holders of a majority of the shares of Common Stock present at the Annual
Meeting in person or by proxy will be required to (i) elect each of the three
nominees for directors of the Company, (ii) approve the amendments to the 1996
Non-Qualified Stock Option Plan, (iii) approve the amendments to the 1996
Incentive Stock Option Plan, and (iv) ratify the selection of Anton Collins
Mitchell LLP as the independent public accountants of the Company for the fiscal
year ending July 31, 2003.
1
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business; however, abstentions will
have the effect of a negative vote on the proposals being submitted. Abstentions
may be specified on all proposals. A broker "non-vote" will have no effect on
the outcome of any of the proposals.
If the accompanying proxy is properly signed and returned to the Company
and not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying Proxy will vote "FOR" the election of the three
nominees for directors of the Company, "FOR" the approval of the amendments to
the 1996 Non-Qualified Stock Plan, "FOR" the approval of the amendments to the
1996 Incentive Stock Option Plan, and "FOR" the ratification of the selection of
Anton Collins Mitchell LLP as the independent public accountants of the Company
for the fiscal year ending July 31, 2003, and as recommended by the Board of
Directors with regard to any other matters or, if no such recommendation is
given, in their own discretion. The Company's executive officers, directors and
key employees have advised the Company that they intend to vote their shares
(including those shares over which they hold voting power), representing
approximately 12.48% as of October 15, 2002, of the outstanding shares of Common
Stock, in favor of each of the proposals above. Each Proxy granted by a
Shareholder may be revoked by such Shareholder at any time thereafter by writing
to the Secretary of the Company prior to the Annual Meeting, or by execution and
delivery of a subsequent Proxy or by attendance and voting in person at the
Annual Meeting, except as to any matter or matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy.
Representatives from Anton Collins Mitchell LLP are expected to attend the
Annual Meeting. As a result, the Company anticipates that a representative from
of Anton Collins Mitchell LLP will be available to make a statement or respond
to any questions at the Annual Meeting.
The cost of soliciting these Proxies, consisting of the printing, handling,
and mailing of the Proxy and related material, and the actual expense incurred
by brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
materials to the beneficial owners of the shares of Common Stock, will be paid
by the Company.
In order to assure that there is a quorum, it may be necessary for certain
officers, directors, regular employees and other representatives of the Company
to solicit Proxies by telephone or telegraph or in person. These persons will
receive no extra compensation for their services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
---------------------
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of October 15, 2002 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (ii) each of the Company's executive
officers and directors; and (iii) all executive officers and directors as a
2
group. On October 15, 2002, the Company had 9,411,210 shares of its Common Stock
issued and outstanding. This calculation includes the 1,129,110 shares which are
held by the Rabbi Trust for the benefit of Thomas V. Geimer that are treated as
outstanding in the calculation of beneficial ownership but are not included in
Mr. Geimer's total as set forth below in footnote 1, and have not been included
in the calculation of the shares entitled to vote. Common Stock not outstanding
but deemed beneficially owned by virtue of the right of an individual to acquire
shares is treated as outstanding only when determining the amount and percentage
of Common Stock owned by such individual. Except as noted, each person or entity
has sole voting and sole investment power with respect to the shares shown.
Name and Address Shares Beneficially Owned
of Beneficial Owner -------------------------
------------------- Number Percent
------ -------
Thomas V. Geimer (1) 348,300 3.58
303 East 17th Avenue, Suite 108
Denver, Colorado 80203
Harry J. Fleury (2), (3) 233,750 2.44
303 East 17th Avenue, Suite 108
Denver, Colorado 80203
A. Alexander Arnold III (4) 938,000 9.88
845 Third Ave., 6th Flr
New York, NY 10021
David C. Wilhelm (5) 244,725 2.58
333 Logan St., Suite 100
Denver, CO 80203
Executive Officers and Directors 1,764,775 17.64
as a Group (4 persons)
DDx, Inc. 1,813,793 19.27
7000 Broadway, Suite 3-305
Denver, CO 80221
--------------------
(1) Does not include 1,129,110 shares, which were purchased by Mr. Geimer upon
exercise of warrants and options. Mr. Geimer exercised these options and
warrants on October 14, 1997, and simultaneously contributed the shares
acquired to a Rabbi Trust. For further information, see Note 6 to Financial
Statements included in the Form 10-KSB for the fiscal year ended July 31,
2002, which has been filed with the SEC and which has been sent to all the
shareholders along with this proxy statement. Calculation also includes
300,000 shares, which may be purchased by Mr. Geimer upon exercise of
options.
(2) Includes 140,000 shares, which may be purchased by Mr. Fleury upon exercise
of options.
(3) Does not include options to purchase 10,000 shares which are currently not
exercisable but which will vest upon the passage of time.
(4) Includes 800,000 shares held by four trusts. Mr. Arnold merely serves as
trustee for each of those trusts, but is not a beneficiary of and has no
pecuniary interest in any of those trusts. Also includes 63,000 shares held
in investment advisory accounts for which Mr. Arnold serves as the
investment advisor. Also includes 75,000 shares, which may be purchased by
Mr. Arnold upon exercise of options.
(5) Includes 162,225 shares held by the Jean C. Wilhelm Trust, of which Mr.
Wilhelm and his children are the lifetime beneficiaries, and 1,000 shares
held by the David C. Wilhelm Living Trust, of which Mr. Wilhelm is the
beneficiary, 6,500 shares held by the Jean Jackson Emery Living Trust, of
which Jean Emery is the beneficiary, who is the wife of Mr. Wilhelm, and
75,000 shares which may be purchased by Mr. Wilhelm upon exercise of
options.
3
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors currently consists of three members, each of whom is
proposed for re-election at the Annual Meeting.
The Board of Directors maintains a Compensation Committee and an Audit
Committee. The Compensation Committee is comprised of Messrs. Arnold and
Wilhelm, the Company's independent, non-management directors. The primary
function of the Compensation Committee is to review and make recommendations to
the Board with respect to the compensation, including bonuses, of the Company's
officers and to administer the Company's stock option plans. The Audit Committee
is comprised of Messrs. Arnold and Wilhelm. The function of the Audit Committee
is to review and approve the scope of audit procedures employed by the Company's
independent auditors, to review and approve the audit reports rendered by the
Company's independent auditors and to approve the audit fee charged by the
independent auditors. The Audit committee reports to the Board of Directors with
respect to such matters and recommends the selection of independent auditors.
The Compensation Committee did not hold any meetings during the last fiscal
year. The Audit Committee held four meetings during the last fiscal year.
The Audit Committee has also discussed with Anton Collins Mitchell LLP the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.
The Audit Committee has received and reviewed the written disclosures and
the letter from Anton Collins Mitchell LLP required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
amended, and has discussed with Anton Collins Mitchell LLP their independence.
Based on the reviews and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited financial statements
referred to above be included in the Company's Annual Report on Form 10-KSB for
the year ended July 31, 2002 filed with the Securities and Exchange Commission.
As noted above, the members of the Audit Committee are David C. Wilhelm and
A. Alexander Arnold III, both of whom are independent directors as defined in
Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards, as applicable and as may be modified or supplemented.
4
Effective as of June 9, 2000, the Board of Directors of the Company adopted
a written charter for the Audit Committee, a copy of which has been furnished in
previous public filings of the Company.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company in the two fiscal years ended July 31,
2002, of Thomas V. Geimer and Harry J. Fleury, who are the Company's most highly
compensated executive officers.
Long Term
Annual Compensation Compensation
------------------- ------------
Other Securities
Name and Fiscal Annual Underlying
Principal Position Year Salary Other Compensation Options
------------------ ---- ------ ----- ------------ -------
Thomas V. Geimer 2002 $100,000 $ 75,000(1) $125,000(5) 200,000(2)
Chief Executive Officer 2001 $100,507 $ 75,000(1) -- 100,000(2)
and Chief Financial
Officer
Harry J. Fleury 2002 $ 75,000 $ 5,678(3) $ 35,000(5) 10,000(4)
President 2001 $ 75,507 $ 11,067(3) -- 10,000(4)
-------------------
(1) Represents deferred compensation for Mr. Geimer pursuant to the Company's
deferred compensation plan, $75,000 of which vested during each of the
fiscal years ended July 31, 2001 and 2002
(2) Includes 100,000 options previously granted to Mr. Geimer and the
replacement of 200,000 options that were previously granted to Mr. Geimer,
which were canceled pursuant to a stock option exchange agreement. See
"Stock Option Exchange."
(3) Includes sales commissions earned by Mr. Fleury on revenues from certain
sales.
(4) Represents stock options to purchase 10,000 shares at an exercise price of
$2.50 per share. On October 19, 1998, Mr. Fleury was granted 50,000 options
to purchase our Common Stock, 40,000 of which had vested as of July 31,
2002 and 10,000 of which will vest on July 31, 2003, if he is still
employed.
(5) The Company reimbursed Messrs. Geimer and Fleury on an after tax basis for
civil penalties paid by them in connection with the settlement of the SEC
matter. (See "Item 2 - Legal Proceedings" and "Item 12 - Certain
Relationships and Related Transactions.")
5
Option Values. The following table provides certain information concerning
the fiscal year end value of unexercised options held by Mr. Geimer and Mr.
Fleury.
Aggregated Option Exercises in 2002 Fiscal Year
and Fiscal Year End Option Values
Shares Number of Unexercised Value of Unexercised
Acquired on Value Options at Fiscal Year In-the-Money Options
Name Exercise Realized End Fiscal Year End(1)
---- -------- -------- ---------------------- ------------------
Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
------- ------- ------- -------
Thomas V. Geimer 0 0 300,000 0 $ 0 0
Harry J. Fleury 0 0 140,000 10,000 $39,000 0
-------------------------------
(1) Value calculated by determining the difference between the closing sales
price on July 31, 2002, of $.75 per share and the exercise price of the
options. Fair market value was not discounted for restricted nature of any
stock purchased on exercise of these options.
Employment Agreements
We have an employment agreement with our Chairman, Mr. Thomas V. Geimer.
The employment agreement expires on November 30, 2003; however, it is
automatically renewable on an annual basis for additional one-year increments.
Mr. Geimer's employment agreement provides for a yearly salary of $100,000 per
year with an additional $75,000 of deferred compensation each year. Mr. Geimer's
agreement also contains provisions under which we will be obligated to pay Mr.
Geimer five times his annual salary and deferred compensation in the amount of
$50,000 (i.e., an aggregate of $750,000) if a change of control as defined in
the agreement occurs.
Compensation Pursuant to Plans
Employee Retirement Plan. During fiscal year 1996, we established a SARSEP-IRA
employee pension plan that covers substantially all full-time employees. Under
the plan, employees have the option to contribute up to the lesser of 15% of
their compensation or $10,500. We may make discretionary contributions to the
plan based on recommendations from the Board of Directors. We made no
contribution for the fiscal years ended July 31, 2001 or 2002.
Deferred Compensation Plan. In January 1996, we established a deferred
compensation plan for our employees. We may make discretionary contributions to
the plan based upon recommendations from the Board of Directors. For each of the
fiscal years ended July 31, 2001 and 2002, we contributed $75,000 to the plan.
The $75,000 contribution for the fiscal year ended July 31, 2002 was made on
August 27, 2002.
6
Options. We currently have outstanding an aggregate of 106,500 options issued to
employees of the Company pursuant to our 1987 non-qualified stock option plan
(the "1987 Plan"). The 106,500 options are exercisable at a price of $0.36 per
share. During the 1994 fiscal year the Board of Directors adopted a resolution
providing that for so long as a recipient of an option grant remains in the
employ of the Company, the options held will not expire and if the recipient's
employment is terminated, the holder will have up to 90 days after termination
to exercise any vested but previously unexercised options. In 1997, the Board of
Directors passed a further resolution clarifying that upon the death of an
optionee, an unexercised option will remain exercisable for a period of one year
by, and only by, the person to whom the optionee's rights have passed by will or
by the laws of descent and distribution. All options previously granted are
administered by our Board of Directors. The options provide for adjustment of
the number of shares issuable in the case of stock dividends or stock splits or
combinations and adjustments in the case of recapitalization, merger or sale of
assets.
On October 14, 1997, Thomas V. Geimer exercised an aggregate of 1,140,000
warrants and options to acquire 1,140,000 shares of the Company's Common Stock
at an exercise price of $0.24 per share. Under the terms of the Rabbi Trust, we
will hold the shares in trust and carry the shares as held for employee benefit
by the Company. The Rabbi Trust provides that upon Mr. Geimer's death,
disability, or termination of his employment the shares will be released ratably
over the subsequent ten (10) years, unless the Board of Directors determines
otherwise. See Note 6 to the Financial Statement for further information.
1996 Stock Option Plans
At a special meeting of shareholders held November 8, 1996, the
shareholders of the Company approved an incentive stock option plan and a
non-qualified stock option plan. For a complete description of our 1996
Non-Qualified Stock Option Plan and 1996 Incentive Stock Option Plan, please see
Proposals 2 and 3 respectively, below.
CERTAIN TRANSACTIONS
During fiscal year 1996, we established a deferred compensation plan for
our employees. We may make discretionary contributions to the plan based on
recommendations from the Board of Directors. As of July 31, 2002, the Board of
Directors had authorized deferred compensation totaling $525,000 since fiscal
year 1996 of which Mr. Geimer was totally vested and $450,000 had been funded.
The $75,000 contribution for fiscal year ended July 31, 2002 was made August 27,
2002.
In connection with the settlement reached with the SEC on July 12, 2001, we
agreed to indemnify the individual officers with respect to the civil penalties
assessed against the individual officers on an after tax basis.
There were no other transactions or series of transactions for the fiscal
year ended July 31, 2002, nor are there any currently proposed transactions, or
series of the same to which we are a party, in which the amount involved exceeds
$60,000 and in which, to the knowledge of the Company, any director, executive
officer, nominee, 5% shareholder or any member of the immediate family of the
foregoing persons, have or will have a direct or indirect material interest.
7
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
generally requires the Company's directors and executive officers and persons
who own more than 10% of a registered class of the Company's equity securities
("10% owners") to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Directors and executive officers and 10%
owners are required by Securities and Exchange Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on review of copies of such reports furnished to us and
verbal representations that no other reports were required to be filed during
the fiscal year ended July 31, 2002, all Section 16(a) filing requirements
applicable to its directors, executive officers and 10% owners were met, except
that Thomas V. Geimer, an officer and director of the Company, failed to file
Form 4's in April, May and July 2002 to report four transactions in which Mr.
Geimer purchased shares of the Company in the open market, which will be
reported in an appropriate filing with the Securities and Exchange Commission.
Also, David C. Wilhelm, a director of the Company, failed to file a Form 4 in
January 2002, to report two transactions for the transfer of shares to an
educational institution and a charitable organization, which will also be
reported in an appropriate filing with the Securities and Exchange Commission.
LEGAL MATTERS
The Company is a party to certain legal proceedings, the outcome of which
management believes will not have a significant impact upon the financial
position of the Company. The Company is not able to predict the outcome of the
pending legal matters described below with any degree of certainty, and there
can be no assurance that the resolution of one or more of the cases described
below may not have a material adverse effect on the Company.
Concluded Legal Matters
-----------------------
On November 16, 1999, the United States Securities and Exchange Commission
("SEC") filed suit in the United States District Court for the District of
Colorado against Accelr8 Technology Corporation, Thomas V. Geimer, Harry J.
Fleury, and James Godkin, captioned Securities and Exchange Commission v.
Accelr8 Technology Corporation, et al., Civil Action No. 99-D-2203. The SEC
sought an injunction permanently restraining and enjoining each defendant from
violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder; Section 13(a) of the Securities Exchange Act of 1934,
and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder, and, in addition,
that Mr. Geimer and Mr. Godkin be enjoined from future violations of Section
13(b)(2) of the Securities Exchange Act of 1934, Section 10(b) of the Exchange
Act and Rule 10b-5 thereunder related to securities fraud, Section 13 of the
Exchange Act and the rules thereunder related to reporting and record keeping.
The SEC alleged that the Defendants made material misrepresentations of fact
regarding the capability of certain of the Company's products, and the Company's
8
financial condition, including its revenues and earnings. The SEC also alleged
that Mr. Geimer and Mr. Godkin failed to implement, or circumvented, a system of
internal accounting controls, falsified books and records, and made
misrepresentations to the Company's accountants. On July 12, 2001, the
Defendants, without admitting or denying the allegations of the Third Amended
Complaint filed by the SEC, consented to the entry of Final Orders in which the
court dismissed the securities fraud claims against all Defendants with
prejudice, made no findings that any violation of law occurred, and enjoined the
Defendants from future violations of Section 13 of the Exchange Act, and the
regulations thereunder referred to above. In addition, Mr. Geimer paid a civil
penalty of $65,000, Mr. Fleury paid a civil penalty of $20,000, and Mr. Godkin
paid a civil penalty of $20,000. All costs, expenses, civil penalties, and
liabilities incurred by the Defendants in defending and settling this matter
were borne by the Company.
On May 24, 2000, William Dews, an alleged shareholder of Accelr8, filed a
derivative action on behalf of the Company, against Thomas Geimer, Alexander
Arnold and David Wilhelm, captioned John William Dews v. Thomas V. Geimer, et
al., Civil Action No. 00-CV-2785 (District Court, City and County of Denver,
Colorado). That action alleged various breaches of fiduciary duty arising out of
Accelr8's accounting and public reporting during 1997 through 1999. On January
4, 2002, the Court approved a settlement between the parties pursuant to which
the complaint was dismissed without prejudice, with no payments to be made by or
on behalf of the defendants.
On July 14, 2000, the Agricultural Excess and Surplus Insurance Company
("AESIC"), which is the carrier of Accelr8's director and officer liability
policy, filed in the United States District Court for the District of Colorado
an action for a declaratory judgment seeking to rescind Accelr8's directors and
officers liability policy, captioned Agricultural Excess and Surplus Insurance
Company v. Accelr8 Technology Corporation, Civil Action No. 00-B-1417. That
policy has a $1 million limit, with a $100,000 deductible. The Company and
certain individuals made demand for coverage under that policy relating to third
party claims involving the Company's accounting and public reporting from 1997
to 1999. AESIC alleged that it was fraudulently induced to enter into the
contract of insurance through knowing material misrepresentations made by the
Company in its Form 10-KSB filed with the SEC, concerning the capabilities of
certain of the Company's products. The defendants answered the Complaint, in
which they denied the claim for rescission, and filed a counterclaim seeking
damages for the insurer's refusal to provide the benefits of insurance.
Subsequent to July 31, 2002, the parties settled this lawsuit and AESIC paid
$825,000 to the Company on November 5, 2002 in full satisfaction of all claims.
Pending Legal Matters
---------------------
On May 4, 2000, Harley Meyer filed in the United States District Court for
the District of Colorado a putative class action against Accelr8 Technology
Corporation, Thomas V. Geimer and Harry J. Fleury. On June 2, 2000, Charles
Germer filed in the United States District Court for the District of Colorado a
putative class action against Accelr8 Technology Corporation, Thomas V. Geimer
and Harry J. Fleury. On June 8, 2000, William Blais filed in the United States
District Court for the District of Colorado a putative class action against
Accelr8 Technology Corporation, Thomas V. Geimer and Harry J. Fleury. On June
20, 2000, Diana Wright filed in the United States District Court for the
9
District of Colorado a putative class action against Accelr8 Technology
Corporation, Thomas V. Geimer and Harry J. Fleury. On August 14, 2000, Derrick
Hongerholt filed in the United States District Court for the District of
Colorado a shareholder derivative action against Thomas V. Geimer, David C.
Wilhelm, A. Alexander Arnold III, Harry J. Fleury, James Godkin and Accelr8
Technology Corporation as a nominal defendant. These actions have been
consolidated under the caption In re Accelr8 Technology Corporation Securities
Litigation, Civil Action No. 00-K-938. On October 16, 2000, a Consolidated
Amended Class Action Complaint was filed which added James Godkin as a
defendant. The Consolidated Amended Complaint alleges violations of Section
10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder,
relating to the Company's accounting and public disclosure from October, 1997 to
November, 1999. The Defendants have answered the Amended Complaint, in which
they denied liability and raised affirmative defenses. On January 23, 2001, the
Court granted the Plaintiff's Motion for Class Certification. The defendants
have answered the Hongerholt derivative complaint, and have denied all claims.
In connection with this proceeding, Accelr8's Board of Directors appointed
David G. Palmer, Esquire, as independent counsel to serve as a Special
Litigation Committee to investigate the claims and circumstances relating to the
derivative action filed by Derrick Hongerholt and to determine whether the
derivative action should be terminated. On September 10, 2002, the Special
Litigation Counsel determined, after investigation, that the derivative claims
were without factual merit, and should be dismissed.
On October 30, 2002, the parties agreed to a settlement of the derivative
action, under which that action will be dismissed with prejudice upon an
exchange of releases, with no payments made by or on behalf of any of the
Defendants. The joint motion for settlement filed with the Court on October 30,
2002, is subject to Court approval, and while the Company believes that approval
is probable, there can be no assurance that the settlement will be approved. In
the event that the settlement is not approved, and the litigation proceeds, the
Company is bearing the costs of defense in accordance with indemnification
agreements for all Defendants, which costs may be material to the Company. No
claims are asserted against the Company in the derivative action.
On October 30, 2002, the parties to the Class Action executed a Memorandum
of Understanding setting out an agreement in principle to settle the Class
Action against all parties. Under the contemplated settlement, the Company will
contribute to a settlement fund $450,000, and 375,000 shares of Common Stock in
the Company. The settlement fund will be distributed in a manner over which the
Company has no control. This agreement in principle is subject to formal
documentation and Court approval. Although the Company believes that it is
probable that the parties will complete formal documentation of the settlement
agreement, and that the settlement will be approved, there can be no assurance
that completion of the settlement, and Court approval will occur. In the event
that the settlement is not completed, the litigation will continue. While the
Company believes it has substantial defenses to the Class Action claims, there
is no assurance that the resolution of the Class Action will not have a material
adverse effect on the Company.
10
PROPOSAL 1
ELECTION OF THREE (3) PERSONS
TO SERVE AS DIRECTORS OF THE COMPANY
The Company's directors are elected annually to serve until the next Annual
Meeting of Shareholders and thereafter until their successors shall have been
elected and qualified. The number of directors presently authorized by the
Bylaws of the Company shall be not less than three (3) nor more than seven (7).
Unless otherwise directed by shareholders, the proxy holders will vote all
shares represented by proxies held by them for the election of the following
nominees, all of whom are now members and constitute the Company's Board of
Directors. The Company is advised that all nominees have indicated their
availability and willingness to serve if elected. In the event that any nominee
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxy holder will vote for a substitute nominee in the exercise of
his best judgment.
INFORMATION CONCERNING NOMINEES
Thomas V. Geimer, 55, has been the Chairman of the Board of Directors and a
director of Accelr8 since 1987. He currently serves as the Chief Executive
Officer, Chief Financial Officer and Secretary of the Company. Mr. Geimer is
responsible for development of our business strategy, day to day operations,
accounting and finance functions. Before assuming full-time responsibilities at
the Company, Mr. Geimer founded and operated an investment banking firm.
David C. Wilhelm, 82, has been a director of the Company since June 1988.
For the past 30 years, Mr. Wilhelm has been President of Wilhelm Co., an
agribusiness company located in Denver, Colorado, which is principally engaged
in the cattle feeding and commodity business. Since 1972, Mr. Wilhelm has been a
director of Colorado National Bank located in Denver, Colorado. Mr. Wilhelm is a
member of the International Executive Service Corp., and was formerly the
Director of the Colorado Cattlemen's Association. Mr. Wilhelm received a
Bachelor of Arts in American History from Yale University in 1942.
Alexander Arnold III, 62, has served as a director of the Company since
September 1992. For the past 25 years Mr. Arnold has served as a Managing
Director of Trainer, Wortham & Co., Inc., a New York City-based investment
counselor firm, which Mr. Arnold co-founded. Mr. Arnold received a Bachelor of
Arts degree from Rollins College in 1964 and a Masters of Business
Administration from Boston University in 1966.
Board Recommendation
The Board recommends a vote FOR the election of each of the three nominees
for directors of the Company.
11
PROPOSAL 2
AMENDMENT TO 1996 Non-Qualified
Stock Option Plan
The Board of Directors have unanimously approved, subject to shareholder
approval, amendments to the Company's 1996 Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") which would (i) give the Compensation Committee (the
"Committee") the power to amend and alter the Non-Qualified Plan so long as the
amendments do not affect any outstanding options; (ii) provide any shares
cancelled, terminated, or expired pursuant to the Non-Qualified Plan be made
available for purposes of the Non-Qualified Plan; (iii) provide that the
cashless exercise provision of the Non-Qualified Plan be in the sole discretion
of the Committee; and (iv) extend the termination date of the Non-Qualified Plan
until December 12, 2012.
Summary of Non-Qualified Plan prior to Proposed Amendments
On November 8, 1996, the Shareholders approved the Company's Non-Qualified
Plan which provides for the grant of options to purchase an aggregate of not
more than 300,000 shares of the Company's Common Stock. The number of shares of
the Company's Common Stock included in the Non-Qualified Plan may only be
increased with the approval of the Company's shareholders. The purpose of the
Non-Qualified Plan is to provide certain key employees, independent contractors,
technical advisors and directors of the Company with options in order to provide
additional rewards and incentives for contributing to the success of the
Company. These options are not incentive stock options within the meaning of
Section 422 of the Code.
The Non-Qualified Plan is administered by the Committee who has
discretionary authority to (a) determine the persons to whom options shall be
granted, (b) determine the quantity of shares to be included in each option, (c)
to interpret the Non-Qualified Plan, and (d) to promulgate such rules and
regulations under the Non-Qualified Plan as they deem necessary and proper. The
Committee may terminate the Non-Qualified Plan at any time. Any such termination
shall not affect options already granted and such options remain in full force
and effect as if the Non-Qualified Plan had not been terminated. The
Non-Qualified Plan terminates, if not terminated earlier, on November 8, 2006.
The option price for the Common Stock to be issued under the Non-Qualified
Plan may be greater, less than or equal to the market value of the Common Stock
at the date of grant in the discretion of the Committee. The number of shares
optioned to a employee or director under the Non-Qualified Plan shall be
exercisable in whole or in part at any time during the term of the option. An
option may not be exercised for fractional shares of the Common Stock of the
Company. An option may only be exercised when written notice of such exercise is
presented to the Company at its principal business office by the person entitled
to exercise the option and full payment for the shares with respect to which the
person entitled to exercise has been received by the Company. The option price
may be paid cash, cash equivalents or secured notes acceptable to the Committee.
12
Until the issuance of stock certificates, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect tog the
optioned shares notwithstanding the exercise of the option. An option may be
exercised only by the optionee while he is, and has continually been an
employee, independent contractor, technical advisor or director of the Company
since the date of grant. Any options granted to an employee will terminate 90
days after his ceasing to be an employee, except in limited circumstances,
including death of the employee, and where the Committee deems it to be in the
Company's best interests not to terminate the options. No options granted under
the Non-Qualified Plan may be transferred by the optionee other than by will or
the laws of descent and distribution and each option must be exercisable, during
the lifetime of the optionee, only by such optionee.
As of July 31, 2002, 250,000 options, exercisable at $1.45 - $2.25 per
share of Common Stock had been granted to the Company's Board members and
certain consultants pursuant to the Non-Qualified Plan.
Summary of the Proposed Amendments to the Non-Qualified Plan
The amendments to the Non-Qualified Plan approved by the Company's Board of
Directors and being submitted for approval to the Company's stockholders are as
follows:
1. The Committee may at any time and from time to time alter, amend,
suspend or terminate the Non-Qualified Plan in whole or in part,
provided however, that (i) any amendment which must be approved by the
stockholders of the Company to comply with applicable law, shall not
be effective unless and until such stockholder approval has been
obtained in compliance with such law, and (ii) provisions of the
Non-Qualified Plan which govern the amount, price or timing of the
award of an option shall not be amended more than once every six
months. No amendment or termination shall, without the written consent
of the holder of a stock option therefore awarded under the
Non-Qualified Plan, adversely affect the rights of such holder with
respect thereto.
2. If any stock option granted under the Non-Qualified Plan is cancelled
by mutual consent or that terminates or expires for any reason without
having been exercised in full, the number of shares subject thereto
shall be made available for purposes of the Plan.
3. The option price may be paid in the discretion of the Committee in any
combination of the following: cash, cash equivalents or secured notes
acceptable to the Committee, by arrangement with a broker which is
acceptable to the Committee where payment of the option price is made
pursuant to the an irrevocable direction to the broker to deliver all
or part of the proceeds from the sale of the option shares to the
Company by the surrender of shares of Common Stock having a fair
market value on the date of exercise equal to the option price. The
surrender of shares of Common Stock method of payment may only be used
if the shares of Common Stock have been held by the optionee for at
least six months, unless the Committee in its discretion permits the
use of shares held less than six months. The method of payment of the
exercise price of the option shall be in the sole discretion of the
Committee.
13
4. The Non-Qualified Plan termination date shall be extend until December
12, 2012, unless sooner terminated.
A copy of the amended Non-Qualified Plan is attached hereto as Exhibit A.
Board Recommendation
The Board recommends a vote FOR the approval of the amendments to the 1996
Non-Qualified Stock Plan.
PROPOSAL 3
AMENDMENT TO 1996 INCENTIVE
Stock Option Plan
The Board of Directors have unanimously approved, subject to shareholder
approval, amendments to the Company's 1996 Incentive Stock Option Plan (the
"Incentive Plan") which would (i) give the Committee the power to amend and
alter the Incentive Plan so long as the amendments do not affect any outstanding
options; (ii) provide any shares cancelled, terminated, or expired pursuant to
the Incentive Plan be made available for purposes of the Incentive Plan; (iii)
provide that the cashless exercise provision of the Incentive Plan be in the
sole discretion of the Committee; and (iv) extend the expiration date of the
Incentive Plan until December 12, 2012.
Summary of Non-Qualified Plan prior to Proposed Amendments
On November 8, 1996, the Shareholders approved the Company's Incentive
Stock Option Plan (the "Incentive Plan"). The Incentive Plan provides for the
grant of options to purchase an aggregate of not more than 700,000 shares of the
Company's Common Stock. The number of shares of the Company's Common Stock
included in the Incentive Plan may only be increased with the approval of the
Company's shareholders. The purpose of the Incentive Plan is to make options
available to management and employees of the Company in order to provide them
with a more direct stake in the future of the Company and to encourage them to
remain with the Company. The Incentive Plan provides for the granting to
management and employees of "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code").
The Incentive Plan is administered by the Committee who has discretionary
authority to (a) determine the persons to whom options shall be granted, (b)
determine the quantity of shares to be included in each option, (c) to interpret
the Incentive Plan, and (d) to promulgate such rules and regulations under the
Incentive Plan as they deem necessary and proper. The Committee may terminate
the Incentive Plan at any time. Any such termination shall not affect options
already granted and such options remain in full force and effect as if the
Incentive Plan had not been terminated. The Incentive Plan terminates upon the
14
merger or consolidation if the Company is not the surviving entity, the
dissolution or liquidation of the Company, the appointment of a trustee if a
petition has been filed for the Company's liquidation, the filing of a petition
for bankruptcy, or the sale, lease or exchange of all or substantially all of
the assets or business of the Company. The Incentive Plan terminates, if not
terminated earlier, on November 8, 2006.
The exercise price of all incentive stock options granted under the
Incentive Plan must be equal to the fair market value of such shares on the date
of grant as determined by the Committee, based on guidelines set forth in the
Incentive Plan. The exercise price may be paid in cash or (if the Incentive Plan
shall meet the requirements of rules adopted under the Securities Exchange Act
of 1934) in Common Stock or a combination of cash and Common Stock. The term of
each option and the manner in which it may be exercised will be determined by
the Committee, subject to the requirement that no option may be exercisable more
than 10 years after the date of grant. With respect to an incentive stock option
granted to a participant who owns more than 10% of the voting rights of the
Company's outstanding capital stock on the date of grant, the exercise price of
the option must be at least equal to 110% of the fair market value on the date
of grant and the option may not be exercisable more than five years after the
date of grant. The aggregate fair market value of stock subject to an option
granted to an optionee under the Incentive Plan in any calendar year shall not
exceed $100,000. The number of shares optioned to a employee or director under
the Incentive Plan shall be exercisable in whole or in part at any time during
the term of the option. An option may not be exercised for fractional shares of
the Common Stock of the Company. An option may only be exercised when written
notices of such exercise is presented to the Secretary of the Company at its
principal business office and full payment for the shares with respect to which
the person entitled to exercise the option has been received by the Company. The
option price may be paid cash, cash equivalents or secured notes acceptable to
the Committee.
Until the issuance of stock certificates, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect tog the
optioned shares notwithstanding the exercise of the option. No options granted
under the Incentive Plan may be transferred by the optionee other than by will
or the laws of descent and distribution and each option must be exercisable,
during the lifetime of the optionee, only by such optionee. Any options granted
to an employee terminates 90 days after his ceasing to be an employee, except in
limited circumstances, including death of the employee, and where the Committee
deems it to be in the Company's best interests not to terminate the options.
As of July 31, 2002, a total of 497,000 options exercisable at $1.45 to
$4.00 per share of Common Stock had been granted to employees pursuant to the
Incentive Plan.
Summary of the Proposed Amendments to the Incentive Plan
The amendments to the Incentive Plan approved by the Company's Board of
Directors and being submitted for approval to the Company's stockholders are as
follows:
15
1. The Committee may at any time and from time to time alter, amend,
suspend or terminate the Incentive Plan in whole or in part, provided
however, that (i) any amendment which must be approved by the
stockholders of the Company to comply with applicable law, shall not
be effective unless and until such stockholder approval has been
obtained in compliance with such law, and (ii) provisions of the
Incentive Plan which govern the amount, price or timing of the award
of an option shall not be amended more than once every six months. No
amendment or termination shall, without the written consent of the
holder of a stock option therefore awarded under the Incentive Plan,
adversely affect the rights of such holder with respect thereto.
2. If any option granted under the Incentive Plan is cancelled by mutual
consent or that terminates or expires for any reason without having
been exercised in full, the number of shares subject thereto shall
again be made available for purposes of the Incentive Plan.
3. The option price may be paid in the discretion of the Committee in any
combination of the following: cash, cash equivalents or secured notes
acceptable to the Committee, by arrangement with a broker which is
acceptable to the Committee where payment of the option price is made
pursuant to the an irrevocable direction to the broker to deliver all
or part of the proceeds from the sale of the option shares to the
Company by the surrender of shares of Common Stock having a fair
market value on the date of exercise equal to the option price. The
surrender of shares of Common Stock method of payment may only be used
if the shares of Common Stock have been held by the optionee for at
least six months, unless the Committee in its discretion permits the
use of shares held less than six months. The method of payment of the
exercise price of the option shall be in the sole discretion of the
Committee.
4. The Incentive Plan termination date shall be extend until December 12,
2012, unless sooner terminated.
A copy of the amended Incentive Plan is attached hereto as Exhibit B.
Board Recommendation
The Board recommends a vote FOR the approval of the amendments to the
Incentive Plan.
16
PROPOSAL 4
RATIFICATION OF SELECTION OF
ANTON COLLINS MITCHELL LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF COMPANY
On August 28, 2002, the Company's independent public accountants, Levine,
Hughes & Mithuen, Inc. (" LH&M"), resigned. LH&M advised the Company that it was
resigning as the Company's independent public accountants as a result of a
decision by LH&M's management to limit their involvement with the audit of
public companies filing periodic reports under the Securities Exchange Act of
1934, as amended.
The reports by LH&M on the Company's financial statements during the
preceding two years contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the preceding two fiscal years and through August 28, 2002, there
were no disagreements between the Company and LH&M on any matter of accounting
principles or practices, financial statement disclosure, or audit scope or
procedure, which, if not resolved to LH&M's satisfaction, would have caused LH&M
to make reference to the subject matter of the disagreements in connection with
LH&M's reports on the Company's financial statements.
During the preceding two fiscal years and through August 28, 2002, there
were no reportable events required to be disclosed pursuant to Item
304(a)(1)(v).
Pursuant to Item 304(a)(3), on August 29, 2002, LH&M furnished the Company
a letter addressed to the Securities and Exchange Commission stating it agrees
with the statements made by the Company in response to Item 304(a). A copy of
the LH&M letter was included on the Form 8-K filed on August 29, 2002 and is
incorporated herein by reference.
On August 29, 2002, the Company engaged Anton Collins Mitchell LLP, an
independent member of the BDO Seidman Alliance, as the new independent public
accountants.
The Board of Directors has selected Anton Collins Mitchell LLP as
independent public accountants of the Company for the fiscal year ending July
31, 2003, and has further directed that the Company submit the selection of
independent public accountants for ratification by shareholders at the Annual
Meeting of Shareholders.
Fees Paid to the Independent Auditors
Audit Fees
The aggregate fees billed by Anton Collins Mitchell LLP for professional
services rendered for the audit of the company's annual consolidated financial
statements for the year ended July 31, 2002 was approximately $30,000. LH&M
aggregate fees billed for professional services for the reviews of the unaudited
interim financial statements included in the company's Form 10-QSB's for the
year ended July 31, 2002 were $ 4,800. (Anton Collins Mitchell LLP and LH&M
professional services collectively referred to as "Audit Services").
17
Financial Information Systems Design and Implementation Fees
Anton Collins Mitchell LLP and LH&M did not perform any professional
services with respect to financial information systems design and implementation
for the year ended July 31, 2002 ("Technology Services").
All Other Fees
Anton Collins Mitchell LLP and LH&M did not perform any professional
services other than Audit Services for the year ended July 31, 2002.
Board Recommendation
The Board recommends a vote FOR the ratification of the selection of Anton
Collins Mitchell LLP as independent public accountants of the Company for the
fiscal year ending July 31, 2003.
GENERAL
Other Matters
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting of Shareholders other than those stated in the
Notice of Annual Meeting and referred to in this Proxy Statement. If any other
matters should properly come before the Annual Meeting, it is intended that the
proxies in the accompanying form will be voted as the persons named therein may
determine in their discretion.
Shareholder Proposals
If any shareholder of the Company intends to present a proposal for
consideration at the 2003 Annual Meeting of Shareholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's offices, 303 East Seventeenth Avenue, Suite 108,
Denver, Colorado 80203, Attention: Secretary, not later than July 9, 2003.
By Order of the Board of Directors
/s/ Thomas V. Geimer
--------------------
Thomas V. Geimer,
Chairman of the Board
18
EXHIBIT A
ACCELR8 TECHNOLOGY CORPORATION
AMENDED NON-QUALIFIED STOCK OPTION PLAN
December 12, 2002
1. Purpose. The purpose of the Accelr8 Technology Corporation Non-Qualified
Stock Option Plan (the "Plan") is to promote the growth and general prosperity
of Accelr8 Technology Corporation (herein called the "Company") and its
subsidiaries by permitting the Company to grant options to purchase shares of
its Common Stock ("Options"), to attract and retain the best available personnel
for positions of substantial responsibility and to provide certain key
employees, independent contractors, technical advisors and directors of the
Company with an additional incentive to contribute to the success of the
Company.
2. Administration and Operation of the Plan. The Plan shall be administered
by the Compensation Committee of the Board or any committee of the Board
performing similar functions, as appointed from time to time by the Board (the
"Committee"). The Committee shall be constituted so as to permit the Plan to
comply with Rule 16b-3 promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended ("Rule
16b-3"). The Plan is intended to qualify and operate pursuant to the provisions
of Rule 16b-3 as in effect at this time or in compliance with any amendments
adopted to that Rule in the future or in compliance with any successor rule
adopted by the Commission.
The Committee shall administer the Plan, and shall have discretionary
authority to (a) determine the persons to whom Options shall be granted, (b)
determine the quantity of shares to be included in each Option, (c) interpret
the Plan, and (d) promulgate such rules and regulations under the Plan as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
3. Eligibility. Upon the terms and conditions hereafter set forth, the
Committee may grant on behalf of the Company, options (the "Options" or,
individually, an "Option") to purchase shares of the Company's common stock to
any key employee, independent contractor, technical advisor or director of the
Company or any of its subsidiaries hereinafter organized or acquired. The
Options shall be substantially in form and substance as set forth in Exhibit A.
4. Stock to be Optioned. Subject to the provisions of Section 10, the
maximum number of shares which may be optioned and sold under the Plan is Three
Hundred Thousand (300,000) shares of no par value authorized, but unissued, or
reacquired Common Stock of the Company; provided that three hundred thousand
shares shall be the number of shares available for issuance under this Plan
either after the Effective Date of the Reverse Stock Split which is contemplated
in connection with the Company's proposed public offering or if the Reverse
Stock Split is abandoned by the Board.
A-1
5. Term. The Plan shall become effective upon its adoption by the Company's
Board of Directors and by a majority of the outstanding security holders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 9.
6. Option Price. The option price for the Common Stock to be issued under
the Plan may be greater than, less than or equal to the market value of the
stock at the date of grant in the discretion of the Committee.
7. Exercise of Option.
(a) The number of shares optioned to an employee or director shall be
exercisable in whole or in part at any time during the term of the Option.
An Option may not be exercised for fractional shares of the stock of the
Company.
In the event the Company or the Shareholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock
of the Company by means of a sale, reorganization, liquidation or
otherwise, an Option shall become immediately exercisable with respect to
the full number of shares subject to that Option, notwithstanding the
preceding provisions of this Section 7(a), during the period commencing as
of the date of such agreement and ending when the disposition of assets or
stock contemplated by the agreement is consummated or the agreement is
terminated. The Company shall seek to notify Optionees in writing of any
event which may constitute such sale, reorganization, liquidation or
otherwise.
(b) An Option may only be exercised when written notice of such
exercise has been given to the Company at its principal business office by
the person entitled to exercise the Option and full payment for the shares
with respect to which the Option is exercised has been received by the
Company. The notice shall state the number of shares with respect to which
the Option is being exercised, shall contain a representation and agreement
by the Optionee substantially in the form and substance as set forth in the
investment letter attached hereto as Exhibit B, and shall be signed by the
Optionee. The option price may be paid in the sole discretion of the
Committee in any combination of the following: cash, cash equivalents or
secured notes acceptable to the Committee, by arrangement with a broker
which is acceptable to the Committee where payment of the option price is
made pursuant to the an irrevocable direction to the broker to deliver all
or part of the proceeds from the sale of the option shares to the Company
by the surrender of shares of Common Stock having a fair market value on
the date of exercise equal to the option price. The surrender of shares of
Common Stock method of payment may only be used if the shares of Common
Stock have been held by the optionee for at least six months, unless the
Committee in its discretion permits the use of shares held less than six
months. The method of payment of the exercise price of the option shall be
in the sole discretion of the Committee. Until the issuance of stock
certificates, no right to vote or receive dividends or any other rights as
a Shareholder shall exist with respect to the optioned shares
notwithstanding the exercise of the Option. No adjustment will be made for
a dividend or other rights for which the record date is prior to the date
the stock certificate is issued except as provided in Section 10.
A-2
(c) An Option may be exercised by the Optionee only while he is, and
has continually been since the date of the grant of the Option, an
employee, independent contractor, technical advisor or director of the
Company, its subsidiaries, its parent or its successor companies, except
that to the extent that installments have accrued and remain unexercised on
the date of the Optionee's death, such Option of the deceased Optionee may
be exercised within one year after the death of such Optionee, but in no
event later than five years after the date of grant of such Option, by (and
only by) the person or persons to whom his rights under such Option shall
have passed by will or by laws of descent and distribution.
(d) An Option may be exercised in accordance with this Section 7 as to
all or any portion of the shares subject to the Option from time to time,
but shall not be exercisable with respect to fractions of a share.
(e) Any option granted under the Plan cancelled by mutual consent or
that terminates or expires for any reason without having been exercised in
full, the number of shares subject thereto shall again be made available
for purposes of the Plan.
8. Options not Transferable. Options under this Plan may not be sold,
pledged, assigned or transferred in any manner otherwise than by will or the
laws of descent or distribution, and may be exercised during the lifetime of an
Optionee only by such Optionee. Further, no Option shall be pledged or otherwise
encumbered or subject to execution, attachment or similar legal process. Any
attempted assignment, transfer, pledge, hypothecation or similar disposition of
the Option, contrary to the provisions of this Agreement, or the levy of any
execution, attachment or similar process upon the Option, shall void the Option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the Plan shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of Options
granted pursuant to this Plan shall not be transferable by the Optionee until
six months after the date of grant, unless the Committee consents to such
transfer.
9. Amendment or Termination of the Plan. The Committee may at any time and
from time to time alter, amend, suspend or terminate the Plan in whole or in
part, provided however, that (i) any amendment which must be approved by the
stockholders of the Company to comply with applicable law, shall not be
effective unless and until such stockholder approval has been obtained in
compliance with such law, and (ii) provisions of the Plan which govern the
amount, price or timing of the award of an option shall not be amended more than
once every six months. No amendment or termination shall, without the written
consent of the holder of a stock option therefore awarded under the Plan,
adversely affect the rights of such holder with respect thereto.
10. Adjustments Upon Changes In Capitalization. If all or any portion of an
Option is exercised subsequent to any stock dividend, split-up,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation, as
a result of which shares of any class shall be issued in respect of outstanding
shares of Common Stock or shares of Common Stock shall be changed into the same
or a different number of shares of the same or another class or classes, the
person or persons so exercising such an Option shall receive, for the aggregate
price payable upon such exercise of the Option, the aggregate number and class
of shares which, if shares of Common Stock (as authorized at the date of the
A-3
granting of such Option) had been purchased at the date of granting of the
Option for the same aggregate price (on the basis of the price per share
provided in the Option) and had not been disposed of, such person or persons
would be holding at the time of such exercise, as a result of such purchase and
any such stock dividend, split-up, recapitalization, combination or exchange of
shares, merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation; provided, however, that no fractional share shall
be issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued. In the
event of any such change in the outstanding Common Stock of the Company, the
aggregate number of and class of shares remaining available under the Plan shall
be that number and class which a person, to whom an Option had been granted for
all of the available shares under the Plan on the date preceding such change,
would be entitled to receive as provided in the first sentence of this Section
10.
11. Optionee as Shareholder. An Optionee shall have no rights as a
shareholder of the Company with respect to the shares of the Company' Common
Stock covered by such Option until the date of the issuance of stock
certificate(s) to him. No adjustment will be made for dividends or other rights
with respect to which the record date is prior to the date of such stock
certificate or certificates.
12. Employment of Optionee. The existence of this Plan shall not impose or
be construed as imposing upon the Company, or any parent or subsidiary of the
Company, any obligation to employ or contract for services with the Optionee for
any period of time, and shall not supersede or in any way increase the
obligations of the Company, or any parent or subsidiary of the Company, under
any employment or other contract now or hereafter existing with any Optionee.
13. Agreement and Representations of Optionee. As a condition to the
exercise of any portion 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 under the Securities Act of 1933
or any other applicable law, regulation or rule of any government agency.
14. Securities to be Unregistered. The Company shall be under no obligation
to register or assist the Optionee in registering either the Options or the
Common Stock covered by an Option under the federal securities law or any state
securities law, and both the Options and all Common Stock issuable thereunder
shall be "restricted securities" as defined in Rule 144 of the General Rules and
Regulations of the Securities Act of 1933 (the "Act"), and may not be offered
for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which is to be established to
the satisfaction of the Company. Accordingly, all certificates evidencing shares
covered by the Option, and any securities issued and replaced or exchanged
therefor, shall bear a restrictive legend to this effect.
15. Reservation of Shares of Common Stock. The Company, during the term of
this Plan, will at all times reserve and keep available, and will seek or obtain
from any regulatory body having jurisdiction, any requisite authority in order
to issue and sell such number of shares of its Common Stock as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain from any regulatory body having jurisdiction authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any shares
of its stock hereunder, shall relieve the Company of any liability in respect of
the non-issuance or sale of such stock as to which such requisite authority
shall not have been obtained.
A-4
16. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Colorado.
17. Definitions. As used herein, the following definitions shall apply:
(a) "Common Stock" shall mean Common Stock, no par value of the
Company.
(b) "Continuous Employment" shall mean employment without
interruption, by any one or more of the Company, its parent, its
subsidiaries and its successor companies. Employment shall not be
considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Company or in the case of transfers
between payroll locations of the Company or among the Company, its parent,
its subsidiaries or its successor companies.
(c) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended.
(d) "Option" shall mean a stock option granted pursuant to the Plan.
(e) "Parent" shall mean a "parent corporation" as defined in Section
425(e) and (g) of the Internal Revenue Code.
(f) "Plan" shall mean the Nonstatutory Stock Option Plan of the
Company.
(g) "Shareholders" shall mean the holders of outstanding shares of the
Company's Common Stock.
(h) "Subsidiary" shall mean a "subsidiary corporation" as defined in
Section 425(f) and (g) of the Internal Revenue Code.
(i) "Successor Company" means any company which acquires all or
substantially all of the stock or assets of the Company.
A-5
IN WITNESS WHEREOF, the Board of Directors has adopted this Plan this 30th
day of October, 2002.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:
--------------------------------
Harry J. Fleury, President
ATTEST:
------------------------------------
Thomas V. Geimer. Secretary
The Shareholders approved this Plan on ________________, 2002.
A-6
EXHIBIT B
ACCELR8 TECHNOLOGY CORPORATION
AMENDED INCENTIVE STOCK OPTION PLAN
December 12, 2002
1. Purpose of the Plan. The Accelr8 Technology Corporation Incentive Stock
Option Plan (the "Plan") is intended to provide additional incentive to key
employees of Accelr8 Technology Corporation (the "Company") and encourage their
stock ownership.
2. Eligible Employees. All officers and employees of the Company shall be
eligible to participate in the Plan.
3. Reservation of Option Stock. The Board of Directors of the Company (the
"Board") shall reserve seven hundred thousand (700,000) of the authorized but
unissued shares of the Company's no par value common stock (the "Common Stock")
for issuance upon the exercise of the options (the "Option Stock"). Such number
of shares shall be the aggregate number of shares which may be issued under
Options granted pursuant to this Plan; provided that seven hundred thousand
shares shall be the number of shares available for issuance under this Plan
either after the Effective Date of the Reverse Stock Split which is contemplated
in connection with the Company's proposed public offering or if the Reverse
Stock Split is abandoned by the Board.
4. Administration and Operation of the Plan. The Plan shall be administered
by the Compensation Committee of the Board or any committee of the Board
performing similar functions, as appointed from time to time by the Board (the
"Committee"). The Committee shall be constituted so as to permit the Plan to
comply with Rule 16b-3 promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended ("Rule
16b-3"). The Plan is intended to qualify and operate pursuant to the provisions
of Rule 16b-3 as in effect at this time or in compliance with any amendments
adopted to that Rule in the future or in compliance with any successor rule
adopted by the Commission.
The Committee shall administer the Plan, and shall have discretionary
authority to (a) determine the persons to whom Options shall be granted, (b)
determine the quantity of shares to be included in each Option, (c) interpret
the Plan, and (d) promulgate such rules and regulations under the Plan as they
may deem necessary and proper. Decisions made by the Committee within their
discretionary authority shall be final and conclusive as to all parties and
shall not be subject to review.
5. Options. Upon the terms and conditions hereinafter set forth, the
Committee may grant on behalf of the Company options (the "Options" or,
individually, an "Option") to purchase shares of Common Stock to eligible
employees (the "Optionees" or, individually, the "Optionee"). The Options shall
be substantially in form and substance as set forth in Exhibit A.
6. Exercise Price. The exercise price of each Option shall be not less than
the fair market value of the Common Stock on the date of grant; provided,
however, that if the amount of stock owned by the Optionee is more than ten
percent (10%) of the total combined voting power of all classes of capital stock
B-1
of the Company as of the date of grant, the exercise price of each Option shall
be not less than one hundred ten percent (110%) of the fair market value of the
Common Stock on the date of grant. Fair market value for purposes of this
Section 6 shall be defined as the closing bid price on the date of grant, or if
there was no trading on the date of grant, then the closing bid price on the
last trading date prior to the date of grant, or, if none, then the price of the
last sale of stock, or as determined by the Committee.
7. Terms of Options. The term of an Option shall be for a period of no more
than ten (10) years from the date of grant of such Option, provided, however,
that if the amount of stock owned by the Optionee is more than ten percent (10%)
of the total combined voting power of all classes of capital stock of the
Company as of the date of grant the term of an Option shall be for a period of
no more than five (5) years from the date of grant of such Option. Any option
granted under the Plan cancelled by mutual consent or that terminates or expires
for any reason without having been exercised in full shall be made available for
purposes of the Plan.
8. Exercise of Options. Subject to Section 14 hereof, an Option shall be
exercisable in whole or in part by written notice delivered to and received by
the Secretary of the Company at its principal office, any time during the term
of the Option. In no case, however, may an Option under this Plan be exercised
if there remains on the date of exercise an incentive stock option which was
granted before the granting of such Option to such Optionee to purchase stock in
the Company or in a corporation which (at the time of the granting of such
option) is a parent or subsidiary corporation of the Company, or in a
predecessor corporation of any such corporations.
The notice shall state the number of shares with respect to which the
Option is being exercised, shall contain a representation and agreement by the
Optionee substantially in the form and substance as set forth in the investment
letter attached hereto as Exhibit B, and shall be signed by the Optionee. The
option price may be paid in the sole discretion of the Committee in any
combination of the following: cash, cash equivalents or secured notes acceptable
to the Committee, by arrangement with a broker which is acceptable to the
Committee where payment of the option price is made pursuant to the an
irrevocable direction to the broker to deliver all or part of the proceeds from
the sale of the option shares to the Company by the surrender of shares of
Common Stock having a fair market value on the date of exercise equal to the
option price. The surrender of shares of Common Stock method of payment may only
be used if the shares of Common Stock have been held by the optionee for at
least six months, unless the Committee in its discretion permits the use of
shares held less than six months. The method of payment of the exercise price of
the option shall be in the sole discretion of the Committee.
In the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, reorganization or liquidation, or otherwise, an
Option shall become immediately exercisable with respect to the full number of
shares subject to that Option, notwithstanding the preceding provisions of this
Section 8, during the period commencing as of the date of such agreement and
ending when the disposition of assets or stock contemplated by the agreement is
consummated or the agreement is terminated. The Company shall seek to notify
Optionees in writing of any event which may constitute such sale,
reorganization, liquidation or otherwise.
B-2
The Option shall not be exercised at any time when its exercise, or the
delivery of shares referred to in the notice, would, in the opinion of the
Company, constitute the violation of any law, governmental regulation or ruling.
During the Optionee's lifetime, the Option shall be exercisable only by the
Optionee or, in the event of the Optionee's incapacity, by his guardian or other
legal representative.
9. Securities to be Unregistered. The Company shall be under no obligation
to register or assist the Optionee in registering either the Options or the
Option Stock under the federal securities law or any state securities law and
both the Options and all Option Stock shall be "restricted securities" as
defined in Rule 144 of the General Rules and Regulations of the Securities Act
of 1933 (the "Act"), and may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under the
Act, or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the Company.
Accordingly, all certificates evidencing shares covered by the Option, and any
securities issued and replaced or exchanged therefor, shall bear a restrictive
legend to this effect.
10. Assignment or Transfer. No Option may be assigned or transferred other
than by will or under the laws of descent and distribution, and no Option shall
be pledged or otherwise encumbered or subject to execution, attachment or
similar legal process. In the event of the death of an Optionee, his Option may
be exercised during its term by the person designated in the will of the
Optionee, or, if no testamentary disposition was made, by the legal
representative of the Optionee, within one (1) year following his death;
provided, however, such Option shall only be exercisable if it was exercisable
according to the terms hereof on the date of the Optionee's death. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option,
contrary to the provisions of this Agreement, or the levy of any execution,
attachment or similar process upon the Option, shall void the Option.
Notwithstanding the above, any "derivative security," as such term is defined
under Rule 16b-3, issued under the Plan shall be transferable by the Optionee
only to the extent such transfer is not or would not be prohibited by Rule
16b-3. In addition, the shares of Common Stock acquired upon exercise of Options
granted pursuant to this Plan shall not be transferable by the Optionee until
six months after the date of grant, unless the Committee consents to such
transfer.
11. Optionee as Shareholder. An Optionee shall have no rights as a
shareholder of the Company with respect to the shares of Option Stock covered by
an Option until the date of the issuance of stock certificate(s) to him. No
adjustment will be made for dividends or other rights with respect to which the
record date is prior to the date of such stock certificate or certificates.
12. Adjustment for Changes in Capital Structure. In the event of a change
in the capital structure of the Company as a result of any stock dividend, stock
split, combination or reclassification of shares, recapitalization, merger,
consolidation or reorganization, the number of shares covered by the Options
granted pursuant to this Plan shall be appropriately adjusted by the Committee,
whose determination shall be final.
13. Employment of Optionee. Except as otherwise provided in this Agreement,
the Optionee may not exercise any Option unless the Optionee has been
continuously employed with the Company, a parent or subsidiary, from the date of
grant to and including the later of the date of exercise or three months
following the termination of the employee's employment.
B-3
The existence of this Plan shall not impose or be construed as imposing
upon the Company, or any parent or subsidiary of the Company, any obligation to
employ the Optionee for any period of time, and shall not supersede or in any
way increase the obligations of the Company, or any parent or subsidiary of the
Company, under any employment contract now or hereafter existing with any
Optionee.
14. Amendment and Termination.
The Committee may at any time and from time to time alter, amend, suspend
or terminate the Plan in whole or in part, provided however, that (i) any
amendment which must be approved by the stockholders of the Company to comply
with applicable law, shall not be effective unless and until such stockholder
approval has been obtained in compliance with such law and, (ii) provisions of
the Plan which govern the amount, price or timing of the award of an option
shall not be amended more than once every six months. No amendment or
termination shall, without the written consent of the holder of a stock option
therefore awarded under the Plan, adversely affect the rights of such holder
with respect thereto.
The Plan may be terminated at any time by action of the Committee, but in
all events this Plan shall terminate ten (10) years from the date of its
approval by the shareholders of the Company, or from its adoption by the Board,
whichever is earlier, and no Options shall be granted under the Plan after such
termination, although Options granted prior to such termination may continue to
be exercised after such date in accordance with the terms hereof. The Plan shall
also terminate upon (a) the merger or consolidation of the Company with one or
more other corporations in which the Company is not the surviving corporation,
(b) the dissolution or liquidation of the Company, (c) the appointment of a
receiver for all, or substantially all, of the assets or business of the
Company, (d) the appointment of a trustee for the Company after a petition has
been filed for the Company's liquidation under applicable statutes, (e) the
filing of a petition in bankruptcy on behalf of the Company under applicable
statutes, or (f) the sale, lease or exchange of all, or substantially all, of
the assets or business of the Company. The Company shall notify an Optionee in
writing thirty (30) days prior to the happening of any of the events described
in clauses (a) through (f) of the preceding sentence.
15. Limitation. The aggregate fair market value (determined on the date the
Option is granted) of stock subject to an Option granted to an Optionee in any
calendar year shall not exceed $100,000.
16. Amendment. No material change or modification of this Plan shall be
valid unless in writing and approved by the Committee, the Company's
shareholders and each Optionee affected by such change.
17. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Colorado.
B-4
IN WITNESS WHEREOF, the Board of Directors has adopted this amended Plan
this 30th day of October, 2002.
ACCELR8 TECHNOLOGY CORPORATION
(The "Company")
By:
--------------------------------
Harry J. Fleury, President
ATTEST:
------------------------------------
Thomas V. Geimer. Secretary
The Shareholders approved this Plan on ____________, 2002.
B-5
ACCELR8 TECHNOLOGY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
December 12, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of ACCELR8 TECHNOLOGY CORPORATION, a Colorado
corporation (the "Company"), acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, dated November 6, 2002, and hereby
appoints Thomas V. Geimer and Henry F. Schlueter, or either of them, each with
the power of substitution, as Attorneys and Proxies to represent and vote all
shares of Common Stock of the Company which the undersigned would be entitled to
vote at the Annual Meeting of Shareholders and at any adjournment or
adjournments thereof, hereby revoking any proxy or proxies heretofore given and
ratifying and confirming all that said Attorneys and Proxies may do or cause to
be done by virtue thereof with respect to the following matters:
1. Election of each of the following three (3) persons to serve as
directors of the Corporation until the next Annual Meeting of
Shareholders and thereafter until their successors shall have been
elected and qualified:
Thomas V. Geimer
FOR /___/ AGAINST /___/ ABSTAIN /___/
David C. Wilhelm
FOR /___/ AGAINST /___/ ABSTAIN /___/
A. Alexander Arnold III
FOR /___/ AGAINST /___/ ABSTAIN /___/
2. Approval of amendments to the Company's 1996 Non-Qualifed Stock Option
Plan.
FOR /___/ AGAINST /___/ ABSTAIN /___/
3 Approval of amendments to the Company's 1996 Incentive Stock Option
Plan.
FOR /___/ AGAINST /___/ ABSTAIN /___/
4 Ratification of the selection of Anton Collins Mitchell LLP as the
independent public accountants of the Company for the fiscal year
ending July 31, 2003.
FOR /___/ AGAINST /___/ ABSTAIN /___/
5. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no direction
is indicated, the Proxy will be voted FOR the election of each of the nominees
listed above to the Board of Directors, FOR the proposal to amend the 1996
Non-Qualified Stock Option Plan, FOR the proposal to amend the 1996 Incentive
Stock Plan, and FOR the proposal to ratify the selection of Anton Collins
Mitchell LLP as the independent public accountants of the Company for the fiscal
year ending July 31, 2003.
Dated:________________________, 2002 ____________________________________
____________________________________
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THE LABEL ATTACHED TO THIS PROXY. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS IT
APPEARS HEREON. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AN
AUTHORIZED OFFICER AND AFFIX CORPORATE SEAL. IF A PARTNERSHIP, PLEASE SIGN IN
FULL PARTNERSHIP NAME BY AUTHORIZED PERSON. NO POSTAGE IS REQUIRED IF RETURNED
IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES.