SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[_] Preliminary Proxy Statement
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CONCERO INC.
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(Name of Registrant as Specified In Its Charter)
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Notes:
[CONCERO INC LOGO]
6300 Bridgepoint Parkway, Building 3, Suite 200
Austin, Texas 78730
April 20, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 annual meeting of stockholders
of Concero Inc., which will be held at our executive offices, 6300 Bridgepoint
Parkway, Building 3, Suite 200, Austin, Texas on Wednesday, May 23, 2001 at
9:00 a.m. (Central Time).
Details of the business to be conducted at the annual meeting are given in
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.
After careful consideration, our Board of Directors has unanimously
approved the proposal set forth in the Proxy Statement and recommends that you
vote in favor of such proposal and for each of the directors nominated for
election to the Concero Inc. Board of Directors.
You may vote your shares by signing, dating, and returning the enclosed
proxy promptly in the accompanying reply envelope. Representation of your
shares at the meeting is very important. Accordingly, whether or not you plan
to attend the meeting, we urge you to submit your proxy promptly by one of the
methods offered. If you are able to attend the annual meeting and wish to
change your proxy vote, you may do so simply by voting in person at the annual
meeting.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ Timothy D. Webb
Timothy D. Webb
President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested
to complete, sign and date the enclosed proxy as promptly as possible and
return it in the enclosed envelope. No postage need be affixed if mailed in
the United States.
CONCERO INC.
6300 Bridgepoint Parkway, Building 3, Suite 200
Austin, Texas 78730
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2001
TO THE STOCKHOLDERS OF CONCERO INC.:
Notice is hereby given that the 2001 Annual Meeting of Stockholders of
Concero Inc. will be held at our executive offices, 6300 Bridgepoint Parkway,
Building 3, Suite 200, Austin, Texas on Wednesday, May 23, 2001 at 9:00 a.m.
(Central Time) for the following purposes:
1. To elect seven directors to serve until the Annual Stockholders' Meeting
in 2002, or in each case until their respective successors have been
elected and qualified;
2. To approve an amendment to our Amended and Restated 1996 Stock
Option/Stock Issuance Plan that will affect the following changes:
(i) increase the number of shares of our common stock subject to
initial option grants under the Automatic Option Grant Program from
10,000 shares to 20,000 shares; and
(ii) provide for additional option grants of 20,000 shares under the
Automatic Option Grant Program to each non-employee board member
on the date of the first annual meeting of stockholders following
such board member's completion of each four-year period of service
after joining our board.
3. To ratify the appointment of Ernst & Young LLP as our independent
auditors for the fiscal year ending December 31, 2001; and
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 30, 2001 are
entitled to notice of, and to vote at, the Annual Meeting. Our stock transfer
books will remain open between the record date and the date of the Annual
Meeting. A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection at our executive offices.
Whether or not you plan to attend the meeting in person, please sign, date
and return the enclosed proxy card in the reply envelope provided. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that
all of your shares are voted. You may revoke your proxy at any time. If you
attend the meeting and vote by ballot, your proxy will be revoked
automatically and only your vote at the meeting will be counted. The prompt
return of your proxy card will assist us in preparing for the meeting.
By Order of the Board of Directors,
/s/ Nancy A. Richardson
NANCY A. RICHARDSON
Secretary
Austin, Texas
April 20, 2001
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ACCOMPANYING PROXY STATEMENT CAREFULLY, AND VOTE YOUR SHARES
BY COMPLETING, SIGNING, AND DATING THE ENCLOSED PROXY CARD AS PROMPTLY
POSSIBLE AS AND RETURNING IT IN THE ENCLOSED ENVELOPE.
CONCERO INC.
6300 Bridgepoint Parkway, Building 3, Suite 200
Austin, Texas 78730
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2001
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Concero Inc., a Delaware corporation, for use at the Annual Meeting of
Stockholders to be held on May 23, 2001. The Annual Meeting will be held at
9:00 a.m. Central Daylight Time at our executive offices, 6300 Bridgepoint
Parkway, Building 3, Suite 200, Austin, Texas. The proxy solicitation
materials were mailed on or about April 20, 2001, to all stockholders entitled
to vote at our Annual Meeting.
Voting
The specific proposals to be considered and acted upon at our Annual
Meeting are summarized in the accompanying notice and are described in more
detail in this proxy statement. On March 30, 2001, the record date for
determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting, we had outstanding 10,165,208 shares of our common stock. Each
stockholder is entitled to one vote for each share of common stock held by
such stockholder on March 30, 2001. Stockholders may not cumulate votes in the
election of directors.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
as present for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions will be counted towards the
tabulations of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes, whereas broker non-votes will not be
counted for purposes of determining whether a proposal has been approved.
Proxies
If the enclosed form of proxy is properly signed and returned, the share
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If you sign and return your proxy without
specifying how the shares represented thereby are to be voted, the proxy will
be voted FOR the election of the directors proposed by our board unless the
authority to vote for the election of such directors is withheld and, if no
contrary instructions are given, the proxy will be voted FOR the approval of
Proposals 2 and 3 described in the accompanying notice and proxy statement.
You may revoke or change your proxy at any time before the Annual Meeting by
filing with our Corporate Secretary at our executive offices at 6300
Bridgepoint Parkway, Building 3, Suite 200, Austin, Texas, a notice of
revocation or another signed proxy with a later date. You may also revoke your
proxy by attending the Annual Meeting and voting in person.
Solicitation
We will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this proxy statement, the proxy and any
additional solicitation material furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in the names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, we may reimburse such persons for their costs in forwarding the
solicitation material to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by a solicitation by telephone, telegram
or other means by our directors, officers or employees. No additional
compensation will be paid to these individuals for any such services. We do
not presently intend to solicit proxies other than by mail.
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Deadline for Receipt of Stockholder Proposals
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholder proposals to be presented at our 2002 Annual Meeting of
Stockholders and in our proxy statement and form of proxy relating to that
meeting, must be received by us at our principal executive offices in Austin,
Texas, addressed to our Corporate Secretary, not later than December 20, 2001,
the date which 120 days prior to April 20, 2002. With respect to any
stockholder proposal not submitted pursuant to Rule 14a-8 and unless notice is
received by us in the manner specified in the previous sentence, persons
acting as proxies shall have discretionary authority to vote against any
proposal presented at our 2002 Annual Meeting of Stockholders. These proposals
must comply with applicable Delaware law, the rules and regulations
promulgated by the Securities and Exchange Commission and the procedures set
forth in our bylaws.
PROPOSAL 1
ELECTION OF DIRECTORS
General
At this Annual Meeting, we will be electing seven directors to hold office
until their term has expired at the 2002 Annual Meeting or until their
successors are duly elected and qualified. Our board currently consists of
seven directors. Each of the nominees listed below is a current director.
The nominees for election have agreed to serve if elected, and management
has no reason to believe that the nominees will be unavailable to serve. In
the event a nominee is unable or declines to serves as a director at the time
of the Annual Meeting, the proxies will be voted for any nominee who may be
designated by our present board of directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees named below.
Nominees for Director
Name Age Current Position
---- --- ----------------
Timothy D. Webb............. 40 President, Chief Executive Officer and Director
Wade E. Saadi............... 51 Chairman of the Board
Edward C. Ateyeh, Jr........ 48 Director
Thomas A. Herring........... 50 Director
W. Frank King, Ph.D......... 61 Director
Kevin B. Kurtzman........... 53 Director
Michael J. Maples........... 58 Director
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Mr. Webb has served as President, Chief Executive and a director of Concero
since September 1, 1998. Prior to joining Concero, Mr. Webb was Vice
President, Enterprise Solutions for Syntel, Inc. From June 1995 through
February 1998, Mr. Webb was employed by Oracle Corporation, last serving as a
Regional Vice President for Oracle's Consulting Service Division. From 1983
through May 1995, Mr. Webb was employed by Andersen Consulting rising to the
level of Associate Partner before leaving to join Oracle. Mr. Webb holds a
bachelor's degree in Systems Management Engineering from Princeton University.
Mr. Saadi has served on our board of directors since October 1, 1996. He is
the founder of Pencom Systems Incorporated, a privately held New York
corporation and has served as its President and Chief Executive Officer since
its inception in 1973. In 1996, Mr. Saadi won the Technology Entrepreneur of
the Year Award(R) in New York City. Mr. Saadi is a governor of the Board of
the Collectors Club and a regional vice president of the United States
Philatelic Classics Society. Mr. Saadi attended the Polytechnic Institute of
Brooklyn where he majored in chemical engineering.
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Mr. Ateyeh has served on our board of directors since October 1, 1996. He
is presently an Executive Vice President of Pencom Systems Incorporated, where
he has been employed since 1977. Mr. Ateyeh served as President of Pencom's
software division, the predecessor to Concero, from 1989 to 1992. In 1994, Mr.
Ateyeh founded Collective Technologies, Pencom's system management consulting
division where he currently serves as President and Chief Executive Officer.
Mr. Ateyeh is a board member of the Economic Development Council of the
Greater Austin Chamber of Commerce, a member of the Austin Community College
Software Industry Advisory Council, as well as the Austin Software Council's
President/CEO Peer Group. Mr. Ateyeh earned a Bachelor of Science degree from
the University of Notre Dame.
Mr. Herring has served on our board of directors since January 1997. Since
October 1998, he has served as a Partner in Polaris Venture Partners. From
December 1997 to October 1998, Mr. Herring served as Senior Vice President of
Compuware Corp., which acquired Numega Technologies, Inc. From May 1996 to
December 1997, Mr. Herring served as Chief Executive Officer of Numega
Technologies, Inc. From July 1995 to May 1996, Mr. Herring was Vice President
of Corporate Marketing of Sybase, Inc., a software company. Mr. Herring was
selected as the 1995 Software Industry Sales and Marketing Executive of the
Year by Upside Magazine. He serves on the board of directors of several
companies, including Allaire Corporation and Incentive Systems. Mr. Herring
holds a bachelor's degree in marketing and a master's degree in mathematics
from Texas Tech University.
Dr. King has served on our board of directors since October 1, 1996. From
1992 to September 1, 1998, Dr. King served as our President and CEO. From 1988
to 1992, Dr. King was Senior Vice President of the Software Business group of
Lotus, a software publishing company. Prior to joining Lotus, Dr. King was
with IBM, a technology company, for 19 years, where his last position was Vice
President of Development for the Personal Computing Division. Dr. King serves
on the boards of directors of several companies, including Natural
Microsystems, Inc., Eon Communications, Inc. and Perficient Inc. Dr. King
earned a doctorate in electrical engineering from Princeton University, a
master's degree in electrical engineering from Stanford University, and a
bachelor's degree in electrical engineering from the University of Florida.
Mr. Kurtzman has served on our board of directors since December 1996. He
is presently the Chief Financial Officer of Pencom, a position he has held
since July 1997. Prior to that, Mr. Kurtzman had been with Margolin, Winer &
Evens LLP, a certified public accounting firm, since 1972 and was a Partner
and a member of its executive committee and an Audit and Business Advisory
Partner. Mr. Kurtzman is a former officer and director of CPA Associates
International. Mr. Kurtzman received a bachelor's degree in accounting from
Queens College of the City University of New York.
Mr. Maples has served on our board of directors since December 1996. Mr.
Maples held several positions with Microsoft, a technology company, from April
1988 through July 1995, where his last position was Executive Vice President
of Worldwide Products. Prior thereto, Mr. Maples held various positions with
IBM over the course of 23 years, the last of which was Director of Software
Strategy. Mr. Maples serves on the boards of directors of Lexmark
International Inc., Mission Critical Software and J.D. Edward and Company. Mr.
Maples holds a master's degree from Oklahoma City University and a bachelor's
degree in electrical engineering from the University of Oklahoma.
Board Meetings and Committees
In 2000, our board of directors met nine times and acted a number of times
by written consent. Each of the incumbent directors attended at least 75% of
the aggregate of (i) the total meetings of the board and (ii) the total number
of meetings held by all committees of the board on which they served.
Compensation Committee
The current members of the compensation committee are Messrs. Saadi Ateyeh,
and King. The compensation committee of the board of directors determines the
salaries and incentive compensation of our officers and provides
recommendations for the salaries and incentive compensation of our employees
and the
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consultants. The compensation committee also administers various incentive
compensation, stock and benefit plans. The compensation committee had no
meetings in 2000 but acted a number of times by written consent.
Audit Committee
The audit committee currently consists of three non-employee directors,
Messrs. Herring, Kurtzman and Maples. The audit committee reviews, act on and
reports to the board of directors with respect to various auditing and
accounting matters, including the selection of our independent accountants,
the scope of the annual audits, fees paid to the independent accountants, the
performance of our independent accountants and our accounting practices. The
Board has adopted and approved a charter for the audit committee, a copy of
which is attached hereto as Appendix A. During 2000, the audit committee held
four meetings.
The board has determined that Messrs. Herring and Maples are "independent"
as that term is defined in Rule 4200 of the listing standards of the National
Association of Securities Dealers (the "NASD"). The board has been unable to
affirmatively determine that Mr. Kurtzman is "independent" as that term is
defined in Rule 4200. Mr. Kurtzman is currently the Chief Financial Officer of
Pencom Systems Incorporated, a privately held corporation. Prior to October
1996, we conducted our business and operations as the software division of
Pencom. In October 1996, Pencom distributed all of the capital stock of
Concero to Pencom's stockholders at that time. As a result of this
transaction, the three largest stockholders of Pencom, Edward C. Ateyeh, Jr.,
Wade E. Saadi and Edgar G. Saadi, received shares of our common stock and, as
of March 30, 2001, collectively owned approximately 48.73% of the outstanding
shares of our common stock. In addition, Messrs. Ateyeh and Wade Saadi serve
as directors. Due to the significant stock ownership of Messrs. Ateyeh, Saadi
and Saadi in both Pencom and Concero and the service of Messrs. Ateyeh and
Wade Saadi as directors of Concero, the NASD may find that Pencom and Concero
are under the common control of Messrs. Ateyeh, Saadi and Saadi and, as a
result, may deem that Pencom and Concero are affiliates. If such determination
were made, Mr. Kurtzman's position as Chief Financial Officer of Pencom would
preclude him from being considered "independent" under the NASD rules.
Although Mr. Kurtzman may not qualify as "independent" under the NASD
listing standards, the board has determined that Mr. Kurtzman's membership on
the audit committee is required by the best interests of Concero and its
stockholders. Mr. Kurtzman has significant experience with financial
statements and financial reporting matters. In addition to his experience as
the Chief Financial Officer of Pencom from July 1997 to the present, Mr.
Kurtzman was a partner with Margolin, Winer & Evans LLP, a certified public
accounting firm, which he joined in 1972 as well as a member of the Executive
Committee. Mr. Kurtzman is also a former officer and director of CPA
Associates International. Mr. Kurtzman has an in-depth knowledge of our
financial reporting matters due to his involvement with our audit committee
since October, 1996. Consequently, the board has determined that Mr. Kurtzman
shall serve on the audit committee pursuant to the exception provided in
Rule 4350(d)(2)(B) of the NASD listing standards.
We do not have a standing nominating committee or any other committee
performing similar functions. Such matters are considered at meetings of the
full board of directors.
Director Compensation and Indemnification Agreements
We pay each of our non-employee directors $3,750 per calendar quarter,
which may be in the form of cash or, at the discretion of each eligible
director, may be applied to the acquisition of an option to purchase common
stock pursuant to the Director Fee Option Grant Program in effect under our
1996 Stock Option/Stock Issuance Plan. Under the Automatic Option Grant
Program each individual who first becomes a non-employee director after June
15, 1997 automatically receives, at the time of such initial election or
appointment, a stock option grant for 10,000 shares of common stock. In
addition, on the date of each annual stockholders meeting, each individual who
is re-elected as a non-employee director is eligible to receive an option
grant for 4,000 shares of common stock, provided such individual has served on
the board for at least six months. Each option grant will
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have an exercise price equal to the fair market value of the option shares on
the grant date and will have a maximum term of ten years, subject to earlier
termination upon the optionee's cessation of board service. Non-employee
directors are members of the board of directors who are not employees of
Concero.
On May 1, 2000, each of Messrs. Saadi, Ateyeh, Herring, King, Kurtzman, and
Maples received a stock option grant to purchase 4,000 shares of our common
stock at an exercise price of $3.50. Following this year's Annual Meeting,
each of Messrs. Saadi, Ateyeh, Herring, King, Kurtzman and Maples will receive
an option to purchase 24,000 shares of our common stock at an exercise price
equal to the fair market value per share (closing selling price) of our common
stock on the date of the Annual Meeting.
Our certificate of incorporation limits the liability of our directors to
us and our stockholders for breaches of the directors' fiduciary duties to the
fullest extent permitted by Delaware law. In addition, our certificate of
incorporation and bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. We also maintain
directors' and officers' liability insurance and enter into indemnification
agreements with all of our directors and executive officers.
The board of directors unanimously recommends that the stockholders vote
FOR the election of all of the nominees listed above.
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE
AMENDED AND RESTATED 1996 STOCK OPTION/STOCK ISSUANCE PLAN
You are being asked to approve an amendment to our Amended and Restated
1996 Stock Option/Stock Issuance Plan (the "Plan") that will affect the
following changes:
1. increase the number of shares of our common stock subject to initial
option grants under the Automatic Option Grant Program from 10,000
shares to 20,000 shares; and
2. provide for additional option grants of 20,000 shares under the
Automatic Option Grant Program to each non-employee board member on the
date of the first annual meeting of stockholders following such board
member's completion of each four-year period of service after joining
our board.
The board of directors adopted the amendment on April 18, 2001, subject to
stockholder approval at this Annual Meeting.
The board believes the amendment is necessary to assure that the option
grants to our non-employee board members are more in line with industry
standards and those granted to non-employee board members of comparable
companies. We rely significantly on equity incentives in the form of stock
option grants in order to attract and retain highly qualified individuals to
serve on our board and believes that such equity incentives are necessary for
us to remain competitive in the marketplace for executive talent.
The following is a summary of the principal features of the Plan, as most
recently amended. Any stockholder of Concero who wishes to obtain a copy of
the actual plan document may do so upon written request to the us at 6300
Bridgepoint Parkway, Building 3, Suite 200, Austin, Texas 78730.
Equity Incentive Programs
The Plan consists of four separate equity incentive programs: (i) the
Discretionary Option Grant Program, (ii) the Stock Issuance Program, (iii) the
Automatic Option Grant Program for non-employee board members and (iv) the
Director Fee Option Grant Program for such board members. The principal
features of each program are described below. The compensation committee of
our board has the exclusive authority to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to option grants and stock
issuances made to our executive officers and non-employee board members and
also has the authority to make option grants and
5
stock issuances under those programs to all other eligible individuals.
However, our board may at any time appoint a secondary committee of one or
more board members to have separate but concurrent authority with the
compensation committee to make option grants and stock issuances under those
two programs to individuals other than our executive officers and non-employee
board members.
The term Plan Administrator, as used in this summary, will mean the
compensation committee and any secondary committee, to the extent each such
entity is acting within the scope of its administrative jurisdiction under the
Plan. However, neither the compensation committee nor any secondary committee
exercises any administrative discretion under the Automatic Option Grant and
Director Fee Option Grant Programs. All grants under those programs are made
in strict compliance with the express provisions of such programs.
Share Reserve
At present, there is a total of 5,028,009 shares of common stock reserved
in the aggregate for issuance over the term of the Plan. Such share reserve
consists of (i) the 1,715,000 shares initially reserved for issuance under the
Plan, (ii) 2,500,000 shares of common stock, of which 1,000,000 shares,
500,000 shares and 1,000,000 shares were each added to the Plan as previously
approved by the board and our stockholders in connection with the 1998, 1999
and 2000 annual meeting of stockholders, respectively, plus (iii) the
additional 813,009 shares of common stock added to the reserve on January 2,
2001 pursuant to the automatic share increase provisions of the Plan. In
addition, on the first trading day of each calendar year during the term of
the Plan, the number of shares of common stock available for issuance under
the Plan will automatically increase by an amount equal to eight percent (8%)
of the total number of shares of common stock outstanding on the last trading
day in December of the preceding calendar year, but in no event will any such
annual increase exceed 2,000,000 shares of common stock.
No participant in the Plan may receive option grants, separately
exercisable stock appreciation rights or direct stock issuances for more than
750,000 shares of common stock in the aggregate per calendar year. Stockholder
approval of this Proposal will also constitute a reapproval of the 750,000-
share limitation for purposes of Internal Revenue Code Section 162(m).
The shares of common stock issuable under the Plan may be drawn from shares
of our authorized but unissued shares of common stock or from shares of common
stock reacquired by us, including shares repurchased on the open market.
In the event any change is made to the outstanding shares of common stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without our receipt of consideration, appropriate adjustments will be made to
the securities issuable (in the aggregate and per participant) under the Plan
and the securities and the exercise price per share in effect under each
outstanding option.
Eligibility
Officers and employees, non-employee board members and independent
consultants in the service of Concero or our parent and subsidiaries (whether
now existing or subsequently established) are eligible to participate in the
Discretionary Option Grant and Stock Issuance Programs. Non-employee members
of the board are also eligible to participate in the Automatic Option Grant
and Director Fee Option Grant Programs.
As of March 31, 2001, eight executive officers, six non-employee board
members and approximately 353 other employees and consultants were eligible to
participate in the Discretionary Option Grant and Stock Issuance Programs. The
six non-employee board members were also eligible to participate in the
Automatic Option Grant and Director Fee Option Grant Programs.
Valuation
The fair market value per share of common stock on any relevant date under
the Plan will be deemed to be equal to the closing selling price per share on
that date on the Nasdaq National Market. On March 31, 2001 the fair market
value per share determined on such basis was $1.66.
6
Discretionary Option Grant Program
The Plan Administrator has complete discretion under the Discretionary
Option Grant Program to determine which eligible individuals are to receive
option grants, the time or times when those grants are to be made, the number
of shares subject to each such grant, the status of any granted option as
either an incentive stock option or a non-statutory option under the federal
tax laws, the vesting schedule (if any) to be in effect for the option grant
and the maximum term for which any granted option is to remain outstanding.
Each granted option will have an exercise price per share no less than the
fair market value of the option shares on the grant date unless otherwise
determined by the Plan Administrator. No granted option will have a term in
excess of ten (10) years, and the option will generally become exercisable in
one or more installments over a specified period of service measured from the
grant date. However, one or more options may be structured so that they will
be immediately exercisable for any or all of the option shares. However, the
shares acquired under those options will be subject to repurchase by us, at
the exercise price paid per share, if the optionee ceases service with us
prior to vesting in those shares.
Upon cessation of service, the optionee will have a limited period of time
in which to exercise any outstanding option to the extent exercisable for
vested shares. The Plan Administrator has complete discretion to extend the
period following the optionee's cessation of service during which his or her
outstanding options may be exercised and/or to accelerate the exercisability
or vesting of such options in whole or in part. Such discretion may be
exercised at any time while the options remain outstanding, whether before or
after the optionee's actual cessation of service.
The Plan Administrator is authorized to issue tandem stock appreciation
rights under the Discretionary Option Grant Program, which provide the holders
with the right to surrender their options for an appreciation distribution
from us equal to the excess of (i) the fair market value of the vested shares
of common stock subject to the surrendered option over (ii) the aggregate
exercise price payable for such shares. Such appreciation distribution may, at
the discretion of the Plan Administrator, be made in cash or in shares of
common stock.
The Plan Administrator also has the authority to effect the cancellation of
any or all options outstanding under the Discretionary Option Grant Program
and to grant, in substitution therefor, new options covering the same or a
different number of shares of common stock but with an exercise price per
share based upon the fair market value of the option shares on the new grant
date.
Stock Issuance Program
Shares of common stock may be issued under the Stock Issuance Program at a
price per share no less than fair market value unless otherwise determined by
the Plan Administrator. Shares will be issued and for such valid consideration
as the Plan Administrator deems appropriate, including cash and promissory
notes. The shares may also be issued as a bonus for past services without any
cash outlay required of the recipient. The shares issued may be fully vested
upon issuance or may vest upon the completion of a designated service period
or the attainment of pre-established performance goals. The Plan Administrator
has, however, the discretionary authority at any time to accelerate the
vesting of any and all unvested shares outstanding under the Stock Issuance
Program.
Automatic Option Grant Program
Grants
Under the Automatic Option Grant Program, eligible non-employee board
members receive a series of option grants over their period of board service.
Each non-employee board member will, at the time of his or her initial
election or appointment to the board, receive an option grant for 20,000
shares of common stock, provided such individual has not previously been in
our employ. On the date of the first annual stockholders meeting following the
fourth anniversary of the date on which a non-employee board member joined our
board and
7
following each four-year period of board service thereafter, he or she will
receive an option for 20,000 shares of common stock, provided he or she will
continue to serve as a non-employee board member. In addition, on the date of
each Annual Meeting, each individual who is to continue to serve as a non-
employee board member will automatically be granted an option to purchase
4,000 shares of common stock, provided he or she has served as a non-employee
board member for at least six months. There will be no limit on the number of
4,000-share option grants any one eligible non-employee board member may
receive over his or her period of continued board service.
Stockholder approval of this Proposal will also constitute pre-approval of
each option granted under the Automatic Option Grant Program after the date of
the Annual Meeting and the subsequent exercise of that option in accordance
with the terms of the program summarized below.
Each automatic grant will have an exercise price per share equal to the
fair market value per share of common stock on the grant date and will have a
maximum term of 10 years, subject to earlier termination following the
optionee's cessation of board service. Each automatic option will be
immediately exercisable for all of the option shares; however, any unvested
shares purchased under such option will be subject to our repurchase, at the
exercise price paid per share, should the optionee cease board service prior
to vesting in those shares. The shares subject to each initial 20,000-share
automatic option grant and each subsequent 20,000-share automatic grant will
vest in a series of four successive equal annual installments upon the
optionee's completion of each year of board service over the four-year period
measured from the grant date. The shares subject to each annual 4,000-share
automatic grant will vest upon the optionee's completion of one-year of board
service measured from the grant date. However, the shares subject to each
outstanding automatic option grant will immediately vest in full upon certain
changes in control or ownership of Concero or upon the optionee's death or
disability while a board member. Following the optionee's cessation of board
service for any reason, each option will remain exercisable for a 12-month
period and may be exercised during that time for any or all shares in which
the optionee is vested at the time of such cessation of board service.
Director Fee Option Grant Program
Each non-employee board member has the right to apply all or a portion of
his total retainer fee otherwise payable in cash each year (currently $3,750 a
calendar quarter) to the acquisition of a special option grant under the
Director Fee Option Grant Program. The grant will automatically be made on the
first trading day in January following the filing of the option-in-lieu-of-
cash election and will have an exercise price per share equal to the fair
market value of the option shares on the grant date. The number of option
shares will be such that the value of the option (as determined by using the
Black-Scholes option valuation model) will be equal to the amount of the
retainer fee applied to the program.
Stockholder approval of this Proposal will constitute pre-approval of each
option granted pursuant to the provisions of the Director Fee Option Grant
Program after the date of the Annual Meeting and the subsequent exercise of
that option in accordance with its terms.
The option will become exercisable for fifty percent (50%) of the option
shares upon the optionee's completion of six months of board service during
the calendar year of the option grant, and the balance of the option will
become exercisable in a series of six successive equal monthly installments
upon the optionee's completion of each additional month of board service
during that calendar year. In the event the optionee ceases board service for
any reason (other than death or permanent disability), the option will
immediately terminate with respect to any unvested shares subject to the
option at the time. However, the option will remain exercisable for the vested
shares subject to the option until the earlier of (i) the expiration of the
ten-year option term or (ii) the end of the three-year period measured from
the date of the optionee's cessation of board service. Should the optionee's
service as a board member cease by reason of death or permanent disability,
then the option will immediately become exercisable for all the shares of
common stock subject to the option and may be exercised for any or all of
those shares until the earlier of (i) the expiration of the ten-year option
term or (ii) the end of the three-year period measured from the date of the
optionee's cessation of board service.
8
Limited Stock Appreciation Rights
Each option granted under the Automatic Option Grant or Director Fee Option
Grant Program will include a limited stock appreciation right. Upon the
successful completion of a hostile tender offer for more than fifty percent
(50%) of our outstanding voting securities or a change in a majority of the
board as a result of one or more contested elections for board membership,
each outstanding option under the Automatic Option Grant or Director Fee
Option Grant Program may be surrendered to us in return for a cash
distribution from us. The amount of the distribution per surrendered option
share will be equal to the excess of (i) the fair market value per share at
the time the option is surrendered or, if greater, the tender offer price paid
per share in the hostile take-over over (ii) the exercise price payable per
share under such option. In addition, the Plan Administrator may grant such
rights to our officers, as part of their option grants under the Discretionary
Option Grant Program.
Stockholder approval of this Proposal will also constitute pre-approval of
each limited stock appreciation right granted under the Automatic Option Grant
or Director Fee Option Grant Program and the subsequent exercise of that right
in accordance with the foregoing terms.
General Provisions
Acceleration
In the event that we are acquired by merger or asset sale, each outstanding
option under the Discretionary Option Grant Program that is not to be assumed
or replaced by the successor corporation or otherwise continued in effect will
automatically accelerate in full, and all unvested shares outstanding under
the Discretionary Option Grant and Stock Issuance Programs will immediately
vest, except to the extent our repurchase rights with respect to those shares
are to be assigned to the successor corporation or otherwise continued in
effect.
The Plan Administrator has authority under the Discretionary Option Grant
Program to provide that those options will automatically vest in full (i) upon
an acquisition of Concero, whether or not those options are assumed or
replaced, (ii) upon a hostile change in control of Concero effected through a
tender offer for more than 50% of our outstanding voting stock or by proxy
contest for the election of board members, or (iii) in the event the
individual's service is terminated, whether involuntarily or through a
resignation for good reason, within a designated period (not to exceed 18
months) following an acquisition in which those options are assumed or
replaced upon a hostile change in control. The vesting of outstanding shares
under the Stock Issuance Program may be accelerated upon similar terms and
conditions. The options granted under the Automatic Option Grant Program and
the Director Fee Option Grant Program will automatically accelerate and become
exercisable in full upon any acquisition or change in control transaction.
The acceleration of vesting in the event of a change in the ownership or
control of Concero may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts
to gain control of Concero.
Financial Assistance
The Plan Administrator may institute a loan program to assist one or more
participants in financing the exercise of outstanding options under the
Discretionary Option Grant Program or the purchase of shares under the Stock
Issuance Program through full-recourse interest-bearing promissory notes.
However, the maximum amount of financing provided any participant may not
exceed the cash consideration payable for the issued shares plus all
applicable taxes incurred in connection with the acquisition of those shares.
Special Tax Election
The Plan Administrator may provide one or more holders of non-statutory
options or unvested share issuances under the Plan with the right to have us
withhold a portion of the shares otherwise issuable to such individuals in
satisfaction of the withholding taxes to which such individuals become subject
in connection with
9
the exercise of those options or the vesting of those shares. Alternatively,
the Plan Administrator may allow such individuals to deliver previously
acquired shares of common stock in payment of such withholding tax liability.
Amendment and Termination
The board may amend or modify the Plan at any time, subject to any required
stockholder approval pursuant to applicable laws and regulations. Unless
sooner terminated by the board, the Plan will terminate on the earliest of (i)
October 1, 2006, (ii) the date on which all shares available for issuance
under the Plan have been issued as fully-vested shares or (iii) the
termination of all outstanding options in connection with certain changes in
control or ownership of Concero.
Stock Awards
The table below shows, as to our Chief Executive Officer, the four other
most highly compensated executive officers of Concero (with base salary and
bonus for the past fiscal year in excess of $100,000) and the other
individuals and groups indicated, the number of shares of common stock subject
to option grants made under the Plan from January 1, 2000 through March 30,
2001, together with the weighted average exercise price payable per share. We
have not made any direct stock issuances to date under the Plan.
OPTION TRANSACTIONS
Number of Shares Weighted Average
Underlying Exercise Price
Name and Position Options Granted(#) Per Share($)
----------------- ------------------ ----------------
Timothy D. Webb........................ 100,000 12.06
President, Chief Executive Officer and
Director
John M. Velasquez...................... 45,000 6.35
Senior Vice President
Pedro A. Fernandez..................... 45,000 6.35
Senior Vice President
Ted L. Downey.......................... 15,000 9.63
Senior Vice President, Western Area
Keith D. Thatcher...................... 45,000 6.35
Chief Financial Officer, Treasurer and
Senior Vice President, Finance
Wade E. Saadi.......................... 13,446 8.36
Chairman of the board
Edward C. Ateyeh, Jr................... 13,446 8.36
Director
Thomas A. Herring...................... 13,446 8.36
Director
W. Frank King, Ph.D.................... 4,000 15.98
Director
Kevin B. Kurtzman...................... 13,446 8.36
Director
Michael J. Maples...................... 13,446 8.36
Director
All current executive officers as a
group (8)............................. 341,500 8.36
All current non-employee directors as a
group (6)............................. 71,230 8.79
All employees, including current
officers who are not executive
officers, as a group.................. 1,892,575 10.34
10
Federal Income Tax Consequences
Option Grants
Options granted under the Plan may be either incentive stock options which
satisfy the requirements of Section 422 of the Internal Revenue Code or non-
statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made
the subject of a taxable disposition. For Federal tax purposes, dispositions
are divided into two categories: (i) qualifying and (ii) disqualifying. A
qualifying disposition occurs if the sale or other disposition is made after
the optionee has held the shares for more than two (2) years after the option
grant date and more than one (1) year after the exercise date. If either of
these two holding periods is not satisfied, then a disqualifying disposition
will result.
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by us in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee
will not recognize any taxable income at the time of exercise but will have to
report as ordinary income, as and when our repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code
to include as ordinary income in the year of exercise of the option an amount
equal to the excess of (i) the fair market value of the purchased shares on
the exercise date over (ii) the exercise price paid for such shares. If the
Section 83(b) election is made, the optionee will not recognize any additional
income as and when the repurchase right lapses.
We will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised non-
statutory option. The deduction will in general be allowed for the taxable
year of Concero in which such ordinary income is recognized by the optionee.
If the optionee makes a disqualifying disposition of the purchased shares,
then we will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the excess of (i) the fair market
value of such shares on the option exercise date over (ii) the exercise price
paid for the shares. If the optionee makes a qualifying disposition, we will
not be entitled to any income tax deduction.
Stock Appreciation Rights
No taxable income is recognized upon receipt of a stock appreciation right.
The holder will recognize ordinary income, in the year in which the stock
appreciation right is exercised, in an amount equal to the appreciation
distribution. We will be entitled to an income tax deduction equal to the
appreciation distribution in the taxable year in which such ordinary income is
recognized by the optionee.
Direct Stock Issuances
The tax principles applicable to direct stock issuances under the Plan will
be substantially the same as those summarized above for the exercise of non-
statutory option grants.
11
Deductibility of Executive Compensation
We anticipate that any compensation deemed paid by us in connection with
the disqualifying dispositions of incentive stock option shares or the
exercise of non-statutory options with exercise prices equal to the fair
market value of the option shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will
not have to be taken into account for purposes of the $1 million limitation
per covered individual on the deductibility of the compensation paid to
certain of our executive officers. Accordingly, all compensation deemed paid
with respect to those options will remain deductible by us without limitation
under Code Section 162(m).
Accounting Treatment
Option grants under the Discretionary Option Grant and Automatic Option
Grant Programs with exercise prices equal to the fair market value of the
option shares on the grant date will not result in any direct charge to our
reported earnings. However, the fair value of those options is required to be
disclosed in the notes to our financial statements, and we must also disclose,
in footnotes to our financial statements, the pro-forma impact those options
would have upon our reported earnings were the fair value of those options at
the time of grant treated as a compensation expense. In addition, the number
of outstanding options may be a factor in determining our earnings per share
on a fully-diluted basis.
Option grants or stock issuances made under the Plan with exercise or issue
prices less than the fair market value of the shares on the grant or issue
date will result in a direct compensation expense to us in an amount equal to
the excess of such fair market value over the exercise or issue price. The
expense must be amortized against our earnings over the period that the option
shares or issued shares are to vest.
On March 31, 2000, the Financial Accounting Standards board issued
Interpretation No. 44, which is an interpretation of APB Opinion No. 25
governing the accounting principles applicable to equity incentive plans.
Under the Interpretation, option grants made to consultants (but not non-
employee board members) after December 15, 1998 will result in a direct charge
to our reported earnings based upon the fair value of the option measured
initially as of the grant date and then subsequently on the vesting date of
each installment of the underlying option shares. Such charge will accordingly
include the appreciation in the value of the option shares over the period
between the grant date of the option (or, if later, the July 1, 2000 effective
date of the Interpretation) and the vesting date of each installment of the
option shares. In addition, if the proposed interpretation is adopted, any
options which are repriced after December 15, 1998 will also trigger a direct
charge to our earnings measured by the appreciation in the value of the
underlying shares over the period between the grant date of the option (or, if
later, the July 1, 2000 effective date of the Interpretation) and the date the
option is exercised for those shares.
Should one or more individuals be granted tandem stock appreciation rights
under the Plan, then such rights would result in a compensation expense to be
charged against our reported earnings. Accordingly, at the end of each fiscal
quarter, the amount (if any) by which the fair market value of the shares of
common stock subject to such outstanding stock appreciation rights has
increased from the prior quarter-end would be accrued as compensation expense,
to the extent such fair market value is in excess of the aggregate exercise
price in effect for those rights.
New Plan Benefits
Upon stockholder approval of this Proposal, on the date of the Annual
Meeting, Messrs. Saadi, Ateyeh, Herring, King, Kurtzman and Maples will each
receive an option grant for 20,000 shares and for 4,000 shares, each at an
exercise price equal to the fair market value per share of the common stock on
that date.
Stockholder Approval
The affirmative vote of at least a majority of the outstanding shares of
common stock present in person or by proxy at the Annual Meeting and entitled
to vote is required for approval of the amendment to the Plan.
12
Should such stockholder approval not be obtained, then the initial grants
under the Automatic Option Grant Program will continue to be for 10,000 shares
of common stock, and no subsequent 20,000-share automatic grant will be made
in connection with the completion of each four-year period of board service.
The Plan will continue in effect, and option grants and direct stock issuances
may continue to be made under the Plan until all the shares available for
issuance under the Plan has been issued pursuant to such option grants and
direct stock issuances.
The board of directors deems this proposal to be in the best interests of
Concero and our stockholders and recommends a vote "FOR" approval of such
proposal. Unless authority to do so is withheld, the person(s) named in each
proxy will vote the shares represented thereby "FOR" the approval of the
Amendment to the Amended and Restated 1996 Stock Option/Stock Issuance Plan.
PROPOSAL 3
Our board of directors appointed the firm of Ernst & Young LLP, as
independent auditors for the year ended December 31, 2000 and has appointed
Ernst & Young LLP to serve in the same capacity for the year ended December
31, 2001. The board is asking the stockholders to ratify this appointment.
In the event that the stockholders fail to ratify the appointment, the
board of directors will reconsider its selection. Even if the selection is
ratified, the board of directors, in its discretion, may direct the
appointment of a different independent accounting firm at any time during the
year if the board of directors believes that such change would be in Concero's
and the stockholders' best interests.
Fees billed to Company by Ernst & Young LLP during the year ended December 31,
2000
Audit Fees: During the year ended December 31, 2000, Ernst & Young LLP
billed us $131,640 for audit of our annual financial statements and for review
of the financial statements included in our quarterly reports on Form 10-Q and
other SEC filings.
Financial Information Systems Design and Implementation Fees: We did not
engage Ernst & Young LLP to provide us with advice regarding financial
information systems design and implementation during the year ended December
31, 2000.
All Other Fees: During the year ended December 31, 2000, for all Ernst &
Young billed us $101,721 other non-audit services rendered to us, including
tax related service.
The Audit Committee, as stated in its Audit Committee Report included
elsewhere in this proxy statement, has considered whether the provision of the
services described in the preceding paragraphs is compatible with maintaining
the independence of Ernst & Young LLP.
A representative of Ernst & Young is expected to be present at the annual
meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
The affirmative vote of a majority of the outstanding shares represented
and entitled to vote at the Annual Meeting is required to ratify the selection
of Ernst & Young LLP.
The board of directors unanimously recommends that the stockholders vote
"FOR" the ratification and approval of the selection of Ernst & Young LLP as
our independent auditors.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our common stock as of March 30, 2001 by :
. each person who is known by us to be a beneficial owner of five percent
(5%) or more of our common stock;
. each current director, each of whom is a nominee for election as a
director;
. each executive officer named in the summary compensation table of the
Executive Compensation and Other Information section of this proxy
statement; and
. all current directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power
with respect to the securities. Except as indicated in the notes following the
table, and subject to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them. The number of shares of
common stock used to calculate the percentage ownership of each listed person
includes shares of common stock underlying options or warrants held by such
persons that are exercisable within 60 days of March 30, 2001. The percentage
of beneficial ownership before the offering is based on 10,165,208 shares of
common stock outstanding as of March 30, 2001.
Our common stock is the only class of voting securities outstanding. Unless
otherwise indicated, each of the stockholders has sole voting and investment
power with respect to the shares beneficially owned, subject to community
property laws, where applicable.
Percentage
Shares of Shares
Beneficially Beneficially
Beneficial Owner Owned Owned
---------------- ------------ ------------
Executive Officers and Directors:
Wade E. Saadi....................................... 1,667,060 16.34%
Edward C. Ateyeh, Jr................................ 1,667,060 16.34
Edgar G. Saadi...................................... 1,631,758 16.05
W. Frank King....................................... 581,046 5.67
Dimensional Fund Advisors, Inc...................... 531,400 5.22
Timothy D. Webb..................................... 493,216 4.66
John M. Velasquez................................... 129,720 1.27
Michael J. Maples................................... 78,109 *
Pedro A. Fernandez.................................. 73,750 *
Kevin B. Kurtzman................................... 56,841 *
Thomas A. Herring................................... 52,252 *
Keith D. Thatcher................................... 51,674 *
Ted Downey.......................................... 41,250 *
All current directors and executive officers as a
group (14 persons)................................. 4,931,848 44.23%
--------
* Less than one percent of the outstanding common stock
Unless otherwise indicated, the address for all officers and directors is
c/o Concero Inc., 6300 Bridgepoint Parkway, Building 3, Suite 200, Austin,
Texas 78730.
Wade E. Saadi. These shares include immediately exercisable options to
purchase 35,303 shares of common stock and immediately exercisable warrants to
purchase 16,372 shares of common stock. Mr. Saadi's address is c/o Pencom
Systems Incorporated, 40 Fulton Street, New York, New York 10038.
Edward C. Ateyeh, Jr. These shares include immediately exercisable options
to purchase 35,303 shares of common stock and immediately exercisable warrants
to purchase 16,372 shares of common stock. Mr. Ateyeh's address is c/o Pencom
Systems Incorporated, 40 Fulton Street, New York, New York 10038.
14
Edgar G. Saadi. These shares include immediately exercisable warrants to
purchase 16,373 shares of common stock. Mr. Saadi's address is c/o Pencom
Systems Incorporated, 40 Fulton Street, New York, New York 10038.
W. Frank King, Ph.D. These shares include immediately exercisable options
to purchase 88,000 shares of common stock.
Timothy D. Webb. These shares include immediately exercisable options to
purchase 410,216, of which 185,716 are unvested and subject to repurchase if
exercised.
John M. Velasquez. These shares include immediately exercisable options to
purchase 81,250 shares of common stock.
Michael J. Maples. These shares include immediately exercisable options to
purchase 36,099 shares of common stock.
Pedro A. Fernandez. These shares include immediately exercisable options to
purchase 68,750 shares of common stock.
Kevin B. Kurtzman. These shares include immediately exercisable options to
purchase 56,841 shares of common stock.
Thomas A. Herring. These shares include immediately exercisable options to
purchase 52,252 shares of common stock.
Keith D. Thatcher. These shares include immediately exercisable options to
purchase 43,204 shares of common stock.
Ted Downey. These shares include immediately exercisable options to
purchase 41,250 shares of common stock.
MANAGEMENT
Executive Officers
Set forth below is certain information concerning our executive officers as
of March 31, 2001:
Name Age Position Held
---- --- -------------
Timothy D. Webb............ 40 President and Chief Executive Officer
Keith D. Thatcher.......... 43 Chief Financial Officer, Treasurer &
Senior Vice President
Ted L. Downey.............. 51 Senior Vice President
Pedro A. Fernandez......... 35 Senior Vice President
John M. Velasquez.......... 37 Senior Vice President
Mary Anne Clement.......... 41 Vice President, People and Culture
Cathy S. Hetzel............ 49 Senior Vice President
Nancy A. Richardson, Esq... 41 General Counsel, Secretary and Senior Vice
President
Biographical information concerning Mr. Webb is set forth under "PROPOSAL
1--Election of Directors."
Mr. Thatcher was promoted to Senior Vice President of Finance in February
2000. Mr. Thatcher continues to serve as our Chief Financial Officer and
Treasurer, positions he has held since May 1998 and October 1996,
respectively. From October 1994 to June 1996, Mr. Thatcher was Chief Financial
Officer, Secretary and Treasurer of Tanisys Technology, Inc., a technology
start-up company. Prior thereto, Mr. Thatcher served as Vice President and
Treasurer for Kinetic Concepts, Inc., a medical services and products company,
from 1987 to 1994. From 1985 to 1987, Mr. Thatcher was employed by Peat
Marwick Main & Co. as an audit manager. Mr. Thatcher earned a bachelor's
degree in accountancy from Northern Arizona University.
15
Mr. Downey was named Senior Vice President in February 2000, after joining
us in December 1999. Mr. Downey has tendered his resignation from Concero
effective July 2, 2001. From February 1996 to December 1999, Mr. Downey was a
Vice President with Oracle Corporation. Prior to joining Oracle, Mr. Downey
was with Intergraph Corporation. Mr. Downey holds a master's degree in
economics and a bachelor's degree in political science from the University of
Illinois.
Mr. Fernandez was named Senior Vice President in February 2000, having
previously served as Vice President of Corporate Strategy and Marketing since
January 1999. Prior to joining us, Mr. Fernandez served as Vice President,
People Soft Solutions for Syntel, Inc. from April 1998 to November 1998. Mr.
Fernandez was a Director for Cambridge Technology Partners from January 1994
to April 1998 and prior to that was employed by Andersen Consulting. Mr.
Fernandez holds a bachelor's degree in computer engineering from the
University of Miami.
Mr. Velasquez was named Senior Vice President in February 2000, having
previously served as Vice President of Enterprise Solutions since January
1999. Prior to joining us, Mr. Velasquez served as Vice President, Data
Warehousing for Syntel, Inc. from April 1998 until January 1999. From 1994 to
1998, Mr. Velasquez was president of a consulting firm specializing in systems
design and management and prior to that was employed by Andersen Consulting.
Mr. Velasquez holds a bachelor's degree in industrial engineering from
Stanford University.
Ms. Clement was named Vice President, People and Culture in February 2000,
after joining us in August 1999 as Associate Vice President, Special
Operations. From December 1993 to August 1999, Ms. Clement was a Director with
McCall Consulting Group. Ms. Clement holds a MBA from Southern Methodist
University and a bachelor's degree from Randolph-Macon Woman's College.
Ms. Hetzel was named Senior Vice President in January 2001 after serving as
Vice President, e-TV and Broadband since February 2000. Prior to joining us,
Ms. Hetzel served as Senior Vice President, Residential Business of Digital
Cable Radio Associates in 1998 and 1999. Ms. Hetzel had previously served as
Senior Vice President, Affiliate Sales & Marketing and Sales and Affiliate
Relations for Digital Cable Radio Associates between 1994 and 1998. Ms. Hetzel
attended San Diego State University.
Ms. Richardson was named Senior Vice President in January 2001 after
serving as General Counsel, Secretary, and Vice President in May 1998 after
providing legal services to the company since May 1997. Ms. Richardson has
tendered her resignation effective May 30, 2001. Ms. Richardson had been a
sole practitioner from November 1995 to May 1998. Ms. Richardson began her
career with Ernst & Young. Ms. Richardson holds a JD and MBA from the
University of Texas and a bachelor's degree in accountancy from St. Edward's
University.
16
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table provides certain summary information concerning the
compensation earned by our Chief Executive Officer and each of the other four
most highly compensated executive officers whose salary and bonus for 2000 was
in excess of $100,000, for services rendered in all capacities to Concero for
the years ended December 31, 1998, 1999 and 2000. The listed individuals shall
be hereafter referred to as the "Named Executive Officers".
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Name and Principal Other Annual (2) Stock
Position Year Salary($)(1) Bonus($) Compensation($) Options(#)
------------------ ---- ------------ -------- ---------------- ------------
Timothy D. Webb......... 2000 342,528 -- 2,500 100,000
Chief Executive Officer 1999 329,344 -- 1,612 --
1998 109,567 -- -- 500,000
John M. Velasquez....... 2000 237,500 16,875(3) 2,500 25,000
Senior Vice President 1999 210,938 85,265(4) 746 150,000
1998 -- -- -- --
Pedro A. Fernandez...... 2000 225,000 70,000(5) -- 25,000
Senior Vice President 1999 191,666 30,000(6) -- 125,000
1998 -- -- -- --
Ted Downey.............. 2000 213,333 -- 2,500 15,000
Senior Vice President 1999 14,394 -- 650 75,000
1998 -- -- -- --
Keith D. Thatcher....... 2000 170,833 50,000(5) 2,500 25,000
Senior Vice President 1999 145,833 -- 1,458 11,139
1998 116,667 12,533(7) 1,292 52,000
--------
(1) Includes salary deferral contributions to our 401(k) Plan.
(2) The indicated amount for each Named Executive Officer is comprised of the
contributions we made on behalf of such individual to our 401(k) Plan.
(3) Represents the final installment of the annual incentive bonus guaranteed
for calendar year 1999
(4) Includes a transition bonus of $30,000 and annual incentive bonus
guaranteed for calendar year 1999.
(5) Represents the annual incentive bonus for calendar year 1999.
(6) Represents a transition bonus of $30,000.
(7) Represents the annual incentive bonus for calendar year 1997.
17
Stock Option Information
The following table sets forth certain information regarding option grants
made pursuant to our 1996 Stock Option/Stock Issuance Plan during 2000 to each
of the Named Executive Officers.
Option Grants in Last Fiscal Year
Individual Grants(1)
--------------------------------------------
Potential
Realizable Value
at Assumed Annual
Percentage Rates of Stock
Number of Of Total Price
Securities Options Appreciation for
Underlying Granted Exercise Option Term(5)
Options to Employees Price Expiration -----------------
Name Granted(2) In 2000(3) ($/Sh)(4) Date 5%($) 10%($)
---- ---------- ------------ --------- ---------- ----- ---------
Timothy D. Webb......... 100,000 6.10% 12.0625 7/21/10 758,860 1,922,450
John M. Velasquez....... 25,000 1.53 9.625 5/31/10 151,328 383,496
Pedro A. Fernandez...... 25,000 1.53 9.625 5/31/10 151,328 383,496
Ted Downey.............. 15,000 0.92 9.625 5/31/10 90,797 230,097
Keith D. Thatcher....... 25,000 1.53 9.625 5/31/10 151,328 383,946
--------
(1) The option will become exercisable in 4 successive equal annual
installments upon the optionee's completion of each year of service
measured from the grant date. The option will become exercisable on an
accelerated bases upon a liquidation or dissolution of Concero or a merger
or consolidation in which there is a change in ownership of securities
possessing more than 50% of the total combined voting power of Concero's
outstanding securities, unless the option is assumed by the surviving
entity, and will become exercisable following such events upon termination
of employment under certain circumstances. In addition, the compensation
committee of the board of directors may accelerate the vesting of the
option in the event (i) there is a change in the composition of the board
of directors over a period of two years or less such that those
individuals serving as directors at the beginning of the period cease to
represent a majority of the board or (ii) change of ownership of
securities possessing more than 50% of the total combined voting power of
Concero's outstanding securities to a hostile tender offer.
(2) The compensation committee has the authority to effect the cancellation of
the options and to grant, in substitution thereof, new options covering
the same or a different number of shares of common stock but with an
exercise price based upon the fair market value of the option shares on
the new grant date.
(3) Based on an aggregate of 1,638,385 options granted to employees in 2000,
including options granted to the Named Executive Officers.
(4) The exercise price may be paid in cash or in shares of common stock valued
at fair market value on the exercise date. Alternately, the option may be
exercised through a cashless exercise procedure pursuant to which the
optionee provides irrevocable instructions to a brokerage firm to sell the
purchased shares and to remit to Concero, out of the sales proceeds, an
amount equal to the exercise price plus all applicable withholding taxes.
The compensation committee may also assist an optionee in the exercise of
an option by authorizing a loan from Concero in a principal amount not to
exceed the aggregate exercise price plus any tax liability incurred in
connection with the exercise.
(5) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the 10-year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent our estimate of
the future market price of the common stock. These amounts do not take
into account any other appreciation in the price of the common stock from
the date of grant to the current date.
18
No options were exercised by the Named Executive Officers in 2000. The
following table sets forth for each of the Named Executive Officers certain
information concerning the value of unexercised options at the end of 2000:
Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying in-the-Money Options
Unexercised Options at December 31,
at December 31, 2000(#) 2000(1)($)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Timothy D. Webb............. 385,716 214,284 -- --
John M. Velasquez........... 75,000 100,000 -- --
Pedro A. Fernandez.......... 62,500 87,500 15,625 15,625
Ted Downey.................. 37,500 52,500 -- --
Keith D. Thatcher........... 34,169 61,355 28,602 29,750
--------
(1) Value is determined by subtracting the exercise price from the market
value of our common stock at December 31, 2000 ($3.00 per share based upon
the closing price of our common stock on the Nasdaq National Market on
such date) and multiplying by the number of shares underlying the options.
Employment Contracts and Change of Control Arrangements
We have entered into an employment agreement with Timothy D. Webb dated
August 28, 1998. Pursuant to the agreement, we have agreed to pay Mr. Webb an
annual base salary of $325,000 with an annual increase of four percent and to
provide customary fringe benefits. In addition, we issued to Mr. Webb options
to purchase an aggregate of 500,000 shares of common stock at $3.50 per share.
The options vest over six (6) years with 100,000 vesting upon Mr. Webb's
completion of six months of employment, an additional 100,000 vesting upon the
completion of two years of employment, an additional 100,000 vesting upon the
completion of three years of employment, 25,000 vesting upon the completion of
four years of employment, 75,000 vesting upon the completion of five years of
employment, and 100,000 vesting upon the completion of six years of service.
The options shall be incentive stock options up to the permitted limitation as
of the hire date. Accordingly, 199,997 options were classified as incentive
stock options. The agreement terminates August 28, 2004.
We have entered into employment agreements with no defined termination
dates with each of Messrs. Velasquez, Fernandez, Downey and Thatcher, dated
January 25, 1999, January 18, 1999, December 3, 1999 and October 1996,
respectively. Pursuant to these agreements, we have agreed to pay Messrs.
Velasquez, Fernandez, Downey, and Thatcher annual base salaries of $225,000,
$200,000, $190,000 and $150,000, respectively, and to provide customary fringe
benefits.
The agreements contain provisions which, among others, prohibit the
employee from disclosing or otherwise using certain confidential information,
assign inventions or ideas conceived by the employee during his employment to
us, prohibit solicitation by the employee of our clients and other employees
and prohibit the employee from accepting any opportunity (whether by contract
or full-time employment) with our clients. Pursuant to the terms of the
agreements, either party may terminate the employment relationship without
cause upon two weeks' prior written notice to the other party. We may
terminate the employment relationship in our sole discretion without cause,
effective immediately, upon payment of two weeks' salary to the employee or
immediately for cause upon written notice.
We have entered into written agreements with our officers whereby in the
event of the officer's involuntary termination within 18 months following an
acquisition of Concero or change in control of Concero either through a change
of control of our Board of Directors or a tender offer made directly to our
shareholders, any unvested options assumed or replaced in connection with the
acquisition or otherwise outstanding will automatically accelerate so that the
option shall become immediately exercisable.
19
The compensation committee as Plan Administrator of the 1996 Plan has the
authority to provide for the accelerated vesting of outstanding options held
by the Chief Executive Officer and any other executive officer or the shares
of common stock subject to direct issuances held by such individual, in
connection with certain changes in control of Concero or the subsequent
termination of the officer's employment following the change in control event.
Key-Person Life Insurance
We do not maintain key-person life insurance policies on the lives of any
of our executive officers.
Compensation Committee Interlocks and Insider Participation
Executive compensation decisions are made by the compensation committee of
the board of directors, which consists of Messrs. Saadi, Ateyeh and King. None
of these individuals was an officer or employee of Concero at any time during
the 2000 fiscal year or at any other time. During 2000, no current executive
officer of Concero served as a member of the board of directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a member of our board of directors or
compensation committee.
Compensation Committee Report on Executive Compensation
It is the duty of the compensation committee to review and determine the
salaries and incentive compensation of our officers, including the President
and Chief Executive Officer, and provide recommendations for the salaries and
incentive compensation of our other employees and consultants. The
Compensation Committee also administers various incentive compensation, stock
and benefit plans.
The compensation committee believes that the compensation programs for our
executive officers should reflect our performance and the value created for
our stockholders. In addition, the compensation programs should support our
short-term and long-term strategic goals and values and should reward
individual contribution to our success. The market for system integration and
software development services is very competitive, and our success depends
upon its ability to attract and retain qualified executives through the
competitive compensation packages it offers to such individuals.
General Compensation Policy. The compensation committee's policy is to
provide our executive officers with compensation opportunities which are based
upon their personal performance, our financial performance and their
contribution to that performance and which are competitive enough to attract
and retain highly skilled individuals. Each executive officer's compensation
package is comprised of three elements: (1) base salary that is competitive
with the market and reflects individual performance, (2) annual variable
performance awards payable in cash or stock options and tied to our
achievement of annual financial performance goals and (3) long-term stock
based incentive awards designed to strengthen the mutuality of interests
between the executive officers and our stockholders. As an officer's level of
responsibility increases, a greater proportion of his or her total
compensation will be dependent upon our financial performance and stock price
appreciation rather than base salary.
Compensation decisions were made by the compensation committee. The
principal factors that were taken into account in establishing each executive
officer's compensation package for 2000 are described below. However, the
compensation committee may in its discretion apply entirely different factors,
such as different measures of financial performance, for future fiscal years.
Base Salary. The base salary for each officer reflects the salary levels
for comparable positions in similar companies, such as systems integrators and
software companies, as well as the individual's personal performance and
internal alignment considerations. The relative weight given to each factor
varies with each individual in the sole discretion of the compensation
committee. Each executive officer's base salary is subject to minimums set
forth in their respective employment agreements and is adjusted each year on
the basis of (1) the compensation
20
committee's evaluation of the officer's personal performance for the year and
(2) the competitive marketplace for persons in comparable positions. Our
performance and profitability may also be a factor in determining the base
salaries of executive officers.
Annual Incentives. We maintain a cash incentive to reward executive
officers and other key employees for attaining defined performance targets.
For most executive officers and other key employees, bonuses are based
primarily on company-wide performance targets. For some management personnel,
company-wide performance is a factor, however significant weight is also given
to individual performance and performance of an operating group. Upon
achievement of a performance target, an employee is entitled to a cash
payment.
In setting performance targets, we considered our historical performance
and underlying business model, and external as well as internal expectations
related to 2000 revenue and operating profits. The financial factors were
derived directly from the our 2000 operating plan.
Long Term Incentives. Generally, stock option grants for our executive
officers are reviewed twice annually by the compensation committee. Each grant
is designed to maintain a significant unvested position to provide incentives
to create stockholder value and allows the officer to acquire shares of our
common stock at a fixed price per share (the fair value on the grant date)
over a specified period of time (up to ten years). Options are immediately
exercisable, but option shares that are purchased subject to vesting
restrictions are repurchasable by us at the exercise price if the officer's
employment is terminated prior to the vesting date.
The size of the option grant to each executive officer, including the Chief
Executive Officer, is set by the compensation committee at a level that is
intended to create a meaningful opportunity for stock ownership based upon the
individual's current position with us, the individual's personal performance
in recent periods and his or her potential for future responsibility and
promotion over the option term. The relevant weight given to each of these
factors varies from individual to individual. The compensation committee has
established certain guidelines with respect to the option grants made to the
executive officers, but has the flexibility to make adjustments to those
guidelines at its discretion.
CEO Compensation. The total compensation payable to Mr. Webb, our President
and Chief Executive Officer, for 2000 and continuing until August 27, 2004, is
governed by the terms of his employment agreement dated August 28, 1998. The
agreement provides for an annual base salary of $325,000 with an annual
increase equal to four percent.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
such compensation exceeds $1 million per covered officer in any fiscal year.
The limitation applies only to the compensation which is not considered to be
performance-based. Non-performance based compensation paid to our executive
officers for 2000 did not exceed the $1 million limit per officer, and the
compensation committee does not anticipate that the non-performance based
compensation to be paid to our executive officers for 2001 will exceed that
limit. Our 1996 Stock Option/Stock Issuance Plan has been structured so that
any compensation deemed paid in connection with the exercise of option grants
made under the plan with an exercise price equal to the fair market value of
the option shares on the grant date will qualify as performance-based
compensation, which will not be subject to the $1 million limitation. Because
it is unlikely that the cash compensation payable to any of our executive
officers in the foreseeable future will approach the $1 million limit, the
compensation committee has decided at this time not to take any action to
limit or restructure the elements of cash compensation payable to our
executive officers. The compensation committee will reconsider this decision
should the individual cash compensation of any executive officer ever approach
the $1 million level.
21
It is the opinion of the compensation committee that the executive
compensation policies and plans provide the necessary total remuneration
program to properly align our performance and the interests of our
stockholders through the use of competitive and equitable executive
compensation in a balanced and reasonable manner, for both the short and long-
term.
Submitted by the Compensation
Committee
of the Board of Directors
Wade E. Saadi
Edward C. Ateyeh, Jr.
W. Frank King, Ph.D.
Audit Committee Report
The following is the report of the audit committee with respect to our
audited financial statements for the year ended December 31, 2000, included in
our Annual Report on Form 10-K for that year. The audit committee has reviewed
and discussed these audited financial statements with management of Concero.
The audit committee has discussed with Concero's independent auditors, Ernst &
Young LLP, the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Section 380) as amended, which includes,
among other items, matters related to the conduct of the audit of the
financial statements. The audit committee has received the written disclosures
and the letter from Ernst & Young LLP required by Independence Standards Board
Standard No. 1 ("Independence Discussions with Audit Committees") as amended,
and has discussed with Ernst & Young LLP the independence of Ernst & Young LLP
from Concero. The audit committee has also considered whether the provision of
services by Ernst & Young LLP to Concero as described under the caption
"Proposal to Ratify Independent Accountants" is compatible with maintaining
the independence of Ernst & Young LLP.
Based on the review and discussions referred to above in this report, the
audit committee recommended to the board of directors that the audited
financial statements be included in Concero's Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission.
Submitted by the Audit Committee
of the Board of Directors
Thomas A. Herring
Kevin B. Kurtzman
Michael J. Maples
22
Stock Performance Graph
The graph below depicts our stock price as an index assuming $100 invested
on June 5, 1997 (the date of our initial public offering), along with the
composite prices of companies listed in the S & P Software & Services
Companies Index and Nasdaq Stock Market (U.S. Companies) Index. This
information has been provided to us by the Standard & Poor's Computers Index
and the Nasdaq Stock Market. The comparisons in the graph are required by
regulations of the Securities Exchange Commission and are not intended to
forecast or to be indicative of the possible future performance of our common
stock.
[PERFORMANCE GRAPH]
Research Data Group, Inc. Total Return--Data Summary
CERO Cumulative Total Return
------------------------- ------------------------------------------
6/5/97 12/31/97 12/31/98 12/31/99 12/31/00
------ -------- -------- -------- --------
CONCERO INC........................ 100 116.11 33.33 221.53 33.33
NASDAQ STOCK MARKET (U.S.)......... 100 112.82 159.10 295.66 177.89
S & P COMPUTERS (SOFTWARE &
SERVICES)......................... 100 104.21 188.82 349.19 164.99
23
CERTAIN TRANSACTIONS WITH MANAGEMENT
Registration Rights Agreement
We have entered into an agreement with each of our existing stockholders
and warrantholders pursuant to which such stockholders and warrantholders were
granted certain registration rights.
Loan Arrangement
We lent $70,000 to John Velasquez, one of our executive officers, pursuant
to a promissory note dated September 25, 2000. The note bears interest at a
rate of 7.5% per annum. The maturity date of the note is September 24, 2001
and all principal and interest is due at maturity.
Employment Agreements
We have entered into employment agreements with all of our executive
officers. See "Employment Contracts and Change of Control Arrangements".
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, which might incorporate future filings made
by us under those statutes, the preceding Report on Executive Compensation,
Audit Committee Report, Audit Committee Charter and the Stock Performance
Graph will not be incorporated by reference into any of those prior filings,
nor will such report or graph be incorporated by reference into any future
filings made by us under those acts.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership of
our common stock and securities with the Securities and Exchange Commission
and the Nasdaq Stock Market. Officers, directors and greater than 10%
beneficial owners are required by Securities and Exchange Commission
regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to us or
written representations from certain reporting persons that no Forms 5 were
required, we believe that, during 2000, our executive officers, directors, and
greater than 10% beneficial owners complied with all other applicable Section
16(a) reporting requirements.
FORM 10-K
We filed an Annual Report on Form 10-K with the Securities and Exchange
Commission on March 27, 2001. Stockholders may obtain a copy of this report,
without charge, by writing to the attention of Chief Financial Officer, at our
executive offices located at 6300 Bridgepoint Parkway, Building 3, Suite 200,
Austin, Texas 78730.
ANNUAL REPORT
A copy of our Annual Report for 2000 has been mailed concurrently with this
proxy statement to all stockholders entitled to notice of and to vote at the
Annual Meeting. The Annual Report is not incorporated into this proxy
statement and is not considered proxy solicitation material.
24
OTHER MATTERS
The board of directors is not aware of any matter to be presented for
action at the Annual Meeting other than the matters set forth in this proxy
statement. Should any other matter requiring a vote of the stockholders arise,
the persons named as proxies on the enclosed proxy card will vote the shares
represented thereby in accordance with their best judgment in the interest of
Concero. Discretionary authority with respect to such other matters is granted
by the execution of the enclosed proxy card.
By Order of the Board of Directors,
/s/ Nancy A. Richardson
NANCY A. RICHARDSON
Secretary
April 20, 2001
25
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
CONCERO INC.,
a Delaware Corporation
I. COMPOSITION
The Audit Committee shall be comprised of three or more independent
directors, or at least two independent directors and an affiliated director if
the Board feels the Committee is best served by an affiliated director who has
substantial financial accounting experience.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise.
II. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to the stockholders and others,
the systems of internal controls which management and the Board of Directors
have established, and the Corporation's audit and financial reporting process.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section III of this Charter.
III. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
A. Review this Charter at least annually and recommend any changes to the
Board.
B. Review the Corporation's annual financial statements and any other
relevant reports or other financial information.
C. Recommend to the Board of Directors the selection of the independent
accountants and approve the fees and other compensation to be paid to
the independent accountants. On an annual basis, the Committee shall
obtain a formal written statement from the independent accountants
delineating all relationships between the accountants and the
Corporation consistent with Independence Standards Board Standard 1, and
shall review and discuss with the accountants all significant
relationships the accountants have with the Corporation to determine the
accountants' independence.
D. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
E. Following completion of the annual audit, review separately with
management, the independent accountants and the internal auditing
department any significant difficulties encountered during the course of
the audit.
F. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and governing law, as the Committee or the Board
deems necessary or appropriate.
IV. FREQUENCY AND TIMING
The Audit Committee shall meet on a regular basis and shall hold special
meetings as circumstances require.
V. Minutes
Minutes will be kept of each meeting of the Audit Committee and will be
provided to each member of the Board. Any action of the Audit Committee shall
be subject to revision, modification, rescission, or alteration by the Board
of Directors, provided that no rights of third parties shall be affected by
any such revision, modification, rescission, or alteration.
26
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CONCERO INC.
The undersigned hereby appoints Timothy D. Webb and Wade E. Saadi as
proxies, and each of them, with full power of substitution, and hereby
authorizes them to represent the undersigned and to vote all of the shares of
Common Stock of CONCERO INC. (the "Company") held of record by the undersigned
on March 30, 2001 at the Annual Meeting of Stockholders of the Company to be
held on Wednesday May 23, 2001, and any adjournment(s) thereof as follows and in
accordance with their judgment upon any other matter properly presented:
(Continued, and to be marked, dated and signed, on the other side)
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This proxy when properly executed will be voted as directed by the undersigned stockholder. If Please mark
directions are not indicated, the proxy will be voted to elect the nominees described in item 1 your vote as [X]
and for items 2 and 3. indicated in
this example
The Board of Directors recommends a vote FOR FOR WITHHELD
Items 1, 2 and 3. FOR ALL FOR AGAINST ABSTAIN
1. Election of Seven Directors [ ] [ ] ITEM 2--APPROVAL OF AN AMENDMENT TO [ ] [ ] [ ]
AMENDED AND RESTATED 1996
Nominees STOCK OPTION/STOCK ISSUANCE
PLAN.
Dr. W. Frank King, Wade E. Saadi, Edward C.
Ateyeh, Jr., Thomas A. Herring, Kevin B. ITEM 3--RATIFY THE APPOINTMENT OF [ ] [ ] [ ]
Kurtzman, Michael J. Maples and Timothy D. ERNST & YOUNG AS INDEPENDENT
Webb AUDITORS FOR THE FISCAL YEAR
2001.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_______________________________________________________________
Signature __________________________________________ Signature __________________________________________ Date ___________________
NOTE: Please sign as name appears hereon. If shares are held jointly, all holders must sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign full corporate name by president
or other authorized officer. If a partnership, please sign in partnership name by authorized person.
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