Our Board of Directors currently consists of nine directors, classified
into three groups of three directors. At the annual meeting, the three
directors of Class I will be re-elected for a term of three years expiring at
our 2004 annual meeting of stockholders. All three of the Class I nominees are
presently serving as our Class I directors. See "Nominees" below.
Six of our directors have terms that do not expire in 2001. Those
individuals will continue to serve after the annual meeting until such time as
their respective terms of office expire and their successors are duly elected
and qualified, unless they die, resign or are removed from office prior to
that time. See "Other Directors" below.
If at the time of the annual meeting, any nominee is unable or declines to
serve, the persons named in the proxy will vote for such substitute nominee as
the Board of Directors recommends, or vote to allow the vacancy to remain open
until filled by the Board of Directors, as the Board of Directors recommends.
The Board of Directors has no reason to believe that any nominee will be
unable or decline to serve as a director if elected.
NOMINEES
The nominees for the office of director are:
Name Age Position With Company
---- --- ---------------------
Paul Carbery (1) 39 Director
John Kraft (2) 59 Director
John Oltman (3) 55 Vice Chairman of the Board of Directors
(1) Member of the audit committee.
(2) Member of the compensation committee.
(3) Member of the executive committee.
Paul Carbery has been a director since June 1999. Mr. Carbery has been a
general partner of Frontenac Company, a Chicago-based private equity investing
firm, since 1993. He is also a director of Allegiance Telecom, Inc., a
provider of voice, data and internet services.
John Kraft has been a director since July 1998. Since 1993, Mr. Kraft has
been active in consulting and assisting many startup companies including Modem
Media, a provider of interactive marketing and communications, Two Way
Communications, a provider of interactive marketing and media services, T-Zero
Inc., a producer of software that delivers and manages images to digital
point-of-sales displays, and BioSafe Medical
5
Technologies, a developer of innovative technologies to exploit small blood
samples for analysis. Prior to 1993, Mr. Kraft was employed for over twenty
years at Leo Burnett, a leader in the advertising industry, most recently as
vice chairman.
John R. Oltman has served on our Board of Directors since 1998, and has
served as Vice-Chairman of the Board of Directors since 1998. Mr. Oltman has
been President of JRO Consulting, Inc. since 1995, in which role he serves as
director, advisor and investor in leading technology companies and investment
firms. Mr. Oltman also currently serves as the Chairman of Evolve Software,
Inc. and XOR, Inc. Mr. Oltman also serves as a director for Exult, Inc.,
Alysis Technologies, Inc., and Premier Systems Integrators, Inc. From February
1996 through August 1997, Mr. Oltman served as Chairman and senior member of
the Executive Committee of TSW International, a global leader in asset care
software and services. From July 1991 to November 1995, Mr. Oltman served as
the Chairman and CEO of SHL Systemhouse, a large provider of client/server
systems integration and technology outsourcing. Before joining SHL
Systemhouse, Mr. Oltman was worldwide managing partner for Andersen
Counsulting's system integration and outsourcing business. Mr. Oltman holds a
B.S. degree from the University of Illinois and a M.B.A. degree from
Northwestern University's Kellogg School of Management.
The Board of Directors recommends that stockholders vote FOR all of the
nominees for election as Class I directors.
OTHER DIRECTORS
The following persons will continue to serve as our directors after the
annual meeting.
Served as Term
Name Age Position with Lante Director Since Expires
---- --- ------------------- -------------- -------
Mark
Tebbe
(1) 39 Chairman of the Board of Directors 1984 2003
James
Cowie
(1)(3) 46 Director 1999 2003
John
Landry
(2) 53 Director 1999 2003
Judith
Hamilton
(3) 56 Director 1999 2002
C. Rudy
Puryear
(1) 49 President, Chief Executive Officer and Director 1999 2002
Paul
Yovovich
(2) 47 Director 1999 2002
(1) Member of the executive committee.
(2) Member of the audit committee.
(3) Member of the compensation committee.
Mark Tebbe, a founder of Lante, served as our president and chief executive
officer from inception until June 1999. Since June 1999, Mr. Tebbe has been
the chairman of our board of directors. Mr. Tebbe also serves as a director of
several technology-based and not-for-profit corporations.
James Cowie has been a director since June 1999. Mr. Cowie has been a
general partner of Frontenac Company, a Chicago-based private equity investing
firm, since 1989. He is also a director of 3Com Corporation, a provider of
information networking systems.
John Landry has been a director since October 1999. Since 1995, Mr. Landry
has served as vice president of technology strategy for IBM. Mr. Landry also
served as chairman of AnyDay.com, an internet calendar and personal
information management company, from February 1999 through June 2000. From
March 1996 to January 1999, he also served as chairman of Narrative
Communications, an internet based media advertising and direct marketing
company. From December 1990 to June 1995, Mr. Landry served as the senior vice
president of development and chief technology officer for Lotus Development
Corporation, a provider of software products and services. He also serves as a
director of GIGA Information Group, a technology market research firm, MCK
Communications, Inc., a voice-over-internet protocol telecommunications
company, and Interliant, Inc., an applications service provider, as well as
several other private companies.
6
Judith Hamilton has been a director since March 1999. She has been
president and chief executive officer at Classroom Connect, a leader in
internet-based curriculum and professional development for kindergarten
through high school education, since January 1999. From April 1996 to July
1998, she served as president and chief executive officer of First Floor,
Inc., an internet information management company. From July 1992 to December
1995, she was president and chief executive officer of Dataquest, Inc., an
information technology research company. Ms. Hamilton also serves as a
director of R.R. Donnelley & Sons Company, Software.com, Inc., an internet
messaging solutions provider, Evolve, Inc., a software provider, and Classroom
Connect.
C. Rudy Puryear has served as our president and chief executive officer
since June 1999. Mr. Puryear was Andersen Consulting's global managing partner
for e-commerce from September 1997 to June 1999. Mr. Puryear served as
Andersen Consulting's managing partner for information technology strategy
from March 1991 to September 1997. Prior to his tenure at Andersen Consulting,
Mr. Puryear was managing director for Nolan, Norton & Co., an information
technology strategy-consulting firm.
Paul Yovovich has been a director since July 1998. He currently serves as
director for several companies, including 3Com Corporation, APAC Customer
Services, Inc., a customer relationship marketing firm, Focal Communications
Corporation, a telecommunications provider, and American Media Operations,
Inc., a publisher of periodicals. From 1993 to 1996, he was president of
Advance Ross Corporation, an international transaction services company. Prior
to 1993, he served in a variety of executive positions with Centel
Corporation.
ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
Director Compensation--No compensation is provided to our employees for
serving as a director. Directors who are not our employees do not receive a
cash fee for serving as a director, but are reimbursed for reasonable expenses
incurred in connection with attendance at Board and committee meetings. During
2000, we did not grant any options to purchase our common stock to any of our
directors.
Meetings--During the year ended December 31, 2000, the Board of Directors
held 15 meetings. During 2000, each of our current directors participated in
at least 75% of all of the Board meetings and meetings of the committees on
which he or she served.
Committees of the Board of Directors--The Board of Directors has three
standing committees: executive, audit and compensation, as described below.
Our Board does not have a standing nominating committee. The following table
shows the current membership of each standing committee.
Compensation
Director Executive Committee Audit Committee Committee
-------- ------------------- --------------- ------------
Mark Tebbe X
Chairman
C. Rudy Puryear X
Paul Carbery X
John Kraft X
Chairman
James Cowie X X
John Landry X
Judith Hamilton X
Paul Yovovich X
Chairman
John Oltman X
Executive Committee
Our executive committee has the power to manage our business and affairs as
the Board of Directors may delegate or assign to it. Subject to certain legal
limitations, these powers may include evaluating and negotiating acquisitions
and strategic alliances. The executive committee held eight meetings in 2000.
7
Audit Committee
The audit committee: (1) recommends the independent public accountants to
the Board of Directors for engagement; (2) reviews the plan, scope and results
of the accountants' annual audit; (3) reviews our internal controls, functions
and financial management policies with the accountants; (4) reviews several of
our internal corporate policies; (5) reviews financial information prior to
public disclosure or filing with the Securities and Exchange Commission; and
(6) reports to the Board of Directors regarding all of the foregoing. The
Audit Committee held six meetings in 2000. See "Report of the Audit Committee
of the Board of Directors" for a description of the functions performed by the
Audit Committee in 2000.
Compensation Committee
The compensation committee: (1) establishes guidelines and standards
relating to the determination of executive and key employee compensation; (2)
reviews our executive compensation policies and recommends to the Board of
Directors compensation for our executive officers and key employees; and (3)
administers the Lante Corporation Amended and Restated 1998 Stock Option Plan
and the 2000 Stock Purchase Plan and will administer the Lante Corporation
2001 Stock Incentive Plan, determining the terms of awards granted pursuant to
these plans. The compensation committee held five meetings in 2000. See
"Report of the Compensation Committee of the Board of Directors" for a
description of the functions performed by the compensation committee in 2000.
EXECUTIVE OFFICERS
The table below identifies our executive officers who are not identified in
the table entitled "--Other Directors."
Name Age Position
---- --- --------
William Davis 33 Chief Financial Officer
Rick Gray 44 Vice President--Marketing
John Harne 44 Chief Creative Officer
Thaddeus Malik 34 Vice President and General Counsel
Marla Mellies 41 Vice President--Human Resources
Marvin Richardson 38 Chief Technology Officer
Glenn B. Yeffeth 39 Chief Strategy Officer
William Davis became our chief financial officer in March 2001. From
November 1999 to March 2001, he was our controller. From September 1991 to
November 1999, Mr. Davis was with PricewaterhouseCoopers LLP, most recently as
a senior manager in their technology practice.
Rick Gray has been our vice president of marketing and communications since
November 1998. From May 1996 to November 1998, he was the worldwide director
of public relations at A.T. Kearney, a subsidiary of EDS that is an
international management consultancy and executive search firm. From June 1993
to May 1996, Mr. Gray served as director of corporate marketing and
communications for SHL Systemhouse, Inc., a client-server outsourcing and
systems integration firm. Prior to June 1993, he served as director of public
and investor relations for Technology Solutions Company, and as vice
president, group director and head of the Midwest Advanced Technology Practice
for Hill and Knowlton, Inc.
John Harne has been our chief creative officer since February 2000. From
January 1997 to February 2000, he was vice president of creative services and
co-chief creative officer at IXL, Inc., a subsidiary of IXL Enterprises, Inc.,
an internet services company. From 1994 to 1996, Mr. Harne served as studio
manager and creative director of intermedia at Design EFX, a subsidiary of
Crawford Communications, Inc., an interactive and video production company.
From 1993 to 1994, he was a principal of Hummingbird Studio, Inc., a design
studio specializing in visual interface design.
8
Thaddeus Malik has been our vice president and general counsel since April
2000. From June 1997 to December 1999, he was senior counsel at Ameritech
Corporation responsible for advising the executive leadership team on
corporate, securities and transactional matters. From September 1991 to June
1997, he was with Gardner, Carton & Douglas where his practice focused on
securities, mergers and acquisitions, finance and venture capital
transactions.
Marla Mellies has been our vice president of human resources since June
1998. From June 1995 to June 1998, Ms. Mellies was vice president of human
resources for client access products at 3Com Corporation/U.S. Robotics, a
provider of information networking systems. From 1992 to May 1995, Ms. Mellies
served as human resources director for the International Business Group of
Caremark, Inc.
Marvin Richardson has been our chief technology officer since October 1999.
From April 1999 to October 1999, he was vice president and chief technology
officer for EDS E. Solutions. From July 1996 to April 1999, he was vice
president and chief technology officer for MCI Systemhouse, Inc., a network
services company. From 1993 to 1995, he was chief architect at SHL
Systemhouse, a company involved in client-server consulting and systems
integration.
Glenn Yeffeth has been our chief strategy officer since December 2000. From
April 1999 to December 2000, he was a partner at Diamond Technology Partners,
now DiamondCluster International, an internet consulting firm, where he
developed internet strategies for Global 2000 companies. From 1997 to 1999, he
was the Managing Director, Europe at CSC Index (the strategy consulting arm of
Computer Sciences Corporation). From 1995 to 1996, Mr. Yeffeth launched and
managed CSC Index's Dallas office. He began his career with Nolan, Norton &
Co. (a unit of KPMG).
The Board of Directors elects executive officers annually and the executive
officers, subject to the terms of their employment agreements, serve at the
discretion of the Board of Directors. All of our executive officers have
employment agreements with the Company. See "Executive Compensation--
Employment Agreements" for a description of the employment agreements with our
chief executive officer and our four other most highly compensated executive
officers.
No executive officer or director is related to any other executive officer
or director.
ADDITIONAL INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE OFFICERS
Section 16(a) Beneficial Ownership Reporting Compliance--Section 16 of the
Securities Exchange Act of 1934 requires our officers (as defined under
Section 16) and directors and persons who beneficially own greater than 10% of
a registered class of our equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based solely
on our review of the forms we have received and on written representations
from reporting persons that no such forms were required for them, we believe
that all Section 16 filing requirements applicable to our officers, directors
and 10% beneficial owners were complied with by these persons during 2000,
except that William Davis, our chief financial officer, filed a late report on
Form 3 and, with respect to a purchase of shares in our initial public
offering, a late report on Form 4.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Our compensation committee consists of Messrs. Kraft and Cowie and Ms.
Hamilton, all of whom are non-employee directors. Our committee establishes
Lante's general compensation policies, and also determines the performance
goals and compensation levels for Lante's senior executive officers. The
committee also administers the Amended and Restated 1998 Stock Option Plan and
the 2000 Stock Purchase Plan and will administer the 2001 Stock Incentive
Plan.
9
In determining the levels and components of executive compensation, our
committee strives to attract, motivate and retain talented and dedicated
executive officers by providing them with appropriate cash and equity
incentives. To insure that Lante's compensation program is competitive, we
periodically confer with independent consultants and review compensation
information from other companies in our industry, as well as other companies
with whom we compete in hiring employees. The compensation paid to Lante's
executive officers is generally composed of a base salary and an annual bonus,
as well as stock option grants. We believe that this combination of cash and
equity compensation provides an appropriate incentive for executives to
achieve long term value for our stockholders.
Base Salaries
We strive to pay base salaries at the median of the salaries paid by the
benchmark companies described above. In determining the base salaries of the
executive officers in 2000, we also considered the performance of each
executive, the nature of their responsibilities and Lante's general
compensation practices. While various executives have signed employment
agreements that entitle them to certain base salary levels, we believe that
the 2000 salaries reflected this information. Pursuant to the terms of his
employment agreement, Mr. Puryear was paid a salary of $511,218 for 2000.
Annual Bonus
Other than those executives entitled to bonuses pursuant to their
employment agreements, annual bonuses for our executive officers are awarded
based upon pre-determined individual and company wide performance criteria, as
well as key contributions to Lante's strategic development. While individuals
may receive an additional bonus for exceeding their performance criteria, none
of the executives earned any such awards in 2000 based on results versus
targets. Pursuant to the terms of his employment agreement, Mr. Puryear
received a bonus of $250,000 for 2000. The annual incentive awards for the
other executives were determined and paid either quarterly or in early 2001,
and the amounts are listed in the Summary Compensation Table appearing later
in this section.
Stock Options
We view stock options as an important part of an executive's overall
compensation package. We believe that options encourage retention of
experienced individuals and create an appropriate incentive to maximize
stockholder value. We generally make option grants on the date of hire and
then twice per year, at a price equal to the fair market value of the common
stock at the time of the grant. In general, each option becomes exercisable in
stages beginning one year after its grant date (25%), then in 36 equal monthly
installments thereafter. In making stock option grants to executives, we
consider a number of factors, including individual performance and
responsibilities, Lante's performance during the previous calendar year,
achievement of specific goals, and the number and exercise prices of stock
options already held by each individual.
Internal Revenue Code Limits on Deductibility of Compensation
Federal income tax law prohibits us from deducting certain compensation
paid to our executives that exceeds $1 million during the tax year. However,
if compensation is based on the achievement of performance goals that we as
the committee set pursuant to plans approved by our stockholders, the
compensation is not included in the computation of the limit. Although we may
award non-deductible compensation in circumstances where we deem it
appropriate, we generally intend for all compensation paid to our executive
officers to be tax deductible to Lante pursuant to the Internal Revenue Code.
COMPENSATION COMMITTEE MEMBERS
John Kraft, Chairman
Judith Hamilton
James Cowie
Paul Carbery (through July 2000)
10
EXECUTIVE COMPENSATION
Compensation Paid and Awarded in 2000 and 1999. The following table
provides information concerning all compensation paid and awarded to our chief
executive officer and our four other most highly compensated (based upon
combined salary and bonus) executive officers whose total salary and bonus
exceeded $100,000 during 2000 (collectively, the "Named Officers") for
services rendered in all capacities to us for the years ended December 31,
2000 and 1999.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
---------------------------------- ------------
Securities
Name and Principal Other Annual Underlying
Position Year Salary($) Bonus($) Compensation($) Options (#)
------------------ ---- --------- -------- --------------- ------------
Mark Tebbe 2000 368,077 108,000 -- --
Chairman of the Board of
Directors 1999 360,000 216,000 -- --
C. Rudy Puryear 2000 511,218 250,000 61,805(1) --
President and Chief
Executive Officer 1999 251,894 125,000 2,149,513(2) --
Brian Henry (3) 2000 255,609 70,000 -- 20,000
Executive Vice President
and Chief Financial
Officer 1999 21,780 -- -- 700,000
Rick Gray 2000 224,102 41,000 -- 25,000
Vice President--Marketing 1999 200,000 52,500 -- --
Marvin Richardson 2000 209,295 62,691 -- 15,000
Chief Technology Officer 1999 13,636 -- -- 200,000
(1) Represents the amount paid for life and long-term disability insurance.
(2) Includes $2,148,000 attributable to the difference between the fair value
of our common stock and the price paid by Mr. Puryear for 2.4 million
shares of our common stock.
(3) Mr. Henry resigned as our Executive Vice President and Chief Financial
Officer in March 2001.
Option Grants in 2000--The following table provides information related to
option grants to our Named Officers in 2000. We did not grant stock
appreciation rights to the Named Officers during 2000.
Option Grants in Last Fiscal Year
Potential
realizable
value
at assumed
annual rates
of stock price
appreciation
for option
Individual Grants term (1)
-------------------------------------------------------- --------------
Percent of
total options
Number of granted to Exercise or
shares underlying employees in base price Expiration
Name options granted (#) fiscal year ($/Sh) Date 5% ($) 10% ($)
---- ------------------- ------------- ----------- ---------- ------ -------
Mark Tebbe.............. -- -- -- -- -- --
C. Rudy Puryear......... -- -- -- -- -- --
Brian Henry (2)......... 20,000 * 10.31 8/11/09 10,312 20,606
Rick Gray............... 25,000 * 10.31 8/11/09 12,890 25,783
Marvin Richardson....... 15,000 * 10.31 8/11/09 7,734 15,470
*Less than 1%
(1) Potential realizable value is presented net of the option exercise price,
but before any federal or state income taxes associated with exercise, and
is calculated assuming that the fair market value on the date of the grant
11
appreciates at the indicated annual rates, compounded annually, for the
term of the option. The 5% and 10% assumed rates of appreciation are
mandated by the rules of the SEC and do not represent our estimate or
projection of future increases in the price of our common stock. Actual
gains will be dependent on the future performance of our common stock and
the option holder's continued employment throughout the vesting period. The
amounts reflected in the table may not be achieved.
(2) Mr. Henry resigned as our Executive Vice President and Chief Financial
Officer in March 2001.
Aggregated Option Exercises in 2000 and Year-End 2000 Option Values--The
following table provides information regarding each of the Named Officer's
unexercised options at December 31, 2000. None of the Named Officers exercised
options in 2000. There were no stock appreciation rights exercised in, or
outstanding as of the end of, 2000.
Fiscal Year-End Option Values
Number of Value of Unexercised
Securities Underlying In-The-Money Options
Unexercised Options at Fiscal Year End ($)
at Fiscal Year End (#) (1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Mark Tebbe.................. -- -- -- --
C. Rudy Puryear............. -- -- -- --
Brian Henry (2)............. 204,167 515,833 -- --
Rick Gray................... 81,250 168,750 105,219 186,156
Marvin Richardson........... 58,333 156,667 -- --
(1) The value per option is calculated by subtracting the exercise price per
option from the $1.5625 closing price of the common stock on the Nasdaq
National Market on December 29, 2000.
(2) Mr. Henry resigned as our Executive Vice President and Chief Financial
Officer in March 2001.
Employment Agreements--We have entered into employment agreements with all
of our Named Officers, as described below.
Mark Tebbe. Our employment agreement with Mark Tebbe, the chairman of our
board, provides for a minimum annual base salary of $360,000 and an annual
bonus based upon his performance. The employment agreement may be terminated
by either Mr. Tebbe or us, provided that the Board of Directors may elect,
other than in the case of termination by us for cause, to pay a severance
amount to Mr. Tebbe in the amount of $360,000 plus his most recent annual
bonus. If the Board elects to pay severance, this agreement imposes upon Mr.
Tebbe noncompetition and nonsolicitation restrictions for two years after
either voluntary or involuntary termination of his employment.
C. Rudy Puryear. We have entered into an employment agreement with Rudy
Puryear, our president and chief executive officer, that provides for a
minimum annual base salary of $500,000. Pursuant to his employment agreement,
Mr. Puryear received a guaranteed bonus of $250,000 for 2000 and is to receive
a guaranteed bonus of $125,000 for 2001. Mr. Puryear may also receive an
annual bonus in an amount and pursuant to conditions determined by the Board
of Directors. Following either voluntary or involuntary termination of his
employment, this agreement imposes on Mr. Puryear nonsolicitation restrictions
for two years and noncompetition restrictions for six months.
In connection with his employment agreement, Mr. Puryear purchased 2.4
million restricted shares of common stock for $1.345 per share which vest in
equal installments over 48 months. In connection with this purchase, we loaned
Mr. Puryear $3.2 million. As of December 31, 2000, $3,488,015 of principal and
accrued interest on the loan was outstanding. All principal and accrued
interest on this loan are due on February 14, 2003. In addition, we made a
second loan to Mr. Puryear for his personal use in the amount of $2.5 million.
As of
12
December 31, 2000, $2,701,375 of principal and accrued interest on the loan
was outstanding. Subject to certain restrictions, principal and accrued
interest on this loan are due upon the earlier of June 30, 2003 or six months
from the termination of Mr. Puryear's employment. However, if Mr. Puryear is
still employed by the company on June 30, 2003, (1) and if a valuation target
of $16.67 per share for Mr. Puryear's stock has not been reached or if a
liquidity event has not occurred, then maturity of the loan will be postponed
until the liquidity event can occur, and (2) if the aforementioned valuation
target has not been achieved as of that date, then the loan will be forgiven
prospectively at the rate of $100,000 per month.
Mr. Puryear is also entitled to a one-time bonus pursuant to his employment
agreement, payable upon the earliest of (1) six months from the date of
termination of employment, (2) June 30, 2003 or (3) the date the accrued
interest on the $2.5 million loan is paid in full. On that date, Mr. Puryear
is entitled to a bonus equal to $20,833 times the number of full months of his
employment from June 16, 1999 until the accrued interest is paid.
If Mr. Puryear's employment is terminated by us without cause, he is
entitled to severance pay equal to one year's base salary plus the current
year's target bonus, 18 months' acceleration on the vesting of the 2.4 million
shares he purchased from us, one year of paid insurance, and forgiveness of a
portion of the $2.5 million loan in an amount equal to $83,333 for each full
month of Mr. Puryear's employment with us. Mr. Puryear is also entitled to
these severance payments if he terminates his employment for "good reason"
pursuant to his employment agreement.
Upon any termination of Mr. Puryear's employment, we have the right to
repurchase from Mr. Puryear any of the unvested 2.4 million shares he
purchased from us, for an amount equal to the original per share purchase
price. All of the shares Mr. Puryear purchased from us become vested on a
change in control. Pursuant to registration rights granted to Mr. Puryear, we
have filed a Form S-8 registration statement, including a resale prospectus,
to allow Mr. Puryear and certain members of his family to resell his shares at
the same time and in the same amount as would be available under Rule 144 of
the Securities Act had Mr. Puryear not acquired his shares pursuant to a
secured loan.
Brian Henry. We entered into an employment agreement with Brian Henry, our
former executive vice president and chief financial officer, that provided for
a minimum annual base salary of $250,000 and an annual bonus, with a target
bonus of $100,000. This employment agreement imposes upon Mr. Henry
nonsolicitation restrictions for two years after termination of his
employment.
In connection with his employment agreement, Mr. Henry purchased 300,000
shares of our common stock for $2.245 per share. Mr. Henry also received an
option to purchase 700,000 shares of our common stock at an exercise price of
$2.245 per share. Mr. Henry resigned in March 2001, at which time he was
entitled to purchase 247,917 shares pursuant to this option. The option to
purchase these shares will terminate if not exercised prior to June 28, 2001.
We have entered into employment agreements with Rick Gray, our vice
president-marketing, and Marvin Richardson, our chief technology officer.
Pursuant to these employment agreements, Messrs. Gray and Richardson have
assigned to us certain of their rights to inventions that are created during
the course of their work for us. In addition, both individuals are subject to
nonsolicitation restrictions for the two year period following their
termination of employment, as well as confidentiality obligations. Pursuant to
a separate option agreement, Mr. Gray is also entitled to accelerated option
vesting if we experience a change in control.
13
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for us,
the Nasdaq Stock Market (U.S.) Composite Index and the JP Morgan H&Q Internet
100 Index during the period commencing on February 11, 2000, the date our
common stock began trading, and ending on December 31, 2000. The comparison
assumes $100 was invested on February 11, 2000 in our common stock, the Nasdaq
Market Composite Index and the JP Morgan H&Q Internet 100 Index and assumes
the reinvestment of any dividends. The performance graph begins with the
closing price of our common stock on February 11, 2000, which was $54.9375.
In 1999, our Board of Directors authorized a contribution to the Lante
Foundation of 335,976 shares of our common stock. We recorded a charge of
$3,359,760 in 1999 for this contribution. This contribution was completed in
March 2000.
14
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 2001, certain information
with respect to the beneficial ownership of our common stock by (1) each of
our directors, (2) each of the Named Officers, (3) each person known by us to
own beneficially more than 5% of the outstanding shares of common stock, and
(4) all of our executive officers and directors as a group. Beneficial
ownership of shares is determined in accordance with Securities and Exchange
Commission rules. Under these rules, beneficial ownership includes any shares
which the person can vote or transfer/sell, as well as any shares that the
individual has the right to acquire on or before May 30, 2001 (60 days after
March 31, 2001) through the exercise of options or other rights. Unless
otherwise indicated, each person has sole investment and voting power with
respect to the shares disclosed below, and the address of each beneficial
owner of more than 5% of our common stock is c/o Lante Corporation, 161 North
Clark Street, Suite 4900, Chicago, Illinois 60601.
Number of Options
Included in
Number of Shares
Number of Shares Percent of Shares Beneficially
Name and Address Beneficially Owned Beneficially Owned (%) Owned
---------------- ------------------ ---------------------- -----------------
Directors and Named
Officers:
Mark Tebbe(1)........... 13,020,500 32.3 --
C. Rudy Puryear(2)...... 2,365,500 5.9 --
Paul Carbery(3)......... 5,391,532 13.4 --
James Cowie(3).......... 5,391,532 13.4 --
Judith Hamilton......... 257,078 * 49,583
John Landry............. 730,566 1.8 --
John Kraft(4)........... 690,756 1.7 68,750
John Oltman(5).......... 1,001,805 2.5 39,167
Paul Yovovich........... 728,130 1.8 71,250
Brian Henry(6).......... 558,333 1.4 233,333
Marvin Richardson....... 102,770 * 81,943
Rick Gray............... 197,500 * 112,500
Five percent
stockholders:
Frontenac Company VII
LLC(7)................. 5,391,532 13.4 --
John Meyer(8)........... 2,938,614 7.3 102,875
Dell USA L.P.(9)........ 3,414,428 8.5 --
Michael Dell(10)........ 3,924,428 9.7 --
All executive officers
and directors as a
group:
(17 people) (11)........ 25,349,280 62.9 878,399
* Less than 1%.
(1) Does not include 335,976 shares of common stock held by the Lante
Foundation, a non-profit organization, of which Mr. Tebbe is the vice
president and a director. In such capacity, Mr. Tebbe shares voting and
investment power with respect to these 335,976 shares. Mr. Tebbe disclaims
beneficial ownership of these 335,976 shares. Does not include 2,375,000
shares held by trusts for the benefit of family members of Mr. Tebbe. See
Note (8).
(2) Does not include 80,000 shares in the aggregate held in trusts of which
family members of Mr. Puryear are the beneficiaries. Mr. Puryear disclaims
beneficial ownership of these 80,000 shares.
15
(3) Represents 5,134,456 shares held by Frontenac VII Limited Partnership and
257,076 shares held by Frontenac Masters VII Limited Partnership. Mr.
Cowie and Mr. Carbery are each a member of Frontenac Company VII LLC,
which is the sole general partner of Frontenac VII Limited Partnership and
Frontenac Masters VII Limited Partnership. As a result, Mr. Cowie and Mr.
Carbery may each be deemed to have beneficial ownership of the shares held
by Frontenac VII Limited Partnership and Frontenac Masters VII Limited
Partnership. Mr. Cowie and Mr. Carbery each disclaim beneficial ownership
of these shares, except to the extent of their pecuniary interests. Based
upon a Schedule 13G filed February 5, 2001, there are six members of
Frontenac Company VII LLC in addition to Messrs. Cowie and Carbery.
(4) Includes 318,006 shares held by Kraft Enterprises Ltd., an entity directly
controlled by Mr. Kraft.
(5) Represents 933,134 shares held by JRO Consulting, Inc., a corporation
controlled by Mr. Oltman, and 29,504 shares held by the John R. Oltman
Charitable Foundation.
(6) Includes 300,000 shares held by BRH Wynstone Limited Partnership, an
entity of which Mr. Henry is a general partner. Mr. Henry resigned his
position as our executive vice president and chief financial officer in
March 2001.
(7) Includes 5,134,456 shares held by Frontenac VII Limited Partnership and
257,076 shares held by Frontenac Masters VII Limited Partnership.
Frontenac Company VII LLC is the sole general partner of both limited
partnerships. Based upon a Schedule 13G filed February 5, 2001, there are
eight individuals that are members of Frontenac Company VII LLC. The
address of Frontenac Company VII LLC is 135 South LaSalle Street, Suite
3800 Chicago, Illinois 60603.
(8) Includes 460,739 shares held by a family limited partnership, of which Mr.
Meyer is a general partner and 2,375,000 shares held by trusts for the
benefit of family members of Mark Tebbe, of which Mr. Meyer serves as
trustee. In such capacity, Mr. Meyer has sole voting and investment power
with respect to the shares held by these trusts. Mr. Meyer disclaims
beneficial ownership of the 2,375,000 shares held by the trusts for family
members of Mr. Tebbe.
(9) Based upon a Schedule 13G filed on behalf of Dell USA L.P. and Dell
Computer Corporation on February 14, 2001. Does not include 510,000 shares
held by Michael Dell, individually. Dell USA L.P. does not have any
ownership interest in, or voting or investment power with respect to,
shares owned by Michael Dell. The address of Dell USA L.P. is One Dell
Way, Round Rock, Texas 78682.
(10) Based upon a Schedule 13G filed by Michael Dell on February 14, 2001,
this includes 510,000 shares held by Michael Dell individually, and
3,414,428 shares held by Dell USA L.P., a wholly-owned subsidiary of Dell
Computer Corporation. Mr. Dell is the chairman, chief executive officer
and a principal stockholder of Dell Computer Corporation. Mr. Dell
disclaims beneficial ownership of the shares held by Dell USA L.P. The
business address of Mr. Dell is Dell Computer Corporation, One Dell Way,
Round Rock, Texas 78682.
(11) Includes all of our directors and executive officers.
16
PROPOSAL 2
APPROVAL AND ADOPTION OF THE
2001 LANTE CORPORATION STOCK INCENTIVE PLAN
Our stockholders are being asked to approve and adopt our 2001 Stock
Incentive Plan. The following discussion of our 2001 Stock Incentive Plan is
qualified in its entirety by reference to the full text of the plan which is
set forth in Appendix A.
General
Our 1998 Amended and Restated Stock Option Plan has 15,000,000 shares
reserved for grant. As of March 31, 2001, options to purchase approximately
7,860,779 shares were outstanding. The 2001 Stock Incentive Plan is designed
to promote the Company's overall financial objectives by attracting,
motivating and retaining employees, outside directors and other persons who
are instrumental to the Company's long-term growth by allowing these
individuals to acquire an equity interest in Lante. The 2001 Stock Incentive
Plan permits the issuance of up to an additional 8,000,000 shares of our
common stock. Additionally, on January 1st of each year commencing on January
1, 2002, the 2001 Stock Incentive Plan provides for an annual increase in the
maximum number of shares of common stock available for grant under the plan by
the lesser of (i) 8% of the total number of shares of common stock outstanding
as of December 31st of the prior year, or (ii) 4,000,000 shares.
The Board of Directors believes that the 2001 Stock Incentive Plan is
appropriate to attract and retain well-qualified persons for service as
officers, employees, advisors and consultants and to align the interests of
those individuals with the interests of our stockholders. The Board of
Directors approved the 2001 Stock Incentive Plan on March 19, 2001 and
recommends that our stockholders approve and adopt it.
Terms of the Stock Incentive Plan
The 2001 Stock Incentive Plan is administered by the compensation committee
of the Board of Directors. The 2001 Stock Incentive Plan provides the
compensation committee with broad discretion to fashion the terms of grants of
awards under the plan as the committee deems appropriate. Directors, officers,
employees, independent contractors, advisors and consultants who are in a
position to make contributions to our growth and success are eligible for
selection by the compensation committee as participants in the 2001 Stock
Incentive Plan. Under this plan, the compensation committee may grant
nonqualified options, incentive stock options, stock appreciation rights and
stock awards.
The exercise price for options granted under the 2001 Stock Incentive Plan
will be established by the compensation committee. If an option is intended to
qualify as an incentive stock option (ISO), the exercise price per share will
not be less than the fair market value per share on the date such option is
granted. If an option is intended to qualify as an ISO which is to be granted
to a participant who is a 10% stockholder of Lante, then the exercise price
per share cannot be less than 110% of the fair market value per share of our
common stock on the grant date. The option exercise price will be payable by
the participant (i) in cash, (ii) by surrendering shares of common stock that
the participant has owned for at least six months having a total fair market
value equal to the exercise price, (iii) by certifying ownership of shares of
common stock for later delivery to us, or (iv) by any combination of the
foregoing.
Options are exercisable during the period specified in each option
agreement and will generally be exercisable in installments pursuant to a
vesting schedule to be designated by the compensation committee. No option
will remain exercisable later than ten years after the grant date (or five
years from the grant date in the case of an ISO granted to 10% stockholders of
Lante).
Stock appreciation rights may be granted either alone or with a stock
option. Stock appreciation rights granted with a non-qualified stock option
may be granted either at or after the time of grant of such stock option.
Stock appreciation rights granted with an ISO may only be granted at the time
of grant of such stock option. A stock appreciation right terminates as
determined by the committee, or, if granted with a stock option, upon the
termination or exercise of the related stock option.
17
Stock awards may be directly issued subject to the terms that the committee
shall determine. A stock award may be issued for any consideration that the
Committee deems appropriate, including, without limitation: (1) cash or cash
equivalents; (2) past services; or (3) future services. A stock award may be
subject to restrictions on transfer and/or forfeiture provisions.
Except as provided in any option agreement or authorized by the
compensation committee, awards generally may not be assigned or transferred
except by will or the laws of inheritance following the participant's death or
pursuant to a qualified domestic relations order. After the termination of a
participant's service to us, the participant will generally have a limited
period of time in which to exercise awards which had vested as of the date of
termination. Each award will be immediately forfeited upon the termination of
the participant's service to the extent it is not vested at that time. In any
event, the participant must exercise options and stock appreciation rights
before the specified expiration date. Upon the termination of a participant's
service due to death or disability, all of the participant's unexpired and
unexercised options and stock appreciation rights will be exercisable for the
shorter of their remaining term or one year after termination of employment.
If awards are forfeited or otherwise terminate for any reason before they
are exercised, then the corresponding shares of common stock will again become
available for awards under the 2001 Stock Incentive Plan. Similarly, if any
shares of common stock are paid to us in connection with the exercise of an
option or stock appreciation rights or in satisfaction of withholding taxes,
those shares may again become available for awards under the 2001 Stock
Incentive Plan. However, these returned shares will not be made available for
incentive stock options. In no event may any one individual receive awards
under the 2001 Stock Incentive Plan covering more than 2,000,000 shares of
common stock in any calendar year period.
In the event of a stock dividend, stock split, recapitalization, or other
change affecting our capital structure, the compensation committee may adjust
or substitute, as the case may be, the aggregate number of shares subject to
the 2001 Stock Incentive Plan and the number and exercise price (if
applicable) of shares subject to outstanding awards. However, fractional
shares resulting from such adjustments will be eliminated by rounding to the
next lower whole number of shares with appropriate payment for such fractional
shares as determined by the compensation committee.
Change in Control
Upon the occurrence of a Change in Control (as defined in the 2001 Stock
Incentive Plan), the compensation committee may provide for the full vesting
of any awards outstanding at the time of the Change in Control. In addition,
after a Change in Control the compensation committee will have the right to
provide for: (1) continuation of the outstanding awards under the plan if
Lante is the surviving corporation; (2) assumption of the outstanding awards
under the plan by the surviving corporation; (3) substitution of equivalent
awards by the surviving corporation for the outstanding awards under the plan;
or (4) cancellation of the outstanding awards if the per share exercise price
(if applicable) equals or exceeds the Change in Control Price (as defined in
the 2001 Stock Incentive Plan) or settlement of all or part of the outstanding
awards for cash in the following amount for each award: (i) the excess of the
Change in Control Price over the exercise price of the award (if applicable)
multiplied by (ii) the number of shares of common stock subject to the award.
Federal Income Tax Consequences
We are advised that under the current Federal income tax laws, the income
tax consequences associated with stock options, stock appreciation rights and
stock awards granted under the 2001 Stock Incentive Plan are summarized as
follows:
Non-Qualified Stock Options
Participant. Generally, a participant receiving a non-qualified stock
option does not realize any taxable income for Federal income tax purposes at
the time of grant. Upon exercise of such option, the excess of the fair market
value of the shares of common stock subject to the non-qualified stock option
on the date of exercise over the exercise price will generally be taxable to
the participant as ordinary income. The participant will have
18
a capital gain (or loss) upon the subsequent sale of the shares of common
stock received upon exercise of the option in an amount equal to the sale
price reduced by the fair market value of the shares of common stock on the
date the option was exercised. The holding period for purposes of determining
whether the capital gain (or loss) is a long-term or short-term capital gain
(or loss) will generally commence on the date the non-qualified stock option
is exercised.
Lante. We generally will be entitled to a tax deduction in the same amount
and in the same year in which the participant recognizes ordinary income
resulting from the exercise of a non-qualified stock option.
Incentive Stock Options
Participant. Generally, a participant will not realize any taxable income
for Federal income tax purposes at the time an incentive stock option is
granted. Upon exercise of the incentive stock option, the participant will
generally incur no income tax liability (other than pursuant to the
alternative minimum tax, if applicable), unless the participant has left our
employ more than three months before exercising the option. If the participant
transfers shares of common stock received upon the exercise of an incentive
stock option within a period of two years from the date of grant of such
incentive stock option or one year from the date of receipt of the shares of
common stock (the "Holding Period"), then, in general, the participant will
have taxable ordinary income in the year in which the transfer occurs in an
amount equal to the excess of the fair market value on the date of exercise
over the exercise price. However, if the sale price is less than the fair
market value of such shares on the date of exercise, the ordinary income will
not be more than the difference between the sale price and the exercise price.
The participant will have long-term or short-term capital gain (or loss) in an
amount equal to the amount by which the amount received for such common stock
exceeds (or is less than) the participant's tax basis in the common stock as
increased by the amount of any ordinary income recognized as a result of the
disqualifying disposition, if any. If the participant transfers the shares of
common stock after the expiration of the Holding Period, he or she will
recognize capital gain (or loss) equal to the difference between the sale
price and the exercise price.
Lante. We are not entitled to a tax deduction upon grant, exercise or
subsequent transfer of shares of common stock acquired upon exercise of an
incentive stock option, provided that the participant holds the shares
received upon the exercise of such option for the Holding Period. If the
participant transfers the common stock acquired upon the exercise of an
incentive stock option prior to the end of the Holding Period, we are
generally entitled to a deduction at the time the participant recognizes
ordinary income in an amount equal to the amount of ordinary income recognized
by such participant as a result of such transfer.
Stock Appreciation Rights
Participant. Generally, a participant receiving a stock appreciation right
does not realize any taxable income for Federal income tax purposes at the
time of grant. Upon the exercise of a stock appreciation right, the
participant will generally recognize ordinary income in an amount equal to the
amount of cash or the fair market value of the common stock distributed to the
participant. The participant will have a capital gain (or loss) upon a
subsequent sale of shares of common stock received in an amount equal to the
sale price reduced by the fair market value of the shares of common stock on
the date the stock appreciation right was exercised. The holding period for
purposes of determining whether the capital gain (or loss) is a long-term or
short-term capital gain (or loss) will generally commence on the date the
stock appreciation right is exercised.
Lante. We generally will be entitled to a tax deduction in the same amount
and in the same year in which the participant recognizes ordinary income
resulting from the exercise of stock appreciation rights.
Stock Awards
Participant. Generally, a participant receiving a stock award will
recognize taxable income at the time of grant of a stock award of unrestricted
shares. The taxable income will be equal to the excess of the fair market
value of the unrestricted shares on the grant date over any amount the
participant pays for the unrestricted shares.
19
Generally, a participant will not recognize taxable income at the time of
grant of a stock award of restricted shares. However, a participant may make
an election under section 83(b) of the Internal Revenue Code of 1986, as
amended (Section 83(b)) to be taxed at the time of the stock award.
If a participant does not elect under Section 83(b) to recognize income at
the time of the stock award, the participant will recognize taxable income at
the time of vesting. The taxable income will be equal to the excess of the
fair market value of the restricted shares at the time the shares vest over
any amount the participant paid for the restricted shares.
A participant may elect under Section 83(b) to include as ordinary income
in the year of the stock award an amount equal to the excess of the fair
market value of the shares on the transfer date over any purchase price paid
for the shares. The fair market value of the shares will be determined as if
the shares were not subject to forfeiture. If a participant makes the Section
83(b) election, the participant will not recognize any additional income when
the shares vest. Any appreciation in the value of the restricted shares after
the award is not taxed as compensation, but instead as a capital gain when the
restricted shares are sold or transferred. If the participant makes a Section
83(b) election and the restricted shares are later forfeited, the participant
is not entitled to a tax deduction or a refund of the tax already paid.
The Section 83(b) election must be filed with the IRS within 30 days
following the date the shares are awarded to a participant. The 83(b) election
generally is not revocable and cannot be made after the 30-day period has
expired. Dividends received on restricted shares subject to a Section 83(b)
election are taxed as dividends instead of compensation.
Lante. We generally will be entitled to an income tax deduction equal to
the amount of ordinary income a participant recognizes in connection with a
stock award. The deduction will generally be allowed for the taxable year in
which the participant recognizes such ordinary income.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (Section
162(m)), provides that any compensation paid to a "covered employee" within
the meaning of Section 162(m) which is in excess of $1,000,000 cannot be
deducted by the Company for Federal income tax purposes unless, in general,
(1) such compensation constitutes "qualified performance-based compensation"
satisfying the requirements of Section 162(m) and (2) the plan or agreement
providing for such performance-based compensation has been approved by
stockholders. In an effort to facilitate our ability to deduct for tax
purposes any compensation of a "covered employee" arising from awards granted
under the 2001 Stock Incentive Plan (including from the exercise of stock
options), the Board of Directors is submitting the 2001 Stock Incentive Plan
to our stockholders for approval. The Board believes the approval by our
stockholders of the 2001 Stock Incentive Plan is in the best interests of
Lante and its stockholders.
The Board of Directors recommends that the stockholders vote FOR the
approval of the 2001 Stock Incentive Plan.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee assists in the oversight of Lante's financial reporting
and accounting processes and internal controls, the performance and
independence of Lante's auditors and related matters. The committee operates
under a written charter adopted by the Board of Directors, a copy of which is
attached to this proxy statement as Appendix B. Each member of the audit
committee is "independent" for purposes of the Nasdaq National Market listing
standards.
This year, the committee reviewed Lante's 2000 audited financial statements
and met with both management and Lante's independent auditors,
PricewaterhouseCoopers LLP, to discuss those financial statements. These
20
meetings included sessions at which management was not present. We discussed
with PricewaterhouseCoopers LLP the results of its audit and examination of
Lante's consolidated financial statements, its evaluation of the company's
internal controls and the overall assessment of the quality of Lante's
financial accounting and reporting functions. We also discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement
on Auditing Standards No. 61. PricewaterhouseCoopers LLP also provided to the
committee the written disclosures and the letter required by the Independent
Standards Board Standard No. 1. The committee discussed with
PricewaterhouseCoopers LLP these materials and the firm's independence from
Lante.
Based on these discussions and review, we recommended that the Board of
Directors include Lante's audited consolidated financial statements in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as
filed with the Securities and Exchange Commission.
AUDIT COMMITTEE MEMBERS
Paul Yovovich, Chairman
Paul Carbery
John Landry
It is expected that representatives of PricewaterhouseCoopers LLP will be
present at the meeting and will be available to respond to questions.
Representatives of PricewaterhouseCoopers LLP will be given an opportunity to
make a statement if they desire to do so.
Audit Fees--We have been billed a total of approximately $165,000 by
PricewaterhouseCoopers LLP, our independent auditors, for professional
services rendered in connection with the audit of our consolidated financial
statements for the fiscal year ended December 31, 2000, its review of
unaudited interim financial statements included in the each of our Forms 10-Qs
filed during the last fiscal year and accounting consultations regarding
generally accepted accounting principals.
Financial Information Systems Design and Implementation Fees--We have not
incurred any fees in connection with financial information systems design and
implementation during the fiscal year ended December 31, 2000 with
PricerwaterhouseCoopers LLP.
All Other Fees--We have been billed a total of approximately $509,000 for
all other services rendered by PricewaterhouseCoopers LLP that are not set
forth above.
ADDITIONAL INFORMATION
Our 2000 annual report to stockholders that we have enclosed with this
proxy statement contains our Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, as filed with the SEC. Upon the written request of
any person who is a stockholder as of the record date and payment of a
reasonable fee which will not exceed our reasonable expenses in providing
them, we will provide copies of the exhibits to the Form 10-K. Requests for
such materials should be directed to Lante Corporation, 161 North Clark
Street, Suite 4900, Chicago, Illinois 60601, Attention Todd Kobayashi.
By order of the Board of Directors
/s/ Mark Tebbe
Mark Tebbe
Secretary
Chicago, Illinois
May 4, 2001
21
APPENDIX A
LANTE CORPORATION
2001 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the Plan is to reward and motivate Employees, Directors and
Advisors to put forth maximum efforts toward the continued growth,
profitability and success of the Company and its Subsidiaries by providing
incentives to such persons through the ownership of Common Stock. Toward this
objective, the Committee may grant Awards to Employees, Directors and Advisors
on the terms and subject to the conditions set forth in the Plan. The Plan is
adopted as of March 19, 2001, subject to the approval by the Company's
stockholders within twelve (12) months after such adoption date. Unless the
Plan is discontinued earlier by the Board as provided herein, no Award shall
be granted hereunder on or after the date ten (10) years after the Effective
Date.
2. Definitions
As used in this Plan, the following definitions shall apply:
2.1. "Advisor" means any advisor or consultant who renders bona fide
services to the Company or a Subsidiary.
2.2. "Award" means a Stock Appreciation Right, Stock Option or Stock
Award.
2.3. "Board" means the Board of Directors of the Company.
2.4. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.5. "Commission" means the Securities and Exchange Commission or any
successor agency.
2.6. "Committee" means the Board, or a committee of Directors,
Employees, shareholders or Advisors designated by the Board, which is
authorized to administer the Plan under Section 3 hereof. With respect to
Stock Options granted at the time the Company is publicly held, if any,
insofar as the Committee is responsible for granting Stock Options to
Participants hereunder, it shall consist solely of two (2) or more
directors, each of whom is a "Non-Employee Director" within the meaning of
Rule 16b-3 as promulgated under the Exchange Act and each of whom is also
an "outside director" under Section 162(m) of the Code.
2.7. "Common Stock" means shares of common stock of the Company.
2.8. "Corporate Transaction" means the approval by the stockholders of
the Company of a reorganization, merger, consolidation, or sale or other
disposition of all or substantially all of the assets of the Company.
2.9. "Company" means Lante Corporation, a Delaware corporation, and any
successor entity.
2.10. "Director" means a member of the Board.
2.11. "Disability" means the inability of a Participant to perform his
normal duties as a full time Employee, or as a Director or Advisor, for a
continuous period of ninety (90) days by reason of physical or mental
illness or incapacity. If there is any dispute as to whether the
termination of the Participant's employment or service was due to his
physical or mental illness or incapacity, such question shall be submitted
to a licensed physician for the purpose of making such determination. An
examination of the Participant shall be made within thirty (30) days after
written notice by the Committee or the Participant by a licensed physician
selected by the Committee. The Participant shall submit to such examination
and provide such information as such physician may request and the
determination of such physician as to the question of the Participant's
physical or mental condition shall be binding and conclusive on all parties
concerned for purposes of this Plan. The disability shall be deemed to be
continuing unless the Participant performs his regular duties as an
Employee, Director or Advisor for a continuous period of ninety (90) days.
2.12. "Effective Date" means March 19, 2001.
A-1
2.13. "Employee" means an employee of the Company or a Subsidiary.
2.14. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
2.15. "Fair Market Value" means, as of any given date, the fair market
value of the Stock as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value per share shall be the closing sales price per share
of the Common Stock on Nasdaq (or the principal stock exchange or market on
which the Common Stock is then traded) on the date as of which such value
is being determined or the last previous day on which a sale was reported.
2.16. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
2.17. "Nasdaq" means The Nasdaq Stock Market, including the Nasdaq
National Market and the Nasdaq SmallCap Market.
2.18. "Non-Employee Director" means a Director who is not an officer or
employee of the Company.
2.19. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
2.20. "Participant" means any individual to whom an Award has been
granted by the Committee under this Plan.
2.21. "Plan" means the Lante Corporation 2001 Stock Incentive Plan, as
amended from time to time.
2.22. "Representative" means (i) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last
will and testament of a Participant or pursuant to the laws of the
jurisdiction in which the Participant had his or her primary residence at
the date of the Participant's death; (ii) the person or entity acting as
the guardian or temporary guardian of a Participant; (iii) the person or
entity which is the beneficiary of the Participant upon or following the
Participant's death; or (iv) any person to whom a Stock Option has been
transferred with the permission of the Committee or by operation of law;
provided that only one of the foregoing shall be the Representative at any
point in time as determined under applicable law and recognized by the
Committee.
2.23. "Stock Appreciation Right" means a right granted under Section 8.
2.24. "Stock Award" means an Award, other than a Stock Option or Stock
Appreciation Right, made in Common Stock or denominated in shares of Common
Stock.
2.25. "Stock Option" means any form of stock option granted under the
Plan to a Participant by the Committee pursuant to the terms, conditions,
restrictions, and/or limitations, if any, as the Committee may establish.
2.26. "Subsidiary" means any company during any period in which it is a
"subsidiary corporation" (as such term is defined in Section 424(f) of the
Code) with respect to the Company.
2.27. "Tebbe Family" means Mark A. Tebbe, his spouse, heirs and any
group (within the meaning of Section 13(d)(3) of the Exchange Act) of which
any of the foregoing persons is a member for purposes of holding, acquiring
or disposing of securities of the Company, any trust established by or for
the benefit of any of the foregoing to which Mark A. Tebbe has consented
and any other entity controlled by or for the benefit of any of the
foregoing to which Mark A. Tebbe has consented.
2.28. "Ten Percent Holder" means an individual who owns, or is deemed to
own, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any parent or subsidiary
corporation of the Company, determined pursuant to the rules applicable to
Section 422(b)(6) of the Code.
In addition, certain other terms used herein have the definitions given to
them in the first places in which they are used.
A-2
3. Administration
The Plan shall be administered by the Committee. The Committee shall have
the authority to: (a) interpret the Plan; (b) establish such rules and
regulations as it deems necessary for the proper operations and administration
of the Plan; (c) select Employees, Directors and Advisors to receive Awards
under the Plan; (d) determine the form of an Award, the number of shares
subject to the Award, all the terms, conditions, restrictions and/or
limitations, if any, of an Award, including the time and conditions of
exercise (if applicable) or vesting; (e) grant waivers of Plan terms,
conditions, restrictions, and limitations; (f) accelerate the vesting or
exercise of an Award; (g) amend or terminate an Award or this Plan in
accordance with the terms hereof; and (h) take any and all other action it
deems necessary or advisable for the proper operation or administration of the
Plan. All determinations of the Committee shall be made by a majority of its
members, and its determinations shall be final, binding and conclusive. The
Committee, in its discretion, may delegate its authority and duties under the
Plan to any of the Company's Directors, Employees, shareholders or Advisors
under such conditions or limitations as the Committee may establish.
4. Eligibility
Any Employee, Director or Advisor is eligible to become a Participant of
the Plan.
5. Shares Available
The maximum number of shares of Common Stock which shall be available for
grant of Awards under the Plan shall not exceed 8,000,000 (such amount being
subject to adjustment as provided in Section 11); provided, however, that as
of January 1 of each year, commencing with the year 2002, the maximum number
of shares of Common Stock which may be delivered under the Plan shall
automatically increase by a number equal to the lesser of (i) 8% of the total
number of shares of Common Stock outstanding as of the last day of the prior
calendar year, assuming for this purpose the conversion into Common Stock of
all outstanding securities that are convertible by their terms (directly or
indirectly) into Common Stock, or (ii) 4,000,000 shares. Any shares of Common
Stock related to Awards which (a) terminate by expiration, forfeiture,
cancellation or otherwise without the issuance of such shares, or (b) are
settled in cash in lieu of Common Stock shall be available again for grant
under the Plan.
Subject to adjustment as provided in Section 11, the maximum number of
shares of Common Stock that may be issued by Stock Options intended to be
Incentive Stock Options shall be 8,000,000 shares.
Subject to adjustment as provided in Section 11, the maximum number of
shares of Common Stock that may be covered by Awards, in the aggregate,
granted to any one Participant during any calendar year shall be 2,000,000
shares.
6. Participation
The Committee shall select, from time to time, Participants from those
Employees, Directors and Advisors who, in the opinion of the Committee, can
further the Plan's purposes. Once a Participant is so selected, the Committee
shall determine the terms, conditions, restrictions and/or limitations, if
any, applicable to the Awards in addition to those set forth in this Plan and
the administrative rules and regulations issued by the Committee.
7. Stock Options
(a) Grants. Stock Options may be granted alone or in addition to other
Awards granted under the Plan and may be of two types: Non-Qualified Stock
Options and Incentive Stock Options. Any Stock Option granted under the Plan
shall be in such form as determined by the Committee in its sole discretion,
subject to the limitations set forth herein. Incentive Stock Options may be
granted only to employees of the Company and its Subsidiaries. To the extent
that any Stock Option is not designated as an Incentive Stock Option or, even
if so designated,
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does not qualify as an Incentive Stock Option, it shall constitute a Non-
Qualified Stock Option. Incentive Stock Options may be granted only within 10
years from the date the Plan is adopted, or the date the Plan is approved by
the Company's stockholders, whichever is earlier. An option agreement shall
indicate on its face whether it is intended to be an agreement for an
Incentive Stock Option or a Non-Qualified Stock Option.
(b) Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any Incentive
Stock Option under Section 422 of the Code.
(c) Terms and Conditions of Stock Options. A Stock Option shall be
exercisable in whole or in such installments and at such times as may be
determined by the Committee. The price at which a share of Common Stock may be
purchased upon exercise of a Stock Option shall be established by the
Committee. However, no Incentive Stock Option shall be exercisable more than
ten (10) years (or five years in the case of an individual who is a Ten
Percent Holder) after the date the Incentive Stock Option is granted.
(d) Additional Terms and Conditions. The Committee may establish such other
terms, conditions, restrictions and/or limitations, if any, of any Stock
Option, provided they are not inconsistent with the Plan.
(e) Exercise Payment. The option price of any Stock Option shall be paid in
full in cash (by certified or bank check or such other instrument as the
Company may accept) or, unless otherwise provided in the applicable option
agreement, by one or more of the following: (i) in the form of Common Stock
already owned by the Participant for a period of at least six months based in
any such instance on the Fair Market Value of the Common Stock on the date the
Stock Option is exercised; (ii) by certifying to the satisfaction of the
Committee ownership of shares of Common Stock owned by the Participant for a
period of at least six months for later delivery to the Company as specified
by the Company; (iii) by irrevocably authorizing a third party to sell shares
of Common Stock (or a sufficient portion of the shares) acquired upon exercise
of the Stock Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting
from such exercise; or (iv) by any combination of cash and/or any one or more
of the methods specified in clauses (i), (ii) and (iii). Notwithstanding the
foregoing, a form of payment shall not be permitted to the extent it would
cause the Company to recognize a compensation expense (or additional
compensation expense) with respect to the Stock Option for financial reporting
purposes.
(f) If the Stock Option is intended to qualify as an Incentive Stock
Option, the exercise price per share shall be not less than the Fair Market
Value per share on the date the Stock Option is granted, or if granted to an
individual who is a Ten Percent Holder, not less than 110% of such Fair Market
Value per share.
(g) Early Exercise. The Committee may permit a Director or Advisor to
exercise a Stock Option, on terms acceptable to the Committee, prior to
vesting of the Stock Option and/or prior to the lapse of restrictions on the
exercisability of the Stock Option; provided, however, the stock so issuable
in respect thereof shall remain subject to such vesting requirements and/or
restrictions and shall be forfeited if the stock does not vest or if the
restrictions do not lapse; provided, further, such early exercise of Stock
Options will generally only be permitted by the Committee (a) at the time of
the grant of the Stock Option or if the Company will not otherwise be required
to recognize a compensation expense for financial reporting purposes as a
result of such early exercise and (b) the Director or Advisor commits to make
an election under Section 83(b) of the Code within 30 days of exercise of the
Stock Option.
(h) Transferability of Stock Options. An Incentive Stock Option shall not
be transferable except by will or the laws of descent and distribution. A
Stock Option shall be exercisable, during the Participant's lifetime, only by
the Participant or by the guardian or legal representative of the Participant,
it being understood that the terms "holder" and "Participant" include the
guardian and legal representative of the Participant named in the applicable
option agreement and any person to whom the Stock Option is transferred as
permitted hereunder or in the applicable option agreement.
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8. Stock Appreciation Rights
Stock Appreciation Rights may be granted either on a stand-alone basis or
in conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such
Stock Option. A Stock Appreciation Right shall terminate and no longer be
exercisable as determined by the Committee, or, if granted in conjunction with
all or part of any Stock Option, upon the termination or exercise of the
related Stock Option.
A Stock Appreciation Right may be exercised by a Participant as determined
by the Committee in accordance with this Section 8, and, if granted in
conjunction with all or part of any Stock Option, by surrendering the
applicable portion of the related Stock Option in accordance with procedures
established by the Committee. Upon such exercise and surrender, the
Participant shall be entitled to receive an amount determined in the manner
prescribed in this Section 8. Stock Options which have been so surrendered, if
any, shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
Stock Appreciation Rights shall be subject to such terms and conditions as
shall be determined by the Committee, including the following:
(i) Stock Appreciation Rights granted on a stand-alone basis shall be
exercisable only at such time or times and to such extent as determined by
the Committee. Stock Appreciation Rights granted in conjunction with all or
part of any Stock Option shall be exercisable only at the time or times and
to the extent that the Stock Options to which they relate are exercisable
in accordance with the provisions of Section 7 and this Section 8.
(ii) Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive an amount in cash, shares of Common Stock or
both, which in the aggregate are equal in value to the excess of the Fair
Market Value of one share of Common Stock over (i) such value per share of
Common Stock as shall be determined by the Committee at the time of grant
(if the Stock Appreciation Right is granted on a stand-alone basis) or (ii)
the exercise price per share specified in the related Stock Option (if the
Stock Appreciation Right is granted in conjunction with all or part of any
Stock Option), multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) A Stock Appreciation Right shall be transferable only to, and
shall be exercisable only by, such persons permitted in the applicable
Award agreement or as otherwise authorized by the Committee.
9. Stock Awards
Stock Awards may be directly issued under the Plan, subject to such terms,
conditions, performance requirements, restrictions, forfeiture provisions,
contingencies and limitations as the Committee shall determine. Stock Awards
may be issued which are fully and immediately vested upon issuance or which
vest in one or more installments over the Participant's period of employment
or other service to the Company or upon the attainment of specified
performance objectives, or the Company may issue Stock Awards which entitle
the Participant to receive a specified number of vested shares of Common Stock
upon the attainment of one or more performance goals or service requirements
established by the Committee.
Shares representing a Stock Award shall be evidenced in such manner as the
Committee may deem appropriate, including book-entry registration or issuance
of one or more certificates (which may bear appropriate legends referring to
the terms, conditions and restrictions applicable to such Award). The
Committee may require that any such certificates be held in custody by the
Company until any restrictions thereon shall have lapsed and that the
Participant deliver a stock power, endorsed in blank, relating to the Common
Stock covered by such Award.
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A Stock Award may be issued in exchange for any consideration which the
Committee may deem appropriate in each individual instance, including, without
limitation:
(i) cash or cash equivalents;
(ii) past services rendered to the Company or any Subsidiary; or
(iii) future services to be rendered to the Company or any Subsidiary
(provided that, in such case, the par value of the stock subject to such
Stock Award shall be paid in cash or cash equivalents, unless the Committee
provides otherwise).
A Stock Award that is subject to restrictions on transfer and/or forfeiture
provisions may be referred to as an award of "Restricted Stock" or "Restricted
Stock Units."
10. Nonassignability
Unless otherwise set forth in the form of Award or authorized by the
Committee, no Award shall be subject in any manner to alienation,
anticipation, sale, transfer (except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code), assignment, pledge, or encumbrance, and during the lifetime of the
Participant, only the Participant may exercise rights under the Plan.
Following the death of the Participant, such individual, trust or estate who
or which by designation of the Participant or operation of law succeeds to the
rights of the Participant under the Plan upon the Participant's death, may
exercise the Participant's rights to the extent they are exercisable under the
Plan following the death of the Participant. All beneficiary designations
shall be made in such form and subject to such limitations as may from time to
time be acceptable to the Committee and delivered to and accepted by the
Committee.
11. Adjustment Provisions
In the event of any Company stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure
of the Company, corporate separation or division of the Company (including,
but not limited to, a split-up, spin-off, split-off or distribution to Company
stockholders other than a normal cash dividend), sale by the Company of all or
a substantial portion of its assets (measured on either a stand-alone or
consolidated basis), reorganization, rights offering, partial or complete
liquidation, or any other corporate transaction, Company share offering or
other event involving the Company and having an effect similar to any of the
foregoing, the Committee may make such substitution or adjustments in the (i)
number and kind of shares that may be delivered under the Plan, (ii) number
and kind of shares subject to outstanding Awards, (iii) exercise price of
outstanding Stock Options and Stock Appreciation Rights and (iv) other
characteristics or terms of the Awards as it may determine appropriate in its
sole discretion to equitably reflect such corporate transaction, share
offering or other event; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated by rounding to the next
lower whole number of shares with appropriate payment for such fractional
share as shall reasonably be determined by the Committee.
12. Change in Control Provisions
(a) Impact of Event.
(i) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change in Control, the Committee shall have authority, in
its sole discretion, to provide:
(A) for the full vesting of any Awards outstanding as of the date
such Change in Control is determined to have occurred and not then
vested and exercisable, if applicable (except to the extent such
vesting is prohibited by Section 21(e), in which case the portion of
the Award for which vesting does not occur under this Section
12(a)(i)(A) shall vest pursuant to the terms of the Award as if the
Change in Control had not occurred); and
(B) for the termination of all outstanding repurchase rights of the
Company with respect to any outstanding Awards.
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(ii) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change in Control, the Committee shall, in its sole
discretion, provide for one of the following:
(A) The continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation;
(B) The assumption of the outstanding Awards by the surviving
corporation or its parent or subsidiary;
(C) The substitution by the surviving corporation or its parent or
subsidiary of equivalent awards for the outstanding Awards; or
(D) Settlement of each share of Common Stock subject to an
outstanding Award for the Change in Control Price (less, to the extent
applicable, the per share exercise price), or, if the per share
exercise price equals or exceeds the Change in Control Price, the
outstanding Award shall terminate and be canceled.
(b) Definition of Change in Control. For purposes of the Plan, a "Change in
Control" shall be deemed to have occurred on the first to occur of any of the
following events:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either (A) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock") or
(B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control of the
Company: (1) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company),
(2) any acquisition by the Company, (3) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company, (4) any acquisition by a lender
of the Company pursuant to a debt restructuring of the Company, (5) any
acquisition by a member or members of the Tebbe Family, or (6) any
acquisition by any Person pursuant to a transaction in which the conditions
described in clauses (A), (B) and (C) of subsection (iii) of this Section
12(b) are satisfied; or
(ii) Individuals who, as of the Effective Date, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 12(b), that any individual
becoming a member of the Board subsequent to the date hereof, whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) The approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless, following
such reorganization, merger or consolidation, (A) more than fifty percent
(50%) of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation and
the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the
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Company, any employee benefit plan (or related trust) of the Company or
such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning immediately prior to such
reorganization, merger or consolidation, directly or indirectly, twenty-
five percent (25%) or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty-five percent (25%) or more of, respectively,
the then outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of
the Incumbent Board of the Company at the time of the execution of the
initial agreement providing for such reorganization, merger or
consolidation; or
(iv) The approval by the stockholders of the Company of the sale or
other disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale or
other disposition, (A) more than fifty percent (50%) of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such corporation
and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, twenty-five percent (25%) or more of
the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (3) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board of the Company at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price, regular way,
of a share of Common Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national securities exchange on which such
shares are listed or on Nasdaq, as applicable, during the 60-day period prior
to and including the date of a Change in Control, and (ii) if the Change in
Control is the result of a tender or exchange offer or a Corporate
Transaction, the highest price per share of Common Stock paid in such tender
or exchange offer or Corporate Transaction. To the extent that the
consideration paid in any such transaction described above consists all or in
part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Board.
13. Withholding Taxes
The Company shall be entitled to deduct from any payment under the Plan,
regardless of the form of such payment, or from the Participant's gross pay,
the amount of all applicable income and employment taxes required by law to be
withheld with respect to the Plan or transactions in Common Stock or Awards,
or may require the Participant to pay to the Company such tax prior to and as
a condition of the making of any payment or delivery under the Plan. If Common
Stock is used to satisfy tax withholding, such stock shall be valued based on
the Fair Market Value thereof when the tax withholding is required to be made.
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14. Amendments to Awards
The Committee may at any time unilaterally amend, any unexercised Award,
whether vested or unvested, earned or unearned, and/or substitute another
Award of the same or different type, to the extent it deems appropriate;
provided, however, that any amendment to an outstanding Award which, in the
opinion of the Committee, is materially adverse to the Participant, shall
require the Participant's consent.
15. Regulatory Approvals
Notwithstanding anything contained in this Plan or any Award to the
contrary, a Stock Option shall not be exercisable, and the Company shall have
no obligation to issue or deliver certificates of Common Stock in respect
thereof, prior to (a) the obtaining of any approval from any governmental
agency which the Company shall, in its sole discretion, determine to be
necessary or advisable, and (b) the completion of any registration or other
qualification of the offer and sale of the Common Stock under any state or
federal law or ruling of any governmental body which the Company shall, in its
sole discretion, determine to be necessary or advisable.
16. No Rights to Continued Service or Grants
Participation in the Plan shall not give any Employee, Director or Advisor
any right to remain in the service of the Company or any Subsidiary. The
Company or Subsidiary reserves the right to terminate the services of any
Employee, Director or Advisor, as the case may be, at any time. Further, the
adoption of this Plan shall not be deemed to give any Employee, Director or
Advisor or any other individual any right to be selected as a Participant or
to be granted an Award.
17. Amendment
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would adversely affect the
rights of a Participant under an Award theretofore granted without the
Participant's consent, except such an amendment (i) made to avoid an expense
charge to the Company or a Subsidiary, or (ii) made to permit the Company a
deduction under the Code. No such amendment shall be made without the approval
of the Company's stockholders to the extent such approval is required by law,
agreement or the rules of any stock exchange or market on which the Common
Stock is listed.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall adversely affect
the rights of the holder thereof without the holder's consent.
Notwithstanding anything in the Plan to the contrary, if any right under
this Plan would cause a transaction to be ineligible for pooling of interests
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interests accounting shall be available, including the substitution
of Common Stock having a Fair Market Value equal to the cash otherwise payable
hereunder for the right which caused the transaction to be ineligible for
pooling of interests accounting.
18. Unfunded Status of Plan
It is intended that this Plan be an "unfunded" plan for incentive and
deferred compensation. The Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under this Plan to deliver
Common Stock or make payments, provided that, unless the Committee otherwise
determines, the existence of such trusts or other arrangements is consistent
with the "unfunded" status of this Plan.
19. Governing Law
The Plan, all Awards, agreements and actions hereunder, shall be governed
by, and construed in accordance with, the laws of the State of Delaware (other
than its law respecting choice of law).
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20. No Right, Title, or Interest in Company Assets
No Participant shall have any right in any fund or in any specific asset of
the Company by reason of being a Participant under this Plan, nor any rights
as a shareholder as a result of participation in the Plan until the date of
issuance of a stock certificate in his name. To the extent any person acquires
a right to receive payments from the Company under this Plan, such rights
shall be no greater than the rights of an unsecured creditor of the Company.
21. Miscellaneous
(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
(b) All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to such stock transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Commission, any stock exchange or
market on which the Common Stock is then listed and any applicable Federal or
state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(c) Nothing contained in the Plan shall prevent the Company from adopting
other or additional compensation arrangements for its employees.
(d) Any amounts owed to the Company by the Participant of whatever nature
may be offset by the Company from the value of any shares of Common Stock,
cash or other thing of value under this Plan or an Agreement to be transferred
to the Participant, and no shares of Common Stock, cash or other thing of
value under this Plan or an Agreement shall be transferred unless and until
all disputes between the Company and the Participant have been fully and
finally resolved and the Participant has waived all claims to such against the
Company or a Subsidiary.
(e) If any payment or right accruing to a Participant under this Plan
(without the application of this Section 21), either alone or together with
other payments or rights accruing to the Participant from the Company or a
Subsidiary ("Total Payments") would constitute a "parachute payment" (as
defined in Section 280G of the Code and regulations thereunder), such payment
or right shall be reduced to the largest amount or greatest right that will
result in no portion of the amount payable or right accruing under this Plan
being subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code; provided, however,
that the foregoing shall not apply to the extent provided otherwise in an
award or in the event the Participant is party to an agreement with the
Company or a Subsidiary that explicitly provides for an alternate treatment of
payments or rights that would constitute "parachute payments." The
determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after
consultation with the Participant, and such determination shall be conclusive
and binding on the Participant. The Participant shall cooperate in good faith
with the Committee in making such determination and providing the necessary
information for this purpose. The foregoing provisions of this Section 21
shall apply with respect to any person only if, after reduction for any
applicable Federal excise tax imposed by Section 4999 of the Code and Federal
income tax imposed by the Code, the Total Payments accruing to such person
would be less than the amount of the Total Payments as reduced, if applicable,
under the foregoing provisions of this Plan and after reduction for only
Federal income taxes.
(f) The headings contained in this Plan are for reference purposes only and
shall not affect the meaning or interpretation of this Plan.
(g) If any provision of this Plan shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not effect
any other provision hereby, and this Plan shall be construed as if such
invalid or unenforceable provision were omitted.
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(h) This Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall be binding
upon the Participant's heirs, legal representatives and successors.
(i) This Plan and each agreement granting an Award constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between this Plan and such agreement, the
terms and conditions of the Plan shall control.
(j) In the event there is an effective registration statement under the
Securities Act pursuant to which shares of Common Stock shall be offered for
sale in an underwritten offering, a Participant shall not, during the period
requested by the underwriters managing the registered public offering, effect
any public sale or distribution of shares of Common Stock received, directly
or indirectly, pursuant to the exercise or settlement of an Award.
(k) None of the Company, a Subsidiary or the Committee shall have any duty
or obligation to disclose affirmatively to a record or beneficial holder of
Common Stock or an Award, and such holder shall have no right to be advised
of, any material information regarding the Company at any time prior to, upon
or in connection with receipt of an Award or the exercise of a Stock Option or
Stock Appreciation Right or the Company's purchase of Common Stock or an Award
from such holder in accordance with the terms hereof.
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APPENDIX B
AUDIT COMMITTEE CHARTER
A. Composition
The Audit Committee (the "Committee") of the Board of Directors (the "Board
of Directors" or "Board") of Lante Corporation, a Delaware corporation (the
"Company"), shall consist of at least three (3) independent, non-employee
directors, free from any relationships that would interfere with their
exercise of independent judgment as members of the Committee, who shall serve
at the pleasure of the Board of Directors. Each Committee member shall have a
working familiarity with basic finance and accounting practices and be able to
read and understand fundamental financial statements, including the Company's
balance sheet, statements of operations and cash flows. In addition, at least
one member of the Committee shall have accounting or related financial
management expertise consisting of employment experience in finance or
accounting, requisite professional certification in accounting or other
comparable experience or background. Committee members shall be selected for
their competence and ability to add substance to the Committee's
deliberations. Committee members and the Committee Chairman shall be
designated by the full Board of Directors upon the recommendation of the
Chairman of the Board. The duties and responsibilities of a member of the
Committee shall be in addition to such member's duties as a member of the
Board of Directors.
B. Responsibilities
The Committee shall provide assistance to the members of the Board of
Directors in fulfilling their responsibilities to the stockholders, potential
stockholders and investment community relating to (i) the quality and
integrity of the Company's financial statements and other financial reports;
(ii) the Company's systems of internal controls regarding finance and
accounting; and (iii) the Company's auditing, accounting and financial
reporting processes generally. In so doing, it shall be the responsibility of
the Committee to serve as an independent and objective party to monitor the
Company's financial reporting process and internal control system.
Additionally, the Committee shall maintain free and open means of
communication between the members of the Board, the Company's independent
public accountants who audit the Company's financial statements (the
"Auditors"), the internal auditors and the financial management of the
Company. The Committee, as representative of the stockholders, shall have
unlimited authority and responsibility to select, evaluate and, where
appropriate, replace the Auditors, who are ultimately accountable to the Board
of Directors.
C. Duties and Functions
The Committee shall:
1. Recommend to the Board of Directors the selection of the Auditors,
considering independence and effectiveness. On an annual basis, the
Committee shall review and discuss with the Auditors all significant
relationships the Auditors have with the Company to oversee the Auditors'
independence. The Committee shall receive from the Auditors a written
statement delineating all relationships affecting objectivity and
independence between the Auditors and the Company.
2. Review the performance of the Auditors and approve any proposed
discharge of the Auditors when circumstances warrant.
3. Following completion of the annual audit, review separately with
management and the Auditors any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of work or
access to required information.
4. Review any significant disagreements between management and the
Auditors in connection with the preparation of the Company's financial
statements.
5. Review with the Auditors and management the extent to which changes
or improvements in financial or accounting practices, as approved by the
Committee, have been implemented.
B-1
6. Inquire of management and the Auditors about significant risks or
exposures and assess the steps management has taken to minimize such risks.
7. Review with management and the Auditors their qualitative judgments
about the appropriateness of the Company's accounting principles and
financial disclosure practices used or proposed and the appropriateness of
significant management judgments.
8. Review with the Auditors and financial and accounting personnel the
adequacy and effectiveness of the accounting and financial controls of the
Company, elicit any recommendations for the improvement of such internal
control procedures and discuss particular areas in which new or more
detailed controls or procedures are desirable. Particular emphasis shall be
given to the adequacy of such internal controls to expose any payments,
transactions or procedures that might be deemed illegal or otherwise
improper.
9. Review periodically, with the Company's general counsel, legal and
regulatory matters that may have a material impact on the Company's
financial statements.
10. Review the Company's annual financial statements and opinion
rendered by the Auditors prior to the filing of the Company's annual report
on Form 10-K.
11. Review with the Auditors and representatives of financial
management, in person or by telephone conference call, the results of the
Auditors' financial review, including the various significant accounting
and reporting matters, prior to any public announcement of financial
results. The Chairman of the Committee or other Committee member designated
by the Committee may represent the entire Committee for this purpose.
12. Review the Company's filings with the Securities and Exchange
Commission containing the Company's financial statements, including,
without limitation, the Company's quarterly reports on Form 10-Q, prior to
the filing thereof. The Chairman of the Committee or other Committee member
designated by the Committee may represent the entire Committee for this
purpose.
13. Provide any audit committee reports or other audit committee-related
disclosure, in filings with the Securities and Exchange Commission or
otherwise, required by applicable securities laws, rules and regulations or
by the rules of any securities exchange or market on which securities of
the Company are listed.
14. Have the power to conduct or authorize investigations into any
matters within the Committee's scope of responsibilities. The Committee
shall be empowered to retain independent counsel, accountants or others to
assist in the conduct of any investigation.
15. Perform such other functions as assigned by law, the Company's
certificate of incorporation or bylaws, or the Board of Directors.
16. Review this charter periodically, at least annually, and update as
conditions dictate.
D. Meetings
The Committee shall meet at least four (4) times annually, or more
frequently as the Chairman of the Committee deems necessary or as
circumstances require. Members of senior management, the Auditors or others
may attend meetings of the Committee at the invitation of the Committee and
shall provide pertinent information as necessary. The Committee shall meet
with the Auditors and management in separate executive sessions to discuss any
matters that the Committee or these groups believe should be discussed
privately with the Committee.
E. Communication with the Board of Directors
The Committee shall, after each meeting, report its activities, findings
and conclusions to the full Board of Directors and shall ensure that the full
Board is fully informed of the Company's accounting policies and related
issues.
February 25, 2000
B-2
LANTE CORPORATION
161 North Clark Street, Suite 4900
Chicago, Illinois 60601
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints C. Rudy Puryear, William Davis
and Scott Smaller and each of them, proxies for the undersigned, with full power
of substitution, to represent and to vote all of the shares which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Lante
Corporation to be held at LaSalle Bank N.A., 43rd Floor, 135 South LaSalle
Street, Chicago, Illinois, on Thursday, May 24, 2001, at 3:00 p.m., Chicago
time, and at any adjournments thereof, upon the matters as set forth in the
Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of which
is hereby acknowledged. The undersigned stockholder hereby revokes any proxy or
proxies previously executed for such matters.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2,
AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENTS THEREOF.
If voting by proxy, you may vote by mail or by Internet. See instructions below
for Internet voting.
If you decide to vote using this proxy card, PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(continued, and to be signed and dated, on reverse side) See Reverse
Side
[CONTROL NUMBER]
FOLD AND DETACH HERE
If you decide to vote via the Internet, your Internet vote is quick, convenient
and your vote is immediately submitted. Just follow these easy steps:
1. Read the accompanying Proxy Statement and Annual Report.
2. Visit our Internet voting site at www.proxyvote.com, enter the information
requested on the computer screen, including your 6-digit control number located
above, and follow the instructions on the screen.
YOUR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES TO THE SAME
EXTENT AS IF YOU MARKED, SIGNED, DATED AND RETURNED THE PROXY CARD. IF YOU VOTE
BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY CARD BY MAIL UNLESS YOU INTEND TO
MODIFY YOUR INTERNET VOTE BY MAILING IN A LATER DATED PROXY CARD.
PLEASE MARK VOTE IN SQUARE IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
The Board of Directors unanimously recommends that you vote FOR all listed
proposals.
1. Election of Class I Directors. Withhold authority to vote For all nominees listed
For all nominees listed below [ ] for all nominees listed below [ ] except as marked below [ ]
(Instruction: to withhold authority to vote for any individual nominee, strike a
line through the nominee's name below)
Paul Carbery John Kraft John Oltman
2. Proposal to approve and adopt the Lante Corporation 2001 Stock Incentive Plan. For [ ] Against [ ] Abstain [ ]
3. Each of the persons named as proxies herein are authorized, in such person's
discretion, to vote upon such other matters as may properly come before the
Annual Meeting, or any adjournments thereof.
Date ______________, 2001
Signature
Signature (if held jointly)
Please date this Proxy and sign it exactly as your name(s) appears hereon. When
shares are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee, guardian or other fiduciary, please indicate
your capacity. If you sign for a corporation, please print full corporate name
and indicate capacity of duly authorized officer executing on behalf of the
corporation. If you sign for a partnership, please print full partnership name
and indicate capacity of duly authorized person executing on behalf of the
partnership.
FOLD AND DETACH HERE
PLEASE VOTE, SIGN EXACTLY AS NAME APPEARS ABOVE, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
ON THE REVERSE SIDE OF THIS PROXY CARD ARE INSTRUCTIONS ON HOW TO VOTE YOUR
SHARES VIA THE INTERNET. PLEASE CONSIDER VOTING VIA THE INTERNET. YOUR VOTE IS
RECORDED AS IF YOU MAILED IN YOUR PROXY CARD. WE BELIEVE VOTING THIS WAY IS
CONVENIENT.
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