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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
THE TRANSLATION GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
THE TRANSLATION GROUP, LTD.
30 Washington Avenue
Haddonfield, NJ 08033
(609) 795-8669
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on September 28, 1999
NOTICE IS HEREBY GIVEN, that the Annual Meeting of the Stockholders of The
Translation Group, Ltd. (the "Meeting") will be held at 10:00 a.m. on Tuesday,
September 28, 1999, at the offices of the Company's counsel, Buchanan Ingersoll
P.C., at Eleven Penn Center, 14th Floor, 1835 Market Street, Philadelphia,
Pennsylvania 19103 for (1) the election of directors of the Company to hold
office until the next Meeting or until their successors are duly elected and
qualified, (2) the approval of certain amendments to the Company's Stock Option
Plan, (3) ratification of the appointment of Wiss & Company, LLP as independent
auditors of the Company for the year ended March 31, 2000, and (4) to transact
such other business as may properly come before the Meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on August 25, 1999,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting.
If you do not expect to be personally present at the Meeting, but wish
your stock to be voted for the business to be transacted thereat, the Board of
Directors request that you fill in, sign and date the enclosed proxy and return
it by mailing it in the accompanying postage-paid envelope.
By Order of the Board of Directors,
Charles D. Cascio
President
August 30, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED TO ENSURE
REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE IS NECESSARY IF MAILED
IN THE UNITED STATES.
<PAGE>
THE TRANSLATION GROUP, LTD.
30 Washington Avenue
Haddonfield, NJ 08033
(609) 795-8669
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held on September 28, 1999
INTRODUCTION
This Proxy Statement and the accompanying Proxy Card are first being
mailed to stockholders on or about August 30, 1999. A copy of the Company's
Annual Report for the year ended March 31, 1999, is being mailed to all
stockholders with this Proxy Statement.
The enclosed proxy is solicited by the Board of Directors of The
Translation Group, Ltd. (the "Company") for use at its Annual Meeting of
Stockholders (the "Meeting") to be held on Tuesday, September 28, 1999, at 10:00
a.m. at the at the offices of the Company's counsel, Buchanan Ingersoll P.C., at
Eleven Penn Center, 14th Floor, 1835 Market Street, Philadelphia, Pennsylvania
19103. The Meeting is called to (1) elect members of the Board of Directors, (2)
approve the proposed amendments to the Company's Stock Option Plan, and (3)
ratify the appointment of the independent auditors of the Company for the year
ended March 31, 2000. The Meeting, however, will be open for the transaction of
such other business as may properly come before it although, as of the date of
this Proxy Statement, management does not know of any other business that will
come before the Meeting.
The holders of record of the Company's common stock, par value $.001 per
share, as of the close of business on August 25, 1999, are entitled to vote on
all matters brought before the Meeting. As of the record date for the Meeting,
there were 2,291,109 shares of common stock outstanding. The presence at the
Meeting, in person or by a proxy relating to any matter to be acted upon at the
Meeting, of a majority of the outstanding shares, or 1,145,555 shares, is
necessary to constitute a quorum for the Meeting. Each outstanding share of
common stock is entitled to one vote on all matters, except as noted below. For
purposes of the quorum and the discussion below regarding the vote necessary to
take stockholder action, stockholders of record who are present at the Meeting
in person or by proxy and who abstain, including brokers holding customers'
shares of record who cause abstentions to be recorded at the Meeting, are
considered stockholders who are present and entitled to vote and they count
toward the quorum.
Brokers holding shares of record for customers generally are not entitled
to vote on certain matters unless they receive voting instructions from their
customers. As used herein, "uninstructed shares" means shares held by a broker
who has not received instructions from its customers on such matters and the
broker has so notified the Company on a proxy form in accordance with industry
practice or has otherwise advised the Company that it lacks voting authority. As
used herein, "broker non-votes" means the votes that could have been cast on the
matter in question by brokers with respect to uninstructed shares if the brokers
had received their customers' instructions. Although there are no controlling
precedents under Delaware law regarding the treatment of broker non-votes in
certain circumstances, the Company intends to apply the principles set forth
herein.
ELECTION OF DIRECTORS: Nominees receiving a plurality of the votes cast
will be elected as directors. Abstentions and broker non-votes will not be taken
into account in determining the outcome of the election of directors.
APPROVAL OF THE AMENDED AND RESTATED STOCK OPTION PLAN: To be adopted, the
Plan must receive the affirmative vote of the majority of the shares of common
stock present in person or by proxy at the Meeting and entitled to vote.
Uninstructed shares are not entitled to vote on this matter, and therefore
broker non-votes do not affect the outcome. Abstentions have the effect of
negative votes.
<PAGE>
APPROVAL OF AUDITORS: To be approved, this matter must receive the
affirmative vote of the majority of the shares of common stock present in person
or by proxy at the Meeting and entitled to vote. Uninstructed shares are
entitled to vote on this matter. Therefore, abstentions and broker non-votes
have the effect of negative votes.
Each stockholder is entitled to one vote for each share of common stock
held by him or her at the close of business on the record date. Unless otherwise
directed in the accompanying proxy, the persons named therein will vote FOR each
of the nominees for director, FOR approval of the proposed amendments to the
Stock Option Plan and FOR the proposal to ratify the appointment of the
independent auditors, all as set forth in the Proxy Statement. As to any other
business which may come before the Meeting, the proxy holders will vote in
accordance with their best judgment.
The solicitation of proxies in the accompanying form is made by, and on
behalf of, the Board of Directors, and no compensation will be paid therefore.
There will be no solicitation by officers and employees of the Company. The
Company will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy material to the beneficial
owners of shares held of record by such persons, and such persons will be
reimbursed for reasonable expenses incurred by them in connection therewith. A
stockholder executing the accompanying proxy has the power to revoke it at any
time prior to the exercise thereof by appearing at the Meeting and voting in
person or by filing with the President of the Company, (i) a duly executed proxy
bearing a later date, or (ii) a written instrument revoking the proxy.
PROPOSAL 1 - ELECTION OF DIRECTORS
The election of directors requires the affirmative vote of at least a
majority of shares of common stock present or represented at a meeting at which
a quorum (one-third of the outstanding shares of common stock) is present or
represented. It is the intention of the persons named in the accompanying proxy
form to vote FOR the election of the persons identified in the table below as
directors of the Company unless authority to do so is withheld. In the event
that any of the below listed nominees for director should become unavailable for
election for any presently unforeseen reason, the persons named in the
accompanying proxy form have the right to use their discretion to vote for a
substitute. James W. Grau is not seeking re-election to the Board of Directors.
As a result, a majority of the directors voted to decrease the Board size from
six persons to five. Therefore, five directors are to be elected at the Meeting
to hold office until the next annual meeting of stockholders or until their
successors have been duly elected and qualified.
Below are the names and ages of each nominee for director, the year first
elected a director and other biographical information including, if relevant,
the positions held by them with the Company.
BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES
NOMINEES FOR DIRECTOR.
CHARLES D. CASCIO (62) became a Director, President and Chief Executive
Officer of the Company in May of 1996. He had previously been engaged by the
Company, from its inception, as a financial consultant. From late 1992 until
July 1996 he was Chairman and President of Electro-Kinetic Systems, Inc., a
publicly held company. From 1990 to late 1992, Mr. Cascio was employed as a full
time marketing and financial consultant to John B. Canuso, Inc., a large
privately held development, building and entertainment company located in
Southern New Jersey. From 1987 to 1990, he was a full time financial and
marketing consultant to Drug Screening Systems, Inc., a publicly held
manufacturer of drug screening systems to detect the presence of "drugs of
abuse." From 1984 to 1987, Mr. Cascio managed a wholly and family owned
sporting, entertainment and recreational facility, known as the Coliseum,
located in Voorhees, NJ. Mr. Cascio holds a Bachelor's degree in Economics from
Iona College.
JOHN TOEDTMAN (54) has been employed by the Company since October 1998 and
was appointed as a Director in February 1999. From 1996 to 1998 Mr. Toedtman was
employed as Managing Director of Blue Stone Capital Partners, L.P., an
investment banking firm. From 1990 to 1996 Mr. Toedtman was President and
Director of Gen/Rx, Inc., a pharmaceutical firm; from 1980 to 1986 he was
President and Director of Personal Diagnostics,
2
<PAGE>
Inc., a medical device company; and from 1976 to 1980 he was President and
Director of Princeton Chemical Research, Inc., a process technology company; and
from 1970 to 1976 he was Group Vice President of Englehard Industries, a large
precious metals company. Mr. Toedtman has a Bachelor's degree in Economics from
Georgetown University.
GARY M. SCHLOSSER (48) was elected a Director in August 1996. Since August
1, 1994, Mr. Schlosser has been the President and a director of Jefferson Bank
of New Jersey. From October 1989 through July 1994 he was Executive Vice
President of Glendale National Bank of New Jersey and prior thereto, from July
1988 to October 1989, he was President of Glendale Mortgage Services
Corporation, a subsidiary of Atlantic Bancorporation. Mr. Schlosser received a
Bachelor of Arts degree in History and Business from the University of Colorado
at Denver. Mr. Schlosser is a member of the Camden County Bankers Association
and the South Jersey Security Bankers Association.
THEODORA LANDGREN (54) was elected a Director in January 1996. She was the
Chairperson of the Board of Directors and Chief Operating Officer of the Company
from January 1996 to April 1998 and she was the Chairman and President of BTS
since founding the firm in 1984 until September 2, 1997. Prior to starting BTS
she studied linguistics and computer programming at several universities
including the Universities of Denver and Innsbruck (Austria) and USC College of
Continuing Education, as well as teaching English to non-English speaking
students at the University of Stockholm, Sweden. Ms. Landgren is active in the
American Translator's Association (ATA) and the Society of Technical
Communication (STC). Ms. Landgren currently resides in London, England.
RICHARD J. L. HERSON (80) is a Director and employee of the Company. Mr.
Herson served as the Chief Financial Officer of the Company from July 6, 1995,
until August 31, 1997. Mr. Herson retired as an employee in July 1999. From 1945
to 1974 Mr. Herson was a general partner in the firm of Hertz, Herson and
Company, CPA's with offices in New York, and Charlotte. He is currently
Secretary of the Bruner Foundation, where he directs its investment portfolio.
He is also secretary/treasury of Electro-Kinetic Systems, Inc., a publicly held
company. He holds a Bachelor's degree from the City College of New York and an
M.S. in Accounting from Columbia University. He has also authored numerous
articles and a book on accounting.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS.
During the fiscal year ended March 31, 1999, there were three regular
meetings of the Board of Directors. No current director was absent from more
than 25% of the meetings. In addition, a number of actions were approved by
unanimous written consent resolutions of the directors.
The Audit Committee, consisting of Mr. Herson, held seven meetings during
fiscal 1999, met with the Company's management and its independent auditors to
review the results of the Company's 1998 audit, and recommended the selection of
the Company's independent auditors for fiscal 1999. Mr. Herson was not absent
from any meeting.
DIRECTORS' COMPENSATION.
Beginning April 1, 1999, outside directors of the Company are compensated
for their services at the rate of $1,000 per meeting and receive options to
acquire 5,000 shares of common stock each quarter at the average market value of
the last ten days of the quarter.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's common stock, as of August 25, 1999, (a) each person
known by the Company to own beneficially more than five percent of the Company's
outstanding shares of common stock, (b) each director and executive officer of
the Company who owns shares and (c) all directors and executive officers of the
Company as a group. Unless otherwise indicated, all shares of common stock are
owned by the individual named as sole record and beneficial owner with exclusive
power to vote and dispose of such shares.
COMMON STOCK
OWNED PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF CLASS
---------------- ------------ ----------
Theodora Landgren (2)(3) 477,000 17.1%
Charles D. Cascio (1)(2)(4) 365,000 13.0%
Richard J.L. Herson (1)(5) 74,000 2.6%
Gary M. Schlosser (1)(6) 50,000 1.8%
Julius Cherny (6) 300,000 10.7%
Edouard Prisse (7) 253,000 9.0%
John Toedtman (1)(6) 100,000 3.6%
All Executive Officers and
Directors as a Group (8) 1,685,660 44.9%
========= =====
- ------------------
* Less than 1%
(1) Uses the Company's address at 30 Washington Avenue, Haddonfield, NJ 08033.
(2) Includes 100,000 currently exercisable warrants and 100,000 currently
vested stock options.
(3) Does not include an additional 112,500 shares of common stock held in a
Voting Trust under which she had sole voting control until December 2,
1998. The Voting Trust has since been terminated and the shares returned to
their respective record owners.
(4) Does not include an aggregate of 144,000 shares owned by his adult
independent children. Mr. Cascio disclaims beneficial ownership of such
shares.
(5) Includes 39,000 currently exercisable stock options.
(6) Consists of currently exercisable stock options.
(7) Includes 100,000 shares of common stock, an additional 103,000 shares of
common stock to be delivered pursuant to a prior agreement and 50,000
currently exercisable stock options.
(8) Includes 587,500 shares, 749,000 currently exercisable stock options, and
206,660 warrants owned by all executive officers and directors of the
Company during the reporting period.
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<PAGE>
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Summary Compensation Table
The following sets forth certain information with respect to the annual
and long-term compensation of the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers of the Company. The
information in this table is presented for the three years ended March 31, 1999.
<TABLE>
<CAPTION>
============================================================================================================================
LONG TERM COMPENSATION
====================================================
ANNUAL COMPENSATION AWARDS PAYOUTS
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER RESTRICTED
NAME AND ANNUAL STOCK STOCK LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPEN- AWARD(S) OPTIONS/SARS(PAYOUTS COMPEN-SATION($)
POSITION YEAR(S) ($) ($) SATION($) ($) ($)
========= ======= ======= ===== ========= ========= ============ ======= ================
Charles D. Cascio 1999 $108,058 -0- $24,956(ii)
President 1998 $106,775 -0- $19,188
and CEO 1997 $ 87,000 (i) -0- -0-
===========================================================================================================================
</TABLE>
(i) for the period from May 10, 1996 to March 31, 1997.
(ii) consists of car allowance and related expenses totaling $10,608,
medical reimbursement of $2,215, health insurance, premium of $5,104
and life insurance premium of $7,028.
EMPLOYMENT AGREEMENTS.
The Company has a five year written employment contract dated July 1, 1996
with its Chief Executive Officer, Charles Cascio, for an annual base salary of
$104,000 during each of the five years thereof, plus annual cost of living
adjustments. This agreement also (i) contains restrictions on competing with the
Company for two years following termination of employment, (ii) provides for
severance payments in the event of termination without cause by the Company in
an amount equal to the aggregate amount of payments due under the term of the
Agreement (without regard to extensions), but in no event less than one year's
compensation, (iii) provides that the Company will purchase a life insurance
policy naming as beneficiary a person chosen by the officer in an amount equal
to 2.5 times his salary and (iv) provides for a car or a car allowance.
The Company has a three-year written employment contract with its Chief
Operating Officer, John Toedtman, for an annual base salary of $100,000 during
each of the three years thereof, plus annual cost of living adjustments. This
agreement also (i) provides for a car or car allowance. Mr. Toedtman was also
granted options to purchase 100,000 shares of the Company's common stock.
The Company also had a similar employment contract with Theodora Landgren,
former president of its foreign subsidiary which was terminated in September,
1998. Ms. Landgren has since retired from the Company as of January 31, 1999.
The Company also had an agreement with the president of its American subsidiary
for a salary in the base amount of $104,000 per year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10 percent of a registered class of the Company's
equity securities, to file reports of ownership and change in ownership with the
Securities and Exchange Commission and Nasdaq. Directors, executive officers and
other 10 percent stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports that they file.
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<PAGE>
Based solely upon information supplied to the Company by its directors,
officers and beneficial owners of at last 10% of the common stock, the Company
believes that during the fiscal year ended March 31, 1999, all filing
requirements under Section 16(a) applicable to its directors and executive
officers were met except that Mr. Herson failed to file a Form 4 relative to the
disposition of certain of his shares to members of his family and to a
foundation of which he is president.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has an exclusive license agreement with Gedanken, a company
controlled by Dr. Julius Cherny, for the worldwide rights to an automated
machine translation system. Dr. Cherny owns a United States Patent that
describes apparatus and methods for translating languages using advanced
telecommunications and computer technologies. The Company is obligated under the
agreement to pay royalties on all revenues generated that use, in whole or in
part, the patent rights and know-how.
On June 29, 1998, the Company entered into a five-year consulting
agreement with a former officer of a foreign subsidiary which provides for an
annual retainer of $20,000 plus the ability to borrow up to $50,000 a year from
the Company which will be secured by common stock of The Translation Group
currently owned by the former officer. In exchange for the above mentioned
remuneration, the consultant will provide his services to the Company for a
minimum of one day per week throughout the term of the agreement.
Michael Cascio, Esquire, the son of Charles Cascio, President and Chief
Executive Officer of The Translation Group, provided legal services to the
Company for the fiscal years ended March 31, 1999 and 1998 valued at $49,004 and
$47,000, respectively.
Theodora Landgren entered into a settlement agreement with the Company
dated September 18, 1998, which allows her to engage in limited consulting
activities in the translation industry. Additionally, Ms. Landgren is entitled
to receive compensation for the license agreement entered into between the
Company and ESTeam. Furthermore, pursuant to an agreement between Ms. Landgren
and the Company, Ms. Landgren will be entitled to receive a finder's fee
constituting 1.5% of the value of any agreement entered into between the Company
and Microsoft.
John Toedtman has purchased $100,000 of the Company's common stock at
$3.25 per share, subject to adjustment in the event there is a lower offering
price during the next twelve months.
The Company has entered into written employment agreements with certain of
its officers. See "Executive Compensation."
STOCK OPTION PLAN.
In October of 1996, the Board of Directors and stockholders of the Company
adopted a Stock Option Plan (the "Option Plan") as an incentive for, and to
encourage share ownership by, the Company's officers, directors and other key
employees and/or consultants and potential management of possible future
acquired companies. The Option Plan provides that options to purchase a maximum
of 2,500,000 shares of common stock (subject to adjustment in certain
circumstances) may be granted under the Option Plan. The Option Plan also allows
for the granting of stock appreciation rights ("SARs") in tandem with, or
independently of, stock options. Any SARs granted will not be counted against
the 2,500,000 share limit.
The purpose of the Option Plan is to make options (both "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and non-qualified options) and "stock appreciation
rights" (with non-qualified options only) available to certain officers,
directors and other key employees and/or consultants of the Company in order to
give such individuals a greater personal interest in the success of the Company
and, in the case of employees, an added incentive to continue and advance in
their employment.
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The Plan is currently administered by the majority vote of a committee
(the "Committee") appointed by the Board of Directors and comprised of at least
two members of the Board who, in the case of the Option Plan, are not eligible
to receive options, other than pursuant to a formula, it being intended that
such plan shall qualify under Rule 16b-3 as promulgated pursuant to the
Securities Exchange Act of 1934, as amended. The Committee designates those
persons to receive grants under the Plan and determines the number of options to
be granted and the price payable for the shares of common stock thereunder. The
price payable for the shares of common stock under each option is fixed by the
Committee at the time of the grant, but, for incentive stock options, must be
not less than 100% (110% if the person granted such option owns more than 10% of
the outstanding shares of common stock) of the fair market value of common stock
at the time the option is granted, and 85% of such price for non-qualified stock
options. Amendments to the Plan are proposed and described below under "Proposal
- - 2 Amended and Restated Stock Option Plan."
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
INTRODUCTION.
The Board is in the process of establishing the Compensation Committee.
The Compensation Committee will be responsible for reviewing and approving
matters involving the compensation of directors and executive officers of the
Company, periodically reviewing management development plans and making
recommendations to the full Board on these matters as well as matters involving
the Company's Stock Option Plan. As of the date of this Proxy Statement, the
Board has not determined the composition of the Compensation Committee.
COMPENSATION PHILOSOPHY.
The members of the Compensation Committee will hold primary responsibility
for determining the remaining executive officer compensation levels. The
Compensation Committee will adopt a compensation philosophy intended to align
compensation with the Company's overall business strategy. The philosophy that
will guide the executive compensation program is designed to link executive
compensation and stockholder value in order to attract, retain and motivate high
quality employees capable of maximizing stockholder value. The goals of the
program are:
o To compensate executive employees in a manner that aligns the employees'
interests with the interests of the stockholders;
o To reward executives for successful long-term strategic management;
o To recognize outstanding performance; and
o To attract and retain highly qualified and motivated executives.
The strategy to be established by the Compensation Committee with respect
to executive compensation will include maintaining base salaries for executives
and providing bonuses which, when combined with base salary amounts, giving the
Company's executives the potential to earn in excess of competitive industry
compensation if certain subjective and objective performance goals for the
Company are achieved. The Compensation Committee intends to continue to grant,
or recommend to the Board of Directors that it approve the granting of stock
options to the Company's executives and other key employees at current market
value, which options will have no monetary value to the executives unless and
until the market price of the Company's common stock increases. The mix of base
salary, bonuses and stock option awards reflects the Compensation Committee's
intention to link executive compensation to the Company's operational
performance and the price of its common stock. The Compensation Committee
anticipates that bonus payments and option grants made during 1999 and
thereafter will be based on a subjective analysis of various performance
criteria and will not directly be tied to any one factor.
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<PAGE>
PROPOSAL 2 - AMENDED AND RESTATED STOCK OPTION PLAN
The stockholders are being asked to vote on a proposal to adopt the
Amended and Restated 1995 Incentive and Non-Qualified Stock Option Plan (the
"Plan"). The Board of Directors believes that adoption of the Plan is necessary
to ensure that the Company will continue to have the ability in the future to
attract and retain the services of highly qualified consultants, officers,
non-employee directors and employees by providing them with adequate equity
incentives in the form of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards, Stock Awards, Performance Share Awards and Stock
Appreciation Rights (the "Awards"). As of August 25, 1999, 2,500,000 shares were
available for future issuance under the Plan.
The terms and provisions of the Plan, as proposed to be amended, are
described more fully below. The description, however, is not intended to be a
complete summary of all the terms of the Plan. The Plan, as it is proposed to be
amended, is attached to this Proxy Statement as Exhibit A. The statements made
in this Proxy Statement with respect to the Plan and the proposed amendments
should be read in conjunction with and are qualified in their entirety by
reference to Exhibit A.
Because executive officers (who may also be members of the Board) are
eligible to receive Awards under the Plan, each of them has a personal interest
in the approval of these amendments.
PURPOSE.
The Board believes that it is in the best interests of the Company to
maintain an equity incentive program which will provide a meaningful opportunity
for highly qualified consultants, officers, non-employee directors and employees
to acquire a substantial proprietary interest in the enterprise and thereby
encourage such individuals to remain in the Company's service and more closely
align their interests with those of the stockholders.
ADMINISTRATION.
The Plan will be administered by a committee of the Board of Directors or
the full Board of Directors comprised of two or more "Non-Employee Directors"
within the meaning of Rule 16b-3(a)(3) (in either case, the "Plan
Administrator"). The Plan Administrator will construe and interpret the Plan and
establish such rules as it deems necessary for the proper administration of the
Plan. The Plan Administrator has authority (subject to full Board review) to
determine which eligible individuals are to receive Awards, the number of Awards
to be granted, the date or dates on which Awards become exercisable, and the
price of Awards.
ELIGIBILITY.
Under the Plan, consultants, officers, directors and employees of the
Company or its Subsidiaries are eligible to participate, if selected.
PRICE AND EXERCISABILITY.
Both non-qualified and incentive stock options may be granted under the
Plan. The term of options granted under the Plan will be fixed by the Plan
Administrator provided, however, that the maximum option term may not exceed ten
(10) years from the grant date and the exercise price per share may not be less
than the fair market value per share of the Company is Common Stock on the grant
date. The exercise price may be paid in cash or in shares of Company Common
Stock; provided however that shares of Common Stock used to pay the exercise
price must have been owned by the participant for a six-month period prior to
the exercise date or such longer period as the Plan Administrator determines. No
optionee is to have any stockholder rights with respect to the option shares
until such optionee has exercised the option and paid the exercise price for the
purchased shares. Options are not assignable or transferable other than by will
or the laws of descent and distribution or as permitted by applicable Federal
Securities laws, rules and regulations.
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<PAGE>
TERMINATION OF EMPLOYMENT.
If the employee to whom an option is granted shall cease to be employed by
the Company or its subsidiaries for any reason, other than death, then, within
30 days next succeeding such termination of employment, but in any event not
later than the expiration date of the option, the option holder may exercise the
option rights granted to the option holder under the option, but only to the
extent that the option holder was entitled to exercise the same on the date of
such termination of employment. Notwithstanding the foregoing, the Plan
Administrator may, in its discretion, extend the post-termination exercise
period to a date not later than the original expiration date of such option.
If the employee to whom an option is granted shall cease to be employed by
the Company or its subsidiaries by reason of death, then, within the six (6)
months next succeeding such option holders death, but in any event not later
than the expiration date of the option, the option holder's executor,
administrator, or any person or persons to whom the option holder's rights under
the option shall pass by testamentary transfer, bequest or by the operation of
the laws of descent and distribution, may exercise the option rights granted to
the option holder under the option, but only to the extent that the option
holder was entitled to exercise the same on the date of such option holder's
death. Notwithstanding the foregoing, the Plan Administrator may, in its
discretion, extend the post-death exercise period to a date not later than the
original expiration date of such option.
AMENDMENT AND TERMINATION.
Under the Plan, the Board of Directors may modify, amend, or terminate the
Plan at any time except that, to the extent then required by applicable law,
rule, or regulation, approval of the holders of a majority of shares of Common
Stock represented in person or by proxy at a meeting of the stockholders will be
required to increase the maximum number of shares of Common Stock available for
distribution under the Plan (other than increases due to adjustments in
accordance with the Plan). No modification, amendment, or termination of the
Plan shall adversely affect the rights of a participant under a grant previously
made to him without the consent of such participant.
ADJUSTMENTS.
In the event of a stock dividend, stock split or other change affecting
the shares or share price of Common Stock, such proportionate adjustments, if
any, as the Board of Directors deems appropriate, will be made with respect to
(1) the aggregate number of shares of Common Stock that may be issued under the
Plan, (2) each outstanding Award made under the Plan, and (3) the exercise price
per share for any outstanding stock options awards or SARs under the Plan.
NEW PLAN BENEFITS AND CLOSING QUOTATION.
Because the grant of awards under the Plan are at the discretion of the
Plan Administrator, it is not possible to indicate what awards will be made to
eligible participants.
As of August 25, 1999, the closing price of the Company's Common Stock as
quoted on the NASDAQ OTC Bulletin Board was $2.937 per share.
FEDERAL INCOME TAX CONSEQUENCES.
(a) NONQUALIFIED OPTIONS. Under the current applicable provisions of the
Internal Revenue Code, no tax will be payable by the recipient of an option at
the time of grant. Upon exercise of a nonqualified option, the excess, if any,
of the fair market value of the shares with respect to which the option is
exercised over the total option exercise price of such shares will be treated
for Federal tax purposes as ordinary income. Any profit or loss realized on the
sale or exchange of any shares actually received will be treated as capital gain
or loss. The Company will be entitled to deduct the amount, if any, by which the
fair market value on the date of exercise of the shares with respect to which
the option was exercised exceeds the exercise price.
9
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(b) INCENTIVE STOCK OPTIONS. With respect to an incentive stock option,
generally, no taxable gain or loss will be recognized when the option is granted
or exercised. Incentive stock options exercised more than three months after
termination of employment will be taxed in the same manner as nonqualified
options described above. Generally, upon exercise of an incentive stock option,
the spread between the fair market value and the exercise price will be an item
of tax preference for the purposes of the alternative minimum tax.
If the shares acquired upon the exercise of an incentive stock option are
held for at least one year, any gain or loss realized upon their sale will be
treated as long-term capital gain or loss. The Company will not be entitled to a
deduction. If the shares are not held for the one-year period, ordinary income
will be recognized in an amount equal to the difference between the exercise
price and the fair market value of the common stock on the date the option is
exercised. The Company will be entitled to a deduction equal to the amount of
ordinary income so recognized. If the shares are not held for the one
year-period and the amount realized upon sale is less than the exercise price,
such difference will be a capital loss.
(c) STOCK APPRECIATION RIGHTS. The Awardee of an SAR will not recognize
ordinary income upon the grant of the SAR. Upon exercise of an SAR, the tax
consequences to the holder are the same as for the exercise of an Non-Qualified
Stock Option.
(d) SHARE AWARDS. The Awardee of a Restricted Stock Award or Stock Award
under the Plan (collectively a "share award") will generally recognize ordinary
income equal to the excess of (i) the fair market value of the shares received
(determined as of the date on which the shares become transferable or not
subject to a substantial risk of forfeiture, whichever occurs first) over (ii)
the amount, if any, paid for the shares. The Awardee may, however, make an
election (the "Tax Election"), within thirty days following the grant of the
share award, to recognize income at the time of the award based on the fair
market value of the shares on that date rather than upon the expiration of the
risk of forfeiture. The Corporation will be entitled to a deduction in the same
amount and at the same time that the Awardee recognizes ordinary income. Upon
the sale or other disposition (including any forfeiture) of the shares awarded,
the Awardee will realize capital gain (or loss) measured by the difference
between the amount realized and the fair market value of the shares on the date
the award vested (or on the date of grant if the Awardee made the Tax Election).
(e) TAXATION OF CAPITAL GAINS AND LOSSES. If shares of stock acquired by a
Awardee are held for more than the long-term capital gains holding period (and,
in the case of Incentive Stock Options, the ISO Holding Periods are satisfied),
any gain realized upon sale will be long-term capital gain rather than
short-term capital gain or ordinary income. For stock acquired after 1987, the
holding period for long-term capital gain or loss is one year. If a Awardee
sells shares at a loss, such loss, together with other capital losses realized
during the year, will be deductible only to the extent that the loss offsets
capital gains plus up to $3,000 of ordinary income per year. Net capital losses
not deductible in the year realized may be carried over to and applied in
succeeding years in accordance with the above limitation.
STOCKHOLDER APPROVAL.
The amendments are being submitted to the stockholders of the Company
because of the addition of Stock, Restricted Stock and Performance Share Awards
to the Plan which were previously not available under the Plan. The affirmative
vote of a majority of the shares of the Company common stock present or
represented and entitled to vote at the Annual Meeting is required for the
approval of the amendment to the Plan. If the stockholders do not approve the
proposal, then the Plan will continue in effect in accordance with its existing
provisions subject to such amendments as the Board may determine in its sole
discretion do not require stockholder approval under applicable law.
PROPOSAL 3 - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors recommends the appointment of Wiss & Company, LLP
to audit the books and financial records of the Company for the year ended March
31, 1999. A representative of Wiss & Company, LLP is
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<PAGE>
expected to be present at the Meeting, will be available to respond to
appropriate questions, and will be afforded the opportunity to make a statement
if so desiring.
On June 14, 1999 the Registrant's Board of Directors approved a change in
its independent accountants, dismissing Richard A. Eisner & Company, LLP, and
engaging the firm of Wiss & Company, LLP to audit the books and records of the
Registrant for its fiscal year ended March 31, 1999. The decision to change
accounting firms was recommended by the Audit Committee of the Board of
Directors. Richard A. Eisner & Company, LLP's reports on the financial
statements of the Registrant for the year ended March 31, 1998 contained neither
an adverse opinion nor a disclaimer of opinion, nor were qualified or modified
as to uncertainty, audit scope or accounting principles. During the year ended
March 31, 1998 and through the date hereof there were no disagreements with the
former accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures.
The affirmative vote of a majority of the votes cast at the Meeting is
required for ratification of the appointment of Wiss & Company, LLP.
ANNUAL REPORT/FORM 10-KSB
The Company's 1999 Annual Report to its stockholders is a reproduction of
its Form 10-KSB filed with the United States Securities and Exchange Commission,
and is being mailed to all stockholders concurrently with this Proxy Statement.
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
Proposals which stockholders intend to present at the 2000 Annual Meeting
of Stockholders must be received by the Company by May 6, 2000, to be eligible
for inclusion in the proxy material for that Meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented at the Meeting. However, if any other matters
properly come before the Meeting, the persons named in the enclosed form of
proxy are expected to vote the proxy in accordance with their best judgment on
such matters.
INCORPORATION BY REFERENCE
The Financial Statements contained in the Annual Report accompanying this
Proxy Statement are incorporated herein by reference.
By Order of the Board of Directors,
Charles D. Cascio
President
Haddonfield, New Jersey
August 30, 1999
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THE TRANSLATION GROUP, LTD.
30 Washington Avenue
Haddonfield, NJ 08033
(609) 795-8669
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - September 28, 1999
The undersigned, as a Stockholder of THE TRANSLATION GROUP, LTD. (the
"Company"), hereby appoints Charles D. Cascio and John Toedtman or any one of
them, the true and lawful proxies and attorneys in fact of the undersigned to
attend the Annual Meeting of the Stockholders of the Company to be held Tuesday,
September 28, 1999, at 10:00 a.m. at the Company's office, and any adjournment
thereof, and hereby authorizes them to vote, as designated below, the number of
shares which the undersigned would be entitled to vote, as fully and with the
same effect as the undersigned might do if personally present on the following
matters as set forth in the Proxy Statement and Notice dated August 30, 1999.
(1) ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary below)
------
WITHHOLD AUTHORITY to vote for all nominees listed below
------
NOMINEES:
Charles D. Cascio Richard J.L. Herson
John Toedtman Gary M. Schlosser
Theodora Landgren
(INSTRUCTIONS: To withhold authority to vote for any of the individual
nominees, PRINT that nominee's name on the line below.)
(2) PROPOSAL TO APPROVE THE AMENDED AND RESTATED STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
------ ----- -----
(3) PROPOSAL TO RATIFY THE APPOINTMENT OF WISS & COMPANY, LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE YEAR ENDING MARCH 31, 2000.
FOR AGAINST ABSTAIN
------ ----- -----
(4) IN THE DISCRETION OF SUCH PROXIES UPON ALL OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, Dated:____________________, 1999
WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED --------------------------------
STOCKHOLDER. IF NO DIRECTION IS Signature*
MADE, THIS PROXY WILL BE VOTED FOR
ITEMS (1) AND (2). --------------------------------
Signature*
This Proxy is revocable and the * NOTE: Please sign exactly as the
undersigned reserves the right to name(s) appear on your Stock
attend the meeting and vote in Certificates. When attorney,
person. The undersigned hereby executor, administrator trustee, or
revokes any proxy heretofore given guardian, please give full title as
in respect of the shares of the such. If more than one name is
Company. shown, as in the case of joint
tenancy, each party should sign.
THE BOARD OF DIRECTORS URGES THAT YOU FILL IN, SIGN AND DATE THE PROXY AND
RETURN IT PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE.
THE TRANSLATION GROUP, LTD.
a Delaware Corporation
AMENDED AND RESTATED 1995 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE. The name of the plan is the Amended and Restated 1995 Incentive
and Non-Qualified Stock Option Plan (the "Plan"). The purposes of the Plan are
to attract and retain the best available personnel, to provide additional
incentive to the employees, Consultants and non-employee directors of The
Translation Group Ltd., a Delaware corporation, and its subsidiaries
(collectively, the "Company"), and to promote the success of the Company's
business. It is anticipated that providing such persons with a direct link with
the Company's welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company's
behalf and strengthen their desire to remain with the Company.
2. DEFINITIONS. As used in this Plan, the following definitions shall
apply:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards, Stock Awards, Performance
Share Awards and Stock Appreciation Rights.
(c) "AWARDEE" means the recipient of an Award.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder.
(f) "COMMISSION" means the United States Securities and Exchange
Commission.
(g) "COMMON STOCK" means the common stock of the Company, par value
$0.01 per share.
(h) "CONSULTANT" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting services and is compensated for such
consulting services; provided that the term Consultant shall not include
directors who are not compensated for their services or are paid only a
director's fee by the Company.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE
DIRECTOR" means the absence of any interruption or termination of service as an
employee, Consultant or non-employee director, as applicable. Continuous Status
as an Employee, Consultant or non-employee director shall not be considered
interrupted in the case of sick leave or military leave, any other leave
provided pursuant to a written policy of the Company in effect
<PAGE>
at the time of determination, or any other leave of absence approved by the
Board or the Plan Administrator; PROVIDED that such leave is for a period of not
more than the greater of (i) 90 days or (ii) the date of the resumption of such
service upon the expiration of such leave which is guaranteed by contract or
statute or is provided in a written policy of the Company.
(j) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(k) "RULE 16B-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as such rule is amended from time to
time and as interpreted by the Commission.
(l) "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
(m) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of this Plan.
(n) "STOCK APPRECIATION RIGHT" or "SAR" means a right, the value of
which is determined relative to appreciation in value of Shares pursuant to an
award granted under Section 12 hereof.
(o) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. SCOPE OF PLAN. Subject to the provisions of Section 10 of this Plan, and
unless otherwise amended by the Board and approved by the stockholders of the
Company as required by law, the maximum aggregate number of Shares issuable
under this Plan is 2,500,000 and such Shares are hereby made available and shall
be reserved for issuance under this Plan. The Shares may be authorized but
unissued, or reacquired, Common Stock. Notwithstanding the foregoing, on and
after the date that the Plan is subject to Section 162(m) of the Code, Options
with respect to no more than 200,000 shares of Common Stock may be granted to
any one individual during any one calendar-year period.
If an Option shall expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall (unless this Plan shall have terminated) become available for grants of
other Options, Restricted Stock Awards, Stock Awards or Performance Share Awards
under this Plan.
4. ADMINISTRATION OF PLAN.
(a) PROCEDURE. The Plan shall be administered by the full Board of
Directors of the Company or a committee of such Board of Directors comprised of
two or more "Non-Employee Directors" within the meaning of Rule 16b-3(a)(3)
promulgated under the Act (the "Plan Administrator").
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<PAGE>
(b) POWERS OF PLAN ADMINISTRATOR. Subject to the provisions of this
Plan, the Plan Administrator shall have full and final authority in its
discretion to:
(i) grant Awards under the Plan;
(ii) determine, upon review of relevant information and in
accordance with Section 7 below, the Fair Market Value of the Common Stock;
(iii) determine the exercise price per share of Options and SARs to
be granted, in accordance with this Plan;
(iv) select the directors, officers, employees and Consultants to
whom, and the time or times at which, Awards shall be granted and the number of
shares to be represented by each Award;
(v) cancel, with the consent of the Awardee, outstanding Awards and
grant new Awards in substitution therefor;
(vi) interpret this Plan and any Award under the Plan;
(vii) accelerate or defer (with the consent of Awardee) the
exercise date of any Option;
(viii) prescribe, amend and rescind rules and regulations relating
to this Plan;
(ix) impose limitations on Awards, including limitations on
transfer and repurchase provisions and extend the exercise period within which
Stock Options and SARs may be exercised;
(x) determine the terms and provisions of each Award (which need
not be identical) by which Options, SARs or Shares shall be evidenced and, with
the consent of the holder thereof, modify or amend any provisions (including
without limitation provisions relating to the exercise price and the obligation
of any Optionee to sell purchased Shares to the Company upon specified terms and
conditions) of any Option;
(xi) require withholding from or payment by an Awardee of any
federal, state or local taxes;
(xii) appoint and compensate agents, counsel, auditors or other
specialists as the Plan Administrator deems necessary or advisable;
(xiii) correct any defect or supply any omission or reconcile any
inconsistency in this Plan and any agreement relating to any Option, in such
manner and to such extent the Plan Administrator determines is necessary to
carry out the purposes of this Plan, and;
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<PAGE>
(xiv) construe and interpret this Plan, any agreement relating to
any Award, and make all other determinations deemed by the Plan Administrator to
be necessary or advisable for the administration of this Plan, even in conflict
with an express provision of the Plan.
(c) EFFECT OF PLAN ADMINISTRATOR'S DECISION. All decisions
determinations and interpretations of the Plan Administrator shall be final and
binding on all Awardees and any other holders of any Awards granted under this
Plan.
(d) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Plan Administrator, in
its discretion, may delegate to the Chairman of the Company or the Chief
Operating Officer all or part of the Plan Administrator's authority and duties
with respect to granting Awards to individuals who are not subject to the
reporting provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. The Plan Administrator may revoke or
amend the terms of such a delegation at any time, but such revocation shall not
invalidate prior actions of the Chairman or Chief Operating Officer that were
consistent with the terms of the Plan.
5. ELIGIBILITY.
(a) Directors, officers, employees and consultants of the Company or
its Subsidiaries who, in the opinion of the Plan Administrator, are mainly
responsible for the continued growth and development and future financial
success of the business shall be eligible to participate in the Plan. In
addition, non-employee directors are eligible to receive an automatic grant of
Stock Options pursuant to Section 9 hereof.
(b) Anything to the contrary notwithstanding, each non-employee
director who is first elected or appointed to serve as a director shall
automatically be granted Non-Qualified Stock Options to purchase 5,000 shares of
Stock. The Option exercise price for Options granted to non-employee directors
under the Plan will be equal the Fair Market Value of the Stock on the date of
grant. Options granted to non-employee directors under the foregoing provisions
will be granted on the date that such non-employee director is first elected or
appointed to serve as a director and will vest in equal annual installments over
three years commencing on the anniversary of the date of grant and will expire
ten years after grant, subject to earlier termination if the optionee ceases to
serve as a director.
(c) Each Option granted under Section 5(b) above shall be a
Nonstatutory Stock Option. Each other Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. Notwithstanding such designations, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the Company) exceeds
$100,000, such options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(c), Options shall be taken into account in the order
in which they are granted, and the Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
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<PAGE>
(d) This Plan shall not confer upon any Awardee any right with respect
to continuation of employment by or the rendition of services to the Company or
any Parent or Subsidiary, nor shall it interfere in any way with his or her
right or the right of the Company or any Parent or Subsidiary to terminate his
or her employment or services at any time, with or without cause. The terms of
this Plan or any Awards granted hereunder shall not be construed to give any
Awardee the right to any benefits not specifically provided by this Plan or in
any manner modify the Company's right to modify, amend or terminate any of its
pension or retirement plans.
6. EFFECTIVENESS OF PLAN. The amendments to this Plan shall become
effective upon its adoption by the Board of Directors of the Company (such
adoption to include the approval of at least two non-employee directors) and the
approval thereof by vote of the holders of a majority of the outstanding shares
of the Company present, or represented, and entitled to vote at a meeting to be
duly held (or through written consents in lieu of a meeting) in accordance with
the applicable laws of the State of Delaware. Such meeting shall be held within
twelve months of the adoption of the Plan by the Board of Directors.
7. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the Plan
Administrator as follows:
(i) In the case of an Incentive Stock Option granted to any
employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant, but if granted to an employee who,
at the time of the grant of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(ii) With respect to (i) above, the per Share exercise price is
subject to adjustment as provided in Section 10 below. For purposes of this
Section 7(a), if an Option is amended to reduce the exercise price, the date of
grant of such option shall thereafter be considered to be the date of such
amendment.
(b) FAIR MARKET VALUE. The "Fair Market Value" of a share of Common
Stock on any day means: (a) if the principal market for the Common Stock is a
national securities exchange or the NASDAQ National Market System, the closing
sales price of the Common Stock on such day as reported by such exchange or
market system, or on a consolidated tape reflecting transactions on such
exchange or market system, or (b) if the principal market for the Common Stock
is not a national securities exchange or the NASDAQ National Market System, and
the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, the mean between the closing bid and the closing
asked prices for the Common Stock on such day as quoted on such system, or (c)
if the principal market for the Common Stock is not a national securities
exchange or the NASDAQ National Market System, and the Common Stock is not
quoted on the National Association of Securities Dealers Automated Quotation
System, the mean between the highest bid and lowest asked priced for the Common
Stock on such day as reported by the National Quotation Bureau, Inc.; provided
that if clauses (a), (b) and (c) of this paragraph are all inapplicable, or if
no trades have been made or no quotes are available for such day, the Fair
Market Value of the Common Stock shall be determined by the Plan Administrator
by any method which it deems to be appropriate. The determination of the Plan
Administrator shall be conclusive as to the Fair Market Value of the Common
Stock.
-5-
<PAGE>
(c) CONSIDERATION. The Option exercise price of each share purchased
pursuant to an Option shall be paid in full at the time of each exercise (the
"Payment Date") of the Option (i) in cash; (ii) by delivering to the Company a
notice of exercise with an irrevocable direction to a broker-dealer registered
under the Act to sell a sufficient portion of the shares and deliver the sale
proceeds directly to the Company to pay the exercise price; (iii) in the
discretion of the Plan Administrator, through the delivery to the Company of
previously-owned shares of Common Stock having an aggregate Fair Market Value
equal to the Option exercise price of the shares being purchased pursuant to the
exercise of the Option; provided, however, that shares of Common Stock delivered
in payment of the Option price must have been held by the participant for at
least six (6) months in order to be utilized to pay the Option price; (iv) in
the discretion of the Plan Administrator, through an election to have shares of
Common Stock otherwise issuable to the optionee withheld to pay the exercise
price of such Option; or (v) in the discretion of the Plan Administrator,
through any combination of the payment procedures set forth in subsections
(i)-(iv) of this Section 7(c).
(d) TAX WITHHOLDING.
(i) Whenever Shares are to be issued or cash is to be paid under
the Plan, the Company shall have the right to require the participant to remit
to the Company an amount sufficient to satisfy federal, state and local tax
withholding requirements prior to the delivery of any certificate for Shares or
any proceeds; provided, however, that in the case of a participant who receives
an Award of Shares under the Plan which is not fully vested, the participant
shall remit such amount on the first business day following the Tax Date. The
"Tax Date" for purposes of this Section 7 shall be the date on which the amount
of tax to be withheld is determined. If a participant makes a disposition of
shares acquired upon the exercise of an Incentive Stock Option within either two
years after the Option was granted or one year after its exercise by the
participant, the participant shall promptly notify the Company and the Company
shall have the right to require the participant to pay to the Company an amount
sufficient to satisfy federal, state and local tax withholding requirements.
(ii) A participant who is obligated to pay the Company an amount
required to be withheld under applicable tax withholding requirements may pay
such amount (i) in cash; (ii) in the discretion of the Plan Administrator,
through the delivery to the Company of previously-owned Shares having an
aggregate Fair Market Value on the Tax Date equal to the tax obligation provided
that the previously owned shares delivered in satisfaction of the withholding
obligations must have been held by the participant for at least six (6) months;
or (iii) in the discretion of the Plan Administrator, through a combination of
the procedures set forth in subsections (i) and (ii) of this Section 7(d).
(iii) A participant who is obligated to pay to the Company an
amount required to be withheld under applicable tax withholding requirements in
connection with either the exercise of a Non-Qualified Stock Option, or the
receipt of a Restricted Stock Award, Stock
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<PAGE>
Award or Performance Share Award under the Plan may, in the discretion of the
Plan Administrator, elect to satisfy this withholding obligation, in whole or in
part, by requesting that the Company withhold shares of stock otherwise issuable
to the participant having a Fair Market Value on the Tax Date equal to the
amount of the tax required to be withheld; provided, however, that shares may be
withheld by the Company only if such withheld shares have vested. Any fractional
amount shall be paid to the Company by the participant in cash or shall be
withheld from the participant's next regular paycheck.
(iv) An election by a participant to have shares of stock withheld
to satisfy federal, state and local tax withholding requirements pursuant to
Section 7(d) must be in writing and delivered to the Company prior to the Tax
Date.
8. OPTIONS.
(a) Term of Option. The term of each Option granted (other than an
Option granted under Section 5(b) above) shall be for a period of no more than
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Option agreement. However, in the case of an Option granted to
an Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power, of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Option Agreement.
(b) EXERCISE OF OPTIONS.
(i) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted under this Plan (other than an Option granted pursuant to Section 5(b)
above) shall be exercisable at such times and under such conditions as
determined by the Plan Administrator, including performance criteria with
respect to the Company and/or the Optionee, and as shall otherwise be
permissible under the terms of this Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Plan Administrator, consist of
any consideration and method of payment allowable under Section 7 of this Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the optioned stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. If the
exercise of an Option is treated in part as the exercise of an Incentive Stock
Option and in part as the exercise of a Nonstatutory Stock Option pursuant to
Section 5(b) above, the Company shall issue a separate stock certificate
evidencing the Shares treated as acquired upon exercise of an Incentive Stock
Option and a separate stock certificate evidencing the Shares treated as
acquired
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upon exercise of a Nonstatutory Stock Option and shall identify each such
certificate accordingly in its stock transfer records. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of this
Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of this
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(ii) METHOD OF EXERCISE. An Optionee may exercise an Option, in
whole or in part, at any time during the option period by the Optionee's giving
written notice of exercise on a form provided by the Plan Administrator (if
available) to the Company specifying the number of shares of Common Stock
subject to the Option to be purchased. Such notice shall be accompanied by
payment in full of the purchase price in a manner provided for under Section
7(c) above. No shares of Common Stock shall be issued until full payment
therefor has been made. An Optionee shall have all of the rights of a
stockholder of the Company holding the class of Common Stock that is subject to
such Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Optionee has given written notice of
exercise, has paid in full for such shares and such shares have been recorded on
the Company's official stockholder records as having been issued or transferred.
(iii) COMPANY LOAN OR GUARANTEE. Upon the exercise of any Option
and subject to the pertinent Option agreement and the discretion of the Plan
Administrator, the Company may at the request of the Optionee; (A) lend to the
Optionee, with recourse, an amount equal to such portion of the option exercise
price as the Plan Administrator may determine; or (B) guarantee a loan obtained
by the Optionee from a third-party for the purpose of tendering the option
exercise price.
(c) TERMINATION OF STATUS AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE
DIRECTOR. An Option or SAR may be exercised in whole at any time, or in part
from time to time, within such period or periods (not to exceed ten years from
the granting of the Option in the case of an Incentive Stock Option) as may be
determined by the Plan Administrator and set forth in the agreement (such period
or periods being hereinafter referred to as the "Option Period"), provided that,
unless the agreement provides otherwise:
(i) If a participant who is an employee of the Company shall cease
to be employed by the Company, all Options and SARs to which the employee is
then entitled to exercise may be exercised only within three months after the
termination of employment and within the Option Period or, if such termination
was due to disability or retirement (as hereinafter defined), within one year
after termination of employment and within the Option Period. Notwithstanding
the foregoing: (a) in the event that any termination of employment shall be for
Cause (as defined herein) or the participant becomes an officer or director of,
a consultant to or employed by a Competing Business (as defined herein), during
the Option Period, then any and all Options and SARs held by such participant
shall forthwith terminate; and(b) the Plan Administrator may, in its sole
discretion, extend the Option Period of any Option or SAR for up
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to three years from the date of termination of employment regardless of the
original Option Period. For purposes of the Plan, retirement shall mean the
termination of employment with the Company, other than for Cause, at any time
after the age 65.
For purposes of this Plan, the term "Cause" shall mean (a) with respect
to an individual who is party to a written agreement with the Company which
contains a definition of "cause" or "for cause" or words of similar import for
purposes of termination of employment thereunder by the Company, "cause" or "for
cause" as defined in such agreement; (b) in all other cases (I) the willful
commission by an employee of a criminal or other act that causes substantial
economic damage to the Company or substantial injury to the business reputation
of the Company; (II) the commission of an act of fraud in the performance of
such person's duties to or on behalf of the Company; or (III) the continuing
willful failure of a person to perform the duties of such person to the Company
(other than a failure to perform duties resulting from such person's incapacity
due to illness) after written notice thereof (specifying the particulars thereof
in reasonable detail) and a reasonable opportunity to cure such failure is given
to the person by the Board of Directors of the Company or the Plan
Administrator. For purposes of the Plan, no act, or failure to act, on the part
of any person shall be considered "willful" unless done or omitted to be done by
the person other than in good faith and without reasonable belief that the
person's action or omission was in the best interest of the Company.
For purposes of this Plan, the term "Competing Business" shall mean:
any person, corporation or other entity engaged in the business of (a) providing
translation and localization services, (b) Web site design or hosting services,
or (c) selling or attempting to sell any product or service which is the same as
or similar to products or services sold by the Company within the last year
prior to termination of such person's employment, consultant relationship or
directorship, as the case may be, hereunder.
(ii) If a participant who is a director of the Company shall cease
to serve as a director of the Company, any Options or SARs then exercisable by
such director may be exercised only within three months after the cessation of
service and within the Option Period unless such cessation was due to
disability, in which case such optionee may exercise such Option or SAR within
one year after cessation of service and within the Option Period.
Notwithstanding the foregoing: (a) if any cessation of service as a director was
the result of removal for Cause or the participant becomes an officer or
director of, a consultant to or employed by a Competing Business during the
Option Period, any Options and SARs held by such participant shall forthwith
terminate; and (b) the Plan Administrator may in its sole discretion extend the
Option Period of any Option or SAR for up to three years from the date of
cessation of service regardless of the original Option Period;
(iii) If the participant shall die during the Option Period, any
Options or SARs then exercisable may be exercised only within one year after the
participant's death and within the Option Period and only by the participant's
personal representative or persons entitled thereto under the participant's will
or the laws of descent and distribution;
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(iv) The Option or SAR may not be exercised for more shares
(subject to adjustment as provided in Section 10) after the termination of the
participant's employment, cessation of service as a director or the
participant's death, as the case may be, than the participant was entitled to
purchase thereunder at the time of the termination of the participant's
employment or the participant's death; and
(v) If a participant owns (or is deemed to own under applicable
provisions of the Code and regulations promulgated thereunder) more than 10% of
the combined voting power of all classes of stock of the Company (or any parent
or subsidiary corporation of the Company) and an Option granted to such
participant is intended to qualify as an Incentive Stock Option, the Option by
its terms may not be exercisable after the expiration of five years from the
date such Option is granted.
9. TRANSFERABILITY OF OPTIONS. An Option granted hereunder shall by its
terms not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or the laws of descent and distribution or as
permitted by applicable Federal Securities laws, rules and regulations.
Specifically, employees or consultants may transfer options to family members or
family entities by gift or pursuant to a domestic relations order. For the
purposes of this section, "family member" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee's household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interests, a
foundation in which these persons (or the employee) control the management of
assets, and any other entity in which these persons (or the employee) own more
than fifty percent of the voting interests. An Option shall also be transferable
to the extent such transfer will not cause either the Option or the Plan to no
longer qualify as an Incentive Stock Option under the Code or as meeting the
requirements of Rule 16b-3.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CAPITALIZATION. Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock which have been authorized
for issuance under this Plan but as to which no Options have yet been granted or
which have been returned to this Plan upon cancellation or expiration of an
Option, the number of shares of Common Stock subject to each outstanding Option,
the price per share of Common Stock covered by each such outstanding Option, and
the number of Options that can be granted to any one individual participant
shall be proportionately adjusted by the Plan Administrator for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock of the Company or other similar transaction. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
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(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Plan Administrator. The Plan Administrator may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Plan Administrator and give each Optionee
the right to exercise his or her Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable.
(c) SALE OR MERGER. Immediately prior to a Sale, each Optionee may
exercise his or her Option as to all Shares then subject to the Option,
regardless of any vesting conditions otherwise expressed in the Option
Agreement. "Sale" means: (i) sale (other than a sale by the Company) of
securities entitled to more than 75% of the voting power of the Company in a
single transaction or a related series of transactions; or (ii) sale of
substantially all of the assets of the Company; or (iii) approval by the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, as a result of which the persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation do not
own securities immediately after the reorganization, merger or consolidation
entitled to more than 50% of the voting power of the reorganized, merged or
consolidated company. Voting power, as used in this Section 10(c), shall refer
to those securities entitled to vote generally in the election of directors, and
securities of the Company not entitled to vote but which are convertible into,
or exercisable for, securities of the Company entitled to vote generally in the
election of directors shall be counted as if converted or exercised, and each
unit of voting securities shall be counted in proportion to the number of votes
such unit is entitled to cast.
(d) PURCHASED SHARES. No adjustment under this Section 10 shall apply
to any purchased Shares already deemed issued at the time any adjustment would
occur.
(e) NOTICE OF ADJUSTMENTS. Whenever the purchase price or the number or
kind of securities issuable upon the exercise of the Option shall be adjusted
pursuant to Section 10, the Company shall give each Optionee written notice
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, and the method by which such adjustment was
calculated.
(f) MITIGATION OF EXCISE TAX. If any payment or right accruing to an
Optionee under this Plan (without the application of this Section), either alone
or together with other payments or rights accruing to the Optionee from the
Company or an affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
the Plan Administrator may in each particular instance determine to (i) reduce
such payment or right to the largest amount or greatest right that will result
in no portion of the amount payable or right accruing under the 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, or (ii) take such other actions, or
make such other arrangements or payments with respect to any such payment or
right as the Plan Administrator may determine under the circumstances. Any such
determination shall be made by the Plan Administrator in the exercise of its
sole discretion, and such determination shall be conclusive and binding on the
Optionee. The Optionee shall
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cooperate as may be requested by the Plan Administrator in connection with the
Plan Administrator's determination, including providing the Plan Administrator
with such information concerning such Optionee as the Plan Administrator may
deem relevant to its determination.
11. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Plan Administrator makes the determination
granting such Option. Notice of the determination shall be given to each
employee, Consultant or non-employee director to whom an Option is so granted
within a reasonable time after the date of such grant. If the Plan Administrator
cancels, with the consent of the Optionee, any Option granted under this Plan,
and a new Option is substituted therefor, the date that the canceled Option was
originally granted shall be the date used to determine the earliest date for
exercising the new substituted Option under Section 7 so that the Optionee may
exercise the substituted Option at the same time as if the Optionee had held the
substituted Option since the date the canceled Option was granted, unless the
canceled Option shall have a new exercise price, in which case, the date of
grant shall be the date the Plan Administrator makes the determination to grant
the substituted Option.
12. STOCK APPRECIATION RIGHTS. The Plan Administrator may, from time to
time, subject to the provisions of the Plan, grant SARs to eligible
participants. Such SARs may be granted (i) alone, (ii) simultaneously with the
grant of an Option (either an Incentive Stock Option or Non-Qualified Stock
Option) and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of an Option (either an Incentive Stock option or a
Non-Qualified Stock Option) and in conjunction therewith or in the alternative
thereto.
(i) An SAR shall entitle the holder upon exercise thereof to
receive from the Company, upon a written request filed with the Secretary of the
Company at its principal offices (the "Request"), (i) a number of shares of
Common Stock (with or without restrictions as to substantial risk of forfeiture
and transferability, as determined by the Plan Administrator in its sole
discretion), (ii) an amount of cash, or (iii) any combination of shares of
Common Stock and cash, as specified in the Request (but subject to the approval
of the Plan Administrator in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment), having an
aggregate Fair Market Value equal to the product of (i) the excess of the Fair
Market Value, on the day of such Request, of one share of Common Stock over the
exercise price per share specified in such SAR or its related Option, multiplied
by (ii) the number of shares of Common Stock for which such SAR shall be
exercised.
(ii) The exercise price of an SAR granted alone shall be determined
by the Plan Administrator, but may not be less than the Fair Market Value of the
underlying Common Stock on the date of grant. An SAR granted simultaneously with
or subsequent to the grant of an Option and in conjunction therewith or in the
alternative thereto shall have the same exercise price as the related Option,
shall be transferable only upon the same terms and conditions as the related
Option, and shall be exercisable only to the same extent as the related Option;
provided, however, that an SAR, by its terms, shall be exercisable only when the
Fair Market Value of the Common Stock subject to the SAR and related Option
exceeds the exercise price thereof.
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(iii) Upon exercise of an SAR granted simultaneously with or
subsequent to an Option and in the alternative thereto, the number of shares of
Common Stock for which the related Option shall be exercisable shall be reduced
by the number of shares of Stock for which the SAR shall have been exercised.
The number of shares of Common Stock for which an SAR shall be exercisable shall
be reduced upon any exercise of a related Option by the number of shares of
Common Stock for which such Option shall have been exercised.
(iv) Any SAR shall be exercisable upon such additional terms and
conditions as may be prescribed by the Plan Administrator.
Any election by a Holder to receive cash in full or partial settlement
of a SAR, and any exercise of a SAR for cash, may be made only by a request
filed with the Corporate Secretary of the Company during the period beginning on
the third business day following the date of release for publication by the
Company of quarterly or annual summary statements of earnings and ending on the
twelfth business day following such date. Within thirty (30) days after the
receipt by the Company of a request to receive cash in full or partial
settlement of a SAR or to exercise such SAR for cash, the Plan Administrator
shall, in its sole discretion, either consent to or disapprove, in whole or in
part, such request.
If the Plan Administrator disapproves in whole or in part any election
by a Holder to receive cash in full or partial settlement of a SAR or to
exercise such SAR for cash, such disapproval shall not affect such Holder's
right to exercise such SAR at a later date, to the extent that such SAR shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive cash upon such later exercise shall be subject to
the approval of the Plan Administrator. Additionally, such disapproval shall not
affect such Holder's right to exercise any related Option or Options granted to
such Holder Under the Plan.
13. RESTRICTED STOCK AWARDS.
(a) The Plan Administrator may grant Restricted Stock Awards to any
officer, employee or Consultant of the Company and its Subsidiaries. A
Restricted Stock Award entitles the recipient to acquire shares of Stock subject
to such restrictions and conditions as the Plan Administrator may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) Upon execution of a written instrument setting forth the Restricted
Stock Award and paying any applicable purchase price, a participant shall have
the rights of a stockholder with respect to the Stock subject to the Restricted
Stock Award, including, but not limited to the right to vote and receive
dividends with respect thereto; provided, however, that shares of Stock subject
to Restricted Stock Awards that have not vested shall be subject to the
restrictions on transferability described in Section 10(d) below. Unless the
Plan Administrator shall otherwise determine, certificates evidencing the
Restricted Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section 13(c) below.
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(c) The Plan Administrator at the time of grant shall specify the date
or dates and/or the attainment of pre-established performance goals, objectives
and other conditions on which Restricted Stock shall become vested, subject to
such further rights of the Company or its assigns as may be specified in the
instrument evidencing the Restricted Stock Award. If the Awardee or the Company,
as the case may be, fails to achieve the designated goals or the Awardee's
relationship with the Company is terminated prior to the expiration of the
vesting period, the Awardee shall forfeit all shares of Stock subject to the
Restricted Stock Award which have not then vested.
(d) Unvested Restricted Stock may not be sold, assigned transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award.
14. STOCK AWARDS. The Plan Administrator may, in its sole discretion, grant
(or sell at a purchase price determined by the Plan Administrator) a Stock Award
to any officer, employee or Consultant of the Company or its Subsidiaries,
pursuant to which such individual may receive shares of Common Stock free of any
vesting restrictions (a "Stock Award") under the Plan. Stock Awards may be
granted or sold as described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to such individual.
15. PERFORMANCE SHARE AWARDS. A Performance Share Award is an Award entitling
the recipient to acquire shares of Common Stock upon the attainment of specified
performance goals. The Plan Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any officer,
employee or Consultant of the Company or its Subsidiaries, including those who
qualify for awards under other performance plans of the Company. The Plan
Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Plan Administrator may rely on the performance goals
and other standards applicable to other performance plans of the Company in
setting the standards for Performance Share Awards under the Plan.
16. AMENDMENT AND TERMINATION OF PLAN.
(a) AMENDMENT AND TERMINATION. The Board or the Plan Administrator may
amend, waive or terminate this Plan, including any express provision contained
herein, from time to time in such respects as it shall deem advisable; provided
that, to the extent necessary to comply with Rule 16b-3 or with Section 422 of
the Code (or any other successor or applicable law or regulation), the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
Notwithstanding the foregoing, neither the provisions of Section 5(b) of this
Plan, nor any other provisions pertaining to the automatic option grants to
non-employee directors, shall be amended more than once every six months, other
than to comport with changes in the Code or other
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applicable laws or any rules or regulations promulgated thereunder. The Plan
shall terminate no later than October 31, 2004.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of this Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Plan Administrator, which agreement must be in writing and signed by the
Optionee and the Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
18. RESTRICTIONS ON SHARES. Shares of Common Stock issued upon exercise of
an Option shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Plan Administrator in its
discretion may determine or provide in the grant. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (a) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (b) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Plan Administrator determines to be necessary or
advisable, and (c) the satisfaction of any applicable withholding obligation in
order for the Company or an affiliate to obtain a deduction with respect to the
exercise of an Option. The Company may cause any certificate for any share of
Common Stock to be delivered to be properly marked with a legend or other
notation reflecting the limitations on transfer of such Common Stock as provided
in this Plan or as the Plan Administrator may otherwise require. The Plan
Administrator may require any person exercising an Option to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares of Common Stock in
compliance with applicable law or otherwise. Fractional shares shall not be
delivered, but shall be rounded to the next lower whole number of shares.
19. STOCKHOLDER RIGHTS. No person shall have any rights of a stockholder as
to shares of Common Stock subject to an Option until, after proper exercise of
the Option or other action required, such shares shall have been recorded on the
Company's official stockholder records as
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having been issued or transferred. Subject to the preceding Section and upon
exercise of the Option or any portion thereof, the Company will have thirty (30)
days in which to issue the shares, and the Optionee will not be treated as a
stockholder for any purpose whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the record date is
prior to the date such shares are recorded as issued or transferred in the
Company's official stockholder records, except as provided herein or in an
agreement.
20. BEST EFFORTS TO REGISTER. The Company may register under the Securities
Act the Common Stock delivered or deliverable pursuant to Options on Commission
Form S-8 if available to the Company for this purpose (or any successor or
alternate form that is substantially similar to that form to the extent
available to effect such registration), in accordance with the rules and
regulations governing such forms, as soon as such forms are available for
registration to the Company for this purpose. The Company will, if it so
determines, use its good faith efforts to cause the registration statement to
become effective as soon as possible and will file such supplements and
amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the option period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Optionees have disposed of all shares delivered pursuant to any Option.
The Company may delay the foregoing actions at any time and from time to time if
the Plan Administrator determines in its discretion that any such registration
would materially and adversely affect the Company's interests or if there is no
material benefit to Optionees.
21. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to permit the exercise of all Options outstanding under this Plan and
the payment of all Restricted Stock Awards, Stock Awards and Performance Share
Awards under this Plan. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained for any reason.
22. AGREEMENTS. Options, Stock Awards, Restricted Stock Awards and
Performance Share Awards shall be evidenced by written agreements in such form
as the Plan Administrator shall approve.
23. INFORMATION TO AWARDEES. To the extent required by applicable law, the
Company shall provide to each Awardee, during the period for which such Awardee
has one or more Awards outstanding, copies of all annual reports and other
information which are provided to all stockholders of the Company. Except as
otherwise noted in the foregoing sentence, the Company shall have no obligation
or duty to affirmatively disclose to any Awardee, and no Awardee shall have any
right to be advised of, any material information regarding the Company or any
Parent or Subsidiary at any time prior to, upon or otherwise in connection with,
the exercise of an Award.
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24. FUNDING. Benefits payable under this Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund or otherwise
segregate assets to be used for payment of benefits under this Plan.
25. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as directors or as members of the Plan Administrator, the members
of the Plan Administrator shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Plan or any option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; provided that within 60 days after
institution of any such action, suit or proceeding a Plan Administrator member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same. The foregoing right of indemnification shall not be
exclusive and shall be independent of any other rights of indemnification to
which such persons may be entitled under the Company's Certificate of
Incorporation or by-laws, by contract, as a matter of law, or otherwise.
26. COMPLIANCE WITH SECTION 16. With respect to persons subject to Section
16 of the Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 (or its successor rule and shall be
construed to the fullest extent possible in a manner consistent with this intent
). To the extent that any Award fails to so comply, it shall be deemed to be
modified to the extent permitted by law and to the extent deemed advisable by
the Plan Administrator in order to comply with Rule 16b-3.
27. PARTICIPATION BY FOREIGN NATIONALS. The Plan Administrator may, in
order to fulfill the purposes of the Plan and without amending the Plan, modify
grants to foreign nationals or United States citizens employed abroad in order
to recognize differences in local law, tax policy or custom.
28. CONTROLLING LAW. This Plan shall be governed by the laws of the State
of New Jersey applicable to contracts made and performed wholly in New Jersey
between New Jersey residents.
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