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
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE JUDGE GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required per Exchange Act Rule 14a-6(i)(2)
/ / 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:(1)
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:
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
THE JUDGE GROUP, INC.
Two Bala Plaza, Suite 405
Bala Cynwyd, Pennsylvania 19004
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
June 9, 1998
May 11, 1998
To the Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders of
The Judge Group, Inc., which will be held at 10:00 a.m. on Tuesday, June 9,
1998, at the Company's corporate headquarters, Two Bala Plaza, Suite 405, Bala
Cynwyd, Pennsylvania, for the following purposes:
1. To elect the Board of Directors;
2. To amend the Company's 1996 Incentive Stock Option and
Non-Qualified Stock Option Plan for Key Employees and
Non-Employee Directors;
3. To ratify the appointment of Rudolph Palitz LLP as the Company's
independent accountants for the 1998 fiscal year; 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 May 4, 1998 as the
record date for the determination of the shareholders of record entitled to
notice of, and to vote at, the Annual Meeting and any adjournments thereof.
The Company's Annual Report for fiscal 1997 is enclosed.
WHETHER OR NOT YOU PLAN TO ATTEND THE 1998 ANNUAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY OR PROXIES IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. RETURNING
YOUR PROXY CARD DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE MEETING AND
VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
KATHARINE A. WIERCINSKI
Secretary
<PAGE>
The Judge Group, Inc.
Two Bala Plaza, Suite 405
Bala Cynwyd, Pennsylvania 19004
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of The Judge Group, Inc., a Pennsylvania corporation
(the "Company"), for use at the 1998 Annual Meeting of Shareholders scheduled
for 10:00 a.m. on Tuesday, June 9, 1998 at the Company's corporate headquarters,
Two Bala Plaza, Suite 405, Bala Cynwyd, Pennsylvania 19004, and at any
postponements or adjournments thereof. This proxy statement and the accompanying
forms of proxy are first being mailed to shareholders on or about May 11, 1998.
Shares represented by properly executed proxy cards received by the Company at
or before the meeting will be voted according to the instructions indicated on
the proxy card. Unless contrary instructions are given, the persons named on the
proxy card intend to vote the shares so represented FOR the election of the
nominees for directors named in this proxy statement, FOR the Amendment to the
Company's 1996 Incentive Stock Option and Non-Qualified Stock Option Plan for
Key Employees and Non-Employee Directors and FOR the ratification of Rudolph,
Palitz LLP as the Company's independent accountants for 1998. The persons named
on the proxy card will vote according to their best judgment as to any other
business which properly comes before the meeting.
Signing and returning the accompanying proxy will not affect a shareholder's
right to attend the Annual Meeting or vote in person. A proxy may be revoked at
any time before it is voted at the meeting by filing with the Secretary of the
Company an instrument revoking it, by a duly executed proxy bearing a later date
or by attending the 1998 Annual Meeting and giving notice of such revocation.
Only shareholders of record at the close of business on May 4, 1998, the record
date for the meeting, will be entitled to vote at the Annual Meeting.
The cost of this proxy statement will be paid by the Company. Additional
solicitation by mail, telephone, telecopy or by personal solicitation may be
conducted by directors, officers and employees of the Company, for which they
will receive no additional compensation. Brokerage houses, fiduciaries and other
nominees holding common shares of the Company as of the record date will be
requested to forward proxy soliciting material to the beneficial owners of such
shares, and will be reimbursed by the Company for their reasonable expenses.
QUORUM, OUTSTANDING SHARES, VOTING RIGHTS AND
SHAREHOLDINGS OF CERTAIN PERSONS
Outstanding Shares and Voting Rights
The presence at the 1998 Annual Meeting, in person or by proxy, of the holders
of shares representing a majority of the total number of votes authorized to be
cast by the Company's outstanding common shares at the close of business on May
4, 1998 is necessary to constitute a quorum. In determining whether a quorum
exists, holders of shares will be treated as being present at the Annual Meeting
if the holders of such shares are present in person or are represented by valid
proxies, whether the proxy cards granting such proxies are marked as casting a
vote or abstaining or are left blank.
The affirmative vote of a majority of the votes cast at the meeting is required
for the approval of any matter to come before the Annual Meeting. In determining
the number of votes cast, shares abstaining from voting and shares held in
street name that are indicated as not being voted due to lack of discretionary
authority, such as a broker non-vote, will not be treated as votes cast.
Shareholders do not have cumulative voting rights.
The Company has one class of outstanding capital stock, common shares, par value
$.01 per share (the "Common Shares"). At the close of business on May 4, 1998,
the record date for the Annual Meeting, there were outstanding 13,454,242 Common
Shares.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of May 4, 1998, the beneficial ownership of
the Company's Common Shares by: (i) each person who is known by the Company to
be the beneficial owner of more than 5% of such shares; (ii) each director and
nominee for director of the Company; (iii) each of the Company's executive
officers named in the Summary Compensation Table ("Named Officers"); and (iv)
all directors and executive officers of the Company as a group. This information
is based upon public filings and in the case of the Company's officers and
directors, information provided to the Company by such persons.
<PAGE>
<TABLE>
<CAPTION>
Common Stock(1)
Number of Percentage
Name(2) Shares Outstanding
- ------- ------------ -----------
<S> <C> <C>
Martin E. Judge, Jr. 6,125,099(3) 45.4%
Michael A. Dunn 1,874,613(4) 13.9%
Wellington Management Company, LLP 1,052,800(5) 7.8%
75 State Street
Boston, Massachusetts 02109
Richard T. Furlano 65,350(6) *
Randolph J. Angermann 8,294 *
James C. Hahn 10,294 *
All directors and executive officers as
a group (7 persons) 8,144,000(7) 60.4%
</TABLE>
- -----------------
* Less than one percent.
(1) Unless otherwise indicated, beneficial ownership is based on sole
voting and dispositive power with respect to the shares, and shares are
held by the person listed or members of his or her family. Common Shares
which the individual has the right to acquire, upon exercise of options
and in certain other circumstances, are deemed to be outstanding and
beneficially owned by the individual.
(2) Unless otherwise indicated, the address of each person listed in the
table is c/o The Judge Group, Inc., Two Bala Plaza, Suite 405, Bala
Cynwyd, Pennsylvania 19004.
(3) Includes 504,549 shares held by Takema, Ltd., LP, a Delaware limited
partnership ("Takema") of which Mr. Judge is the General Partner, and
12,500 Common Shares issuable upon the exercise of the vested portion of
outstanding stock options.
(4) Includes 261,010 shares held by the Michael A. Dunn Descendants'
Trust, over which Mr. Dunn has sole dispositive power, and 6,500 Common
Shares issuable upon the exercise of the vested portion of outstanding
stock options.
(5) Consists of 962,800 Common Shares over which Wellington Management
Company, LLP ("WMC") has shared voting power and 1,052,800 Common Shares
over which WMC has shared investment power.
(6) Includes 10,250 Common Shares issuable upon the exercise of the vested
portion of outstanding stock options.
(7) Includes 37,000 Common Shares issuable upon the exercise of the
vested portion of outstanding stock options.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons beneficially owning more
than 10% of the Company's Common Shares and certain other persons (collectively,
"Covered Persons") to file with the Securities and Exchange Commission and the
Nasdaq Stock Market, within specified time periods, initial reports of
ownership, and subsequent reports of changes in ownership, of Common Shares and
certain other securities of the Company.
Based on the Company's review of the copies of reports received by it, and
written representations, if any, received from Covered Persons with respect to
the filing of reports on Forms 3, 4 and 5, the Company believes that all filings
required to be made by the Covered Persons for fiscal 1997 were made on a timely
basis, except for the initial Form 3's required to be filed on February 14,
1997, by Mr. Judge, Mr. Furlano, Mr. Dunn, Mr. Andrews and Ms. Wiercinski in
connection with the completion of the Company's initial public offering (the
"Offering"), all of which were filed on February 18, 1997.
2
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The entire Board of Directors (the "Board"), comprised of five directors, will
be elected at the 1998 Annual Meeting. All directors are elected annually and,
if elected, will hold office until the next annual meeting of shareholders and
until the election and qualification of their successors. Unless contrary
instructions are given, the shares represented by the enclosed proxy will be
voted FOR the election of the nominees set forth in the following table.
Nominees for Election as Directors; Identification of Executive Officers
Each nominee has consented to being named in this proxy statement and to serve,
if elected. If any nominee at the time of his election is unable or unwilling to
serve or is otherwise unavailable for election, and as a result another nominee
is designated by the Board of Directors, the persons named in the enclosed
proxy, or their substitutes, will have discretion and authority to vote or
refrain from voting for such nominee in accordance with their judgment. The five
nominees receiving the highest number of votes cast at the Annual Meeting will
be elected directors. For such purposes, the withholding of authority to vote,
an abstention or the specific direction not to cast a vote, such as a broker
non-vote, will not constitute the casting of a vote in the election of
directors. The following table also sets forth certain information concerning
the Company's executive officers who are not also a director of the Company.
<TABLE>
<CAPTION>
Director/Officer
Name Age Since Principal Occupation and Experience
- ---- ---- ---------------- -----------------------------------
<S> <C> <C> <C>
Martin E. Judge, Jr. 54 1970 Founder; Chief Executive Officer and Chairman of the Board
since 1970.
Richard T. Furlano 48 1996 Director and President of the Company. President of the
Company's Contract Placement business since April 1992. He served as
President of Judge Imaging Systems, Inc. ("JIS"), a publicly held
subsidiary of the Company until its merger into another wholly-owned
subsidiary of the Company in February 1997 (the "JIS Merger").
During fiscal 1996 and until the JIS Merger in fiscal 1997, Mr.
Furlano was also a director of JIS. Mr. Furlano is the
brother-in-law of Mr. Judge.
Michael A. Dunn 50 1995 Director and Executive Vice President of the Company.
President of the Company's Permanent Placement business since 1990.
From 1980 to 1990, Mr. Dunn served as Executive Vice President of
the Permanent Placement business, and has also held various
recruiting and managerial positions in that business since joining
the Company in 1973. During fiscal 1996 and until the JIS Merger in
fiscal 1997, Mr. Dunn was a director of JIS.
Randolph J. Angermann 47 1997 Director. Since February 1994, Mr. Angermann has been the
President of Four Seasons Properties Inc., a real estate investment
firm. From 1971 until its sale to Office Depot, Inc. in February
1994, Mr. Angermann owned and operated Yorkship Business Supply, a
diversified office products company.
James C. Hahn 55 1997 Director. Since January 1996, Mr. Hahn has served as
President and Chief Executive Officer of AutoImage ID, Inc., a
company that designs and manufactures real time recognition systems
using automatic data collection applications. From July 1991 to
January 1994, Mr. Hahn was the Vice President of Product Marketing
for Gandalf Technologies, a publicly held multi-national Canadian
company that manufactures, sells and services data communication
products used for computer-to-computer communications. In addition,
from October 1991 to January 1996, Mr. Hahn served as a director of
Harbor Technology, Inc., a data communication and telemarketing
network company.
</TABLE>
The Board of Directors and its Committees
The Board held four meetings during the year ended December 31, 1997. During
fiscal 1997, the Board had one pre-existing standing committee, the Stock Option
Committee, and effective upon the successful completion of the Offering and the
subsequent election to the Board of two independent directors in April 1997, the
Board established two additional standing committees, the Compensation Committee
and the Audit Committee. The Board does not have a standing nominating
committee. The functions of a nominating committee are carried on by the Board
of Directors as a whole.
3
<PAGE>
The Compensation Committee. The Board established the Compensation Committee in
April 1997 and elected Messrs. Angermann and Hahn as its members. This committee
reviews categories of compensation levels of the Company's employees and
determines guidelines for future compensation, including incentive compensation.
This committee held one meeting during fiscal 1997.
The Stock Option Committee. This committee is authorized to grant options to
officers and key employees of the Company pursuant to the Company's 1996
Incentive Stock Option and Non-Qualified Stock Option Plan for Key Employees and
Non-Employee Directors (the "Stock Option Plan") and otherwise. Mr. Judge and
Mr. Furlano served as the members of the Stock Option Committee for the first
three months of fiscal 1997. Effective April 1997, the Board elected Messrs.
Angermann and Hahn as the members of the Stock Option Committee. This committee
held four meetings during fiscal 1997.
The Audit Committee. Effective April 1997, the Board established an Audit
Committee and elected Messrs. Judge, Angermann and Hahn as its members. The
primary responsibilities of this committee are to recommend annually the
independent public accountants for appointment by the Board as auditors for the
Company, review the scope of the audit made by the accountants, review the audit
reports submitted by the accountants, conduct such other reviews as the
committee deems appropriate and make reports and recommendations to the Board
within the scope of its functions. This committee held one meeting during fiscal
1997.
Directors' Compensation
In fiscal 1997, the Company's directors, and the directors of each of the
Company's subsidiaries, did not receive any compensation for their services as
directors.
Upon election to the Board in April 1997, Mr. Angermann and Mr. Hahn (each a
"Non-Employee Director" as defined in the Securities Exchange Act of 1934, as
amended) each received 10,000 options, 2,500 of which were granted pursuant to
the Company's Stock Option Plan.
Pursuant to the Company's Stock Option Plan, as amended, each person elected as
a Non-Employee Director at the Annual Meeting will receive a grant of a
Non-Qualified Stock Option (a "NQSO") to purchase 10,000 Common Shares
(increased from 2,500 shares) on the first business day immediately following
the date he or she is elected a director. In addition, pursuant to the Company's
Stock Option Plan, as amended, on the first business day immediately following
each of the dates on which an incumbent Non-Employee Director is re-elected, he
or she will receive an additional grant of an NQSO to purchase 10,000 additional
Common Shares (increased from 2,500 shares). The grant of NQSOs to Non-Employee
Directors pursuant to the Stock Option Plan is automatic and neither the
Committee nor the Board shall have any discretionary authority with respect
thereto.
PROPOSAL 2. AMENDMENT TO STOCK OPTION PLAN
Unless contrary instructions are given, certain amendments, as described below,
will be made to the Company's 1996 Incentive Stock Option and Non-Qualified
Stock Option Plan for Key Employees and Non-Employee Directors. The Stock Option
Plan was approved by the Company's Board of Directors in September of 1996.
On March 4, 1998, the Company's Board of Directors unanimously approved an
amendment to the Stock Option Plan, subject to shareholder approval, to: (i)
increase the number of Common Shares authorized for issuance under the Stock
Option Plan from its current 1,500,000 shares to 3,500,000 shares, and (ii)
increase the number of shares subject to options that can be granted under the
Stock Option Plan to any key employee in a one-year period from the current
50,000 shares to 100,000 shares. The Board of Directors also amended the Stock
Option Plan in certain other respects for which shareholder approval is not
required and is not being sought.
The Board of Directors believes that the increase in the two limits on shares
issuable under the Stock Option Plan is necessary for the Stock Option Plan to
continue to fulfill its purpose of assisting the Company in attracting and
retaining capable officers and other key management level employees, as well as
non-employee directors, and motivating them, through stock ownership, to promote
the best interests of the Company and its shareholders. Accordingly, the Board
recommends approval of the amendment to the Stock Option Plan. A majority of the
votes cast in favor of the amendments is necessary to approve this matter. For
such purposes, the withholding of authority to vote, an abstention or the
specific direction not to cast a vote, such as a broker non-vote, will not
constitute the casting of a vote in favor of the amendments.
4
<PAGE>
Summary of the Stock Option Plan, as Amended
The text of the Stock Option Plan, as amended and restated effective June 4,
1998, is attached as Appendix A to this proxy statement. The following
description of the Stock Option Plan is intended merely as a summary of its
principal features and is qualified in its entirety by reference to the
provisions of the Stock Option Plan itself.
1. Stock Available Under Plan. The Stock Option Plan, as amended, authorizes up
to an aggregate of 3,500,000 Common Shares for the granting of incentive stock
options (within the meaning of Section 422 of the Internal Revenue Code)
("ISOs") and nonqualified stock options ("NQSOs"). As amended, no more than
100,000 Common Shares are available for options granted to any one key employee
over any one-year period. Authorized but unissued shares or treasury shares may
be issued under the Stock Option Plan.
The closing price of Common Stock on the NASDAQ National Market System on April
29, 1998 was $5.8125.
2. Eligible Individuals. Key employees of the Company and certain related
corporations are eligible to receive ISOs and NQSOs under the Stock Option Plan.
There are approximately 200 key employees currently eligible for participation
in the Stock Option Plan. Non-employee directors of the Company are eligible to
receive NQSOs under the Stock Option Plan in accordance with a formula discussed
below. There are currently two non-employee directors eligible for participation
in the Stock Option Plan.
3. Administration. The Stock Option Plan is currently administered by the
Company's Stock Option Committee (the "Stock Option Committee"). The Stock
Option Committee is given considerable discretion with respect to options
granted to key employees under the Stock Option Plan. The Stock Option Committee
has no discretion with respect to NQSOs granted to non-employee directors,
because non-employee director grants are made under a formula discussed below.
4. Options Granted to Key Employees. The exercise price of options granted to
key employees under the Stock Option Plan is determined by the Stock Option
Committee, and must be at least equal to the fair market value of the Common
Stock on the date of grant (110% of fair market value for an ISO granted to a
more than 10% shareholder).
Options granted to key employees under the Stock Option Plan may not extend for
more than ten years (five years for an ISO granted to a more than 10%
shareholder), and become exercisable in such installments as the Stock Option
Committee may specify, but not earlier than six months from the date of grant,
except in limited circumstances. The Stock Option Committee determines the
period following an optionee's termination of employment during which the option
may be exercised. For ISOs, the period may not be longer than three months after
termination of employment for a reason other than death or disability, or one
year after termination of employment on account of disability. If the optionee
dies, the option may be exercised for up to three years following death, such
period to be determined by the Stock Option Committee. In no event, however,
will an option be exercisable after its expiration date (generally up to ten
years from the date of grant). The Stock Option Committee also has discretion
under the Stock Option Plan to accelerate the exercisability of all or part of
the unvested portion of a key employee's options.
The exercise price of an option is payable in cash. The Stock Option Committee,
in its discretion, may also permit a key employee to pay the exercise price by
surrendering previously held Common Shares or Common Shares subject to the
option being exercised, or through a so-called broker-financed transaction. The
Stock Option Plan also permits the withholding of shares issuable upon exercise
of options or the delivery of previously acquired Common Shares to satisfy
withholding taxes.
ISOs and, unless otherwise permitted by the Stock Option Committee, NQSOs
granted to key employees under the Stock Option Plan are not transferable other
than by will or pursuant to the laws of descent and distribution.
5. Options Granted to Non-Employee Directors. A non-employee director who is
first elected to the Board at or after the 1998 annual shareholders meeting will
receive an initial grant of an NQSO to purchase 10,000 Common Shares (increased
from 2,500 shares) on the date he or she is elected. In addition, on the first
business day immediately following each of the annual shareholders meetings at
which an incumbent non-employee director is re-elected, starting with the 1998
annual shareholders meeting, each non-employee director will receive a grant of
an NQSO to purchase 10,000 Common Shares (increased from 2,500 shares).
5
<PAGE>
NQSOs granted to non-employee directors will become exercisable in three equal
annual installments commencing with the first anniversary of the grant date, but
only if the non-employee director has attended at least 75 percent of the Board
meetings during the 12-month period immediately preceding the date the annual
installment first becomes exercisable. In the event the non-employee director
fails to attend at least 75 percent of the Board meetings during the 12-month
period immediately preceding the date the annual installment first becomes
exercisable, the options otherwise exercisable in that installment will not be
exercisable but will be cancelled and will be available for other grants under
the Stock Option Plan. The exercise price of NQSOs granted to non-employee
directors is the fair market value of the Common Stock at the time of grant. The
exercise price may be paid in cash or by surrendering Common Stock to the
Company. Options granted to non-employee directors expire on the earliest of (1)
ten years from the date of grant, (2) one year from the date the optionee ceases
to be a director on account of death or disability, or (3) three months from the
date the optionee ceases to be a director for a reason other than death or
disability.
A non-employee director may transfer his or her NQSO to an immediate family
member, or a partnership or trust established solely for the benefit of
immediate family members.
6. Capital Adjustments. The limits on the number of shares issuable under the
Stock Option Plan, as well as the number of shares subject to annual grants to
non-employee directors, will be adjusted in the event of a stock split, stock
dividend or similar change in the capitalization of the Company. The Stock
Option Plan also provides that, in the event of a merger, consolidation or other
specified corporate transactions, options will be assumed by the surviving or
successor corporation, if any. However, the Stock Option Plan also authorizes
the Stock Option Committee to terminate options granted to key employees in the
event of such a corporate transaction. The exercise date of any options to be so
terminated may be accelerated by the Stock Option Committee, in its discretion.
In the event of a corporate transaction where shareholders are to receive cash,
stock or other property, and NQSOs granted to non-employee directors are not
assumed by the surviving or successor corporation, all NQSOs held by
non-employee directors will be terminated, and each non-employee director will
receive cash equal to the difference between (1) the exercise price of the
shares not yet exercised under the NQSO, and (2) the per share value to be
received by shareholders in connection with such transaction.
7. Effective Date; Duration. The Stock Option Plan became effective on September
4, 1996. As amended and restated, the Stock Option Plan becomes effective on
June 9, 1998, subject to shareholder approval. The Stock Option Plan
automatically terminates on September 3, 2006, and no further options may be
granted under the Stock Option Plan thereafter. The Stock Option Plan may be
amended, suspended or terminated at any time by the Board, provided that,
without shareholder approval, no such amendment may: (i) change the class of
persons eligible to receive ISOs, (ii) increase the maximum number of Common
Shares authorized for issuance of ISOs, or (iii) extend the duration of the
Stock Option Plan with respect to ISOs. Requisite shareholder approval is also
required for any amendment that would require shareholder approval under the
rules of the market on which Common Stock is listed.
Federal Income Tax Treatment of Options
The Company has been advised that, under present federal tax laws and
regulations, the federal income tax consequences to the Company, to employees
receiving ISOs, and to employees and non-employee directors receiving NQSOs
pursuant to the Stock Option Plan are as described below.
Upon the grant or exercise of an ISO, no income will be realized by the optionee
for federal income tax purposes (although the excess of the fair market value of
the shares over the exercise price will generally be included in the optionee's
alternative minimum taxable income), and the Company will not be entitled to any
deduction. If the shares received on the exercise of an ISO are not disposed of
within one year following the date of the transfer of such shares to the
optionee, or within two years following the date of the grant of the option, any
profit realized by the optionee upon the disposition of such shares will
generally be taxed as capital gain. In such event, no deduction will be allowed
to the Company.
Upon the grant of an NQSO, no income will be realized by the optionee for
federal income tax purposes. Upon the exercise of an NQSO, the amount by which
the fair market value of the shares at the time of exercise exceeds the exercise
price will be taxed as ordinary income to the optionee, and the Company will be
entitled to a corresponding deduction.
Various additional tax consequences apply to the granting and exercise of
options and to the disposition of shares acquired thereunder, but such
consequences are beyond the scope of this summary.
6
<PAGE>
PROPOSAL 3. RATIFICATION OF ACCOUNTANTS
In the absence of instructions to the contrary, proxies will be voted in favor
of the reappointment of Rudolph, Palitz LLP as independent accountants of the
Company to serve until the next Annual Meeting of Shareholders. The election of
independent accountants by the shareholders is not required by law or by the
Company's By-Laws; however, the Company has decided to submit this matter to the
shareholders and believes that it is good practice to do so. A majority of the
votes cast in favor of the election of Rudolph, Palitz, LLP is necessary to
approve this matter. For such purposes, the withholding of authority to vote, an
abstention or the specific direction not to cast a vote, such as a broker
non-vote, will not constitute the casting of a vote in favor of the election. If
a majority of the votes cast on this matter are not cast in favor of the
election of Rudolph, Palitz LLP, the Company will appoint other independent
accountants as soon as is practical and before the close of 1998.
A representative of Rudolph, Palitz LLP is expected to be present at the Annual
Meeting to make a statement if desired and will be available to respond to any
appropriate questions.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning the annual and
long-term compensation paid or accrued for the Company's Chief Executive Officer
and each of the Company's other executive officers whose total annual salary and
bonus exceeded $100,000 for services rendered to the Company and its
subsidiaries during fiscal 1997 ("Named Officers").
<TABLE>
<CAPTION>
Annual Compensation(1)
-----------------------------------------
All Other
Name Principal Position Year Salary Bonus Compensation
- ---- ------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C> <C>
Martin E. Judge, Jr. Chief Executive Officer and 1997 $494,782 $-- $116,411(2)
Chairman of the Board
Richard T. Furlano President 1997 $304,025 $17,500 --
Michael A. Dunn Executive Vice President 1997 $261,525 $-- $41,347(3)
</TABLE>
____________
(1) The Company has omitted in the Summary Compensation Table information
concerning the value of perquisites and other personal benefits which, in
the aggregate, do not exceed the lesser of $50,000 or 10% of the total
salary and bonus reported for the Named Officers.
(2) Includes life insurance premiums of $97,961 paid by Company (recoverable by
Company upon policy cancellation or payment of death benefits).
(3) Represents life insurance premiums of $30,447 paid by Company (recoverable
by Company upon policy cancellation or payment of death benefits) and
$10,900 for a company provided car.
7
<PAGE>
Stock Option Tables
The following tables provide information with respect to stock option grants by
the Company to the Named Officers in 1997 and the number of unexercised options
and the value of unexercised in-the-money options at December 31, 1997,
respectively.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at Assumed
----------------- Annual Rates of Stock Price
% of Total Options Appreciation for Option Term (3)
Options Granted to Employees Exercise Expiration --------------------------------
Granted in Fiscal Year (1) Per Share Date (2) 5% 10%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Judge, Jr. 50,000 7.20% $7.50 2/14/07 $610,835 $972,653
Michael A. Dunn 26,000 3.73 7.50 2/14/07 317,634 505,780
Richard T. Furlano 41,000 5.90 7.50 2/14/07 500,885 797,576
====================================================================================================================
</TABLE>
(1) The Company granted a total of 695,500 options during fiscal 1997 (including
20,000 options granted to Non-Employee Directors, 15,000 of which were
issued outside of the Stock Option Plan).
(2) The options will become exercisable in equal annual installments over a
four-year period and will have a term of ten years.
(3) These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End(2)
Shares ---------------------- ------------------------
Acquired on Exercis- Unexercis- Exercis- Unexercis-
Name Exercise Value Realized (1) able able able able
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Judge, Jr. -- $-- 12,500 37,500 $-- $--
Michael A. Dunn -- -- 6,500 19,500 -- --
Richard T. Furlano -- -- 10,250 30,750 -- --
====================================================================================================================
</TABLE>
- --------------------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) In-the-money options are those where the fair market value of the underlying
securities exceeds the exercise price of the option. The closing price of
the Company's Common Shares on December 31, 1997 was $4.875 per share.
8
<PAGE>
Performance Graph
The graph set forth below compares the cumulative total returns to holders of
Common Shares of the Company with the cumulative total return of the NASDAQ
Stock Market-US Index and of a peer group selected by the Company for the period
beginning February 14, 1997, the date trading first began in the Company's
Common Shares on the Nasdaq National Market following the Offering, and ending
December 31, 1997, assuming the investment in the relevant stock or index was
$100 at February 14, 1997 and that all dividends were reinvested. The peer
companies were selected by the Company on the basis of their involvement in the
employment staffing industry and/or their selection by the underwriters of the
Offering for purposes of valuing the Company's Common Shares. The peer group is
composed of Data Processing Resources Corp., Hall Kinion & Associates, Inc.,
Alternative Resources Corp., TSR, Inc., and Metro Information Services. The
information with respect to Hall Kinion & Associates, Inc. is provided as of
August 5, 1997, the date of its initial public offering. The closing market
price of the Company's Common Shares as of December 31, 1997 was $4.875 per
share.
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD FROM FEBRUARY 14, 1997 TO DECEMBER 31, 1997
In the printed version of the document, a line graph
appears which depicits the following plot points:
=============================================================================
February 14, December 31,
1997 1997
=============================================================================
The Judge Group, Inc. $ 100.00 $ 65.00
Peer Group 100.00 143.21
NASDAQ Stock Market - US 100.00 116.03
============================================================================
Employment Agreements
The Company does not have employment agreements with any Named Officers. The
Company does, however, require that all key employees execute confidentiality
and one-year post-termination non-competition agreements.
Compensation Committee Interlocks and Insider Participation
From January to April 1997, decisions concerning compensation of executive
officers were made by the Board of Directors, which was comprised of Mr. Judge,
Chairman of the Board and Chief Executive Officer; Mr. Furlano, President; and
Mr. Dunn, Executive Vice President of the Company. Effective April 1997, Messrs.
Angermann and Hahn were elected as members of the Compensation Committee.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Introduction
Pursuant to rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information with respect to the
compensation provided to the Company's Chief Executive Officer and certain other
of its executive officers. In fulfillment of this requirement, the Compensation
Committee of the Board of Directors have prepared the following report
addressing the Company's executive compensation policies for the fiscal year
ended December 31, 1997 for inclusion in this Proxy Statement.
The Compensation Committee reviews and approves salaries and other matters
relating to compensation of the Company's executive officers, including
incentives and other forms of compensation and benefits. The Compensation
Committee is comprised of Messrs. Angermann and Hahn, both of whom are
non-employee directors.
Compensation Policies
Historically, the Company's compensation package has consisted of base salary,
bonuses and equity incentives in the form of stock options. In light of the
Company's need to secure, retain and motivate management employees of high
caliber who possess skills useful to the development and growth of the Company,
the Compensation Committee has established the following principles in awarding
compensation:
o Executive and management compensation should be based in part on
the Company's performance. Stock options and cash incentive
performance bonuses should be used to motivate executives and
management to achieve the Company's long-term goals and
objectives.
o Equity ownership by employees, including executive officers,
serves to align the interests of employees with the interests of
shareholders by providing employees with incentives to build
shareholder values.
o Salaries for each executive officer should be set with reference
to the range of salaries for similar positions in comparable
companies in the Company's industry [as reported in compensation
survey information obtained by the Company from compensation
consulting firms].
Base and Cash Incentive Performance Bonus Compensation
The base compensation paid to the Company's executive officers is influenced
significantly by the need to attract and retain management employees with high
levels of expertise.
In the opinion of the Compensation Committee, based upon a survey conducted by
the Company of companies with a similar market capitalization as the Company and
other information available to the Compensation Committee on competitive
salaries, the base compensation paid to the Company's executive officers and
managers falls within the range of salaries for similar positions in comparable
employment staffing companies.
The Company's bonus plan (the "Bonus Plan") was established in 1997 to award
cash incentive performance bonuses to management employees. Under the Bonus
Plan, cash incentive bonuses are awarded to management employees, including
executive officers, based upon a formula consisting of the accomplishment of
certain Company and individual performance goals, which include meeting revenue,
revenue growth rate and operating income targets related to the business
operations for which they are responsible.
10
<PAGE>
The amount of the cash incentive bonus to be awarded to each management employee
is based upon the responsibility of the employee within the Company. The higher
the level of responsibility of the employee, the greater the portion of that
employee's base compensation that can be awarded as a cash incentive performance
bonus. For 1997, targeted cash incentives ranged from 5% to 30% of the base
compensation of a particular employee.
Equity Incentives
Historically, the Company has relied heavily upon the grant of stock options as
part of its compensation policy. The Company believes that the granting of stock
options encourages its executive officers and other key employees to achieve
long-term goals and objectives that are consistent with results that benefit the
Company's shareholders. The Company also believes that the grant of
opportunities for an equity stake in the Company is important in attracting and
retaining key employees. As a result, in 1997, the Company granted options under
the Stock Option Plan to executive officers, senior managers and other key
employees, to purchase a total of 675,500 of the Company's Common Shares
(including options to purchase 95,000 of the Company's Common Shares cancelled
upon resignation). The Company intends in 1998 and in the future to make
additional grants to key employees and non-employee directors under the Stock
Option Plan, as amended.
Chief Executive Officer Compensation
The Compensation Committee uses the same factors in determining the compensation
of the Chief Executive Officer as it does for the other executive officers. The
salary received by the Chief Executive Officer in 1997 was based on the
compensation policies discussed above.
THE COMPENSATION COMMITTEE
Randolph J. Angermann
James C. Hahn
CERTAIN TRANSACTIONS
Since February 20, 1997, any transactions between the Company and related
parties have been subject to the review and approval of its Audit Committee or a
comparable committee consisting of a majority of disinterested parties.
As of September 3, 1996 each of Mr. Judge and Mr. Dunn and his wife executed
personal guaranties of the Company's obligations under its line of credit and
term loan with Midlantic Bank, N.A., to enable the Company to obtain the line of
credit and term loan. Following the completion of the Offering in February 1997,
the amount outstanding under the line of credit was repaid and Mr. Judge and Mr.
and Mrs. Dunn were released from these guaranties.
As of January 1, 1997, the Company owed an aggregate of approximately $95,862 to
Mr. Judge. These loans were unsecured and due upon demand and bore interest at
various rates (from prime plus 1% to a fixed rate of 12%). The Company paid the
interest related to these loans directly to the commercial banks from which Mr.
Judge borrowed the funds on behalf of the Company. These loans were repaid at
the closing of the Offering in February 1997. As of January 1, 1997, Mr. Judge
owed the Company $398,605. This loan, which represented advances for personal
expenditures paid by the Company, was due upon demand, unsecured and
non-interest bearing, and was repaid at the closing of the Offering in February
1997.
As of January 1, 1997, the Company had advanced $133,350 to Judge Financial
Group, a personal financial advisory company, which is owned by Dennis Judge,
Martin E. Judge, Jr.'s brother. This advance was made for working capital
purposes, did not bear interest, was unsecured and due upon demand and was
repaid in February 1997.
11
<PAGE>
As a condition to the completion of the Offering, the Company acquired JIS in a
merger in which JIS merged into a newly organized wholly-owned subsidiary of the
Company ("Judge Acquisition"). Judge Acquisition was the surviving corporation
in the merger and changed its name to "Judge Imaging Systems, Inc." As a result
of the merger, JIS became a wholly-owned subsidiary of the Company. The merger
was approved by the stockholders of JIS at a Special Meeting held on January 17,
1997. As consideration, each share of JIS common stock or Series A preferred
stock, other than shares owned by the Company, outstanding at the time of the
merger was converted into one-third of a Common Share of the Company, which is
equal to $2.50 divided by the initial public offering price. All JIS shares
owned by the Company were cancelled. Prior to the merger, the Company owned
approximately 25.6% of JIS's fully-diluted outstanding common stock. Mr. Judge
beneficially owned an additional 34.1%, and other officers and directors of the
Company beneficially owned an additional 3.7% of JIS's fully-diluted outstanding
common stock. As a result, Mr. Judge and Mr. Dunn acquired 504,549 and 58,763
Common Shares of the Company, respectively, in exchange for shares of common
and/or preferred stock they held in JIS.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR 1997, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED TO ANY
SHAREHOLDER WITHOUT CHARGE UPON WRITTEN REQUEST DIRECTED TO THE ATTENTION OF THE
SECRETARY OF THE COMPANY, AT THE COMPANY'S PRINCIPAL ADDRESS SHOWN ON THE COVER
PAGE OF THIS PROXY STATEMENT. THE COMPANY WILL FURNISH TO EACH PERSON WHOSE
PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST, ANY EXHIBIT DESCRIBED IN THE
LIST ACCOMPANYING THE FORM 10-K OF THE COMPANY FOR FISCAL 1997, UPON THE
PAYMENT, IN ADVANCE, OF REASONABLE FEES RELATING TO THE COMPANY'S FURNISHING OF
SUCH EXHIBIT(S).
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for presentation at the 1999
Annual Meeting of Shareholders must forward such proposal to the Secretary of
the Company, at the address indicated on the cover page of this proxy statement,
so that the Secretary receives it no later than February 4, 1999.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action at the
1998 Annual Meeting, other than those set forth in the attached Notice. However,
if any other matters should properly come before the meeting or any adjournments
thereof, the proxies solicited hereby will be voted on such matters, to the
extent permitted by the rules of the Securities and Exchange Commission, in
accordance with the judgment of the persons voting such proxies.
By Order of the Board of Directors,
KATHARINE A. WIERCINSKI
Secretary
12
<PAGE>
Appendix A
THE JUDGE GROUP, INC.
1996 INCENTIVE STOCK OPTION
AND
NON-QUALIFIED STOCK OPTION PLAN
FOR
KEY EMPLOYEES AND NON-EMPLOYEE DIRECTORS
(As Amended and Restated Effective June 9, 1998)
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
----
SECTION 1 - Purpose and Definitions.............................................A-3
SECTION 2 - Administration......................................................A-5
SECTION 3 - Eligibility........................................................A-5
SECTION 4 - Stock...............................................................A-5
SECTION 5 - Granting of Options.................................................A-6
SECTION 6 - Annual Limit........................................................A-6
SECTION 7 - Options for Non-Employee Directors..................................A-6
SECTION 8 - Terms and Conditions of Options Granted to Key Employees............A-8
SECTION 9 - Option Agreements - Other Provisions...............................A-11
SECTION 10 - Capital Adjustments...............................................A-12
SECTION 11 - Amendment or Discontinuance of the Plan...........................A-12
SECTION 12 - Termination of Plan...............................................A-13
SECTION 13 - Effective Date....................................................A-13
SECTION 14 - Miscellaneous.....................................................A-13
</TABLE>
<PAGE>
THE JUDGE GROUP, INC.
1996 INCENTIVE STOCK OPTION AND
NON-QUALIFIED STOCK OPTION PLAN
FOR
KEY EMPLOYEES AND NON-EMPLOYEE DIRECTORS
(As Amended and Restated Effective June 9, 1998)
WHEREAS, The Judge Group, Inc. ("Company") adopted The Judge Group,
Inc. 1996 Incentive Stock Option and Non-Qualified Stock Option Plan for Key
Employees and Non-Employee Directors ("Plan") effective September 4, 1996; and
WHEREAS, the Company desires to amend and restate the Plan to (i)
incorporate Amendment No. 1 to the Plan, (ii) increase the number of shares
available for granting under the Plan, (iii) increase the number of shares
subject to options granted annually to non-employee directors, (iv) provide for
the limited transfer of options granted to non-employee directors, and (v)
clarify certain other provisions of the Plan (such as the restriction on
amendments affecting grants to non-employee directors);
NOW, THEREFORE, effective June 9, 1998, and subject to shareholder
approval, the Plan is hereby amended and restated as follows:
SECTION 1 - Purpose and Definitions
(a) Purpose. This, THE JUDGE GROUP, INC. 1996 INCENTIVE STOCK
OPTION AND NON-QUALIFIED STOCK OPTION PLAN FOR KEY EMPLOYEES AND
NON-EMPLOYEE DIRECTORS, is intended to provide a means whereby THE
JUDGE GROUP, INC. may, through the grant of Incentive Stock Options and
Non-Qualified Stock Options to purchase Common Stock of the Company to
Key Employees, attract and retain such Key Employees and motivate such
Key Employees to exercise their best efforts on behalf of the Company
and of any Related Corporation. Moreover, the Company may, through the
grant of Non-Qualified Stock Options to Non-Employee Directors under a
formula, attract and retain Non-Employee Directors and motivate
Non-Employee Directors to exercise their best efforts on behalf of the
Company and any Related Corporation.
(b) Definitions.
(1) Board. The term "Board" shall mean the Board of
Directors of the Company.
(2) Common Stock. The term "Common Stock" shall mean
the common stock of the Company, par value $0.01 per share.
(3) Code. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended.
(4) Committee. The term "Committee" shall mean:
(A) A committee which consists of not fewer
than two (2) directors of the Company who shall be
appointed by, and serve at the pleasure of, the Board
(taking into consideration the rules under Section
16(b) of the Securities Exchange Act of 1934 and the
requirements of section 162(m) of the Code); or
(B) In the event a committee has not been
established in accordance with (A) above, the entire
Board; provided, however, that a member of the Board
shall not participate in a vote approving the grant
of an Option to himself or herself to the extent
provided under the laws of the Commonwealth of
Pennsylvania governing corporate self-dealing.
A-3
<PAGE>
(5) Company. The term "Company" shall mean The Judge
Group, Inc.
(6) Fair Market Value. The term "Fair Market Value"
shall mean the fair market value of the optioned shares of
Common Stock, which shall be arrived at by a good faith
determination of the Committee and shall be:
(A) The quoted closing price, if there is a
market for the Common Stock on a registered
securities exchange or in an over the counter market,
on the date of grant;
(B) The weighted average of the quoted
closing prices on the nearest date before and the
nearest date after the date of grant, if there are no
sales on the date of grant but there are sales on
dates within a reasonable period both before and
after the date of grant;
(C) The mean between the bid and asked
prices, as reported by the National Quotation Bureau
on the date of grant, if actual sales are not
available during a reasonable period beginning before
and ending after the date of grant; or
(D) Such other method of determining fair
market value as shall be authorized by the Code, or
the rules or regulations thereunder, and adopted by
the Committee.
Where the fair market value of the optioned shares of
Common Stock is determined under (B) above, the average of the
quoted closing prices on the nearest date before and the
nearest date after the date of grant is to be weighted
inversely by the respective numbers of trading days between
the selling dates and the date of grant (i.e., the valuation
date), in accordance with Treas. Reg. ss.20.2031-2(b)(1).
(7) Incentive Stock Option. The term "Incentive Stock
Option" ("ISO") shall mean an option which, at the time such
option is granted under the Plan, qualifies as an ISO within
the meaning of section 422 of the Code and is designated as an
ISO in the Option Agreement.
(8) Key Employees. The term "Key Employees" shall
mean officers and other key employees of the Company or a
Related Corporation.
(9) Non-Employee Directors. The term "Non-Employee
Directors" shall mean directors of the Company who are not
employees of the Company or any Related Corporation.
(10) Non-Qualified Stock Option. The term
"Non-Qualified Stock Option" ("NQSO") shall mean an option
which, at the time such option is granted, does not qualify as
an ISO, and/or is designated as an NQSO in the Option
Agreement.
(11) Option Agreement. The term "Option Agreement"
shall mean a written document evidencing the grant of an
Option, as described in Section 9.
(12) Options. The term "Options" shall mean Incentive
Stock Options and Non-Qualified Stock Options.
(13) Plan. The term "Plan" shall mean The Judge
Group, Inc. 1996 Incentive Stock Option and Non-Qualified
Stock Option Plan for Key Employees and Non-Employee
Directors, as set forth herein and as amended from time to
time.
(14) Related Corporation. The term "Related
Corporation" shall mean either a corporate subsidiary of the
Company, as defined in section 424(f) of the Code or the
corporate parent of the Company, as defined in section 424(e)
of the Code.
A-4
<PAGE>
Notwithstanding Sections 1(b)(7) and (10) if the option is not
designated in the Option Agreement as an ISO or NQSO, the option shall
constitute an ISO if it complies with the terms of section 422 of the
Code, and otherwise, it shall constitute an NQSO.
SECTION 2 - Administration
The Plan shall be administered by the Committee. Each member
of the Committee, while serving as such, shall be deemed to be acting in his or
her capacity as a director of the Company.
The Committee shall have full authority, subject to the terms
of the Plan, to select the Key Employees to be granted ISOs and/or NQSOs under
the Plan, to grant Options on behalf of the Company and to set the date of grant
and the other terms of such Options. The Committee may correct any defect,
supply any omission and reconcile any inconsistency in this Plan and in any
Option granted hereunder in the manner and to the extent it shall deem
desirable. The Committee also shall have the authority to establish such rules
and regulations, not inconsistent with the provisions of the Plan, for the
proper administration of the Plan, and to amend, modify or rescind any such
rules and regulations, and to make such determinations and interpretations
under, or in connection with, the Plan, as it deems necessary or advisable. All
such rules, regulations, determinations and interpretations shall be binding and
conclusive upon the Company, its shareholders and all employees, and upon their
respective legal representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
Notwithstanding the foregoing, the terms and conditions of
grants of NQSOs to Non-Employee Directors are intended to be fixed in advance.
Consequently, the grants of NQSOs to Non-Employee Directors shall be as set
forth in Section 7 and neither the Committee nor the Board shall have any
discretionary authority with respect thereto.
No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
SECTION 3 - Eligibility
Key Employees shall be eligible to receive Options under the
Plan. Non-Employee Directors shall be eligible to receive NQSOs (but not ISOs)
pursuant to Section 7. More than one Option may be granted to a Key Employee or
Non-Employee Director under the Plan.
SECTION 4 - Stock
Options may be granted under the Plan to purchase up to a
maximum of three million five hundred thousand (3,500,000) shares of Common
Stock, subject to adjustment as hereinafter provided; provided, however, that no
Key Employee shall receive Options for more than one-hundred thousand (100,000)
shares of Common Stock over any one (1) year period. Shares issuable under the
Plan may be authorized but unissued shares or reacquired shares, and the Company
may purchase shares required for this purpose, from time to time, if it deems
such purchase to be advisable.
If any Option granted under the Plan expires or otherwise
terminates for any reason whatever (including, without limitation, the Key
Employee's or Non-Employee Director's surrender thereof) without having been
exercised, the shares subject to the unexercised portion of such Option shall
continue to be available for the granting of Options under the Plan as fully as
if such shares had never been subject to an Option, provided, however, that:
(a) If an Option is cancelled, the cancelled Option is counted
against the maximum number of shares for which Options may be granted
to a Key Employee, and
(b) If the Option price is reduced after the date of grant,
the transaction is treated as a cancellation of an Option and the grant
of a new Option for purposes of counting the maximum number of shares
for which Options may be granted to a Key Employee.
A-5
<PAGE>
SECTION 5 - Granting of Options
From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Key Employees under the Plan such Options as it determines are warranted;
provided, however, that grants of ISOs and NQSOs shall be separate and not in
tandem. The granting of an Option under the Plan shall not be deemed either to
entitle the Key Employee to, or to disqualify the Key Employee from, any
participation in any other grant of Options under the Plan. In making any
determination as to whether a Key Employee shall be granted an Option and as to
the number of shares to be covered by such Option, the Committee shall take into
account the duties of the Key Employee, his or her present and potential
contributions to the success of the Company or a Related Corporation, and such
other factors as the Committee shall deem relevant in accomplishing the purposes
of the Plan. Moreover, the Committee may provide in a Key Employee's Option that
said Option may be exercised only if certain conditions, as determined by the
Committee, are fulfilled.
The Committee shall grant NQSOs to Non-Employee Directors in accordance
with Section 7.
SECTION 6 - Annual Limit
(a) ISOs. The aggregate fair market value (determined as of
the date the ISO is granted) of the Common Stock with respect to which
ISOs are exercisable for the first time by a Key Employee during any
calendar year (under this Plan and any other ISO plan of the Company or
a Related Corporation) shall not exceed one hundred thousand dollars
($100,000).
(b) NQSOs. The annual limit set forth above for ISOs shall not
apply to NQSOs.
SECTION 7 - Options for Non-Employee Directors
(a) Granting of Options to Non-Employee Directors. Effective
with the Company's annual shareholders' meeting in 1998, and with each
annual shareholders' meeting thereafter, each elected or re-elected
Non-Employee Director shall be granted an NQSO to purchase ten thousand
(10,000) shares of Common Stock. In each case described above, the NQSO
shall be granted as of the first business day immediately following the
Non-Employee Director's election or subsequent re-election(s) to the
Board, as applicable.
(b) Terms and Conditions of Options. Options granted to
Non-Employee Directors shall expressly specify that they are NQSOs. In
addition, such NQSOs shall include expressly or by reference the
following terms and conditions, as well as such other provisions not
inconsistent with the provisions of the Plan:
(1) Number of Shares. A statement of the number of
shares of Common Stock to which the Option pertains.
(2) Price. A statement of the per share Option
exercise price, which shall be 100% of the Fair Market Value
per share of the optioned Common Stock on the date the Option
is granted.
(3) Term. Subject to earlier termination as provided
in Section 7(b)(5), (6) and (7) below and in Section 10
hereof, the term of each Option granted under this Section 7
shall be 10 years from the date of grant.
(4) Exercise. Options granted under this Section 7
shall be exercisable in three equal annual installments
commencing with the first anniversary of the grant date, but
only if the Non-Employee Director has attended at least
seventy-five (75) percent of the Board meetings during the
twelve (12) month period immediately preceding the date the
annual installment first becomes exercisable. In the event the
Non-Employee Director fails to attend at least seventy-five
(75) percent of the Board meetings during the twelve (12)
month period immediately preceding the date the annual
installment first becomes exercisable, the Options otherwise
exercisable in that installment shall not be exercisable but
A-6
<PAGE>
shall be cancelled and shall be available for other grants
under the Plan. Any Common Stock the right to the purchase of
which accrued under an Option may be purchased at any time up
to the expiration or termination of the Option. Exercisable
Options may be exercised, in whole or in part, from time to
time by giving written notice of exercise to the Company at
its principal office, specifying the number of shares to be
purchased and accompanied by payment in full of the aggregate
option exercise price for such shares. Only full shares shall
be issued under the Plan, and any fractional share which might
otherwise be issuable upon the exercise of an Option granted
hereunder shall be forfeited.
The Option price shall be payable:
(A) In cash or its equivalent; or
(B) Unless in the opinion of counsel to the
Company to do so may result in a possible loss of an
exemption from short-swing profit liability, in whole
or in part through the transfer of Common Stock
previously acquired by the Non-Employee Director,
provided the Common Stock so transferred has been
held by the Non-Employee Director for more than 12
months on the date of exercise.
In the event such Option exercise price is paid, in
whole or in part, with Common Stock, the portion of the Option
exercise price so paid shall equal the Fair Market Value of
the Common Stock so surrendered (determined in accordance with
Section 1(b)(6), but on the date of exercise rather than on
the date of grant).
(5) Expiration of Term or Removal as Director. If a
Non-Employee Director's service as a director of the Company
terminates prior to the expiration date fixed for his or her
Option under this Section 7 for any reason (such as, without
limitation, failure to be re-elected by the Company's
shareholders) other than by disability or death, such Option
may be exercised, to the extent of the number of shares of
Common Stock with respect to which he or she could have
exercised it on the date of such termination, by the
Non-Employee Director at any time prior to the earlier of:
(A) The expiration date specified in such
Option; or
(B) Three months after the date of such
termination of service as a director.
(6) Exercise upon Disability of Non-Employee
Director. If a Non-Employee Director shall become disabled
(within the meaning of section 22(e)(3) of the Code) during
his or her term as a director of the Company and, prior to the
expiration date fixed for his or her Option, his or her term
as a director is terminated as a consequence of such
disability, such Option may be exercised, to the extent of the
number of shares of Common Stock with respect to which the
Non-Employee Director could have exercised it on the date of
such termination, by the Non-Employee Director at any time
prior to the earlier of:
(A) The expiration date of such Option; or
(B) One year after the date of such
termination of service as a director.
In the event of the Non-Employee Director's legal
disability, such Option may be so exercised by his or her
legal representative.
(7) Exercise upon Death of Non-Employee Director. If
a Non-Employee Director shall die during his or her term as a
director of the Company and prior to the expiration date fixed
for his or her Option, or if a Non-Employee Director whose
term as a director has been terminated for any reason shall
die following his or her termination as a director, but prior
to the earlier of:
(A) The expiration date fixed for his or
her Option; or
(B) The expiration of the period determined
under Section 7(b)(5) and (6) above;
such Option may be exercised, to the extent of the number of
shares with respect to which the Non-Employee Director could
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have exercised it on the date of his or her death, by the
Non-Employee Director's estate, personal representative or
beneficiary who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Non-Employee Director, at any time prior to the earlier of:
(i) The expiration date specified in
such Option (which may be the expiration
date determined under Section 7(b)(5) and
(6) above); or
(ii) One year after the date of
death.
(c) Transferability. A Non-Employee Director may transfer an
NQSO granted pursuant to this Section 7 to (1) a member of his or her
immediate family, (2) a partnership of which the only partners are
members of his or her immediate family, or (3) a trust established
solely for the benefit of his or her immediate family members. Except
as provided in the preceding sentence, or by will or the laws of
descent and distribution, NQSOs granted pursuant to this Section 7
shall not be assignable or transferable by the Non-Employee Director,
and during the lifetime of the Non-Employee Director, the NQSO shall be
exercisable only by him or her or by his or her guardian or legal
representative. Any NQSO transferred by a Non-Employee Director shall
not be assignable or transferrable by the transferee. If the
Non-Employee Director is married at the time of exercise and if the
Non-Employee Director so requests at the time of exercise, the
certificate or certificates shall be registered in the name of the
Non-Employee Director and the Non-Employee Director's spouse, jointly,
with right of survivorship.
SECTION 8 - Terms and Conditions of Options Granted to Key Employees
The Options granted to Key Employees pursuant to the Plan shall
expressly specify whether they are ISOs or NQSOs; however, if the Option is not
designated in the Option Agreement as an ISO or NQSO, the Option shall
constitute an ISO if it complies with the terms of section 422 of the Code, and
otherwise, it shall constitute an NQSO. In addition, the Options granted to Key
Employees pursuant to the Plan shall include expressly or by reference the
following terms and conditions, as well as such other provisions not
inconsistent with the provisions of this Plan and, for ISOs granted under this
Plan, the provisions of section 422(b) of the Code, as the Committee shall deem
desirable:
(a) Number of Shares. A statement of the number of shares to
which the Option pertains.
(b) Price. A statement of the Option price which shall be
determined and fixed by the Committee in its discretion but shall not
be less than the higher of one hundred percent (100%) (one hundred ten
percent (110%) in the case of an ISO granted to a more than ten percent
(10%) shareholder as discussed in (i) below) of the per share Fair
Market Value of Common Stock, or the par value thereof, on the date the
Option is granted.
(c) Term.
(1) ISOs. Subject to earlier termination as provided
in Subsections (e), (f) and (g) below and in Section 10
hereof, the term of each ISO shall be not more than ten (10)
years (five (5) years in the case of more than ten percent
(10%) shareholders as discussed in (i) below) from the date of
grant.
(2) NQSOs. Subject to earlier termination as provided
in Subsections (e), (f) and (g) below and in Section 10
hereof, the term of each NQSO shall be not more than ten (10)
years from the date of grant.
(d) Exercise.
(1) General. Options shall be exercisable in such
installments and on such dates, not less than six (6) months
from the date of grant, as the Committee may specify, provided
that:
(A) In the case of new Options granted to a
Key Employee in replacement for options (whether
granted under the Plan or otherwise) held by the Key
Employee, the new Options may be made exercisable, if
so determined by the Committee, in its discretion, at
the earliest date the replaced options were
exercisable, but not earlier than six (6) months from
the date of grant of the new Options; and
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(B) The Committee may accelerate the
exercise date of any outstanding Options (including,
without limitation, the six (6) month exercise date
referred to in (A) above), in its discretion, if it
deems such acceleration to be desirable.
Any Option shares, the right to the purchase of which
has accrued, may be purchased at any time up to the expiration
or termination of the Option. Exercisable Options may be
exercised, in whole or in part, from time to time by giving
written notice of exercise to the Company at its principal
office, specifying the number of shares to be purchased and
accompanied by payment in full of the aggregate Option price
for such shares. Only full shares shall be issued under the
Plan, and any fractional share which might otherwise be
issuable upon exercise of an Option granted hereunder shall be
forfeited.
(2) Manner of Payment. The manner(s) in which the
Option price may be paid shall be determined by the Committee,
in its sole discretion. Such determination shall be made in
the Option Agreement and, in the case of an Option which is
not intended to be an ISO, may be changed at or prior to the
time of exercise in accordance with Section 11. The Committee
may determine that the Option price shall be payable:
(A) In cash or its equivalent;
(B) In whole or in part, in Company Common
Stock previously acquired by the Key Employee,
provided that if such shares of Common Stock were
acquired through the exercise of an ISO and are used
to pay the Option price of an ISO, such shares have
been held by the Key Employee for a period of not
less than the holding period described in section
422(a)(1) of the Code on the date of exercise, or if
such shares of Common Stock were acquired through
exercise of an NQSO or of an option under a similar
plan or through exercise of an ISO and are used to
pay the Option price of an NQSO, such shares have
been held by the Key Employee for a period of more
than six months on the date of exercise;
(C) In whole or in part, in Company Common
Stock newly acquired by the Optionee upon exercise of
such Option (which shall constitute a disqualifying
disposition in the case of an Option which is an
ISO);
(D) In any combination of (A), (B) and (C)
above; or
(E) By permitting the Key Employee to
deliver a properly executed notice of exercise of the
Option to the Company and a broker, with irrevocable
instructions to the broker promptly to deliver to the
Company the amount of sale or loan proceeds necessary
to pay the exercise price of the Option.
In the event such Option price is paid, in whole or
in part, with shares of Common Stock, the portion of the
Option price so paid shall be equal to the Fair Market Value
of the Common Stock so surrendered (determined in accordance
with Section 1(b)(6), but on the date of exercise rather than
on the date of grant).
(e) Termination of Employment. If a Key Employee's employment
by the Company (and Related Corporations) is terminated by either party
prior to the expiration date fixed for his or her Option for any reason
other than death or disability, such Option may be exercised, to the
extent of the number of shares with respect to which the Key Employee
could have exercised it on the date of such termination, or to any
greater extent permitted by the Committee, by the Key Employee at any
time prior to the earlier of:
(1) The expiration date specified in such Option; or
(2) An accelerated termination date determined by the
Committee, in its discretion, except that, subject to Section
10 hereof, such accelerated termination date shall not be
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earlier than the date of the Key Employee's termination of
employment, and in the case of ISOs, such termination date
shall not be later than three (3) months after the date of
such termination of employment.
(f) Exercise upon Disability of Key Employee. If a Key
Employee shall become disabled (within the meaning of section 22(e)(3)
of the Code) during his or her employment and, prior to the expiration
date fixed for his or her Option, his or her employment is terminated
as a consequence of such disability, such Option may be exercised, to
the extent of the number of shares with respect to which the Key
Employee could have exercised it on the date of such termination, or to
any greater extent permitted by the Committee, by the Key Employee at
any time prior to the earlier of:
(1) The expiration date specified in such Option; or
(2) An accelerated termination date determined by the
Committee, in its discretion, except that, subject to Section
10 hereof, such accelerated termination date shall not be
earlier than the date of the Key Employee's termination of
employment by reason of disability, and in the case of ISOs,
such date shall not be later than one (1) year after the date
of such termination of employment. In the event of the Key
Employee's legal disability, such Option may be so exercised
by the Key Employee's legal representative.
(g) Exercise upon Death of Key Employee. If a Key Employee
shall die during his or her employment, and prior to the expiration
date fixed for his or her Option, or if a Key Employee whose employment
is terminated for any reason, shall die following his or her
termination of employment but prior to the earliest of:
(1) The expiration date fixed for his or her Option;
(2) The expiration of the period determined under
Subsections (e) and (f) above; or
(3) In the case of an ISO, three (3) months
following termination of employment;
such Option may be exercised, to the extent of the number of shares
with respect to which the Key Employee could have exercised it on the
date of his or her death, or to any greater extent permitted by the
Committee, by the Key Employee's estate, personal representative or
beneficiary who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of the Key Employee, at any
time prior to the earlier of:
(A) The expiration date specified in such
Option; or
(B) An accelerated termination date
determined by the Committee, in its discretion except
that, subject to Section 10 hereof, such accelerated
termination date shall not be earlier than one (1)
year, nor later than three (3) years after the date
of death.
(h) Non-Transferability.
(1) ISOs. No ISO shall be assignable or transferable
by the Key Employee otherwise than by will or by the laws of
descent and distribution, and during the lifetime of the Key
Employee, the ISO shall be exercisable only by him or by his
or her guardian or legal representative. If the Key Employee
is married at the time of exercise and if the Key Employee so
requests at the time of exercise, the certificate or
certificates shall be registered in the name of the Key
Employee and the Key Employee's spouse, jointly, with right of
survivorship.
(2) NQSOs. Except as otherwise provided in any Option
Agreement, no NQSO shall be assignable or transferable by the
Key Employee otherwise than by will or by the laws of descent
and distribution, and during the lifetime of the Key Employee,
the NQSO shall be exercisable only by him or by his or her
guardian or legal representative. If a Key Employee's Option
Agreement provides that the NQSO is transferable, such Option
Agreement shall set forth any limitations on the transfer of
the NQSO. If the Key Employee is married at the time of
exercise and if the Key Employee so requests at the time of
exercise, the certificate or certificates shall be registered
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in the name of the Key Employee and the Key Employee's spouse,
jointly, with right of survivorship.
(i) Ten Percent Shareholder. If the Key Employee owns more
than ten percent (10%) of the total combined voting power of all shares
of stock of the Company or of a Related Corporation at the time an ISO
is granted to such Key Employee, the Option price for the ISO shall be
not less than one hundred ten percent (110%) of the Fair Market Value
of the optioned shares of Common Stock on the date the ISO is granted,
and such ISO, by its terms, shall not be exercisable after the
expiration of five (5) years from the date the ISO is granted. The
conditions set forth in this Subsection (i) shall not apply to NQSOs.
(j) Withholding and Use of Shares to Satisfy Tax Obligations.
The obligation of the Company to deliver shares of Common Stock upon
the exercise of any Option shall be subject to applicable federal,
state and local tax withholding requirements.
If the exercise of any Option is subject to the withholding
requirements of applicable federal, state and/or local tax laws, the
Committee, in its discretion (and subject to such withholding rules
("Withholding Rules") as shall be adopted by the Committee), may permit
the Key Employee to satisfy the minimum required federal, state and/or
local withholding tax, in whole or in part, by electing to have the
Company withhold (or by returning to the Company) shares of Common
Stock, which shares shall be valued, for this purpose, at their Fair
Market Value (determined in accordance with Section 1(b)(6), but on the
date of exercise (rather than the date of grant) or if later, the date
on which the Optionee recognizes ordinary income with respect to such
exercise (the "Determination Date")). An election to use shares of
Common Stock to satisfy tax withholding requirements must be made in
compliance with and subject to the Withholding Rules. The Committee may
not withhold shares in excess of the number necessary to satisfy the
minimum federal income tax withholding requirements. In the event
shares of Common Stock acquired under the exercise of an ISO are used
to satisfy such withholding requirement, such shares of Common Stock
must have been held by the Key Employee for a period of not less than
the holding period described in section 422(a)(1) of the Code on the
Determination Date.
SECTION 9 - Option Agreements - Other Provisions
Options granted under the Plan shall be evidenced by Option Agreements
in such form as the Committee shall, from time to time, approve, which Option
Agreements shall contain such provisions, not inconsistent with the provisions
of the Plan for NQSOs granted pursuant to the Plan, and such conditions, not
inconsistent with section 422(b) of the Code or the provisions of the Plan for
ISOs granted pursuant to the Plan, as the Committee shall deem advisable. Each
Key Employee and Non-Employee Director shall enter into, and be bound by, such
Option Agreement.
SECTION 10 - Capital Adjustments
The number of shares which may be issued under the Plan, and the
maximum number of shares with respect to which options may be granted during a
specified period to any Key Employee under the Plan, both as stated in Section 4
hereof, the number of shares with respect to which NQSOs are granted to
Non-Employee Directors under Section 7(a), and the number of shares issuable
upon exercise of outstanding Options under the Plan (as well as the Option price
per share under such outstanding Options), shall, subject to the provisions of
section 424(a) of the Code and as permitted under Rule 16b-3, be adjusted, to
reflect any stock dividend, stock split, share combination, or similar change in
the capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation; provided, however, that, in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options granted to Key Employees if it
determines that such termination is in the best interests of the Company. If the
Committee decides to terminate outstanding Options, the Committee shall give
each Key Employee holding an Option to be terminated not less than seven (7)
days' notice prior to any such termination by reason of such a corporate
transaction, and any such Option which is to be so terminated may be exercised
(if and only to the extent that it is then exercisable) up to, and including the
date immediately preceding such termination. Further, as provided in Section
8(d) hereof the Committee, in its discretion, may accelerate, in whole or in
part, the date on which any or all Options become exercisable.
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Notwithstanding the foregoing, in the event of a corporate transaction
(as described above) in which holders of Common Stock are to receive cash,
securities or other property, and provision is not made for the continuance and
assumption of NQSOs granted to Non-Employee Directors, all such outstanding
NQSOs shall terminate as of the last business day immediately preceding the
closing date of such corporate transaction and the Company shall pay to each
Non-Employee Director an amount in cash with respect to each share to which a
terminated NQSO pertains equal to the difference between the Option exercise
price and the value of the consideration to be received by the holders of Common
Stock in connection with such transaction.
The Committee also may, in its discretion, change the terms of any
outstanding Option to reflect any such corporate transaction, provided that, in
the case of ISOs, such change is excluded from the definition of a
"modification" under section 424(h) of the Code.
SECTION 11 - Amendment or Discontinuance of the Plan
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(a) General. The Board from time to time may suspend or
discontinue the Plan or amend it in any respect whatsoever, and the
Committee may amend any outstanding Option in any respect whatsoever,
except that the following amendments shall require shareholder approval
(given in the manner set forth in Section 11(b) below):
(1) With respect to Options which are ISOs, any
amendment which would:
(A) Change the class of employees eligible
to participate in the Plan;
(B) Except as permitted under Section 10
hereof, increase the maximum number of shares of
Common Stock with respect to which ISOs may be
granted under the Plan; or
(C) Extend the duration of the Plan under
Section 12 hereof with respect to any ISOs granted
hereunder; and
(2) With respect to Options, any amendment which
would require shareholder approval pursuant to Treas. Reg.
ss. 1.162-27(e)(4)(vi) or any successor thereto (to the extent
compliance with section 162(m) of the Code is desired); and
(3) Any amendment for which shareholder approval is
required under the rules of an exchange or market on which
Common Stock is listed.
Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any
holder of an outstanding Option without the consent of such holder.
(b) Shareholder Approval Requirements. The approval of
shareholders must comply with all applicable provisions of the
corporate charter, bylaws, and applicable state law prescribing the
method and degree of shareholder approval required for the issuance of
corporate stock or options. If the applicable state law does not
prescribe a method and degree of shareholder approval in such case, the
approval of shareholders must be effected:
(1) By a method and in a degree that would be treated
as adequate under applicable state law in the case of an
action requiring shareholder approval (i.e., an action on
which shareholders would be entitled to vote if the action
were taken at a duly held shareholders' meeting); or
(2) By a majority of the votes cast at a duly held
shareholders' meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person
or by proxy, present and voting on the plan.
(c) Amendments Affecting Non-Employee Directors.
Notwithstanding the foregoing, no amendment to any provision of the
Plan that would affect NQSOs to be awarded to Non-Employee Directors
shall be made if such amendment would cause the terms and conditions of
grants made pursuant to Section 7 of the Plan to fail to be fixed in
advance, within the meaning of Securities and Exchange Commission
interpretations under Section 16(b) of the Securities Exchange Act of
1934.
SECTION 12 - Termination of Plan
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
September 3, 2006, which date is within ten (10) years after the date the Plan
was adopted by the Board (or the date the Plan was approved by the shareholders
of the Company, whichever is earlier), and no Options hereunder shall be granted
thereafter. Nothing contained in this Section 12, however, shall terminate or
affect the continued existence of rights created under Options issued hereunder
and outstanding on September 3, 2006, which by their terms extend beyond such
date.
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SECTION 13 - Effective Date
This Plan became effective on September 4, 1996 (the date the
Plan was adopted by the Board). As amended and restated, this Plan shall become
effective June
9, 1998, subject to shareholder approval in the manner described
in Section 11(b).
SECTION 14 - Miscellaneous
(a) Governing Law. With respect to any ISOs granted pursuant
to the Plan and the Option Agreements thereunder, the Plan, such Option
Agreements and any ISOs granted pursuant thereto shall be governed by
the applicable Code provisions to the maximum extent possible.
Otherwise, the operation of, and the rights of Key Employees and
Non-Employee Directors under, the Plan, the Option Agreements and any
Options granted thereunder shall be governed by applicable federal law
and otherwise by the laws of the Commonwealth of Pennsylvania.
(b) Rights. Neither the adoption of the Plan nor any action of
the Board or the Committee shall be deemed to give any individual any
right to be granted an Option, or any other right hereunder, unless and
until the Committee shall have granted such individual an Option, and
then his or her rights shall be only such as are provided by the Option
Agreement.
Any Option under the Plan shall not entitle the holder thereof
to any rights as a shareholder of the Company prior to the exercise of
such Option and the issuance of the shares pursuant thereto. Further,
notwithstanding any provisions of the Plan or the Option Agreement with
a Key Employee, the Company shall have the right, in its discretion, to
retire a Key Employee at any time pursuant to its retirement rules or
otherwise to terminate his or her employment at any time for any reason
whatsoever.
(c) Indemnification of Board and Committee. Without limiting
any other rights of indemnification which they may have from the
Company and any Related Corporation, the members of the Board and the
members of the Committee shall be indemnified by the Company against
all costs and expenses reasonably incurred by them in connection with
any claim, action, suit, or proceeding 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, the Plan, or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit, or
proceeding, except a judgment based upon a finding of willful
misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board
or Committee member shall notify the Company in writing, giving the
Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on
his or her own behalf.
(d) Application of Funds. The proceeds received by the Company
from the sale of Common Stock pursuant to Options granted under the
Plan shall be used for general corporate purposes. Any cash received in
payment for shares upon exercise of an Option to purchase Common Stock
shall be added to the general funds of the Company and shall be used
for its corporate purposes. Any Common Stock received in payment for
shares upon exercise of an Option to purchase Common Stock shall become
treasury stock.
(e) No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon a Key Employee or Non-Employee
Director to exercise such Option.
(f) Listing and Registration of Shares. Each Option shall be
subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or
qualification of the shares covered thereby upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Option or the
purchase of shares thereunder, or that action by the Company, Key
Employee or Non-Employee Director should be taken in order to obtain an
exemption from any such requirement, no such Option may be exercised,
in whole or in part, unless and until such listing, registration,
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qualification, consent, approval, or action shall have been effected,
obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Key Employee or
Non-Employee Director or his or her legal representative or beneficiary
may also be required to give satisfactory assurance that shares
purchased upon exercise of an Option are being purchased for investment
and not with a view to distribution, and certificates representing such
shares may be legended accordingly.
(g) Rights as a Shareholder. A Key Employee or Non-Employee
Director shall have no rights as a shareholder with respect to any
shares covered by his or her Option until the issuance of a stock
certificate to him or her for such shares.
IN WITNESS WHEREOF, THE JUDGE GROUP, INC. has caused these presents to
be duly executed, under seal, this day of __________, 1998.
ATTEST: THE JUDGE GROUP, INC.
[SEAL]
By:
- ----------------------------------- ----------------------------------
Katharine A. Wiercinski, Secretary Martin E. Judge, Jr., Chairman and
Chief Executive Officer
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THE JUDGE GROUP, INC.
TWO BALA PLAZA, SUITE 405
BALA CYNWYD, PENNSYLVANIA 19004
PROXY -- Annual Meeting of Shareholders -- Tuesday, June 9, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Martin E. Judge, Jr. as proxy, with the power to
appoint his substitute, and hereby authorizes him to represent and to vote, as
designated below, all the Common Shares of The Judge Group, Inc. held of record
by the undersigned on May 4, 1998 at the Annual Meeting of Shareholders to be
held on Tuesday, June 9, 1998 or at any adjournment thereof.
1. ELECTION OF DIRECTORS.
FOR all nominees listed WITHHOLD AUTHORITY to vote
below (except as marked to for all nominees listed below / /
the contrary below) / /
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Randolph J. Angermann, Michael A. Dunn, James C. Hahn,
Martin E. Judge, Jr. and Richard T. Furlano
2. PROPOSAL TO AMEND THE COMPANY'S 1996 INCENTIVE STOCK OPTION AND NON-QUALIFIED
STOCK OPTION PLAN FOR KEY EMPLOYEES AND NON-EMPLOYEE DIRECTORS.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO RATIFY THE APPOINTMENT OF RUDOLPH, PALITZ LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the Proxies are authorized, to the extent permitted by
the rules of the Securities and Exchange Commission, to vote upon such other
business as may properly come before the meeting or any adjournment.
(Continued, and to be signed, on Reverse Side)
<PAGE>
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS; FOR PROPOSAL 2; FOR
PROPOSAL 3; AND IN ACCORDANCE WITH THE PROXIES' BEST JUDGMENT UPON OTHER MATTERS
PROPERLY COMING BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Date
---------------------------------------------
Signature
----------------------------------------
Signature, if held jointly
------------------------
<PAGE>
DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Direct Dial Number:
(215) 988-2548
May 12, 1998
Securities and Exchange Commission
450 Fifth Steet, N.W.
Washington, DC 20549
Re: The Judge Group, Inc. - Revised Proxy Statement
Ladies and Gentlemen:
On behalf of The Judge Group, Inc. (the "Company"), and pursuant to
Rule 14a-6(h) of the Securities Exchange Act of 1934, as amended, we are filing
on behalf of the Company a revised Proxy Statement, together with exhibits
thereto, in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Company's 1998 Annual Meeting of
Shareholders. The revisions relate to a change in the date of the Annual Meeting
from June 4, 1998 to June 9, 1998.
Would you please contact the undersigned at 215-988-2548 if you have
any questions in connection with this filing.
Very truly yours,
/s/ F. Douglas Raymond
-----------------------
F. Douglas Raymond, III
cc: Amy E. Feldman, Esq.
