SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GLOBALINK, 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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: [ ]
(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.: File No. 1-13046
(3) Filing Party:
(4) Date Filed:
<PAGE>
GLOBALINK, INC.
[LOGO]
GLOBALINK
THE TRANSLATION COMPANY
NOTICE OF 1998
ANNUAL MEETING OF
STOCKHOLDERS AND
PROXY STATEMENT
------------
YOUR VOTE IS IMPORTANT!
PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR PROXY
IN THE ENCLOSED ENVELOPE.
<PAGE>
April 30, 1998
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to attend
the Annual Meeting of Stockholders of Globalink, Inc., on June 19, 1998, at
10:00 a.m., at 9302 Lee Highway, First Floor, Fairfax, Virginia 22031.
Information about the meeting is presented on the following pages.
In addition to the formal items of business to be brought before the meeting,
members of management will report on the Company's operations and answer
stockholder questions.
Your vote is very important. Please ensure that your shares will be represented
at the meeting by completing, signing, and returning your proxy card in the
envelope provided, even if you plan to attend the meeting. Sending us your proxy
will not prevent you from voting in person at the meeting should you wish to do
so.
Sincerely,
Harry E. Hagerty, Jr.
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 19, 1998
The annual meeting of the stockholders of Globalink, Inc. (the "Company") will
be held at 9302 Lee Highway, First Floor, Fairfax, Virginia 22031 at 10:00 a.m.
or the following purposes:
1. To elect the Directors of the Company to serve for the ensuing year.
2. To approve the appointment of Grant Thornton LLP, as independent
accountants, to audit the books and accounts of the Company for 1998.
3. To approve the Company's 1997 Employee Stock Option Plan.
4. To transact such other and further business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on April 30, 1998, as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting.
By Order of The Board of Directors,
Harry E. Hagerty, Jr.
Chairman of the Board
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Globalink, Inc. (The "Company") for use at the
annual meeting of stockholders of the Company to be held at the time and place
and for the purposes set forth in the foregoing Notice of Annual Meeting of
Stockholders. The address of the Company's principal executive office is 9302
Lee Highway, 12th Floor, Fairfax, Virginia 22031. This proxy statement and the
form of proxy are being mailed to stockholders on or about May 11, 1998.
REVOCABILITY OF PROXY AND VOTING OF PROXY
A proxy given by a stockholder may be revoked at any time before it is exercised
by giving another proxy bearing a later date, by notifying the Secretary of the
Company in writing of such revocation at any time before the proxy is exercised,
or by attending the meeting in person and casting a ballot. Any proxy returned
to the Company will be voted in accordance with the instructions indicated
thereon. If no instructions are indicated on the proxy, the proxy will be voted
for the election of the nominees for Directors named herein in Item 1 and in
favor of Item 2 in the Notice of Annual Meeting. The Company knows of no reason
why any of the nominees named herein would be unable to serve. In the event,
however, that any nominee named should, prior to the election, become unable to
serve as a Director, the proxy will be voted in accordance with the best
judgment of the Proxy Committee named therein. The Board of Directors know of no
matters, other than as described herein, that are to be presented at the
meeting, but if matters other than those herein mentioned properly come before
the meeting, the proxy will be voted by that Committee in a manner that the
members of the Committee (in their judgment) consider to be in the best
interests of the Company.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on April 30, 1998, are
entitled to vote at the meeting. On April 23, 1998, the Company had outstanding
and entitled to vote 9,173,749 shares of common stock. Each stockholder entitled
to vote shall have one vote for each share of common stock registered in such
stockholder's name on the books of the Company as of the record date.
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The following persons have been nominated for election as Directors of the
Company:
Name Age Director Since
- --------------------- --- --------------
Harry E. Hagerty, Jr. 57 1990
William E. Kimberly 65 1990
John F. McCarthy, III 52 1993
Thomas W. Patterson 38 1997
Ronald W. Johnston 51 1997
David H. Biggs 52 1998
All Directors hold office until the annual meeting of stockholders of the
Company and until their successors have been elected and qualified. Information
about each nominee for Director is given below.
Harry E. Hagerty, Jr., a Director of Globalink since January 1990, is President
of Hagerty & Associates, a company that invests in and consults with start-up
and early-stage businesses. Mr. Hagerty participated in the initial funding of
the Discovery Channel and was a founder of Digital Switch Corporation (now "DSC
Communications, Inc."). Until recently he served on the Board of Directors of
CCAIR, Inc., a regional airline based in Charlotte, N.C. Mr. Hagerty currently
serves as Chairman of the Board of Directors of Systems Impact Corporation.
William E. Kimberly, a Director of the Company since 1990, is Chairman of NAZTEC
International Group, Inc., a McLean, VA based investment banking firm. Prior to
this, Mr. Kimberly worked for Kimberly-Clark Corporation from 1959 to 1983,
where he held various management positions including Marketing Director, CEO of
a major subsidiary and Senior Vice President. Mr. Kimberly has held Board of
Director positions at Pabst Brewing, Co., Blue Cross and Blue Shield of
Wisconsin and First National Bank of Neenah, Wisconsin. He is currently director
of several emerging companies.
John F. McCarthy, III, a Director of Globalink since 1993, was Vice President
and General Counsel for Computone Corporation, which was engaged in the
development of computer peripheral products. Prior to joining Computone, Mr.
McCarthy was the managing partner of the Washington, DC, offices of the law firm
of Burnham, Connolly, Osterle and Henry. Mr. McCarthy joined Globalink in August
1995 as Chief Legal Counsel and is responsible for resolving all international
and domestic legal issues for the Company.
Mr. Thomas W. Patterson was appointed as a Director of Globalink in March 1997
and has over fifteen years of combined experience in information security and
electronic commerce. He has advised the White House, U.S. Congress, NII
Committee, Departments of Defense, Treasury, Energy and Commerce, and scores of
large businesses and organizations around the world. Formerly the Information
Security Director for MicroElectronics and Computer Technology
<PAGE>
Corp. ("MCC") and the Chief Strategist for Electronic Commerce for IBM
Corporation, Mr. Patterson is a leader in driving industry toward reasonable use
of the Internet.
Mr. Ronald W. Johnston was appointed as a Director of Globalink in October 1997
and brings over 25 years of executive experience with an emphasis on operations,
administration and finance to Globalink. He has first-hand knowledge of foreign
and domestic markets and an extensive background in overseas business, due in
part to 11 years in senior management positions at Whittaker Corporation. Mr.
Johnston joined Globalink in April 1995 as Chief Operating Officer and was
promoted to President in October 1997.
Mr. David H. Biggs was appointed as a director of Globalink in January 1998 has
extensive experience and expertise in the business arena. He formerly served as
Vice President of Operations and Product Development at Bently Nevada
Corporation where he managed operations for a number of domestic and
international sites and implemented an MRP II system that is today the basis of
Bently Nevada's competitive edge. He was also responsible for the MAP (Market
Aimed Products) development methodology at Bently Nevada and is the author of a
popular book on the same subject called Market Aimed Products. He is currently
Vice President at R. D. Garwood, Inc.
Executive Compensation
The following table sets forth as of the year ended December 31, 1997, the cash
compensation paid to Harry E. Hagerty, Jr., who has served as Chief Executive
Officer since September 1994; Ronald W. Johnston, who has served as Chief
Operating Officer since March 1995 and President since October 1997; John F.
McCarthy, III, who has served as Vice President and General Counsel since August
1995; Philippe J. Kuperman, who has served as Executive Vice President of Sales
& Marketing since January 1997; Mark A. Paiewonsky, who has served as Chief
Financial & Accounting Officer since January 1997 and all Executive Officers as
a group.
Other Annual
Name Year Salary Bonus Compensation
- ---------------------- ------ -------- --------- ------------
Harry E. Hagerty, Jr. 1997 200,894
1996 152,106
1995 96,000
Ronald W. Johnston 1997 155,397 55,000
1996 126,449 33,000
1995 91,554
John F. McCarthy, III 1997 151,146 99,417(1)
1996 112,964
1995 40,007
Philippe J. Kuperman 1997 214,772(2)
Mark A. Paiewonsky 1997 104,952 5,000
All executive officers 1997 986,578(2) 159,417
as a group (5, 8 and 7 1996 877,152(3) 33,000
persons, respectively) 1995 463,959
- ----------------------
(1) Includes special one-time bonus of $55,000 for additional efforts associated
with raising financial capital for the Company.
(2) Includes $79,091 in sales commissions.
(3) Includes $79,161 in sales commissions.
<PAGE>
Employment Agreements
The Company has entered into employment agreements with each of Harry E.
Hagerty, Jr., effective as of June 1, 1996, Ronald W. Johnston effective as of
March 24, 1995, and John F. McCarthy, III, effective as of August 18, 1995,
providing for base annual compensation of $200,000, $130,000 and $115,000 per
annum, respectively, plus certain incentive compensation. The agreements are
each for a three-year period from their respective effective dates, and will
renew automatically for succeeding consecutive periods of one year each unless
sooner terminated by either party at the end of the original term or any renewal
term. In the event the Company terminates without cause the employment of any of
these employees (except by causing non-renewal of such employment agreement),
such employee shall receive a severance payment equal to one year's base salary
plus accrued benefits and incentive compensation; the employment agreements also
contain a provision in which the employee would receive three times one year's
base salary plus the value of his other employment benefits, in the event of a
hostile takeover.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Number of Securities % of Total Options Exercise Or
Underlying Options Granted to Employees Base Price Expiration
Name Granted in Fiscal Year ($/Sh) Date
- --------------------- -------------------- -------------------- ----------- ----------
<S> <C> <C> <C> <C>
Harry E. Hagerty, Jr. 10,000 1.1% 3.4400 10/13/2005
Harry E. Hagerty, Jr. 175,000 19.3% 3.4400 10/13/2005
Harry E. Hagerty, Jr. 175,000 19.3% 4.2500 10/13/2005
Ronald W. Johnston 100,000 11.0% 3.4400 10/13/2005
John F. McCarthy, III 10,000 1.1% 3.4400 10/13/2005
John F. McCarthy, III 100,000 11.0% 3.4400 10/13/2005
Philippe J. Kuperman 50,000 5.5% 3.4400 10/13/2005
Mark A. Paiewonsky 30,000 3.3% 3.4400 10/13/2005
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of
Underlying Unexercised Unexercised
Shares Options At In-the-Money Options
Acquired Value Fiscal Year-End at Fiscal Year-End (1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harry E. Hagerty, Jr. 245,000 255,000
Ronald W. Johnston 116,666 83,334
John F. McCarthy, III 113,334 66,666
Philippe J. Kuperman 41,667 58,333
Mark A. Paiewonsky 31,666 18,334
<FN>
- ---------------------
(1) The fair market value of the Company's common stock on December 31, 1996,
minus the exercise price.
</FN>
</TABLE>
<PAGE>
SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of April 23, 1998, the only people known by Globalink to be the beneficial
owner of more than 5% of the outstanding voting securities of Globalink are:
Amount and
Name and Address of Nature of Percentage
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------------- -------------------- ----------
Common.... Ronald I. Heller 856,364(1) 9.3%
525 Washington Blvd
34th Floor
Jersey City, NJ 07310
Common.... David S. Nagelberg 856,364(1) 9.3%
525 Washington Blvd
34th Floor
Jersey City, NJ 07310
- --------------
(1) Assumes the exercise of warrants and unit purchase options to purchase
236,364 shares of common stock.
Set forth below is the security ownership of Officers and Directors, as of April
23, 1998.
Amount and
Name of Nature of Percentage
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- --------------------- -------------------- ----------
Common.... Harry E. Hagerty, Jr. 385,150(1) 4.2%
Common.... William E. Kimberly 216,400(2) 2.4%
Common.... Ronald W. Johnston 116,666(3) 1.3%
Common.... John F. McCarthy, III 113,334(4) 1.2%
Common.... Thomas W. Patterson 30,650(5) *
Common.... David H. Biggs 16,000(6) *
Common.... Philippe J. Kuperman 41,667(7) *
Common.... Mark A. Paiewonsky 31,666(8) *
Common.... All Officers and
Directors as a Group
(8 persons) 951,533 10.4%
- --------------
* Represents less than 1%.
(1) Assumes the exercise of options to purchase 245,000 shares of common stock.
(2) Assumes the exercise of options to purchase 50,000 shares of common stock.
(3) Assumes the exercise of options to purchase 116,666 shares of common stock.
(4) Assumes the exercise of options to purchase 113,334 shares of common stock.
(5) Assumes the exercise of options to purchase 30,000 shares of common stock.
(6) Assumes the exercise of options to purchase 10,000 shares of common stock.
(7) Assumes the exercise of options to purchase 41,667 shares of common stock.
(8) Assumes the exercise of options to purchase 31,666 shares of common stock.
<PAGE>
APPROVAL OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
Action will be taken with respect to the approval of independent accountants for
the Company for the year 1998. The Board of Directors has, subject to such
approval, selected Grant Thornton LLP. Grant Thornton LLP also conducted the
audits of the Company's records for the years ended December 31, 1992, 1993,
1994, 1995, 1996 and 1997.
A representative of Grant Thornton LLP will be present at the meeting. Such
representative will have an opportunity to make a statement, if he so desires,
and will be available to respond to appropriate questions by stockholders.
The Board of Directors recommends a vote FOR the proposal to approve the
appointment of Grant Thornton LLP.
APPROVAL OF 1997 EMPLOYEE STOCK OPTION PLAN
(ITEM 3 ON PROXY CARD)
General
The Board of Directors has approved and is proposing for stockholder approval
the 1997 Employee Stock Option Plan (the "1997 Plan"). The purpose of the 1997
Plan is to enable eligible employees of the Corporation or any of its
subsidiaries and other individuals whose participation in the 1997 Plan is
determined to be in the best interests of the Corporation by the Compensation
Committee, to purchase shares of the Corporation's Common Stock and thus to
encourage stock ownership by employees and officers of the Corporation and other
individuals and to encourage the continued provision of services by employees,
officers and other individuals.
The affirmative vote of a majority of the shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to approve the 1997 Plan.
Abstentions and broker non-votes will be treated as shares that are present and
entitled to vote on each matter, but will not count as votes in favor of such
matter. Accordingly, an abstention from voting or a broker non-vote with
respect to the approval of the 1997 Plan would have the same legal effect as a
vote "against" approval. Unless otherwise indicated, properly executed proxies
will be voted in favor of Proposal 3 to approve the 1997 Plan.
The Federal income tax consequences of the 1997 Plan are discussed below. See
"Federal Income Tax Consequences of the Stock Option Plan."
<PAGE>
Federal Income Tax Consequences of the Stock Option Plan
The grant of an option is not a taxable event for the optionee or the
Corporation. With respect to "incentive stock options," an optionee will not
recognize taxable income upon grant or exercise of an incentive option, and any
gain realized upon a disposition of shares received pursuant to the exercise of
an incentive option will be taxed as long-term capital gain if the optionee
holds the shares for at least two years after the date of grant and for one year
after the date of exercise. However, the excess of the fair market value of the
shares subject to an incentive option on the exercise date over the option
exercise price will be included in the optionee's alternative minimum taxable
income in the year of exercise (except that, if the optionee is subject to
certain securities law restrictions, the determination of the amount included in
alternative minimum taxable income may be delayed, unless the optionee elects
within 30 days following exercise to have income determined without regard to
such restrictions) for purposes of the alternative minimum tax. This excess
increases the optionee's basis in the shares for purposes of the alternative
minimum tax but not for purposes of the regular income tax. An optionee may be
entitled to a credit against regular tax liability in future years for minimum
taxes paid with respect to the exercise of incentive options (e.g., for a year
in which the shares are sold at a gain). The Corporation and its subsidiaries
will not be entitled to any business expense deduction with respect to the grant
or exercise of an incentive option, except as discussed below.
For the exercise of an incentive option to qualify for the foregoing tax
treatment, the optionee generally must be an employee of the Corporation or a
subsidiary from the date the option is granted through a date within three
months before the date of exercise. In the case of an optionee who is disabled,
this three-month period is extended to one year. In the case of an employee who
dies, the three-month period and the holding period for shares received pursuant
to the exercise of the option are waived.
If all of the requirements for incentive option treatment are met except for the
special holding period rules set forth above, the optionee will recognize the
ordinary income upon the disposition of the shares in an amount equal to the
excess of the fair market value of the shares at the time the option was
exercised over the option exercise price. However, if the optionee was subject
to certain restrictions under the securities laws at the time the option was
exercised, the measurement date may be delayed, unless the optionee has made a
special tax election within 30 days after the date of exercise to have taxable
income determined without regard to such restrictions. The balance of the
realized gain, if any, will be long- or short-term capital gain, depending upon
whether or not the shares were sold more than one year after the option was
exercised. If the optionee sells the shares prior to the satisfaction of the
holding period rules but at a price below the fair market value of the shares at
the time the option was exercised (or other applicable measurement date), the
amount of ordinary income (and the amount included in alternative minimum
taxable income, if the sale occurs during the same year as the option was
exercised) will be limited to the excess of the amount realized on the sale over
the option exercise price. If the Corporation complies with applicable reporting
(if any) and other requirements, it will be allowed a business expense deduction
to the extent the optionee recognizes ordinary income.
<PAGE>
If, pursuant to an option agreement, an optionee exercises an incentive option
by tendering shares of Common Stock with a fair market value equal to part or
all of the option exercise price, the exchange of shares will be treated as a
nontaxable exchange (except that this treatment would not apply if the optionee
had acquired the shares being transferred pursuant to the exercise of an
incentive option and had not satisfied the special holding period requirements
summarized above). If the exercise is treated as a tax free exchange, the
optionee would have no taxable income from the exchange and exercise (other than
minimum taxable income as discussed above) and the tax basis of the shares
exchanged would be treated as the substituted basis for the shares received.
These rules would not apply if the optionee used shares received pursuant to the
exercise of an incentive option (or another statutory option) as to which the
optionee had not satisfied the applicable holding period requirement. In that
case, the exchange would be treated as a taxable disqualifying disposition of
the exchanged shares, with the result that the excess of the fair market value
of the shares tendered over the optionee's basis in the shares would be taxable.
Upon exercising a non-qualifying (i.e. non-incentive) option, an optionee will
recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise (except that, if the optionee is subject to certain restrictions
imposed by the securities laws, the measurement date may be delayed, unless the
optionee makes a special tax election within 30 days after exercise to have
income determined without regard to the restrictions). If the Corporation
complies with applicable reporting requirements, it will be entitled to a
business expense deduction in the same amount. Upon a subsequent sale or
exchange of shares acquired pursuant to the exercise of a non-incentive option,
the optionee will have taxable gain or loss, measured by the difference between
the amount realized on the disposition and the tax basis of the shares
(generally, the amount paid for the shares plus the amount treated as ordinary
income at the time the option was exercised).
If, pursuant to an option agreement, the optionee surrenders shares of Common
Stock in payment of part or all of the exercise price for non-qualifying
options, no gain or loss will be recognized with respect to the shares
surrendered (regardless of whether the shares were acquired pursuant to the
exercise of an incentive option) and the optionee will be treated as receiving
an equivalent number of shares pursuant to the exercise of the option in a
nontaxable exchange. The basis of the shares surrendered will be treated as the
substituted tax basis for an equivalent number of option shares received and the
new shares will be treated as having been held for the same holding period as
had expired with respect to the transferred shares. However; the fair market
value of any shares received in excess of the number of shares surrendered
(i.e., the difference between the aggregate option exercise price and the
aggregate fair market value of the shares received pursuant to the exercise of
the option) will be taxed as ordinary income. Under current federal income tax
law, for 1993 and subsequent years, the highest tax rate on ordinary income is
39.6% and long-term capital gains are subject to a maximum tax rate of 28% (20%
if the asset has been held for a minimum of 18 months). Gain on a sale of stock
acquired as a consequence of the exercise of an option should qualify as
long-term if the stock has been held for more than one year (after exercise).
Because of certain provisions in the law relating to the "phase out" of personal
exemptions and certain limitations on itemized deductions, the federal income
tax consequences to a particular taxpayer of receiving additional amounts of
ordinary income or
<PAGE>
capital gain may be greater than would be indicated by application of the
foregoing tax rates to the additional amount of income or gain.
Adoption of the 1997 Employee Stock Option Plan (Proposal 3)
The Board of Directors has voted, subject to stockholder approval at the Annual
Meeting, to adopt the 1997 Plan and to reserve 750,000 shares of Common Stock
reserved for issuance under the 1997 Plan. The number of shares reserved for
issuance is subject to adjustment upon the occurrence of certain events as
described below. See "Description of the Plan."
The following summary of the 1997 Plan does not purport to be complete, and is
subject to and qualified in its entirety by reference to the complete text of
the 1997 Plan, which is attached hereto as Appendix A and is incorporated herein
by reference.
The Board of Directors recommends a vote FOR Proposal 3.
Description of the Plan
The 1997 Plan provides for the grant of options that are intended to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") to full time employees as well as the grant of
non-qualifying options to directors and employees of the Corporation and its
subsidiaries and other individuals.
The 1997 Plan is administered by Compensation Committee, which consists of three
outside directors appointed by the Board of Directors. The Compensation
Committee makes all determinations concerning the employees of the Corporation
and its subsidiaries and other individuals to whom incentive and non-qualifying
options will be granted.
The option exercise price for incentive stock options granted under the 1997
Plan may not be less than 100% of the fair market value of the Common Stock on
the date of grant of the option (or 110% in the case of an incentive stock
option granted to an optionee beneficially owning more than 10% of the
outstanding Common Stock). The option exercise price for non-incentive stock
options granted under the 1997 Plan is set by the Compensation Committee but
shall not be less than 50% of fair market value of Common Stock on the date of
grant. The maximum option term is 10 years (or five years in the case of an
incentive stock option granted to an optionee beneficially owning more than 10%
of the outstanding Common Stock). Options may be exercised at any time after
grant, except as otherwise provided in the particular option agreement. To the
extent not otherwise exercisable, Options become exercisable on and after a
Change in Control, as defined in the Plan. Options covering no more than 500,000
shares may be granted to any officer or other individual during the term of the
Plan. There is also a $100,000 limit on the value of stock (determined at the
time of grant) covered by incentive stock options that first become exercisable
by an optionee in any calendar year. No option may be granted more than 10 years
after the effective date of this Plan. Subject to the terms of the applicable
option agreement, non-qualifying stock options are transferable to immediate
family members of the optionee to whom an option has been granted, a trust for
the benefit of immediate family members of the optionee or a partnership, all of
the interests in which are owned by immediate family members of the optionee.
<PAGE>
Payment for shares purchased under the 1997 Plan may be made either in cash or,
if permitted by the particular option agreement, by exchanging shares of Common
Stock of the Corporation which, if acquired from the Corporation have been held
for at least six months, with a fair market value equal to the total option
exercise price or cash for any difference. Options may, if permitted by the
particular option agreement, be exercised by directing that certificates for the
shares purchased be delivered to a licensed broker as agent for the optionee,
provided that the broker tenders to the Corporation cash or cash equivalents
equal to the option exercise price plus the amount of any taxes that the
Corporation may be required to withhold in connection with the exercise of the
option.
If an employee's or other individual's service with the Corporation or its
subsidiaries terminates by reason of death, or an employee's service with the
Corporation terminates by reason of permanent and total disability, his or her
options, to the extent then exercisable, may be exercised within one year after
such death or disability unless a later date is otherwise provided in the
particular option agreement (but not later than the date the option would
otherwise expire). If an employee's service terminates for any reason other than
death or disability, options held by such optionee generally terminate three
months after the date of such termination unless otherwise provided in the
particular option agreement (but not later than the date the option would
otherwise expire).
If the outstanding shares of Common Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares or securities of the
Corporation, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares without receipt of
consideration by the Corporation, an appropriate and proportionate adjustment
will be made in the number and kinds of shares subject to the 1997 Plan, and in
the number, kinds, and per share exercise price of shares subject to the
unexercised portion of options granted prior to any such change. Any such
adjustment in an outstanding option, however, will be made without a change in
the total price applicable to the unexercised portion of the option but with a
corresponding adjustment in the per share option price.
Upon any dissolution or liquidation of the Corporation, or upon a
reorganization, merger or consolidation in which the Corporation is not the
surviving corporation, or upon the sale of all or substantially all of the
assets of the Corporation to another corporation, or upon any transaction
approved by the Board of Directors which results in any person or entity owning
51% or more of the total combined voting power of all classes of stock of the
Corporation, the 1997 Plan and the options issued thereunder will terminate,
unless provision is made in connection with such transaction for the
continuation of this Plan and/or the assumption of the options or for the
substitution for such options of new options covering the stock of a successor
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kinds of shares and the per share exercise price. In the event
of such termination, all outstanding options will be exercisable in full during
such period immediately prior to the occurrence of such termination as the Board
of Directors in its discretion will determine.
<PAGE>
The Board of Directors may amend the 1997 Plan with respect to shares of the
Common Stock as to which options have not been granted.
The Board of Directors at any time may terminate or suspend the 1997 Plan.
Unless previously terminated, this Plan will terminate automatically on October
13, 2007, the tenth anniversary of the date of adoption of this Plan by the
Board of Directors. No termination, suspension or amendment of this Plan may,
without the consent of the optionee to whom an option has been granted,
adversely affect the rights of the holder of the option. The Federal income tax
consequences of the 1997 Plan are discussed above. See "Federal Income Tax
Consequences of the Stock Option Plan."
ADDITIONAL INFORMATION CONCERNING THE BOARD
OF DIRECTORS OF THE COMPANY
Regular meetings of the Board of Directors of the Company are normally held
quarterly. During 1997 the Board of Directors held 4 meetings. One Director
attended only two of the meetings prior to his resignation. Two Directors
attended three of the meetings. The remaining three Directors attended all of
the total number of meetings of the Board of Directors. In addition to regularly
scheduled meetings, a number of Directors were involved in numerous informal
meetings with management, offering valuable advice and suggestions on a broad
range of corporate matters. The members of the Compensation Committee are
William E. Kimberly, Harry E. Hagerty, Jr., and John F. McCarthy, III. The
Compensation Committee held 3 meetings during 1997. Directors are not
compensated for attending Board meetings.
Audit Committee
The members of the Audit Committee are John F. McCarthy, III, William E.
Kimberly, and Thomas W. Patterson. The Audit Committee met formally two times
during 1997 and two or more members of the Audit Committee met informally on
several occasions. The functions of the Audit Committee are to recommend to the
Board of Directors the selection, retention or termination of the Company's
independent accountants; determine through consultation with management the
appropriateness of the scope of the various professional services provided by
the independent accountants, and consider the possible effect of the performance
of such services on the independence of the accountants; review the arrangements
and the proposed overall scope of the annual audit with management and the
independent accountants; discuss matters of concern to the Audit Committee with
the independent accountants and management relating to the annual financial
statements and results of the audit; obtain from management, the independent
accountants and the Chief Financial Officer their separate opinions as to the
adequacy of the Company's system of internal accounting control; review with
management and the independent accountants the recommendations made by the
accountants with respect to changes in accounting procedures and internal
accounting control; and hold regularly scheduled meetings, separately and
jointly, with representatives of management, the independent accountants, and
the Chief Financial Officer to make inquiries into and discuss their activities.
<PAGE>
STOCKHOLDER PROPOSALS FOR 1998
Proposals of security holders intended to be presented at the Company's 1999
Annual Meeting of Stockholders must be received by the Company by not later than
February 1, 1999.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company and will consist
primarily of printing, postage and handling, including the expenses of brokerage
houses, custodians, nominees, and fiduciaries in forwarding documents to
beneficial owners. Solicitation also may be made by the Company's officers,
Directors, or employees, personally or by telephone.
Fairfax, Virginia
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
Appendix A
GLOBALINK, INC.
1997 EMPLOYEE STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
1. PURPOSE.............................................................. 1
2. DEFINITIONS.......................................................... 3
3. ADMINISTRATION....................................................... 3
3.1. Board......................................................... 3
3.2. Committee..................................................... 3
3.3. No Liability.................................................. 4
4. STOCK................................................................ 4
5. ELIGIBILITY.......................................................... 4
6. EFFECTIVE DATE AND TERM.............................................. 4
6.1. Effective Date................................................ 4
6.2. Term.......................................................... 5
7. GRANT OF OPTIONS..................................................... 5
8. LIMITATION ON INCENTIVE STOCK OPTIONS................................ 5
9. OPTION AGREEMENTS.................................................... 5
10. OPTION PRICE........................................................ 5
11. TERM AND EXERCISE OF OPTIONS........................................ 6
11.1. Term......................................................... 6
11.2. Option Period and Limitations on Exercise.................... 6
11.3. Change in Control............................................ 7
11.4. Method of Exercise........................................... 8
12. TRANSFERABILITY OF OPTIONS.......................................... 9
12.1. Transferability of Options................................... 9
12.2. Family Transfers............................................. 9
13. TERMINATION OF SERVICE RELATIONSHIP................................. 9
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY.......................... 10
14.1. Death........................................................ 10
14.2. Disability................................................... 10
15. USE OF PROCEEDS..................................................... 11
<PAGE>
16. SECURITIES LAWS..................................................... 11
17. EXCHANGE ACT: RULE 16b-3............................................ 12
17.1. General...................................................... 12
17.2. Compensation Committee....................................... 12
17.3. Restriction on Transfer of Stock............................. 12
18. AMENDMENT AND TERMINATION........................................... 12
19. EFFECT OF CHANGES IN CAPITALIZATION................................. 13
19.1 Changes in Stock.............................................. 13
19.2. Reorganization With Corporation Surviving.................... 13
19.3. Other Reorganizations; Sale of Assets or Stock............... 13
19.4. Adjustments.................................................. 14
19.5. No Limitations on Corporation................................ 14
20. WITHHOLDING......................................................... 14
21. DISCLAIMER OF RIGHTS................................................ 14
22. NONEXCLUSIVITY...................................................... 15
23. NONCOMPETITION...................................................... 15
24. GOVERNING LAW....................................................... 15
<PAGE>
GLOBALINK, INC.
1997 EMPLOYEE STOCK OPTION PLAN
Globalink, Inc., a Delaware corporation (the "Corporation"),
sets forth herein the terms of the 1997 Employee Stock Option Plan (the "Plan")
as follows:
1. PURPOSE
The Plan is intended to advance the interests of the
Corporation by providing eligible individuals, persons an entities (as
designated pursuant to Section 5 hereof) an opportunity to acquire or increase a
proprietary interest in the Corporation, which thereby will create a stronger
incentive to expend maximum effort for the growth and success of the Corporation
and its subsidiaries and will encourage such eligible individuals, persons and
entities to continue to service the Corporation. Each stock option granted under
the Plan is intended to be an Incentive Stock Option within the meaning of
Section 422 of the Code, except (a) to the extent that any such Option would
exceed the limitations set forth in Section 8 hereof and (b) for Options
specifically designated at the time of grant as not being Incentive Stock
Options.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Option Agreements), the following definitions shall apply:
2.1 "Affiliate" means Globalink, Inc. and any company or other
trade or business that is controlled by or under common control with the
Corporation, (determined in accordance with the principles of Section 414(b) and
414(c) of the Code and the regulations thereunder) or is an affiliate of the
Corporation within the meaning of Rule 405 of Regulation C under the 1933 Act.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Code" means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.
2.4 "Committee" means the Compensation Committee of the Board
which must consist of no fewer than two members of the Board and shall be
appointed by the Board.
2.5 "Corporation" means Globalink, Inc.
2.6 "Effective Date" means the date of adoption of the Plan by
the Board.
<PAGE>
2.7 "Employer" means Globalink, Inc. or other Affiliate which
employs the designated recipient of an Option.
2.8 "Exchange Act" means the Securities Exchange Act of 1934,
as now in effect or as hereafter amended.
2.9 "Fair Market Value" means the value of each share of Stock
subject to the Plan determined as follows: if on the Grant Date or other
determination date the shares of Stock are listed on an established national or
regional stock exchange, are admitted to quotation on the National Association
of Securities Dealers Automated Quotation System, or are publicly traded on an
established securities market, the Fair Market Value of the shares of Stock
shall be the closing price of the shares of Stock on such exchange or in such
market (the highest such closing price if there is more than one such exchange
or market) on the trading day immediately preceding the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on such trading day) or, if no sale of
the shares of Stock is reported for such trading day, on the next preceding day
on which any sale shall have been reported. If the shares of Stock are not
listed on such an exchange, quoted on such System or traded on such a market,
Fair Market Value shall be determined by the Board in good faith.
2.10 "Grant Date" means the later of (i) the date as of which
the Committee approves the grant and (ii) the date as of which the Optionee and
the Corporation or Affiliate enter the relationship resulting in the Optionee
being eligible for grants.
2.11 "Immediate Family Members" means the spouse, children and
grandchildren of the Optionee.
2.12 "Incentive Stock Option" means an "incentive stock
option" within the meaning of section 422 of the Code.
2.13 "Option" means an option to purchase one or more shares
of Stock pursuant to the Plan.
2.14 "Option Agreement" means the written agreement evidencing
the grant of an Option hereunder.
2.15 "Optionee" means a person who holds an Option under the
Plan.
2.16 "Option Period" means the period during which Options may
be exercised as defined in Section 11.
<PAGE>
2.17 "Option Price" means the purchase price for each share of
Stock subject to an Option.
2.18 "Plan" means the Globalink, Inc. 1997 Employee Stock
Option Plan.
2.19 "1933 Act" means the Securities Act of 1933, as now in
effect or as hereafter amended.
2.20 "Stock" mean the shares of common stock, par value $.01
per share, of the Corporation.
2.21 "Subsidiary" means any "subsidiary corporation" of the
Corporation within the meaning of Section 425(f) of the Code.
3. ADMINISTRATION
3.1. Board
The Plan shall be administered by the Board which shall have
the full power and authority to take all actions and to make all determinations
required or provided for under the Plan or any Option granted or Option
Agreement entered into hereunder and all such other actions and determinations
not inconsistent with the specific terms and provisions of the Plan deemed by
the Board to be necessary or appropriate to the administration of the Plan or
any Option granted or Option Agreement entered into hereunder. The
interpretation and construction by the Board of any provision of the Plan or of
any Option granted or Option Agreement entered into hereunder shall be final,
binding and conclusive.
3.2. Committee
If the Board so delegates, the Plan may be administered by the
Committee appointed by the Board, which sha l have the full power and authority
to take all actions and to make all determinations required or provided for
under the Plan or any Option granted or Option Agreement entered into hereunder
and all such other actions and determinations not inconsistent with the specific
terms and provisions of the Plan deemed by the Committee to be necessary or
appropriate to the administration of the Plan or any Option granted or Option
Agreement entered into hereunder. The interpretation and construction by the
Committee of any provision of the Plan or of any Option granted or Option
Agreement entered into hereunder shall be final and conclusive.
<PAGE>
3.3. No Liability
No member of the Board or of the Committee shall be liable for
any action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
4. STOCK
The stock that may be issued pursuant to Options granted under
the Plan shall be Stock, which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate 750,000 shares
of Stock, which number f shares is subject to adjustment as provided in Section
20 hereof. If any Option expires, terminates or is terminated for any reason
prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options granted
under the Plan.
5. ELIGIBILITY
Options may be granted under the Plan to (i) any officer or
key employee of the Corporation or any Subsidiary (including any such officer or
key employee who is also a director of the Corporation or any Subsidiary) or
(ii) any other individual, person or entity whose participation in the Plan is
determined to be in the best interests of the Corporation by the Committee. An
individual, person or entity may hold more than one Opt on, subject to such
restrictions as are provided herein.
6. EFFECTIVE DATE AND TERM
6.1. Effective Date
The Plan shall become effective as of the date of adoption by
the Board, subject to stockholders' approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or b proxy, and voting on the
matter, or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Corporation and in a manner that
satisfies the requirements of Rule 16b-3(b) of the Exchange Act; provided,
however, that upon approval of the Plan by the stockholders of the Corporation,
all Options granted under the Plan on or after the effective date shall be fully
effective as if the stockholders of the Corporation had approved the Plan on the
effective date. If the stockholders fail to
<PAGE>
approve the Plan within one year of such effective date, any Options granted
hereunder shall be null, void and of no effect.
6.2. Term
The Plan shall terminate on the date 10 years after the
effective date.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee
may, at any time and from time to time prior to the date of termination of the
Plan, grant to such eligible individuals, persons or entities as the Committee
may determine Options to purchase such number of shares of Stock on such terms
and conditions as the Committee may determine, including any terms or conditions
which may be necessary to qualify such Options as Incentive Stock Options.
Without limi ing the foregoing, the Committee may at any time, with the consent
of the Optionee, amend the terms of outstanding Options or issue new Options in
exchange for the surrender and cancellation of outstanding Options. The date on
which the Committee approves the grant of an Option (or such later date as is
specified by the Committee) shall be considered the date on which such Option is
granted. The maximum number of shares of Stock subject to Options that can be
awarded under the Plan to any individual is 500,000 shares.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in Section 1 hereof)
shall constitute an Incentive Stock Option only to the extent that the aggregate
fair market value (determined at the tim the Option is granted) of the Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under the Plan and all other plans of
the Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements to be executed by the Corporation and the Optionee, in such
form or forms as the Committee shall from time to time determine. Option
Agreements covering Options granted from time t time or at the same time need
not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
<PAGE>
10. OPTION PRICE
The purchase price of each share of Stock subject to an Option
shall be fixed by the Committee and stated in each Option Agreement. In the case
of an Option that is intended to constitute an Incentive Stock Option, the
Option Price shall be not less than the greater of par value or 100 percent of
the Fair Market Value of a share of the Stock covered by the Option on the date
the Option is granted (as determined in good faith by the Committee); provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the Fair
Market Value of a share of the Stock covered by the Option at the time such
Option is granted. In the case of an Option not intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the greater of
par value or 50 percent of the Fair Market Value of a share of the Stock covered
by the Option on the date the Option is granted (as determined in good faith by
the Committee).
11. TERM AND EXERCISE OF OPTIONS
11.1. Term
Each Option granted under the Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of 10 years
from the date such Option is granted, or on such date prior thereto as may be
fixed y the Committee and stated in the Option Agreement relating to such
Option; provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
11.2. Option Period and Limitations on Exercise
Each Option granted under the Plan shall be exercisable in
whole or in part at any time and from time to time over a period commencing on
or after the date of grant of the Option and ending upon the expiration or
termination of the Option, as the Committee shall determine and set forth in the
Option Agreement relating to such Option. Without limitation of the foregoing,
the Committee, subject to the terms and conditions of the Plan, may in its sol
discretion provide that an Option may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding as the
Committee shall determine and set forth in the Option Agreement relating to such
Option. Any such limitation on the
<PAGE>
exercise of an Option contained in any Option Agreement may be rescinded,
modified or waived by the Committee, in its sole discretion, at any time and
from time to time after the date of grant of such Option. Notwithstanding any
other provisions of the Plan, no Option shall be exercisable in whole or in part
prior to the date the Plan is approved by the stockholders of the Corporation as
provided in Section 6.1 hereof.
11.3. Change in Control
In the event of a "Change of Control", al non-vested Options
outstanding under the Plan shall become immediately exercisable. For purposes of
this Plan, "Change of Control" means:
(a) execution by the Corporation of an agreement for the
merger of the Corporation into or with another corporation, the result of which
would be that the stockholders of the Corporation at the time of execution of
such agreement would own less than 49% of the total equity of the corporation
surviving the merger; or
(b) the sale of assets of the Corporation having an aggregate
book value of 40% or more of the total book value of all assets of the
Corporation as shown on the then most recent annual audited financial statement
of the Corporation; or
(c) a change of control of a nature that would be required to
be reported in response to Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, provided that, without limitation, such a
change of control shall be deemed to have occurred if (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 25% of the
Corporation's then outstanding securities; or (ii) during any two (2) year
period, individuals who at the beginning of such period constitute the Board of
Directors, together with any new directors elected or appointed during the
period whose election or appointment resulted from a vacancy on the Board of
Directors caused by the retirement, death, or disability of a director and whose
election or appointment was approved by a vote of at least two-thirds (2/3rds)
of the directors then still in office who were directors at the beginning of the
period, cease for any reason to constitute a majority thereof;
and provided further that no such change of control shall be deemed to have
occurred if prior to such transaction the full Board of Directors of the Company
shall by at least a two-thirds vote have specifically approved such transaction
and determined that such transaction does not constitute a Change in Control for
purposes of Options granted under the Plan
<PAGE>
11.4. Method of Exercise
An Option that is exercisable hereunder may be exercised by
delivery to the Corporation on any business day, at its principal office
addressed to the attention of the Committee, of written notice of exercise,
which notice shall specify the number of shares for which the Option is being
exercised, a d shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised. Payment of the Option Price
for the shares of Stock purchased pursuant to the exercise of an Option shall be
made, as determined by the Committee and set forth in the Option Agreement
pertaining to an Option, (a) in cash or by certified check payable to the order
of the Corporation; (b) through the tender to the Corporation of shares of
Stock, which shares, if acquired from the Corporation, have been owned for at
least six (6) months and which shares shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their
Fair Market Value on the date of exercise; or (c) by a combination of the
methods described in Sections 11.4(a) and 11.4(b) hereof; provided, however,
that the Committee may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions on the use of
shares of Stock to exercise Options as it deems appropriate. Payment in full of
the Option Price need not accompany the written notice of exercise provided the
notice directs that the Stock certificate or certificates for the shares for
which the Option is exercised be delivered to a licensed broker acceptable to
the Corporation as the agent for the individual exercising the Option and, at
the time such Stock certificate or certificates are delivered, the broker
tenders to the Corporation cash (or cash equivalents acceptable to the
Corporation) equal to the Option Price plus the amount (if any) of federal
and/or other taxes which the Corporation may, in its judgment, be required to
withhold with respect to the exercise of the Option. An attempt to exercise any
Option granted hereunder other than as set forth above shall be invalid and of
no force and effect. Promptly after the exercise of an Option and the payment in
full of the Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock certificate
or certificates evidencing such individual's ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares which
were purchased pursuant to the exercise of an Option which is not an Incentive
Stock Option. An individual holding or exercising an Option shall have none of
the rights of a stockholder until the shares of Stock covered thereby are fully
paid and issued to such individual and, except as provided in Section 19 hereof,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date of such issuance.
<PAGE>
12. TRANSFERABILITY OF OPTIONS
12.1. Transferability of Options
Except as provided in Section 12.2, during the lifetime of an
Optionee, only the Optionee (or, in the event of legal incapacity or
incompetency, the Optionee's guardian or legal representative) may exercise an
Option. Except as provided in Section 12.2, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
12.2. Family Transfers.
Subject to the terms of the applicable Option Agreement, an
Optionee may transfer all or part of an Option which is not an Incentive Stock
Option to (i) any Immediate Family Member, (ii) a trust or trusts for the
exclusive benefit of any Immediate Family Member, or (iii) a partnership in
which Immediate Family Members are the only partners, provided that (x) there
may be no consideration for any such transfer, and (y) subsequent transfers of
transferred Options are prohibited except those in accordance with this Section
12.2 or by will or the laws of descent and distribution. Following transfer, any
such Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of
Section 12.2 hereof the term "Optionee" shall be deemed to refer the transferee.
The events of termination of the Service Relationship of Sections 13 and 14
hereof shall continue to be applied with respect to the original Optionee,
following which the Option shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 11.2.
13. TERMINATION OF SERVICE RELATIONSHIP
The Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.2 hereof), in the event of
termination of employment or other relationship of the Optionee wit the
Corporation or a Subsidiary, exercise an Option, in whole or in part, at any
time subsequent to such termination of employment or other relationship and
prior to termination of the Option pursuant to Section 11.1 hereof, either
subject to or without regard to any installment limitation on exercise imposed
pursuant to Section 11.2 hereof, as the Committee, in its sole and absolute
discretion, shall determine and set forth in the Option Agreement. Whether a
leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Plan shall
be determined by the Committee, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment or other
relationship with the Corporation or a Subsidiary shall not be deemed to occur
if
<PAGE>
the Optionee is immediately thereafter employed or commences a relationship
with the Corporation or any other Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. Death
If an Optionee dies while employed by, or in a service
relationship with, the Corporation or a Subsidiary or within the period
following the termination of employment or other relationship during which the
Option is exercisable under Section 13 or 14.2 hereof, the executors,
administrators, legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
11.2 hereof), at any time within one year after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 11.1 hereof, to
exercise any Option held by such Optionee at the date of such Optionee's death,
to the extent such Option was exercisable immediately prior to such Optionee's
death; provided, however, that the Committee may provide by inclusion of
appropriate language in any Option Agreement that, in the event of the death of
an Optionee, the executors, administrators, legatees or distributees of such
Optionee's estate may exercise an Option (subject to the general limitations on
exercise set forth in Section 11.2 hereof), in whole or in part, at any time
subsequent to such Optionee's death and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.2 hereof, as
the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement.
14.2. Disability
If an Optionee terminates employment or other relationship
with the Corporation or a Subsidiary by reason of the "permanent and total
disability" (within the meaning of Section 22(e) (3) of the Code) of such
Optionee, then such Optionee shall have the right (subject to the general
limitations on exercise set forth in Section 11.2 hereof), at any time within
one year after such termination of employment or other relationship and prior to
termination of the Option pursu nt to Section 11.1 hereof, to exercise, in whole
or in part, any Option held by such Optionee at the date of such termination of
employment or other relationship, to the extent such Option was exercisable
immediately prior to such termination of employment or other relationship;
provided, however, that the Committee may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 11.2 hereof), in the event of the
termination of employment or other relationship of the Optionee with the
Corporation or a Subsidiary by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such
<PAGE>
Optionee, exercisean Option, in whole or in part, at any time subsequent to such
termination of employment and prior to termination of the Option pursuant to
Section 11.1 hereof, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 11.2 hereof, as the
Committee, in its sole and absolute discretion, shall determine and set forth in
the Option Agreement. Whether a termination of employment is to be considered by
reason of "permanent and total disability" for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of
Stock pursuant to Options granted under the Plan shall constitute general funds
of the Corporation.
16. SECURITIES LAWS
The Corporation shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or by the
Corporation of any provisions of any law or regulation of any governmental
authority, including, without limitation, any federal or state securities laws
or regulations. If at any time the Corporation shall determine, in its
discretion, th t the listing, registration or qualification of any shares
subject to the Option upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Corporation, and any delay
caused thereby shall in no way affect the date of termination of the Option.
Specifically in connection with the Securities Act, upon exercise of any Option,
unless a registration statement under the Securities Act is in effect with
respect to the shares of Stock covered by such Option, the Corporation shall not
be required to sell or issue such shares unless the Corporation has received
evidence satisfactory to the Corporation that the Optionee may acquire such
shares pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Corporation shall be final and
conclusive. The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act. The Corporation
shall not be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable unless
and until the shares of Stock covered by such Option are registered or are
subject to an available exemption from registration, the
<PAGE>
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
17. EXCHANGE ACT: RULE 16B-3
17.1. General
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3")
(and any successor thereto) under the Exchange Act. Any provision inconsistent
with Rule 16b-3 shall, to the extent permitted by law and determined to be
advisable by the Committee (constituted in accordance with Section 17.2 hereof),
be inoperative and void.
17.2. Compensation Committee
The Committee appointed in accordance with Section 3.2 hereof
shall consist of not fewer than two members of the Board each of whom sh ll
qualify (at the time of appointment to the Committee and during all periods of
service on the Committee) in all respects as a "non-employee director" as
defined in Rule 16b-3.
17.3. Restriction on Transfer of Stock
No director, officer or other "insider" of the Corporation
subject to Section 16 of the Exchange Act shall be permitted to sell Stock
(which such "insider" had received upon exercise of an Option) during the six
months immediately following the grant of such Option.
18. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which Options have
not been granted; provided, however, any amendment or alteration to the Plan s
all be subject to the approval of the Company's stockholders not later than the
annual meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Code Section 162(m)) or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed or quoted, and the Board
may otherwise, in its discretion, determine to submit other such changes to the
Plan to stockholders for approval.
Except as permitted under Section 19 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the
Optionee,
<PAGE>
alter or impair rights or obligations under any Option theretofore granted under
the Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
19.1 Changes in Stock
If the number of outstanding shares of Stock is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other ecurities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares for which Options are outstanding, so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
19.2. Reorganization With Corporation Surviving
Subject to Section 19.3 here f, if the Corporation shall be
the surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
19.3. Other Reorganizations; Sale of Assets or Stock
Upon the dissolution or liquidation of the Corporation, or
upon a merger, consolidation or reorganization of the Corporation with one or
more other entities in which the Corporation is not the surviving entity, or
upon a sale of substantially all of the assets of he Corporation to another
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving entity) approved by the
Board that results in any person or entity (other than persons who are holders
of stock of the Corporation at
<PAGE>
the time the Plan is approved by the Stockholders and other than an Affiliate)
owning 51 percent or more of the combined voting power of all classes of stock
of the Corporation, the Plan and all Options outstanding hereunder shall
continue and/or be assumed, or there shall be a substitution for such Options of
new options covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. The Committee shall send
written notice of an event covered by this Section not later than the time at
which the Corporation gives notice thereof to its stockholders.
19.4. Adjustments
Adjustments under this Section 19 relating to stock or
securities of the Corporation shall be made by the Committee, whose
determination in that respect shall be final and conclusive. No fractional
shares of Stock or units of other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.
19.5. No Limitations on Corporation
The grant of an Option pursuant to the Plan shall not affect
or limit in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
20. WITHHOLDING
The Corporation or a Subsidiary may be obligated to withhold federal
and local income taxes and Social Security taxes to the extent that an Optionee
realizes ordinary income in connection with the exercise of an Option. The
Corporation or a Subsidiary may withhold amounts needed to cover such taxes from
payments otherwise due and owing to an Optionee, and upon demand the Optionee
will promptly pay to the Corporation or a Subsidiary having such obligation any
additional amounts as may be necessary to satisfy such withholding tax
obligation. Such payment shall be made in cash or cash equivalents.
21. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option
Agreement entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ of the Corporation or any
Subsidiary,
<PAGE>
or to interfere in any way with the right and authority of the Corporation or
any Subsidiary either to increase or decrease the compensation of any individual
at any time, or to terminate any employment or other relationship between any
individual and the Corpor tion or any Subsidiary. The obligation of the
Corporation to pay any benefits pursuant to the Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Corporation to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.
22. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the
Plan to the stockholders of the Corporation for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such
other incentive compe sation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
23. NONCOMPETITION
The Corporation may retain the right in an Option Agreement to cause a
forfeiture of the shares or gain realized by an Optionee on account of the
Optionee taking actions in "competition with the Corporation," as defined in the
applicable Option Agreement. Furthermore, the Corporation may, in the Option
Agreement, retain the right to annul the grant of an Option or to cause a
forfeiture of the shares or gain realized by an Optionee if the holder of such
grant was an employee of the Corporation or a Subsidiary and is terminated "for
cause," as defined in the applicable Option Agreement.
24. GOVERNING LAW
This Plan and all Options to be granted hereunder shall be
governed by the laws of the State of Delaware (but not including the choice of
law rules thereof).
<PAGE>
The Plan was duly adopted and approved by the Board on October
14, 1997 and was duly approved by the stockholders of the Corporation on _______
____, 1997.
______________________
Secretary
<PAGE>
