<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use
[X] Definitive Proxy Statement of the Commission Only
[ ] Definitive Additional Materials (as permitted by Rule
[ ] Soliciting Material Pursuant to Rule 14a-6(e)(2))
14a-11(c) or Rule 14a-12
TALX CORPORATION
----------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------------------------
(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE> 2
[LOGO]
NOTICE OF THE ANNUAL MEETING OF
THE SHAREHOLDERS OF
TALX CORPORATION
St. Louis, Missouri
July 17, 1998
TO THE SHAREHOLDERS OF
TALX CORPORATION
The Annual Meeting of the Shareholders of TALX Corporation will be held at
the Holiday Inn Westport, 1973 Craigshire Drive, St. Louis, Missouri 63146 on
September 10, 1998, commencing at 2:00 p.m., St. Louis time, at which meeting
only holders of record of the Company's Common Stock at the close of business
on July 10, 1998 will be entitled to vote, for the following purposes:
1. To elect one director;
2. To approve an amendment to the Company's Amended
and Restated 1994 Stock Option Plan, including an increase in
the number of authorized shares issuable thereunder from
430,000 to 930,000;
3. To approve an amendment to the Company's 1996
Employee Stock Purchase Plan, including an increase in the
number of authorized shares issuable thereunder from 80,000 to
200,000;
4. To ratify the appointment of KPMG Peat Marwick
LLP as the independent auditor of the Company for the 1999
fiscal year;
5. To transact such other and further business, if
any, as properly may be brought the meeting or any adjournment
or postponement thereof.
TALX CORPORATION
/S/ William W. Canfield
-------------------------------------
By: William W. Canfield
Chairman of the Board, President
and Chief Executive Officer
/s/ Craig N. Cohen
Craig N. Cohen
Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
DATE, AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A POSTAGE-PAID
RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
[LOGO]
TALX CORPORATION
1850 BORMAN COURT, ST. LOUIS, MISSOURI 63146
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD SEPTEMBER 10, 1998
---------------------------------------------------------
This proxy statement is furnished to the holders of Common Stock of TALX
Corporation (the "Company" or "TALX") in connection with the solicitation of
proxies for use in connection with the Annual Meeting of the Shareholders to be
held at the Holiday Inn Westport, 1973 Craigshire Drive, St. Louis, Missouri
63146 on September 10, 1998 at 2:00 p.m. St. Louis time, and all adjournments
or postponements thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of the Shareholders. Such holders are hereinafter referred
to as the "Shareholders." The Company is first mailing this proxy statement
and the enclosed form of proxy to Shareholders on or about July 17, 1998.
Whether or not you expect to be present in person at the meeting, you are
requested to complete, sign, date, and return the enclosed form of proxy, and
the shares represented thereby will be voted in accordance with your
instructions. If you attend the meeting, you may vote by ballot. If you do
not attend the meeting, your shares of Common Stock can be voted only when
represented by a properly executed proxy.
Any person giving such a proxy has the right to revoke it at any time
before it is voted by giving written notice of revocation to the Secretary of
the Company, by duly executing and delivering a proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
The close of business on July 10, 1998 has been fixed as the record date
for the determination of the Shareholders entitled to vote at the Annual
Meeting of the Shareholders. As of the record date, 5,322,885 shares of Common
Stock were outstanding and entitled to be voted at such meeting, with 107
holders of record. Shareholders will be entitled to cast one vote on all
matters for each share of Common Stock held of record on the record date.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended March 31, 1998 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be by mail and the expense thereof will be paid
by the Company. In addition, proxies may be solicited by telephone, telefax or
other means, or personal interview, by directors, officers or regular employees
of the Company.
<PAGE> 4
COMMON STOCK OWNERSHIP OF DIRECTORS, NOMINEES AND OFFICERS
The following table sets forth information regarding the amount of the
outstanding Common Stock as of May 1, 1998 beneficially owned by each director
and nominee, the Chief Executive Officer and the three other most highly
compensated executive officers of the Company (each a "Named Executive") and
all of the directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK OUTSTANDING(1)
- ------------------------ ------------------ --------------------
<S> <C> <C>
William W. Canfield 561,986 (2) 10.6%
Craig N. Cohen 17,001 (3) *
Richard F. Ford 682,731 (4) 12.8%
Craig E. LaBarge 3,000 (5) *
Michael E. Smith 21,232 (6) *
Eugene M. Toombs 481,268 (7) 9.0%
John E. Tubbesing 49,509 (8) *
M. Steve Yoakum 1,600 (9) *
All directors and executive officers as a group
(8 persons) 1,818,327(10) 33.5%
</TABLE>
- ----------------
* Represents beneficial ownership of less than one percent.
(1) Percentages are determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(2) Includes 67,459 shares held in trust for Mr. Canfield's children for
which Mr. Canfield's spouse is trustee, and 7,849 shares which Mr.
Canfield may acquire upon the exercise of common stock purchase warrants.
(3) Includes 15,070 shares which Mr. Cohen may acquire upon exercise of
options within 60 days after May 1, 1998.
(4) Includes 660,824 shares beneficially owned by Gateway Venture Partners
II, L.P., the manager of which is Gateway Associates, of which Mr. Ford is
the managing general partner, 1,500 shares which Gateway Venture Partners
II, L.P. may acquire upon exercise of options within 60 days after May 1,
1998, and 20,407 shares which Gateway Partners, L.P. (of which Mr. Ford is
the managing general partner), may acquire upon exercise of common stock
purchase warrants.
(5) Includes 1,500 shares which Mr. LaBarge may acquire upon the exercise of
options within 60 days after May 1, 1998.
(6) Includes 17,012 shares which Mr. Smith may acquire upon the exercise of
options within 60 days after May 1, 1998.
(7) Includes 471,629 shares owned by MiTek, Inc. of which Mr. Toombs is
President and Chief Executive Officer and a director, 3,139 shares which
Mr. Toombs may acquire upon the exercise of common stock purchase warrants
and 1,500 shares which Mr. Toombs may acquire upon the exercise of options
within 60 days after May 1, 1998.
(8) Includes 45,598 shares which Mr. Tubbesing may acquire upon the exercise
of options within 60 days after May 1, 1998.
(9) Includes 1,500 shares which Mr. Yoakum may acquire upon the exercise of
options within 60 days after May 1, 1998.
(10) Includes 115,075 shares which may be acquired upon exercise of options or
warrants within 60 days after May 1, 1998.
2
<PAGE> 5
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person known to the Company to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock as of May 1, 1998:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
- ------------------------------------ -------------------- -----------
<S> <C> <C>
Gateway Venture Partners II, L.P.(2) 660,824 12.4%
William W. Canfield(3) 561,986 10.6%
Merrill Lynch Asset Management(4) 518,750 9.8%
MiTek, Inc.(5) 471,629 8.9%
</TABLE>
_______________________
(1) Percentages are determined in accordance with Rule 13d-3 under the
Exchange Act.
(2) The address of Gateway Venture Partners II, L.P. is 8000 Maryland Avenue,
St. Louis, MO 63105. Richard F. Ford, a director of the Company, is
managing general partner of Gateway Associates, which is the manager of
Gateway Venture Partners II, L.P.
(3) Mr. Canfield's address is c/o TALX Corporation, 1850 Borman Court, St.
Louis, MO 63146. Includes 67,459 shares held in trust for Mr. Canfield's
children for which Mr. Canfield's spouse is trustee, and 7,849 shares
which Mr. Canfield may acquire upon the exercise of common stock purchase
warrants.
(4) The address of Merrill Lynch Asset Management is 800 Scudders Mill Road,
Plainsboro, New Jersey 08536.
(5) The address of MiTek, Inc. is 14515 N. Outer Forty Rd., St. Louis, MO
63017. Eugene M. Toombs, a director of the Company, is President and
Chief Executive Officer and a director of MiTek, Inc.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC"). Directors, executive officers, and greater
than 10 percent beneficial shareholders are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, or written representations from certain reporting persons that no
Forms 5 were required for these persons, the Company believes that all its
directors, executive officers and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during its fiscal year ended March 31, 1998.
3
<PAGE> 6
I. ELECTION OF DIRECTOR
NOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, with the terms of
office of each class ending in successive years. At the Annual Meeting, one
director of the Company is to be elected for a term expiring at the Annual
Meeting in 2001, or until his respective successor has been elected and has
qualified. Certain information with respect to the nominee for election as
director proposed by the Company and the other directors whose terms of office
as directors will continue after the Annual Meeting is set forth below. Each
nominee and director has served in his principal occupation for the last five
fiscal years, unless otherwise indicated. Should the nominee be unable or
unwilling to serve (which is not expected), the proxies (except proxies marked
to the contrary) will be voted for such other person as the Board of Directors
of the Company may recommend.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
- --------------------------------------------------------------------- ---------
<S> <C>
TO BE ELECTED FOR TERM ENDING IN 2001:
Craig E. LaBarge, 47 1994
Mr. LaBarge is Chief Executive Officer and President and a
director of LaBarge, Inc., a publicly held company which is
listed on the American Stock Exchange. LaBarge, Inc. is
engaged in the contract engineering and manufacture of
sophisticated electronic systems and devices and complex
interconnect systems. Mr. LaBarge has held the position of
Chief Executive Officer and President since 1991. Prior to
that, Mr. LaBarge held the position of Chief Operating Officer
and President from 1986-1991 and President of the Electronics
Division from 1979-1986. Mr. LaBarge is a director of Young
Innovations, Inc. Mr. LaBarge holds a Bachelor of Science
degree from St. Louis University.
TO CONTINUE IN OFFICE UNTIL 2000:
Eugene M. Toombs, 56 1994
Mr. Toombs is President and Chief Executive Officer and a
director of MiTek, Inc. ("MiTek"), which is an international
building components corporation with operations in nineteen
countries around the world. Mr. Toombs has held the position
of Chief Executive Officer since January 1, 1993. Prior to
that, Mr. Toombs was President and Chief Operating Officer since
1991 and a Corporate Vice President from 1989 when he joined
MiTek. Other professional services includes five years with
Sonoco Products Co. as a Vice President and President of a
joint-venture company and thirteen years at Boise Cascade
Corporation where he held a variety of general management
positions, including the presidency of a joint-venture company.
Mr. Toombs holds a Bachelor of Science Degree from Fairleigh
Dickinson University and an Executive Education Degree from
Harvard Business School.
Mr. Steve Yoakum, 45 1991
Mr. Yoakum is the Chief Operating Officer and a director of
Rockwood Capital Advisors, L.L.C., a fixed income investment
management firm managing tax exempt assets, a position held
since April 1997. From 1994 through March 1997, he was
Executive Director of The Public School Retirement System of
Missouri. Prior to his role at Public School, Mr. Yoakum held
the position of Executive Director of the Missouri State
Employee's Retirement System ("MOSERS") from 1987 to 1994.
Additionally, Mr. Yoakum served two years as Executive Director
of the Joint Committee on Public Employee Retirement Systems
("JCPERS") and eight years as Assistant Executive Director of the
Missouri Local Government Employees' Retirement System. Mr.
Yoakum holds a Bachelor of Science degree in Public Administration
from the University of Missouri - Columbia.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
- --------------------------------------------------------------------- ---------
<S> <C>
1991 TO CONTINUE IN OFFICE UNTIL 1999:
William W. Canfield, 59 1986
Mr. Canfield has been President and Chief Executive Officer
and a director of the Company since 1986 and has been Chairman
of the Board of Directors since 1988. He had earlier become
Chairman of the Board of EKI, Incorporated ("EKI"), which was
acquired by the Company in fiscal 1994. For approximately 10
years, Mr. Canfield was President of Intech Group Inc. ("Intech
Group"), until its acquisition by the Company in 1996, and from
1985 through 1989, Mr. Canfield was Chairman, and a principal
shareholder of Noetic Technologies Corp., an engineering software
company which was purchased by MacNeal-Schwendler Corporation in
1989. Prior to that, Mr. Canfield was one of two founders of
Financial Data Systems, Inc. which was started in 1968. In 1980,
the company, which provided services and turnkey systems to savings
banks, was purchased by Citicorp. Mr. Canfield is a director of
Jefferson Savings Bancorp, Inc. Mr. Canfield holds a Bachelor of
Science degree in Electrical Engineering from Purdue University
and an M.B.A. degree from Washington University.
Richard F. Ford, 62 1987
Mr. Ford is Managing General Partner of Gateway Associates L.P.,
a venture capital management firm he formed in 1984. From
1976-1983, he was President and Chief Operating Officer of
Centerre Bancorporation (a regional bank holding company later
acquired by Boatmen's Bancshares, Inc. which in turn was recently
acquired by NationsBank Corporation). He joined the lead bank of
Centerre Bancorporation in 1971 as Vice President of Corporate
Lending before becoming President. Mr. Ford has served as Chairman
of the American Bankers Association Commercial Lending Division
and is a director of CompuCom Systems, Inc., D&K Wholesale Drug,
Inc. and Stifel Financial Corp. Mr. Ford holds a Bachelor of Arts
degree in Economics from Princeton University.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met four times during fiscal 1998. Each incumbent
director attended at least 75% of the meetings of the Board and committees on
which he served during 1998.
The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a nominating or similar committee. The Audit
Committee, of which Messrs. Canfield, LaBarge (Chairman) and Yoakum are
members, met twice in the past fiscal year. This committee is responsible for
recommending a public accounting firm to be retained for the coming year and
reviews the work to be done by such firm and the adequacy of the Company's
internal controls. The Compensation Committee, of which Messrs. Canfield, Ford
and Toombs (Chairman) are members, establishes and oversees the compensation
policies of the Company and determines executive compensation. The committee
held three meetings in the past fiscal year. See "Compensation Committee
Report on Executive Compensation."
DIRECTOR COMPENSATION
The Company pays each director a $500 fee for each Board meeting attended
and a $250 fee for each Committee meeting attended, plus expenses. Officers of
the Company do not receive any additional compensation for serving the Company
as members of the Board of Directors or any of its Committees.
5
<PAGE> 8
Pursuant to the Company's Outside Directors' Stock Option Plan (the
"Outside Directors' Plan"), adopted in July 1996, each non-employee director
receives on April 1 of each year an option to purchase 1,500 shares of Common
Stock at an exercise price equal to the fair market value of the Common Stock
on the grant date. The options have a term of six years and become exercisable
one year after date of grant, provided, that no option may be exercised at any
time unless the participant is then an outside director and has been so
continuously since the granting of the option (except as described below), and
provided further that upon a Change in Control (as defined in the Outside
Directors' Plan), the options will become immediately exercisable. Unexercised
options will expire upon the termination of a participant's service as a
director of the Company, unless such termination was by reason of death or
disability or subsequent to a Change in Control, in which case the personal
representative of the participant may exercise any or all of the participant's
unexercised unexpired options (provided such exercise occurs within 12 months
of the date of the participants' death or termination) or, in the case of a
Change in Control, the participant may exercise any or all of the participant's
unexercised unexpired options but not after the term of such options. A total
of 80,000 shares of Common Stock have been authorized for issuance under the
Outside Directors' Plan and 6,000 options were issued pursuant to the Plan on
April 1, 1997. Unless earlier terminated by the Board of Directors, the Plan
will terminate on July 15, 2006.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
William W. Canfield.. 59 Chairman, President and Chief Executive Officer
John E. Tubbesing.... 46 Executive Vice President
Michael E. Smith..... 55 Vice President
Craig N. Cohen....... 39 Chief Financial Officer and Secretary
</TABLE>
William A. Canfield, Chairman, President and Chief Executive Officer. For
more information about Mr. Canfield, please see the appropriate description
above under the above caption "Nominees and Continuing Directors."
John E. Tubbesing, Executive Vice President. Mr. Tubbesing has been a
Vice President of the Company since 1988 and the Executive Vice President of
the Company since 1992 and is currently responsible for Sales and Operations
for all lines of business of the Company other than The Work Number(R). His
experience prior to joining the Company in 1988 was as Vice President,
Marketing for LDXNet, a predecessor to Wiltel, a national fiber optic-based
telecommunications carrier, and as a Sales Manager for McDonnell Douglas
Corporation's computer company, a major worldwide supplier of information
systems to the manufacturing and telecommunications industries. Mr. Tubbesing
holds a Bachelor of Science degree in Marketing and an MBA degree from the
University of Missouri--Columbia.
Michael E. Smith, Vice President. Mr. Smith has been Vice President of
Business Development of the Company since 1994, and Mr. Smith's primary
responsibility is managing the Company's relationships with its strategic
marketing alliances. Previously, from 1989 to 1994, Mr. Smith had product
responsibility for the Company's minicomputer-based voice response system.
Before joining the Company, Mr. Smith served six years with Monsanto Company's
MIS Systems corporate department and two years with the Digital Systems Group
at General Motors' AC Electronics. Mr. Smith holds a Bachelor of Science
degree in Mathematics from Southeast Missouri State University.
Craig N. Cohen, Chief Financial Officer and Secretary. Mr. Cohen has been
Chief Financial Officer of the Company since 1994 and Secretary since 1996.
Prior to that, Mr. Cohen spent twelve years with KPMG Peat Marwick LLP in a
variety of positions, most recently as a Senior Manager in the Audit
Department. Mr. Cohen also managed the information systems consulting practice
of KPMG Peat Marwick LLP's St. Louis office. Mr. Cohen holds a Bachelor of
Science in Accountancy and a Masters of Accountancy from the University of
Missouri--Columbia.
6
<PAGE> 9
EXECUTIVE COMPENSATION
Compensation Summary. The following table sets forth certain summary
information for the fiscal years ended March 31, 1998, 1997 and 1996 concerning
the compensation paid and awarded to each of the Named Executives during such
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ----------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTIONS(#) ($)(3)
------------------ ---- -------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William W. Canfield..... 1998 $220,833 --- --- --- $30,716
Chairman, President and 1997 208,750 --- --- --- 21,624
Chief Executive Officer 1996 200,000 $ 5,000 --- --- 20,072
John E. Tubbesing....... 1998 $149,833 $ 4,115 --- 4,000 $ 3,200
Executive Vice President 1997 138,433 16,729 --- 4,856 3,000
1996 129,433 33,927 --- --- 2,979
Michael E. Smith........ 1998 $104,083 --- --- 2,500 $ 2,212
Vice President 1997 97,500 $ 7,897 --- 3,428 2,135
1996 92,500 29,777(4) --- --- 2,325
Craig N. Cohen.......... 1998 $ 97,667 $ 2,280 --- 2,500 $ 2,086
Chief Financial Officer 1997 89,667 20,160 --- 4,285 2,430
and Secretary 1996 82,913 18,504 --- --- 1,715
</TABLE>
_______________________________
(1) Includes bonuses earned in the reported year, which were paid in the
following year. The payment of bonuses is at the discretion of the
Compensation Committee of the Board of Directors.
(2) The Company has not included in the Summary Compensation Table the value
of incidental personal perquisites furnished by the Company to the Named
Executives since such value did not exceed the lesser of $50,000 or 10% of
the total of annual salary and bonus reported for any of such Named
Executives.
(3) For 1998, represents contributions made by the Company on behalf of the
Named Executives under the Company's 401(k) Plan and $27,516 for Mr.
Canfield's premiums paid by the Company on his life insurance policies.
(4) Includes $19,777 of commissions.
7
<PAGE> 10
Stock Option Awards. The following table presents certain information
concerning stock options granted during fiscal 1998 to each of the Named
Executives. The exercise price for all of the grants of stock options was the
fair market value of the Common Stock on the dates of grant as determined by
the Compensation Committee of the Board of Directors.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
------------------------------------------------------------------------------
NUMBER OF
SHARES % OF TOTAL POTENTIAL REALIZABLE $ VALUE AT
UNDERLYING OPTIONS GRANTED ASSUMED ANNUAL RATES OF STOCK
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION PRICE APPRECIATION FOR
GRANTED FISCAL YEAR PRICE ($/SH) DATE OPTION TERM (2)
------- ----------- ------------ ---- ---------------
Name 5% 10%
---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William W. Canfield -- -- -- -- -- --
John E. Tubbesing 4,000 7.4% 4.00 07/01/03 $5,442 $12,345
Michael E. Smith 2,500 4.7% 4.00 07/01/03 3,401 7,716
Craig N. Cohen 2,500 4.7% 4.00 07/01/03 3,401 7,716
</TABLE>
_______________________________
(1) Represents incentive stock options granted pursuant to the Company's 1994
Stock Option Plan. For a description of certain terms of such stock
options, see "-Benefit Plans-1994 Stock Option Plan" below.
(2) As required by the rules of the SEC, potential values are stated based on
the prescribed assumptions that Common Stock will appreciate in value from
the date of grant to the end of the option term at the indicated rates
(compounded annually) and therefore are not intended to forecast possible
future appreciation, if any, in the price of Common Stock.
The following table sets forth, for the Named Executives, the number of
shares for which stock options were exercised in fiscal 1998, the realized
value or spread (the difference between the exercise price and market value on
the date of exercise) and the number and unrealized spread of the unexercised
options held by each at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR-END (3)
ON REALIZED --------------------------------- ---------------------------
NAME EXERCISE(1) $(2) EXERCISABLE UNEXERCISABLE TOTAL EXERCISABLE UNEXERCISABLE
- ---- -------------------- ------------- ----------- ------------- ----- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
William W. Canfield -- -- -- -- -- -- --
John E. Tubbesing 1,714 10,498 45,598 21,542 67,140 $43,276 $18,614
Michael E. Smith 571 3,497 17,012 9,771 26,783 15,035 7,607
Craig N. Cohen -- -- 15,070 10,285 25,355 11,365 7,607
<CAPTION>
NAME TOTAL
- ---- -----
<S> <C>
William W. Canfield --
John E. Tubbesing $61,800
Michael E. Smith 22,641
Craig N. Cohen 18,972
</TABLE>
_______________________________
(1) Does not include shares purchased by the Named Executives during fiscal
1998 under the Company's 1996 Employee Stock Purchase Plan, as follows:
Mr. Tubbesing - 94 shares; Mr. Smith - 134 shares, and Mr. Cohen - 805
shares.
(2) Reflects the difference between the exercise price and the market price
on the date of exercise.
(3) Reflects the difference between the exercise price and $4.875 per share,
which was the closing price of the Common Stock on March 31, 1998.
8
<PAGE> 11
BENEFIT PLANS
1988 Stock Option Plan. In 1988, the Company adopted a stock option plan
(the "1988 Stock Option Plan"). Under the 1988 Stock Option Plan, the Board of
Directors may from time to time grant stock options to purchase up to 187,109
shares of Common Stock to various key employees who may be designated by the
Executive Committee in its discretion; 98,787 shares are available for future
grants under this plan, although the Board of Directors has determined that no
future grants will be made pursuant to this plan. The purchase price for
options granted pursuant to the 1988 Stock Option Plan are not less than the
fair market value of the Common Stock at the time of the award. The term of
the options granted under the plan is not more than six years.
1994 Stock Option Plan. On August 31, 1994, the Company adopted an
incentive stock option plan which was amended and restated in July 1996 (the
"1994 Stock Option Plan"). Under the 1994 Stock Option Plan, the Board of
Directors may from time to time grant options to purchase up to 430,000 shares
of Common Stock to certain key employees, who will be designated by a committee
selected to administer the Plan; 2,769 shares are available for future grants.
As discussed under Proposal II, the Company is proposing that shareholders
approve an amendment to increase the number of shares of Common Stock issuable
under the Plan and effect certain other amendments to the Plan. The purchase
price of stock options will not be less than fair market value (110% of fair
market value in the case of 10% shareholders), in the case of incentive stock
options, or as determined by the committee in the case of non-qualified stock
options. The purchase price may be paid in cash or, in the discretion of the
committee, shares of Common Stock. Option terms will not be more than ten
years (five years in the case of incentive stock options awarded to 10%
shareholders). Options vest ratably over five years from the date of grant;
provided, that except in the case of death, disability or termination of
employment, no option may be exercised at any time unless the optionee is then
an employee or an officer or director of the Company or a subsidiary and has
been so continuously since the granting of the option. Notwithstanding the
foregoing limitations, in the event of a Change in Control (as defined in the
1994 Stock Option Plan), options will become immediately exercisable and remain
exercisable during the term thereof, notwithstanding a subsequent termination
within twelve months of the date of the Change in Control. Unless earlier
terminated by the Board, the 1994 Stock Option Plan will terminate on July 15,
2006.
1996 Employee Stock Purchase Plan. In July 1996, the Company established
the 1996 Employee Stock Purchase Plan (the "1996 Employee Stock Purchase Plan"
or "ESPP") to provide employees of the Company with an opportunity to purchase
Common Stock through payroll deductions through periodic offerings to be made
during the period from January 1, 1997 to December 31, 2001. A total of 80,000
shares of Common Stock were reserved for issuance under the ESPP, and 3,285 and
34,901 shares of such shares were issued under the ESPP in fiscal year 1997 and
1998, respectively. As discussed under Proposal III, the Company is proposing
that shareholders approve an amendment to increase the number of shares of
Common Stock issuable under the Plan and effect certain other amendments to the
Plan. The ESPP is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code.
The Company will make one or more periodic offerings, each offering to
last three months, provided that a committee of the Board of Directors will
have the power to change the duration without shareholder approval, to
participating employees to purchase stock under the ESPP. Employees will
participate in the ESPP through authorized payroll deductions, which may not
exceed 15% of the compensation such employee receives during each offering
period, but not more than $25,000 in value of stock per year. Amounts withheld
from payroll are applied at the end of each offering period to purchase shares
of Common Stock. Participants may withdraw their contributions at any time
before stock is purchased, and in the event of withdrawal such contributions
will be returned to the participants without interest. The purchase price of
the Common Stock is equal to 85% of the lower of (i) the market price of Common
Stock at the beginning of the applicable offering period or (ii) the market
price of Common Stock at the end of each offering period. All expenses
incurred in connection with the implementation and administration of the ESPP
will be paid by the Company.
In addition, the Company has established a stock option plan for its
outside directors. See "--Director Compensation" above.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
In September 1996, the Company entered into employment agreements with
William W. Canfield (36 months; $225,000 per year), John E. Tubbesing (12
months; $155,000 per year), Michael E. Smith (12 months; $107,000 per year) and
Craig N. Cohen (12 months; $101,000 per year). The term of each agreement as
well as each individual's current annual base salary, is as noted in
parenthesis next to each individual's name. Additionally, each employment
agreement will automatically be extended annually for an additional one-year
period unless prior written notice is delivered to the employee or the Company
by the other 90 days prior to the anniversary date of such employment
agreement. Such employees are also eligible for a performance bonus based on a
formula recommended by a committee of the Board of Directors and approved by
the Board of Directors. Each employment agreement contains confidentiality
provisions that extend indefinitely after termination of employment as well as
non-solicitation and non-competition provisions that extend for one year after
termination of employment. If the employment agreement is terminated by the
Company without "cause" (as defined in the agreement, but including, without
limitation, breach by the employee of the employment agreement) or by the
employee for "good reason" (as defined in the agreement, but including, without
limitation, breach of the employment agreement by the Company, the reduction of
salary, benefits or other perquisites provided to employee under the agreement
and failure by the Company to agree to an extension of such employee's
employment agreement), the Company would be obligated to pay the employee his
annual base salary plus a bonus (based on their estimated bonus for the year of
termination) over the period (the "Continuation Period") which is equal to the
original term of his agreement and which period commences on the date of early
termination of such employee, and such amount shall be payable ratably over
such Continuation Period, as well as to continue his employee benefits over
such Continuation Period; however, if his employment agreement is terminated
otherwise, the employee is only entitled to be paid through the date of his
early termination. Further, if within 12 months of a "Change of Control" of the
Company the employee, under certain circumstances, is terminated or resigns, (a)
in the case of Mr. Canfield, he will be entitled to (i) a lump-sum cash payment
equal to $1 less than three times an amount equal to the average annual
compensation received by Mr. Canfield from the Company reported on his Form W-2
for the five calendar years preceding the calendar year of the Change of Control
and (ii) the continuation of certain health insurance benefits for a three-year
period and (b) in the case of Mr. Tubbesing, Mr. Smith and Mr. Cohen, each will
be entitled to (i) a lump-sum cash payment equal to 100% of their respective
annual base salaries plus, (ii) a lump sum cash payment equal to their
anticipated annual bonus (based on their estimated bonus for the year of
termination), (iii) the continuation of certain health insurance and other
employee benefits for a one-year period and (iv) payment for certain
outplacement services. Additionally, the Company has agreed to make certain
"gross-up" payments in the event any excise taxes are imposed pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended or replaced,
related to the employment agreements. The term "Change of Control" shall mean
(i) a change of control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, or any comparable successor provisions. Without limiting the foregoing, a
"Change of Control" shall also include, without limitation, (i) the purchase or
other acquisition by any person or group of beneficial ownership of 25% or more
of either the then outstanding shares of common stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote in
the election of directors, (ii) when individuals who, as of the date of the
employment agreement, constitute the Board of Directors of the Company cease for
any reason to constitute at least two-thirds of the Board of Directors, provided
that generally persons who are approved by the incumbent Board will be deemed a
member thereof, and (iii) approval by the shareholders of the Company of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or of the sale
of all or substantially all of the assets of the Company. All four employment
agreements contain an arbitration provision.
10
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors, which is comprised of two
non-employee directors and one employee director. The Compensation Committee
works with management to develop compensation plans for the Company and is
responsible for determining the compensation of each executive officer and
recommending such compensation to the Board of Directors.
The Company's executive compensation program is intended to align
executive compensation with the Company's business objectives and the
executive's individual performance and to enable the Company to attract, retain
and reward executive officers who contribute, and are expected to continue to
contribute, to the Company's long-term success. In establishing executive
compensation, the Compensation Committee is guided by the following principles:
(i) the total compensation payable to executive officers should be
sufficiently competitive with the compensation paid by other high growth
companies in the interactive communications industry for officers in comparable
positions so that the Company can attract and retain qualified executives and
(ii) individual compensation should include components which reflect both the
financial performance of the Company and the performance of the individual.
The compensation of the Company's executive officers consists of a
combination of base salary, bonuses and equity-based compensation. In general,
the Company's compensation program attempts to limit increases in salaries and
favors bonuses based on revenues, operating profit and individual merit. The
Compensation Committee believes that executive compensation should be designed
to motivate executives to increase shareholder value and further believes that
executive officers can best increase shareholder value by managing the revenues
and operating profit of the Company and by conceiving, developing and
positioning the leading products and services in the Company's chosen markets.
Compensation payments in excess of $1 million to the Chief Executive
Officer or the other three most highly compensated executive officers are
subject to a limitation of deductibility for the Company under Section 162(m)
of the Internal Revenue Code of 1986, as amended. Certain performance-based
compensation is not subject to the limitation on deductibility. The
Compensation Committee does not expect cash compensation to its Chief Executive
Officer or any other executive officer in the foreseeable future to be in
excess of $1 million.
BASE SALARY
The Compensation Committee sets the base salary for executives annually,
based upon a review of the salaries for comparable positions in technology
companies in the Company's industry, the historical compensation levels
of the Company's executives and the individual performance of the executives in
the preceding year. In fiscal 1998, the base salaries of the executive officers
were increased at an average rate of 6.8%.
MERIT BONUS PROGRAM
Each year the Compensation Committee adopts management incentive plans for
the executive officers, which reflect the Compensation Committee's belief that
a portion of each executive officer's compensation should be tied to the
achievement by the Company of its revenue and profit goals and by each
executive officer of his individual objectives as determined by the
Compensation Committee. Merit bonus goals based on the fiscal 1998 operating
plan were approved by the Board of Directors at the beginning of the fiscal
year. Quarterly, and at the end of the year, the Compensation Committee
allocated merit bonuses to individual executives based on the executive's
performance relative to his or her performance objectives. Under the plans,
executive officers were entitled to receive an average bonus of approximately
40% of base salary if the Company achieved its goals for fiscal 1998 and the
individual executive met or exceeded his objectives. In fiscal 1998, the
executive officers received an average bonus of 1.1% of base salary.
11
<PAGE> 14
STOCK-BASED COMPENSATION
Awards of stock options under the Company's stock option plans are
intended to closely tie the long-term interests of the Company's executives and
its shareholders and to assist in the retention of executives. The
Compensation Committee selects the executive officers, if any, to receive stock
options and determines the number of shares subject to each option. However,
all grants of stock options are ultimately authorized by the Company's Board of
Directors. The Compensation Committee's determination of the size of option
grants is generally intended to reflect an executive's position with the
Company and his or her contributions to the Company. Options generally have a
five-year vesting period to encourage key employees to continue in the employ
of the Company. The Compensation Committee reviews the outstanding unvested
options of the key executives from time to time and may grant additional
options to encourage the retention of key executives. Options for 9,000 shares
were granted to executive officers in fiscal 1998 to reward the executive
officers for their performance in fiscal 1997 and to establish appropriate
incentives for these key executives. Options for 130,000 shares, including
100,000 granted to Mr. Canfield, were granted to executive officers on May 29,
1998, to establish appropriate incentives for these executives.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's compensation generally is based on the same
policies and criteria as the other executive officers. Although Mr. Canfield
is a member of the Compensation Committee, he does not participate in
deliberations concerning his own compensation or in setting his performance
objectives or goals. Mr. Canfield's base salary for 1998 was increased by
approximately 5% over his 1997 salary based upon the extent to which the
Company achieved its goals in 1997 and the Compensation Committee's view of Mr.
Canfield's role in that achievement. Mr. Canfield received no merit bonus or
stock option awards in fiscal 1998.
******
The foregoing report is provided by the following directors, who were
members of the Compensation Committee on March 31, 1998:
William W. Canfield
Richard F. Ford
Eugene M. Toombs, Chairman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Canfield is the Chairman, President and Chief Executive Officer of the
Company.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph sets forth a comparison for the period beginning
October 17, 1996 (the date the Company's Common Stock began trading on The
Nasdaq National Market) and ending March 31, 1998, of the cumulative total
return on a $100.00 investment in the Company's Common Stock, based on the
market price of the Common Stock, with the cumulative total return, assuming
reinvestment of dividends, on an investment of $100.00 for the same period in
companies on The Nasdaq Stock Market (U.S.) and on the Nasdaq Computer and Data
Processing Index. The indices are included for comparative purposes only.
They do not necessarily reflect management's opinion that such indices are an
appropriate measure of the relative performance of the Company's Common Stock
and are not intended to forecast or be indicative of future performance of the
Common Stock.
[PERFORMANCE GRAPH HERE]
COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN*
AMONG TALX CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
*$100 INVESTED ON 10/17/96 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
10/17/96 3/31/97 3/31/98
- --------------------------------------------------------------------
<S> <C> <C> <C>
TALX CORPORATION 100 86 54
- --------------------------------------------------------------------
NASDAQ STOCK MARKET (U.S.) 100 98 149
- --------------------------------------------------------------------
NASDAQ COMPUTER & DATA PROCESSING 100 95 167
- --------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
II. APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED
AND RESTATED 1994 STOCK OPTION PLAN
Shareholders are being asked to approve an amendment (the "Amendment") to
the Company's 1994 Amended and Restated Stock Option Plan (the "Option Plan"),
including, among other things, to increase the number of shares of Common Stock
reserved for issuance thereunder from 430,000 shares to 930,000 shares (an
increase of 500,000 shares). The purpose of the Amendment is, among other
things, to secure sufficient additional shares under the Option Plan so that
the Company can continue to make awards. The Board of Directors believes that
the Company's ability to grant options under the Option Plan is a valuable and
necessary compensation tool that plays an important role in the Company's
efforts to attract and retain employees of outstanding ability and aligns the
long-term financial interests of the Company's key employees with the financial
interests of the Company's shareholders.
As of March 31, 1998, options to purchase 287,349 shares of Common Stock
were outstanding under the Option Plan, and options to purchase 133,769 shares
of Common Stock were available for future grants. The Board of Directors
approved the proposed Amendment to the Stock Option Plan on May 29, 1998 to be
effective on shareholder approval. The Board of Directors also approved an
additional award of options to purchase 211,000 shares on May 29, 1998, of
which 80,000 shares were awarded to Mr. Canfield contingent upon shareholder
approval of the proposed Amendment. As a result, only 2,769 shares are
available for future grants. The Company believes an increase in the number of
shares available for issuance under the Option Plan is necessary to maintain a
competitive equity compensation program.
Shareholder approval of the Amendment requires the affirmative vote of a
majority of shares of Common Stock that are present in person or represented by
proxy and entitled to vote at the Annual Meeting. Shares represented by
proxies which are marked "abstain" with respect to this proposal will be
counted for the purpose of determining the number of shares represented by
proxy at the Annual Meeting. Such proxies will thus have the same effect as if
the shares represented thereby were voted against this proposal. Broker
non-votes will be counted towards a quorum but will not be counted for any
purpose in determining whether this proposal has been approved.
Below is a description of the principal provisions of the Option Plan,
assuming approval of the Amendment. This description does not purport to be
complete, and it is qualified in its entirety by reference to the full text of
the Option Plan.
SUMMARY OF THE OPTION PLAN
The Board of Directors originally adopted the 1994 Stock Option Plan in
February 1994, and it was subsequently approved by the Company's shareholders.
The 1994 Stock Option Plan was amended and restated by the Board of Directors
in July 1996 to, among other things, increase the number of shares of Common
Stock (the "Shares") authorized for issuance thereunder from 270,000 to
430,000. The Company's shareholders approved such amendments in July 1996.
The Plan is intended as an incentive to, and to encourage ownership of the
stock of the Company by, certain key management employees of the Company and
its subsidiaries. It is intended that some options granted under the Option
Plan will qualify as Incentive Stock Options ("Incentive Stock Options" or
"ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and that other options granted hereunder will not so
qualify.
SECURITIES SUBJECT TO THE OPTION PLAN. A total of 930,000 Shares would be
allocated to the Option Plan and would be reserved for the grant of options
under the Option Plan, subject to subsequent adjustments as described below
under "Share Adjustments Upon Changes in Capitalization or Corporate
Acquisitions." The maximum number of Shares with respect to which any
individual may be granted options in any calendar year would be increased from
430,000 to 930,000.
ADMINISTRATION. The Plan is administered by a committee appointed by the
Board of Directors (the "Committee"), which subject to the express provisions
of the Option Plan, has plenary authority, in its discretion, to determine the
individuals to whom, and the time or times at which, options shall be granted
and the number of shares to be subject to each option. Subject to the express
provisions of the Option Plan, the Committee also has plenary authority to
interpret the Option Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective stock option agreements (which need not be identical) and to make
all other determinations necessary or advisable for the administration of the
Option Plan.
ELIGIBILITY FOR AND TERMS OF OPTIONS. Options may be granted to key
employees of the Company or its subsidiaries. The term "key employees" is not
limited to, but includes, officers who are employees whether or not they are
directors, employees who are employed in positions of management, and such
other employees as the Committee determines. The term "subsidiary" means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the option each
of the corporations other than
14
<PAGE> 17
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain, or such other meaning as may be hereafter ascribed
to it in Section 424 of the Code.
The purchase price of the Shares under each Option which is an ISO will
not be less than 100% of the fair market value of the stock at the time of the
granting of the option (110% in the case of an option granted to a holder of
10% or more of the then outstanding Common Stock of the Company (a "10%
Owner")). The Committee will determine fair market value and may adopt such
criterion for such determination as it may determine to be appropriate;
provided, that if the Shares are included on The Nasdaq National Market, the
fair market value will be the mean between the high and the low sales prices on
the date as of which the Common Stock is to be valued, or if the Shares have
not been traded on such date, the mean between the high and low sales
prices on such market on the first day prior thereto on which the Shares are
traded. The purchase price of the Shares under each option which is not an ISO
will be determined by the Committee.
The maximum aggregate fair market value (determined at the time an option
is granted in the same manner as described in the prior paragraph) of the
Common Stock with respect to which ISOs are exercisable for the first time by
any optionee during any calendar year (under all plans of the Company and its
subsidiaries) shall not exceed $100,000.
PAYMENT UPON EXERCISE OF OPTIONS. The purchase price is to be paid in
full upon the exercise of the option, either (i) in cash, (ii) in the
discretion of the Committee, by tender of shares of the Common Stock of the
Company, already owned by the optionee having a fair market value equal to the
cash exercise price of the option being exercised or (iii) in the discretion of
the Committee, by any combination of the payment methods specified in clauses
(i) and (ii) hereof; provided, however, that no shares of Common Stock may be
tendered in exercise of an option if such shares were acquired by the optionee
through the exercise of an ISO unless (i) such shares have been held by the
optionee for at least one year and (ii) at least two years have elapsed since
such ISO was granted.
EXERCISE OF OPTIONS. The options granted under the Option Plan will
contain certain restrictions on the exercise thereof as described below. The
term of each option will be not more than ten years from the date of granting
thereof (five years in the case of an ISO granted to a 10% Owner) or such
shorter period as is described below under "Termination of Employment;"
provided, that the right to exercise an option will be restricted so that no
shares may be purchased during the first year of the term thereof, that at any
time during the term of the option after the end of the first year from the
date of the grant, the optionee may purchase up to 20% of the total number of
shares to which the option relates; that at any time during the term of the
option after the end of the second year from the date of grant the optionee may
purchase up to an additional 20% of the total number of shares to which the
option relates; that at any time during the term of the option after the end of
the third year from the date of grant, the optionee may purchase up to an
additional 20% of the total number of shares to which the option relates; that
at any time during the term of the option after the end of the fourth year from
the date of grant the optionee may purchase up to an additional 20% of the
total number of shares to which the option relates; and that at any time during
the term of the option after the end of the fifth year from the date of the
grant, the optionee may purchase an additional 20% of the total number of
shares to which the option relates so that the optionee may purchase 100% of
the total number of shares to which the option relates after five years from
the date of grant; provided, further that except as described below under
"Termination of Employment" and "Death or Disability," no option may be
exercised at any time unless the optionee is then an employee or an officer or
director of the Company or a subsidiary and has been so continuously since the
granting of the option.
Notwithstanding the foregoing, in the event of a Change in Control, the
option holder will be entitled to purchase, at any time thereafter and during
the term thereof (subject, however, to the provisions described below under
"Termination of Employment"), the entire number of shares to which the option
relates.
As defined in the Option Plan, the term "Change in Control" means:
(i) The purchase or other acquisition by any person, entity or group
of persons, within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(excluding, for this purpose, the Company or its subsidiaries or any
employee benefit plan of the Company or its subsidiaries), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
Company's then-outstanding voting securities entitled to vote generally
in the election of directors in any transaction or series of
transactions; or
(ii) When individuals who, as of June 30, 1996, constitute the Board
of Directors (the "Continuing Directors"), cease for any reason to
constitute at least a majority of the Board of Directors, provided that
any person who becomes a director subsequent to the date thereof whose
election or nomination for election by the Company's shareholders, was
approved in advance by a vote of at least three-quarters of the
Continuing Directors (other than a nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Company, as such terms are
15
<PAGE> 18
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of this Paragraph, considered as though such
person were a Continuing Director; or
(iii) Approval by the shareholders of the Company of (a) a
reorganization, merger or consolidation with respect to which persons who
were shareholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own more than 50% of the combined voting power of the voting securities
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated corporation's then-outstanding voting
securities, or (b) a liquidation or dissolution of the Company or of the
sale of all or substantially all of the assets of the Company; or
(iv) Any other event that a majority of the Continuing Directors, in
their sole discretion, shall determine constitutes a Change of Control.
TERMINATION OF EMPLOYMENT. Except as described under "Death or
Disability" below, any option issued under the Option Plan may only be
exercised during the period prior to the holder's termination of service with
the Company or a subsidiary, except that (i) if such termination follows a
Change in Control, the holder may exercise any or all of the holder's
unexercised unexpired options, but not after the term of the option, provided
such termination is within twelve months of the date of the Change in Control,
and (ii) if the service of an optionee terminates with the consent and approval
of the holder's employer, the Committee in its absolute discretion may permit
the optionee to exercise the option, to the extent that the holder was entitled
to exercise it at the date of such termination of service, at any time within
three months after such termination, but not after ten years from the date of
the granting thereof (five years in the case of an option granted to a 10%
Owner). Options granted under the Option Plan will not be affected by any
change of employment so long as the holder continues to be an employee of the
Company or a subsidiary. The option agreements may contain such provisions as
the Committee will approve with reference to the effect of approved leaves of
absence.
DEATH OR DISABILITY. In the event of the death of an individual to whom
an option has been granted under the Option Plan, while he or she is employed
by the Company (or a subsidiary) or within three months after termination of
service (or one year in the case of the termination of service of an option
holder who is disabled as provided below) the option theretofore granted may be
exercised, to the extent exercisable at the date of death, by a legatee or
legatees under the option holder's last will, or by personal representatives or
distributees, at any time within a period of one year after death, but not
after ten years from the date of granting thereof (five years in the case of an
option granted to a 10% Owner), and only if and to the extent that the option
was exercisable at the date of death. If the holder of an option terminates
service on account of disability, the holder may exercise such option to the
extent the holder was entitled to exercise it at the date of such termination
at any time within one year of the termination of employment but not after ten
years from the date of the granting thereof (five years in the case of an
option granted to a 10% or more owner of the Company). For this purpose a
person will be deemed to be disabled if he or she is permanently and totally
disabled within the meaning of Section 422(c)(6) of the Code, which means that
he or she is unable to engage in any substantial gainful activity by reason of
any medically determined physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a period of
not less than 12 months. A person will be considered disabled only if he or
she furnishes such proof of disability as the Committee may require.
NON-TRANSFERABILITY OF OPTIONS. Each option granted under the Option Plan
will, by its terms, be non-transferable otherwise than by will or the laws of
descent and distribution and an option may be exercised, during the lifetime of
the holder thereof, only by such holder.
SHARE ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CORPORATE
ACQUISITIONS. The option agreements may contain such provisions as the
Committee determines to be appropriate for the adjustment of the number and
class of shares subject to each outstanding option, the option price amounts in
the event of changes in the outstanding Common Stock by reason of stock
dividends, recapitalizations, mergers, consolidations, spin-offs, split-offs,
split-ups, combinations or exchanges of shares and the like, and, in the event
of any such change in the outstanding Common Stock, the aggregate number and
class of shares available under the Option Plan and the maximum number of
shares as to which options may be granted to any individual will be
appropriately adjusted by the Committee, whose determination shall be
conclusive. In the event the Company or a subsidiary enters into a transaction
described in Section 424(a) of the Code with any other corporation, the
Committee may grant options to employees or former employees of such
corporation in substitution of options previously granted to them upon such
terms and conditions as is necessary to qualify such grant as a substitution
described in Section 424(a) of the Code.
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<PAGE> 19
DURATION; AMENDMENT. The Plan will terminate on July 15, 2006, but
options outstanding at that time will continue in full force and effect and
will not be affected thereby. The Board of Directors may at any time terminate
the Option Plan, or make such modifications of the Option Plan as it shall deem
advisable; provided, however, that the Board of Directors or the Committee may
not, without further approval by the holders of Common Stock, make any
modifications which, by applicable law, require such approval. No termination
or amendment of the Option Plan may, without the consent of the optionee to
whom any option shall theretofore have been granted, adversely affect the
rights of such optionee under such option. The Committee may, but need not,
amend option agreements existing as of the effective date of the amendments to
the Option Plan to incorporate the provisions thereof.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of
the Option Plan, based on current income tax laws, regulations and rulings.
Any deduction to which the Company may otherwise be entitled under this Plan
may be limited by Section 162(m) of the Code. (See "Limitation on Deduction"
below.)
INCENTIVE STOCK OPTIONS. Subject to the effect of the alternative minimum
tax, discussed below, an optionee does not recognize income on the grant of an
ISO. If an optionee exercises an ISO in accordance with the terms of the
option and does not dispose of the Shares acquired within two years from the
date of the grant of the option nor within one year from the date of exercise,
the optionee will not realize any income by reason of the exercise, and the
Company will be allowed no deduction by reason of the grant or exercise. The
optionee's basis in the Shares acquired upon exercise will be the amount paid
upon exercise. Provided the optionee holds the Shares as a capital asset at
the time of sale or other disposition of the Shares, his gain or loss, if any,
recognized on the sale or other disposition will be capital gain or loss. The
amount of his gain or loss will be the difference between the amount realized
on the disposition of the Shares and his basis in the Shares.
If an optionee disposes of the Shares within two years from the date of
grant of the option or within one year from the date of exercise ("Early
Disposition"), the optionee will realize ordinary income at the time of such
Early Disposition, which will equal the excess, if any, of the lesser of (i)
the amount realized on the Early Disposition, or (ii) the fair market value of
the Shares on the date of exercise, over the optionee's basis in the Shares.
The Company will be entitled to a deduction in an amount equal to such
income. The excess, if any, of the amount realized on the Early Disposition of
such Shares over the fair market value of the Shares on the date of exercise
will be long-term or short-term capital gain, depending upon the holding period
of the Shares, provided the optionee holds the Shares as a capital asset at the
time of Early Disposition. If an optionee disposes of such Shares for less
than his basis in the Shares, the difference between the amount realized and
his basis will be a long-term or short-term capital loss, depending upon the
holding period of the Shares, provided the optionee holds the Shares as a
capital asset at the time of disposition.
The excess of the fair market value of the Shares at the time the ISO is
exercised over the exercise price for the Shares is treated as an item of
adjustment for purposes of determining whether the alternative minimum tax
applies ("Stock Option Adjustment").
NON-QUALIFIED STOCK OPTION. Non-Qualified Stock Options ("NQOs") are
those options which do not qualify for the special tax treatment accorded to
ISOs under the Code. Although an optionee does not recognize income at the
time of the grant of the option, he recognizes ordinary income upon the
exercise of a NQO in an amount equal to the excess, if any, of the fair market
value of the Shares on the date of exercise of the option over the amount of
cash paid for the Shares.
As a result of the optionee's exercise of a NQO, the Company will be
entitled to deduct as compensation an amount equal to the amount included in
the optionee's gross income. The Company's deduction will be taken in the
Company's taxable year in which the option is exercised.
The excess of the fair market value of the Shares on the date of exercise
of a NQO over the exercise price is not treated as a Stock Option Adjustment.
TAXATION OF PREFERENCE ITEMS. Section 55 of the Code imposes an
Alternative Minimum Tax equal to the excess, if any, of (i) 26% of the
optionee's "alternative minimum taxable income" up to $175,000 ($87,500 in the
case of married taxpayers filing separately) and 28% of "alternative minimum
taxable income" over $175,000 ($87,500 in the case of married taxpayers filing
separately) over (ii) his "regular" federal income tax. Alternative minimum
taxable income is determined by adding the optionee's items of tax preference
to the optionee's taxable income and then subtracting certain allowable
deductions and an exemption amount. The optionee's taxable income for purposes
of this calculation includes the Stock Option Adjustment. The exemption amount
is $33,750 for single taxpayers, $45,000 for married taxpayers filing jointly
and $22,500 for married taxpayers filing separately. However, these exemption
amounts are phased out beginning at certain levels of alternative minimum
taxable income.
17
<PAGE> 20
LIMITATION ON DEDUCTION. Section 162(m) of the Code provides that no
deduction will be allowed for certain remuneration with respect to a covered
employee to the extent such remuneration exceeds $1,000,000.00. Under
regulations issued by the Internal Revenue Service, an employee is a covered
employee if his compensation is required to be reported under the SEC's
disclosure rules and he or she is employed as of the last day of the taxable
year. Compensation to a covered employee arising from exercise of an NQO or
from an Early Disposition of Shares acquired by exercise of an ISO is subject
to this limitation.
WITHHOLDING. The Plan provides that the Company may, at the time any
distribution is made under the Option Plan, whether in cash or in Shares,
withhold from such payment any amount necessary to satisfy federal and state
income tax withholding requirements with respect to such distribution. Such
withholding may be in cash or in Shares.
GENERAL. The foregoing statement is only a summary of certain federal
income tax consequences of the Option Plan and is based on the Company's
understanding of present federal tax laws and regulations. Since tax
regulations may change or interpretations may differ, each individual should
consult his or her tax advisor regarding the tax consequences related to
participation in the Option Plan.
STOCK OPTION AWARDS
The following table shows options which have been granted under the Option
Plan to date to each of the Named Executives and certain specified groups
(including options which have been exercised and options awarded contingent on
shareholder approval of the Amendment):
<TABLE>
<CAPTION>
Number of Exercise Price
Name and Position Shares Per Share (1)
----------------- ------ -------------
<S> <C> <C>
WILLIAM W. CANFIELD.............................................. --- (4) ---
Chairman, President and Chief 100,000 (5) $5.50 (6)
Executive Officer
JOHN E. TUBBESING.................................................. 47,427 (4) $4.19 (7)
Executive Vice President 10,000 (5) $5.00 (7)
MICHAEL E. SMITH.................................................... 20,213 (4) $4.40 (7)
Vice President 10,000 (5) $5.00 (7)
CRAIG N. COHEN....................................................... 21,070 (4) $4.51 (7)
Chief Financial Officer and Secretary 10,000 (5) $5.00 (7)
Executive Officer Group (2).................................... 88,710 (4) $4.31 (7)
130,000 (5) $5.38 (7)
Non-Executive Officer Employee Group (3).......... 207,521 (4) $4.84 (7)
81,000 (5) $5.00 (7)
</TABLE>
___________________________
(1) The closing price of the Company's Common Stock as reported on the Nasdaq
National Market on May 1, 1998 was $4.375.
(2) Consists of four persons.
(3) Consists of 106 persons.
(4) Incentive and non-qualified stock options granted prior to March 31,
1998.
(5) Incentive stock options granted on May 29, 1998. Of these 80,000 of Mr.
Canfield's are contingent upon the approval of the proposed amendment to
the Company's Amended and Restated 1994 Stock Option Plan.
(6) Exercise price is 110% of the fair market value of the stock at the time
of the granting of the option.
(7) Exercise prices shown are weighted averages of the actual exercise prices
for stock options granted to the individuals or members of the groups, as
applicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT
TO THE COMPANY'S 1994 AMENDED AND RESTATED STOCK OPTION PLAN.
18
<PAGE> 21
III. APPROVAL OF AMENDMENT TO THE COMPANY'S
1996 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors originally adopted the Company's 1996 Employee
Stock Purchase Plan (the "Stock Purchase Plan") in July 1996, and the Company's
shareholders approved the Stock Purchase Plan in July 1996. In May 1998, the
Board of Directors adopted an amendment to the Stock Purchase Plan, to be
effective upon shareholder approval, to increase the number of shares of Common
Stock reserved for issuance thereunder by 120,000 shares from 80,000 shares (of
which 38,186 shares had been issued as of May 1, 1998) to 200,000 shares. This
amendment is intended to ensure that the Company can continue to provide such
incentives to its employees at levels determined appropriate by the Board of
Directors. Purchases of the Common Stock under the Stock Purchase Plan are
made at the discretion of the participants therein. Accordingly, future
purchases under the Stock Purchase Plan are not yet determinable.
At the Annual Meeting, the shareholders will be requested to consider and
approve the amendment to the Stock Purchase Plan increasing the number of
shares of Common Stock authorized for issuance thereunder by 120,000 shares
from 80,000 shares to 200,000 shares. Shareholder approval of the amendment
requires the affirmative vote of a majority of shares of Common Stock that are
present in person or represented by proxy and entitled to vote at the Annual
Meeting. Shares represented by proxies which are marked "abstain" with respect
to this proposal will be counted for the purpose of determining the number of
shares represented by proxy at the Annual Meeting. Such proxies will thus have
the same effect as if the shares represented thereby were voted against this
proposal. Broker non-votes will be counted towards a quorum but will not be
counted for any purpose in determining whether this proposal has been approved.
Below is a description of the principal provisions of the Stock Purchase
Plan, assuming approval of the above amendment. This description does not
purport to be complete, and it is qualified in its entirety by reference to the
full text of the Stock Purchase Plan.
SUMMARY OF THE STOCK PURCHASE PLAN
The purpose of the Stock Purchase Plan is to provide employees a continued
opportunity to purchase stock of the Company through certain periodic offerings
to be made during the period commencing on the later of January 1, 1997 or the
beginning of the fiscal quarter after completion of the Company's initial
public offering and ending December 31, 2001.
ADMINISTRATION. The Plan is administered by a committee ("Committee")
consisting of at least three members appointed by the Board of Directors either
from members of senior management, from the Board of Directors, or a
combination thereof. Members of the Committee will not be eligible to
participate in the Stock Purchase Plan. The Committee will have authority to
make rules and regulations for the administration of the Stock Purchase Plan;
its interpretations and decisions with regard thereto shall be final and
conclusive.
SECURITIES SUBJECT TO THE STOCK PURCHASE PLAN. A total of 200,000 Shares
in the aggregate would be approved for the Stock Purchase Plan, if the
amendment is approved. In the event of a subdivision of the outstanding shares
of Common Stock or the payment of a stock dividend, the number of Shares
approved for the Stock Purchase Plan will be increased proportionately, and
such other adjustments will be made as may be deemed equitable by the Board of
Directors. In the event of any other change affecting the Common Stock, such
adjustments will be made as may be deemed equitable by the Board of Directors
to give proper effect to such event.
ELIGIBILITY. Except as described below, all employees of the Company or
its subsidiaries are eligible to participate in the Stock Purchase Plan in
accordance with such rules as may be prescribed by the Committee (as defined
above) from time to time, which rules, however, may neither permit nor deny
participation in the Stock Purchase Plan contrary to the requirements of the
Code and the regulations promulgated thereunder. No member of the Committee
may participate in the Stock Purchase Plan. No employee may participate in an
offering if such employee, immediately after the commencement of such offering,
owns 5% or more of the total combined voting power or value of the stock of the
Company or any subsidiary. For purposes of the preceding sentence, the rules
of Section 424(d) of the Code will apply in determining the stock ownership of
an employee, and stock that the employee may purchase under outstanding options
will be treated as stock owned by the employee.
OFFERINGS. The Company will make one or more periodic offerings to
participating employees to purchase Shares under the Stock Purchase Plan. Each
offering period will be three months in duration; provided that the
19
<PAGE> 22
Committee has the power to change the duration of an offering period
without shareholder approval if such change is announced at least fifteen days
prior to the scheduled beginning of the first offering period affected. During
an offering the amounts received as compensation by a participating employee
will constitute the measure of such employee's participation in the offering as
is based on compensation.
PAYROLL DEDUCTIONS, CHANGES IN DEDUCTION AMOUNTS. An employee eligible on
the effective date of any offering may participate in such offering at any time
by completing and forwarding a payroll deduction authorization to the
employee's appropriate payroll location. The form will authorize a regular
payroll deduction from such employee's compensation, and must specify the date
on which such deduction is to commence, which may not be retroactive.
The Company will maintain payroll deduction accounts for all participating
employees. With respect to any offering made under the Stock Purchase Plan, a
participating employee may authorize a payroll deduction of whole percentages
(up to a maximum of 15%) of the compensation such employee receives during the
offering period (or during such portion thereof in which the employee may elect
to participate).
No employee may be granted an option that permits his or her rights to
purchase stock under the Stock Purchase Plan, and all other employee stock
purchase plans of the Company and its subsidiaries described in Section 423 of
the Code, to accrue at a rate that exceeds $25,000 of the fair market value of
such stock (determined at the effective date of the applicable offering) for
each calendar year in which the option is outstanding at any time. In the
event that a participating employee's payroll deductions would otherwise result
in the purchase of stock in excess of the foregoing limitations, the stock
purchase will cease when the limitations are reached and the excess cash will
be refunded to such participating employee.
A participating employee may increase or decrease such employee's payroll
deduction by filing a new payroll deduction authorization at any time during an
offering period. The change may not become effective sooner than the next pay
period after receipt of the authorization. If a participating employee ceases
his or her payroll deductions, the Committee may, in its discretion, either
declare his or her participation to have terminated and authorize distribution
as described below under "Rights on Retirement, Death, Termination of
Employment or Termination of Participation" or permit the employee to have his
or her cash remain credited under the Stock Purchase Plan and apply such cash
to the purchase of stock at the end of the offering period in which such
cessation occurs.
PURCHASE OF SHARES. Each employee participating in any offering under the
Stock Purchase Plan will be granted an option, upon the effective date of such
offering, for as many full Shares as the participating employee may elect to
purchase with up to 15% of the compensation received during the specified
offering period (or during such portion thereof as the employee may elect to
participate), to be paid by payroll deductions during such period.
The purchase price for each Share will be 85% of the lower of (i) the fair
market value of a share of Common Stock at the beginning of the offering
period, or (ii) the fair market value of a share of Common Stock at the end of
the offering period. As of the last day of an offering, the account of each
participating employee will be totaled, and the employee will be deemed to have
exercised an option to purchase one or more full Shares at the then-applicable
price; the participating employee's account will be charged for the amount of
the purchase; and the ownership of such Share or Shares will be appropriately
evidenced on the books of the Company.
The plan defines "fair market value" to mean the average of the high and
low sales prices of the Common Stock on The Nasdaq National Market on a given
day or, if no sales of the Common Stock were made on that day, the average of
the high and low sales prices of the Common Stock on the next preceding day on
which sales were made on The Nasdaq National Market; provided, that the
Committee may, in its discretion, establish such other measure of fair market
value as it deems appropriate.
EMPLOYEE ACCOUNTS AND CERTIFICATES, REGISTRATION OF SHARES. Upon purchase
of one or more full Shares by a participating employee, the Company will
establish a book entry account in the name of the employee to reflect the
Share(s) purchased at that time. Certificates will be issued only on request,
on termination of participation in the Stock Purchase Plan, or when necessary
to comply with transaction requirements outside the United States. In the
event a participating employee terminates his or her account, any remaining
cash credited to the account will be paid to such employee.
20
<PAGE> 23
Shares may be registered only in the name of the participating employee,
or, if such employee so indicates on the employee's payroll deduction
authorization form, in the participating employee's name jointly with a member
of such employee's family, with right of survivorship. A participating
employee who is a resident of a jurisdiction that does not recognize such a
joint tenancy may have Shares registered in such employee's name as tenant in
common or as community property with a member of such employee's family,
without right of survivorship.
RIGHTS ON RETIREMENT, DEATH, TERMINATION OF EMPLOYMENT OR TERMINATION OF
PARTICIPATION. In the event of a participating employee's retirement, death,
or termination of employment, such employee will be ineligible to continue to
participate in the Stock Purchase Plan, and no payroll deduction will be taken
from any pay due and owing to the employee after the pay period during which
the employee became ineligible. Upon any such termination of participation, or
in the event a participating employee's participation is declared terminated as
described above, certificates representing the Shares credited to the
terminating employee's account, and any remaining cash credited to such
account, will be transferred to such employee, or to his or her beneficiary if
the employee has died.
RIGHTS NOT TRANSFERABLE. Rights under the Stock Purchase Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee.
AMENDMENT. The Board of Directors may at any time, or from time to time,
amend the Stock Purchase Plan in any respect, except that, without the approval
of the holders of a majority of the shares of stock of the Company entitled to
vote and represented in person or by proxy, no amendment may be made (i)
increasing the number of shares approved for the Stock Purchase Plan (other
than as described above in "Securities Subject to the Stock Purchase Plan"),
(ii) decreasing the purchase price per share, (iii) withdrawing the
administration of the Stock Purchase Plan from a Committee consisting of
persons not eligible to participate in the Stock Purchase Plan or (iv) changing
the designation of subsidiaries eligible to participate in the Stock Purchase
Plan.
TERMINATION OF THE STOCK PURCHASE PLAN. The Stock Purchase Plan and all
rights of employees under any offering thereunder will terminate:
a. on the day that participating employees become entitled to
purchase a number of shares equal to or greater than the number of shares
remaining available for purchase. If the number of shares so purchasable
is greater than the shares remaining available, the available shares
shall be allocated by the Committee among such participating employees in
such manner as it deems fair, or
b. at any time, at the discretion of the Board of Directors.
No offering under the Stock Purchase Plan will be made which extends
beyond December 31, 2001.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of
the Stock Purchase Plan, based on current income tax laws, regulations and
rulings. Any deduction to which the Company may otherwise be entitled under
this Plan may be limited by Section 162(m) of the Code, as discussed below.
The amount which an employee contributes to the Stock Purchase Plan
through payroll deductions is currently taxed as ordinary income. The employee
does not recognize income on either the beginning of the offering period
("Offering Date") or the end of the offering period ("Termination Date").
However, if the employee disposes of shares of the Common Stock acquired
pursuant to the Stock Purchase Plan (other than by death) within two years from
the related Offering Date (an "Early Disposition"), the employee will recognize
ordinary income equal to the excess of the fair market value of such shares on
the related Termination Date over the purchase price. The employee's basis in
any shares disposed of, for purposes of computing gain or loss upon the
disposition, will be the fair market value of the shares on the related
Termination Date. The Company will be entitled to a deduction in an amount
equal to the amount includible as ordinary income. The Company's deduction
will be taken in its taxable year in which or which ends within the taxable
year of the employee in which the employee recognizes the income.
21
<PAGE> 24
If the employee disposes of Common Stock two or more years after the
related Offering Date, or if the employee dies without having disposed of
Common Stock, the employee will recognize ordinary income in an amount equal to
the lesser of (a) the excess of the fair market value of the Common Stock on
the related Offering Date over the purchase price, or (b) the excess (if any)
of the fair market value of the Common Stock on the date of disposition or
death, over the purchase price. The basis of the shares will be the sum of the
purchase price and the amount of any such recognized income.
Any interest on the employee's funds held by the Company which are paid to
the employee is ordinary income.
Section 162(m) of the Code provides that no deduction will be allowed for
certain remuneration with respect to a covered employee to the extent such
remuneration exceeds $1,000,000.00. Under regulations issued by the Internal
Revenue Service, an employee is a covered employee if his compensation is
required to be reported under the SEC's disclosure rules and he is employed as
of the last day of the taxable year. Compensation to a covered employee arising
from an Early Disposition of Shares acquired under the Plan is subject to this
limitation.
The foregoing statement is only a summary of certain federal income tax
consequences of the Stock Purchase Plan and is based on the Company's
understanding of present federal tax laws and regulations. Since tax
regulations may change or interpretations may differ, each individual should
consult his or her tax advisor regarding the tax consequences related to
participation in the Stock Purchase Plan.
STOCK ISSUANCES TO CERTAIN INDIVIDUALS AND GROUPS
As described above, only employees employed by the Company on the first
day of an offering period may participate in the Purchase Plan. The following
table sets forth, as to each of the Company's Named Executives and the various
indicated groups, certain information concerning: (i) the aggregate number of
shares of the Common Stock purchased under the Stock Purchase Plan between and
including March 31, 1997 and March 31, 1998 (the most recent purchase date)
and (ii) the weighted average purchase price paid per share.
<TABLE>
<CAPTION>
Number of Weighted Average
Name and Position Purchased Shares Purchase Price
----------------- ---------------- --------------
<S> <C> <C>
William W. Canfield...............................................................
Chairman, President and Chief Executive Officer --- ---
John E. Tubbesing.................................................................
Executive Vice President 149 $5.04
Michael E. Smith..................................................................
Vice President 134 $4.14
Craig N. Cohen....................................................................
Chief Financial Officer and Secretary 931 $4.39
All current executive officers as a group (4 persons)............................. 1,214 $4.44
All employees, including current officers who are not
executive officers, as a group (approximately 108 persons)... 36,972 $4.26
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT
TO THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN.
22
<PAGE> 25
IV. RATIFICATION OF APPOINTMENT INDEPENDENT AUDITORS
KPMG Peat Marwick LLP was the auditing firm for the fiscal year ended
March 31, 1998, and the Company has selected this firm as auditors for the year
ending March 31, 1999. A representative of KPMG Peat Marwick LLP is expected
to be present at the 1998 Annual Meeting to respond to appropriate questions
and to make a statement if such representative so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF SUCH
APPOINTMENT.
V. VOTING
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock entitled to vote which are present in person or
represented by proxy at the 1998 Annual Meeting is required to elect a
director, to approve the proposed amendments to the Option Plan and the Stock
Purchase Plan, to ratify the appointment of independent auditors and to act on
any other matters properly brought before the meeting. Shares represented by
proxies which are marked "withhold authority" with respect to the election of
the nominee for election as director, proxies which are marked "abstain" with
respect to the proposed amendments to the Option Plan and the Stock Purchase
Plan or the ratification of the appointment of the independent auditors, and
proxies which are marked to deny discretionary authority on other matters will
be counted for the purpose of determining the number of shares represented by
proxy at the meeting. Such proxies will thus have the same effect as if the
shares represented thereby were voted against such nominee, against the
amendments to the Option Plan or the Stock Purchase Plan, against the
ratification of the appointment of the independent auditors and against such
other matters, respectively. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter. If no specification is made on a duly executed proxy,
the proxy will be voted FOR the election of the director nominated by the Board
of Directors, FOR the proposed amendments to the Option Plan and the Stock
Purchase Plan, FOR the ratification of the appointment of the independent
auditors and in the discretion of the persons named as proxies on such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
The Company knows of no other matters to come before the meeting.
However, if any other matters properly come before the meeting or any
postponement or adjournment thereof, the proxies solicited hereby will be voted
on such matters in accordance with the judgment of the persons voting such
proxies.
VI. SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be presented at the 1999 Annual
Meeting, currently scheduled to be held on August 18, 1999, must be received by
the Company by March 20, 1999 for inclusion in the Company's proxy statement
and proxy relating to that meeting. Upon receipt of any such proposal, the
Company will determine whether or not to include such proposal in the proxy
statement and proxy in accordance with regulations governing the solicitation
of proxies.
In order for a Shareholder to nominate a candidate for director, under the
Company's Bylaws, timely notice of the nomination must be given to the Company
in advance of the meeting. Ordinarily, such notice must be given not less than
60 nor more than 90 days before the first anniversary of the preceding year's
annual meeting (or between June 12 and July 12, 1999 for the 1999 Annual
Meeting); provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, then the Shareholder must give such notice not earlier
than 90 days prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the 10th
day following the day on which public announcement of such meeting is first
made. In certain cases, notice may be delivered later if the number of
directors to be elected to the Board of Directors is increased. The
Shareholder filing the notice of nomination must describe various matters as
specified in the Company's Bylaws, including such information as name, address,
occupation, and number of shares held.
In order for a Shareholder to bring other business before a Shareholder
meeting, timely notice must be given to the Company within the time limits
described above. Such notice must include a description of the proposed
business, the reasons therefor and other matters specified in the Company's
Bylaws. The Board or the presiding officer at
23
<PAGE> 26
the Annual Meeting may reject any such proposals that are not made in
accordance with these procedures or that are not a proper subject for
Shareholder action in accordance with applicable law. These requirements are
separate from and in addition to the requirements a Shareholder must meet to
have a proposal included in the Company's proxy statement.
In each case the notice must be given to the Secretary of the Company,
whose address is 1850 Borman Court, St. Louis, Missouri 63146. Any Shareholder
desiring a copy of the Company's Restated Articles of Incorporation, as
amended, or Bylaws will be furnished a copy without charge upon written request
to the Secretary.
MISCELLANEOUS
Even if you plan to attend the meeting in person, please complete, sign,
date and return the enclosed proxy promptly. Should you attend the meeting,
you may revoke the proxy and vote in person. A postage-paid, return-addressed
envelope is enclosed for your convenience. No postage need be affixed if
mailed in the United States. Your cooperation in giving this your immediate
attention will be appreciated.
By Order of the Board of Directors
/s/ Craig N. Cohen
--------------------------
Craig N. Cohen, Secretary
St. Louis, Missouri
July 17, 1998
24
<PAGE> 27
PROXY
TALX CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William W. Canfield and Richard F. Ford,
or either of them, the true and lawful attorneys in fact, agents and proxies of
the undersigned to represent the undersigned at the Annual Meeting of the
Shareholders of TALX CORPORATION (the "Company") to be held on Thursday,
September 10, 1998, commencing at 2:00 p.m., St. Louis time, at the Holiday Inn
Westport, 1973 Craigshire Drive, St. Louis, Missouri, and at any postponement
or adjournment of said meeting, and to vote all the shares of Common Stock of
the Company standing on the books of the Company in the name of the undersigned
on July 10, 1998 as specified below and in the discretion of any such person on
such other business as may properly come before the meeting and any
postponement of adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE SAID NOMINEE AS DIRECTOR AND FOR
PROPOSALS 2, 3 AND 4 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
Please sign as registered, date and return promptly in the enclosed
envelope to: TALX Corporation, Midtown Station, P.O. Box 936, New York, NY
10138.
(Continued and to be signed and dated on reverse side)
SEE REVERSE SIDE
FOLD AND DETACH HERE
<PAGE> 28
<TABLE>
<S><C>
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING: Please mark |
your vote |
as indicated in | X
this example |
1. Election of One Director for term expiring in 2001: 2. Proposal to approve an amendment of the Company's
Nominee: Craig E. LaBarge Amended and Restated 1994 Stock Option Plan, including
an increase in the number of authorized shares
thereunder from 430,000 to 930,000.
FOR WITHHOLD
nominee listed AUTHORITY
to vote for the
nominee listed FOR AGAINST ABSTAIN
/ / / / / / / / / /
3. Proposal to approve an amendment of the Company's 1996 Employee 4. Proposal to ratify the appointment of KPMG Peat Marwick
Stock Purchase Plan, including an increase in the number of LLP as independent auditor of the Company for the 1999
authorized shares thereunder from 80,000 to 200,000. fiscal year.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / /
_________ The undersigned hereby acknowledges receipt of the
| 1998 Annual Report to Shareholders and the Notice
| of said Annual Meeting and accompanying Proxy
| Statement.
Dated this ______ day of ___________________ , 1998
Signature: _______________________________________
Signature: _______________________________________
Please sign exactly as name(s) appear on this proxy
card. (If Stock is owned in joint names, both
owners must sign, or if owned by a corporation,
partnership or trust, this Proxy must be signed by
an authorized officer, partner or trustee.) If
the address at left is incorrect, please write in
the correct information.
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THIS PROXY
IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
____________________________________________________________________________________________________________________________________
- FOLD AND DETACH HERE -
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