<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 of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 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:
________________________________________________________
4) Date Filed:
<PAGE> 2
[LOGO]
NOTICE OF THE ANNUAL MEETING OF
THE SHAREHOLDERS OF
TALX CORPORATION
St. Louis, Missouri
July 17,2000
TO THE SHAREHOLDERS OF
TALX CORPORATION
The Annual Meeting of the Shareholders of TALX Corporation will be held
at the St. Louis Marriott West, 660 Maryville Centre Drive, St. Louis, Missouri
63141 on September 7, 2000. The meeting will begin at 2:00 p.m., St. Louis time.
Only holders of record, of the Company's Common Stock at the close of business
on July 7, 2000, will be entitled to vote, for the following purposes:
1. To elect two directors;
2. To approve amendments to the Company's Amended and
Restated 1994 Stock Option Plan, including an increase
in the number of authorized shares issuable thereunder
from 930,000 to 1,680,000;
3. To approve amendments to the Company's 1996 Employee
Stock Purchase Plan, including an increase in the number
of authorized shares issuable thereunder from 200,000 to
500,000;
4. To ratify the appointment of KPMG LLP as the independent
auditor of the Company for the 2001 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 7, 2000
-------------------------------------------------------------------
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 St. Louis Marriott West, 660 Maryville Centre
Drive, St. Louis, Missouri 63141 on September 7, 2000 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, 2000.
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 7, 2000 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, 5,635,096 shares of
Common Stock were outstanding and entitled to be voted at such meeting, with 98
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, 2000 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, fax 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 June 1, 2000 beneficially owned by each director
and nominee, the Chief Executive Officer and the two other most highly
compensated executive officers of the Company in fiscal year 2000 (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 606,475 (2) 10.6%
Craig N. Cohen 31,820 (3) *
Richard F. Ford 15,500 (4) *
Craig E. LaBarge 6,000 (5) *
Michael E. Smith 35,093 (6) *
Eugene M. Toombs 215,489 (7) 3.6%
M. Steve Yoakum 5,000 (8) *
All directors and executive officers as a group 915,377 (9) 16.0%
(7 persons)
</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 31,542 shares owned by Mr. Canfield's spouse and 45,000 shares
that Mr. Canfield may acquire upon exercise of options within 60 days
after June 1, 2000.
(3) Includes 13,928 shares that Mr. Cohen may acquire upon exercise of
options within 60 days June 1, 2000.
(4) Includes 4,000 shares owned by Mr. Ford's spouse and 4,500 shares that
Gateway Venture Partners II, L.P., the manager of which is Gateway
Associates, of which Mr. Ford is the managing general partner, may
acquire upon exercise of options within 60 days after June 1, 2000.
(5) Includes 4,500 shares that Mr. LaBarge may acquire upon the exercise of
options within 60 days after June 1, 2000.
(6) Includes 23,327 shares that Mr. Smith may acquire upon the exercise of
options within 60 days after June 1, 2000.
(7) Includes 195,354 shares owned by MiTek, Inc. of which Mr. Toombs is
President and Chief Executive Officer and a director and 4,500 shares
that Mr. Toombs may acquire upon the exercise of options within 60 days
after June 1, 2000.
(8) Includes 4,500 shares that Mr. Yoakum may acquire upon the exercise of
options within 60 days after June 1, 2000.
(9) Includes 100,255 shares that may be acquired upon exercise of options
within 60 days after June 1, 2000.
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 June 1, 2000:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
------------------------------------ -------------------- -----------
<S> <C> <C>
William W. Canfield(2) 606,475 10.6%
Merrill Lynch Asset Management(3) 418,250 7.6%
</TABLE>
--------------------
(1) Percentages are determined in accordance with Rule 13d-3 under the
Exchange Act.
(2) Mr. Canfield's address is c/o TALX Corporation, 1850 Borman Court, St.
Louis, MO 63146. Includes 31,542 shares owned by Mr. Canfield's spouse
and 45,000 shares which Mr. Canfield may acquire upon exercise of
options within 60 days after June 1, 2000.
(3) Based upon Schedule 13F filed effective March 31, 2000. The address of
Merrill Lynch Asset Management is 800 Scudders Mill Road, Plainsboro,
New Jersey 08536.
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, 2000.
3
<PAGE> 6
I. ELECTION OF DIRECTORS
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,
two directors of the Company are to be elected for terms expiring at the Annual
Meeting in 2003, or until their respective successors have been elected and have
qualified. Certain information with respect to the nominees 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 one or both of the nominees 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 or persons
as the Board of Directors of the Company may recommend.
<TABLE>
<CAPTION>
SERVED AS
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS DIRECTOR
SINCE
TO BE ELECTED FOR TERM ENDING IN 2003:
<S> <C>
Eugene M. Toombs, 58 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.
M. Stephen Yoakum, 47 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
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS DIRECTOR
SINCE
TO CONTINUE IN OFFICE UNTIL 2002:
<S> <C>
William W. Canfield, 61 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, 64 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 acquired by NationsBank Corporation, which in
turn was acquired by Bank of America). 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 Healthcare Resources, Inc. and
Stifel Financial Corp. Mr. Ford holds a Bachelor of Arts degree in
Economics from Princeton University.
TO CONTINUE IN OFFICE UNTIL 2001:
Craig E. LaBarge, 49 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.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met four times during fiscal 2000. Each
incumbent director attended at least 75% of the meetings of the Board and
committees on which he served during 2000.
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
5
<PAGE> 8
are members, met three times 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. Effective May 10, 2000, Mr. Ford replaced Mr.
Canfield as a member of the Audit Committee, so that the composition of the
committee is believed to conform to new independence rules promulgated by the
SEC and Nasdaq.
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 four
meetings in the past fiscal year. See "Compensation Committee Report on
Executive Compensation."
DIRECTOR COMPENSATION
The Company pays each director a $2,000 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.
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
each of April 1, 1998, 1999 and 2000. A total of 24,000 options have been
issued. 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................. 61 Chairman, President and Chief Executive Officer
Craig N. Cohen...................... 41 Vice President - Application Services and Software,
Chief Financial Officer and Secretary
Michael E. Smith.................... 57 Vice President
</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."
Craig N. Cohen, Vice-President - Application Services and
Software, Chief Financial Officer and Secretary. Mr. Cohen has been Chief
Financial Officer of the Company since 1994, Secretary since 1996 and Vice
President - Application Services and Software since May 1999. Prior to that, Mr.
Cohen spent twelve years with KPMG 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 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.
Michael E. Smith, Vice President. Mr. Smith has been Vice President of
Business Development of the Company since 1994. His 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
6
<PAGE> 9
Motors' AC Electronics. Mr. Smith holds a Bachelor of Science degree in
Mathematics from Southeast Missouri State University.
EXECUTIVE COMPENSATION
Compensation Summary. The following table sets forth certain
summary information for the fiscal years ended March 31, 2000, 1999 and 1998
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..................... 2000 $257,000 $156,000 - - 25,000 $40,432
Chairman, President and Chief Executive 1999 234,038 - - - - 100,000 32,151
Officer 1998 220,833 - - - - - - 30,716
Craig N. Cohen.......................... 2000 $145,000 $72,500 - - 15,000 $2,933
Vice President - Application Services 1999 109,419 1,200 - - 20,000 2,212
and Software, Chief Financial Officer 1998 97,667 2,280 - - 2,500 2,086
and Secretary
Michael E. Smith........................ 2000 $113,000 $28,476 - - 4,000 $2,434
Vice President 1999 110,763 10,554 - - 10,000 2,426
1998 104,083 - - - - 2,500 2,212
</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 2000, represents contributions made by the Company on behalf of the
Named Executives under the Company's 401(k) Plan and $35,276 for Mr.
Canfield's premiums paid by the Company on his life insurance policies.
7
<PAGE> 10
Stock Option Awards. The following table presents certain information
concerning stock options granted during fiscal 2000 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, except in the case of Mr.
Canfield, for whom the exercise price was 110% of the fair market value, in
accordance with the terms of the Option Plan for 10% shareholders.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (1)
--------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE $
SHARES OPTIONS VALUE AT ASSUMED ANNUAL
UNDERLYING GRANTED TO EXERCISE RATES OF STOCK PRICE
OPTIONS EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR
GRANTED FISCAL YEAR ($/SH) DATE OPTION TERM (2)
---------- ------------ ------- ---------- ----------------------
Name 5% 10%
---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William W. Canfield 25,000 14.1% 8.52 5/14/09 $102,598 $289,538
Craig N. Cohen 15,000 8.5% 7.75 5/14/09 73,109 185,273
Michael E. Smith 4,000 2.3% 7.75 5/14/09 19,496 49,406
</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 2000, 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 (2)
ON REALIZED -------------------------------- ---------------------------------
NAME EXERCISE $(1) EXERCISABLE UNEXERCISABLE TOTAL EXERCISABLE UNEXERCISABLE TOTAL
---- -------- ---- ----------- ------------- ----- ----------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William W. Canfield - - 45,000 80,000 125,000 $ 592,400 $ 1,019,600 $ 1,612,000
Craig N. Cohen 18,570 $144,453 13,928 27,857 41,785 178,886 346,284 525,170
Michael E. Smith 5,713 30,280 23,327 10,886 34,213 336,827 143,227 480,054
</TABLE>
-----------------
(1) Reflects the difference between the exercise price and the market price
on the date of exercise.
(2) Reflects the difference between the exercise price and $19.00 per
share, which was the closing price of the Common Stock on March 31,
2000.
8
<PAGE> 11
BENEFIT PLANS
1994 Stock Option Plan. On August 31, 1994, the Company adopted
an incentive stock option plan which was amended and restated in July 1996 and
further amended in September 1998 (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 930,000 shares of Common Stock to certain key employees, who will
be designated by a committee selected to administer the Plan; 90,268 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 which was amended in September
1998 (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 200,000 shares of Common Stock were
reserved for issuance under the ESPP, and 147,249 shares of such shares have
been issued under the ESPP. 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; $290,000 per year), Craig N.
Cohen (12 months; $160,000 per year) and Michael E. Smith (12 months; $120,000
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. 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 of the
agreement, 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. The 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 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 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 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 compensation for these purposes 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 on a subjective basis, 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 2000, the base
salaries of the executive officers were increased at an average rate of 10.7%.
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 profit goals and by each
executive officer of his individual objectives as determined by the Compensation
Committee. Merit bonus goals based on the fiscal 1999 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, which consist of sales and
earnings per share targets. Under the plans, executive officers were entitled to
receive an average bonus of approximately 50% of base salary if the Company
achieved its goals for fiscal 2000 and the individual executive met or exceeded
his objectives. In fiscal 2000, the executive officers received an average bonus
of 49.6% of base salary, based on the achievement of the targeted goals.
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 full 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, without regard to his or here
existing stock ownership. 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 44,000 shares were granted to executive
officers in fiscal 2000, to reward the executive officers for their performance
in fiscal 1999 and to establish appropriate incentives for these key 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 2000 was increased by
approximately 8.3% over his 1999 salary based upon the extent to which the
Company achieved its goals in 1999 and the Compensation Committee's view of Mr.
Canfield's role in that achievement. Mr. Canfield received a merit bonus of
$156,000 and a 25,000 stock option award in fiscal 2000 in recognition of his
performance in fiscal 2000, including the Company meeting its earnings per share
target, and to provide proper incentive for future performance.
******
The foregoing report is provided by the following directors,
who were members of the Compensation Committee on March 31, 2000:
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. 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.
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, 2000, 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.
COMPARISON OF 41 MONTH CUMULATIVE TOTAL RETURN*
AMONG TALX CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
[LINE CHART]
* $100 INVESTED ON 10/17/96 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING MARCH 31.
<TABLE>
<CAPTION>
10-17-96 3-97 3-98 3-99 3-00
-------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Talx Corporation 100 86 54 72 211
NASDAQ Stock Market (U.S.) 100 98 149 201 373
NASDAQ Computer & Data 100 95 167 272 486
Processing
</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 930,000 shares to 1,680,000
shares (an increase of 750,000 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, 2000, options to purchase 586,376 shares of Common
Stock were outstanding under the Option Plan, and options to purchase 260,018
shares of Common Stock were available for future grants. The Board of Directors
approved the proposed Amendment to the Stock Option Plan on May 10, 2000 to be
effective on shareholder approval. The Board of Directors also approved an
additional award of options to purchase 169,750 shares on May 10, 2000. As a
result, only 90,268 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 was
further amended by the Board of Directors, in May 1998, to, among other things
increase the number of shares authorized for issuance under the plan from
430,000 to 930,000. The Company's shareholders approved such amendments in
September 1998. 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 1,680,000 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 930,000 to
1,680,000.
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
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<PAGE> 17
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 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
15
<PAGE> 18
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 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.
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<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 that have been granted under the
Option Plan to date to each of the Named Executives and certain specified
groups:
<TABLE>
<CAPTION>
Number of Exercise Price
Name and Position Shares Per Share (1)
----------------- ------------- -----------------
<S> <C> <C>
WILLIAM W. Canfield............................................. 125,000 (4) $6.10 (6)
Chairman, President and Chief Executive Officer 20,000 (5) $16.36 (6)
CRAIG N. Cohen.................................................. 56,070 (4) $5.77 (7)
Vice President - Application Services and Software, 10,000 (5) $14.88 (7)
Chief Financial Officer and Secretary
MICHAEL E. Smith................................................ 34,213 (4) $4.97 (7)
Vice President 4,000 (5) $14.88 (7)
Executive Officer Group (2)..................................... 215,283 (4) $5.84 (7)
34,000 (5) $15.75 (7)
Non-Executive Officer Employee Group (3)........................ 458,583 (4) $6.00 (7)
135,750 (5) $14.88 (7)
</TABLE>
------------------
(1) The closing price of the Company's Common Stock as reported on the
Nasdaq National Market on June 1, 2000 was $15.438.
(2) Consists of three persons.
(3) Consists of 97 persons.
(4) Incentive and non-qualified stock options granted prior to March 31,
2000.
(5) Incentive stock options granted on May 10, 2000.
(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. The Stock Purchase
Plan was amended by the Board of Directors, in May 1998, to, among other things
increase the number of shares authorized for issuance under the Plan from 80,000
to 200,000. The Company's shareholders approved such amendments in September
1998. In June 2000, 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 300,000 shares
from 200,000 shares (of which 147,249 shares had been issued as of June 1, 2000)
to 500,000 shares. The Board further approved an extension of the expiration
date of the Stock Purchase Plan from December 31, 2001 to December 31, 2006.
These amendments are 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 amendments to the Stock Purchase Plan, increasing the number of
shares of Common Stock authorized for issuance thereunder by 300,000 shares from
200,000 shares to 500,000 shares and extending the expiration date of the Stock
Purchase Plan from December 31, 2001 to December 31, 2006. Shareholder approval
of the amendments 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 that 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, 2006.
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 500,000
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.
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<PAGE> 22
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 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
20
<PAGE> 23
participating employee terminates his or her account, any remaining cash
credited to the account will be paid to such employee.
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, 2006.
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
21
<PAGE> 24
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.
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, 2000 (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
Craig N. Cohen.......................................................... 2,439 $4.91
Vice President - Application Services and Software,
Chief Financial Officer and Secretary
Michael E. Smith........................................................ 1,110 $4.91
Vice President
All current executive officers as a group (3 persons)................... 3,549 $4.91
All employees, including current officers who are not 147,249 $5.31
executive officers, as a group (approximately 230 persons)..............
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENTS TO THE COMPANY'S 1996 EMPLOYEE STOCK PURCHASE PLAN.
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<PAGE> 25
IV. RATIFICATION OF APPOINTMENT INDEPENDENT AUDITORS
KPMG LLP was the auditing firm for the fiscal year ended March
31, 2000, and the Company has selected this firm as auditors for the year ending
March 31, 2001. A representative of KPMG LLP is expected to be present at the
2000 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 2000 Annual Meeting is required to elect directors,
to approve the proposed amendments to the Option Plan and 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 nominees for
election as directors, proxies which are marked "abstain" with respect to the
Option Plan, 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 Option Plan or 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 directors 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 2000
Annual Meeting, currently scheduled to be held on September 6, 2001, must be
received by the Company by March 19, 2001 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 9 and July 9, 2001 for the 2001
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 the Annual Meeting may reject any
such proposals that are not made in accordance with these procedures or that are
not a
23
<PAGE> 26
proper subject for Shareholder action in accordance with applicable law. The
foregoing time limits also apply in determining whether notice is timely for
purposes of rules adopted by the Securities and Exchange Commission relating to
the exercise of discretionary voting authority. 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, 2000
24
<PAGE> 27
TALX CORPORATION AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide employees a continued opportunity to
purchase stock of TALX Corporation, a Missouri corporation, through 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, 2006. A total of 500,000 shares
of TALX Corporation Stock in the aggregate have been approved for this purpose.
1. Administration. The Plan shall be administered by a 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 shall not be eligible to participate in the
Plan. The Committee shall have authority to make rules and regulations for the
administration of the Plan; its interpretations and decisions with regard
thereto shall be final and conclusive.
2. Eligibility. Except as provided below; all employees of TALX
Corporation or its subsidiaries shall be eligible to participate in the Plan in
accordance with such rules as may be prescribed by the Committee from time to
time, which rules, however, shall neither permit nor deny participation in the
Plan contrary to the requirements of the Internal Revenue Code (including, but
not limited to, Section 423(b)(3), (4), (5), and (8) hereof) and the regulations
promulgated thereunder. No member of the Committee may participate in the 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 TALX Corporation or any subsidiary. For purposes
of the preceding sentence, the rules of Section 424(d) of the Internal Revenue
Code shall apply in determining the stock ownership of an employee, and stock
that the employee may purchase under outstanding options shall be treated as
stock owned by the employee.
3. Offerings. TALX Corporation shall make one or more periodic offerings
to participating employees to purchase TALX Corporation stock under the Plan.
Each offering period shall be three months in duration; provided that the
Committee shall have the power to change the duration of an offering period
without shareholder approval if such change is announced at least fifteen (15)
days prior to the scheduled beginning of the first offering period affected.
During an offering the amounts received as compensation by a participating
employee shall constitute the measure of such employee's participation in the
offering as is based on compensation.
4. Participation. 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
1
<PAGE> 28
payroll deduction from such employee's compensation, and must specify the date
on which such deduction is to commence, which may not be retroactive.
5. Deductions. TALX Corporation shall maintain payroll deduction
accounts for all participating employees. With respect to any offering made
under the 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 Plan, and all other employee stock purchase plans of
TALX Corporation and its subsidiaries described in Section 423 of the Internal
Revenue 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
shall cease when the limitations are reached and the excess cash shall be
refunded to such participating employee.
6. Deduction Changes. 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 pursuant to Section 12 or permit the
employee to have his or her cash remain credited under the Plan and apply such
cash to the purchase of stock at the end of the offering period in which such
cessation occurs.
7. Purchase of Shares. Each employee participating in any offering
under the Plan shall be granted an option, upon the effective date of such
offering, for as many full shares of TALX Corporation stock 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 purchased shall be 85% of the lower of
(i) the fair market value of TALX Corporation stock at the beginning of the
offering period, or (ii) the fair market value of TALX Corporation stock at the
end of the offering period. As of the last day of an offering, the account of
each participating employee shall be totaled, and the employee shall be deemed
to have exercised an option to purchase one or more full shares at the then-
applicable price; the participating employee's account shall be charged for
the amount of the purchase; and the ownership of such share or shares shall be
appropriately evidenced on the books of TALX Corporation.
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<PAGE> 29
8. Employee Accounts and Certificates. Participants are asked to open a
brokerage account with First Albany Corporation Corporate Services for the
purpose of electronically issuing purchased shares to each participant's
personal account.
9. Registration of Shares. 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.
10. Definitions. The term "TALX Corporation stock" means the common stock
of TALX Corporation.
The phrase "fair market value" means the average of the high and low sales
prices of TALX Corporation stock on the NASDAQ System on a given day or, if no
sales of TALX Corporation stock were made on that day, the average of the high
and low sales price of TALX Corporation stock on the next preceding day on
which sales were made on the NASDAQ System; provided, that the Committee may,
in its discretion, establish such other measure of fair market value as it
deems appropriate.
The phrase "NASDAQ System" means the automated quotation system operated
by the National Association of Securities Dealers.
The term "Plan" means this TALX Corporation 1996 Employee Stock Purchase
Plan.
The term "subsidiary" means a subsidiary of TALX Corporation within the
meaning of Section 424(f) of the Internal Revenue Code and the regulations
promulgated thereunder.
11. Rights as a Shareholder. None of the rights or privileges of a
shareholder of TALX Corporation shall exist with respect to shares purchased
under the Plan unless and until such shares shall have been appropriately
evidenced on the books of TALX Corporation.
12. 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 shall be ineligible to continue to
participate in the Plan, and no payroll deduction shall be taken from any pay
due and owning to the employee after the pay
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<PAGE> 30
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 under Section 6, certificates representing the shares
credited to the terminating employee's account, and any remaining cash credited
to such account, shall be transferred to such employee, or to his or her
beneficiary if the employee has died.
13. Rights Not Transferable. Rights under the 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.
14. Application of Funds and Administrative Fees. All funds received
or held by TALX Corporation under the Plan may be used for any corporate
purpose. The Committee may impose reasonable administrative fees on
participating employees to defray the administrative costs of the Plan, which
shall in no event exceed the actual administrative costs of the Plan.
15. Adjustments in Case of Changes Affecting TALX Corporation Stock. In
the event of a subdivision of outstanding shares, or the payment of a stock
dividend (other than the proposed 1-for-3.5 reverse stock split), the number of
shares approved for the Plan shall be increased proportionately, and such other
adjustments shall be made as may be deemed equitable by the Board of Directors.
In the event of any other change affecting TALX Corporation stock, such
adjustments shall be made as may be deemed equitable by the Board of Directors
to give proper effect to such event.
16. Amendment of the Plan. The Board of Directors may at any time, or
from time to time, amend the Plan in any respect, except that, without the
approval of the holders of a majority of the shares of stock of TALX Corporation
entitled to vote and represented in person or by proxy, no amendment shall be
made (i) increasing the number of shares approved for the Plan (other than as
provided in Section 15 hereof), (ii) decreasing the purchase price per share,
(iii) withdrawing the administration of the Plan from a Committee consisting of
persons not eligible to participate in the Plan, or (iv) changing the
designation of subsidiaries eligible to participate in the Plan.
17. Termination of the Plan. The Plan and all rights of employees under
any offering hereunder shall 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
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<PAGE> 31
b. at any time, at the discretion of the Board of Directors.
No offering hereunder shall be made which shall extend beyond December 31,
2001.
18. Government Regulations. TALX Corporation's obligation to sell and
deliver TALX Corporation stock under the Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance,
or sale of such stock.
19. Plan Shares Purchases. Purchases of outstanding shares may be made
pursuant to and on behalf of the Plan, upon such terms as TALX Corporation may
approve, for delivery under the Plan.
20. Plan Subject to Shareholder Approval. The Plan is adopted subject
to the approval of the shareholders of TALX Corporation given within 12 months
from the date of adoption by the Board of Directors, and subject further to
completion of the Company's initial public offering of its common stock within
12 months from the date of adoption by the Board of Directors. Notwithstanding
anything else contained herein, no shares of TALX Corporation stock may be
purchased under the Plan prior to such shareholder approval.
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<PAGE> 32
TALX CORPORATION
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
1. Purpose of the Plan.
The TALX Corporation 1994 Stock Option Plan (the "Plan") is intended as an
incentive to, and to encourage ownership of the stock of TALX Corporation
("Company") by certain key management employees of the Company and its
subsidiaries. It is intended that some options granted hereunder will qualify as
Incentive Stock Options ("Incentive Stock Options") 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.
2. Stock Subject to the Plan.
(a) Stock Available For Grants of Options. A total of 1,680,000
shares of the Common Stock of the Company ("Common Stock") have
been allocated to the Plan and will be reserved for the grant of
options under the Plan, subject to subsequent adjustments under
Paragraph 15. The maximum number of shares with respect to which
any individual may be granted options in any calendar year is
1,680,000.
(b) Reservation of Shares. The Company will allocate and reserve in
each calendar year, a sufficient number of shares of its Common
Stock for issue upon the exercise of options granted under the
Plan.
(c) Treasury Shares. The Company may, in its discretion, use shares
held in the Treasury under this Plan in lieu of authorized but
unissued shares of Common Stock. If any option shall expire or
terminate for any reason without having been exercised in full,
the unpurchased shares subject thereto shall again be available
for the purposes of the Plan. Any shares of Common Stock which
are used as full or partial payment to the Company by an optionee
of the purchase price upon exercise of an option shall again be
available for the purposes of the Plan.
3. Administration.
The Plan shall be administered by the Committee referred to in Paragraph 4
(the "Committee"). Subject to the express provisions of the Plan, the Committee
shall have 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. In making such determinations the Committee
may take into account the nature of the services rendered by the respective
individuals, their present and potential contributions to the Company's success
and such other factors as the Committee, in its discretion, shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall also have
plenary authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, to determine the
<PAGE> 33
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 Plan. The Committee's determinations on the matters
referred to in this Paragraph 3 shall be conclusive.
4. The Committee.
The Committee shall be appointed by the Board of Directors of the Company
("Board"), which may from time to time appoint members of the Committee in
substitution for members previously appointed and may fill vacancies, however
caused, in the Committee. The Committee may select one of its members as its
Chairman, and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by a majority of the
members shall be fully as effective as if it had been made by a majority vote at
a meeting duly called and held. The Committee may appoint a secretary, shall
keep minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
5. Eligibility.
Options may be granted to key employees of the Company or its subsidiaries
(as defined below). 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
shall determine. The term "subsidiary" shall mean 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
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.
6. Option Prices.
The purchase price of the Common Stock under each Option which is an
Incentive Stock Option shall 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 purchase price of the Common Stock under
each option which is not an Incentive Stock Option shall be determined by the
Committee. The Committee shall determine fair market value and may adopt such
criterion for such determination of as it may determine to be appropriate;
provided, that if the Common Stock is included on the NASDAQ National Market,
the fair market value shall be the mean between the high and the low sales price
on the date as of which the Common Stock is to be valued, or if the Common Stock
shall not have been traded on such date, the mean between the high and low sales
price on such market on the first day prior thereto on which the Common Stock is
traded.
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<PAGE> 34
7. Payment of Option Prices.
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
Incentive Stock Option 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
Incentive Stock Option was granted. The cash proceeds of sale of stock subject
to option are to be added to the general funds of the Company and used for its
general corporate purposes. The shares of Common Stock of the Company received
by the Company as payment of the option price are to be added to the shares of
the Common Stock of the Company held in its Treasury and used for the purposes
of granting options under the Plan.
8. Option Amounts.
The maximum aggregate fair market value (determined at the time an option
is granted in the same manner as provided for in Paragraph 6 hereof) of the
Common Stock of the Company with respect to which Incentive Stock Options 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.
9. Exercise of Options.
The term of each option shall be not more than ten (10) years from the
date of granting thereof (five (5) years in the case of an Incentive Stock
Option granted to a 10% Owner) or such shorter period as is prescribed in
Paragraph 10 hereof; provided, that the right to exercise an option shall be
restricted so that no shares may be purchased during the first year of the
term thereof, that at anytime 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 anytime
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 (5) years from the date of grant; provided, further that except as
provided in Paragraphs 10 and 11 hereof, no option may be exercised at any time
unless the
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<PAGE> 35
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. The
holder of an option shall have none of the rights of a stockholder with respect
to the shares subject to option until such shares shall be issued to such holder
upon the exercise of the option.
Notwithstanding the foregoing, in the event of a Change in Control (as
hereinafter defined), the option holder will be entitled to purchase, at any
time thereafter and during the term thereof (subject, however, to Section 10 of
this Plan), the entire number of shares to which the option relates.
The term "Change in Control" shall mean:
(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
(the "Continuing Directors"), cease for any reason to constitute at least a
majority of the Board, provided that any person who becomes a director
subsequent to the date hereof 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 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 stockholders of the Company of (a) a
reorganization, merger or consolidation with respect to which persons who were
stockholders 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.
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<PAGE> 36
10. Termination of Employment.
Except as provided in Section 11, below, any option issued hereunder 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 (12) 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 (3) months after such termination, but not after ten (10) years
from the date of the granting thereof (five (5) years in the case of an option
granted to a 10% Owner). Options granted under the Plan shall 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 shall approve with reference to the effect of approved leaves
of absence. Nothing in the Plan or in any option granted pursuant to the Plan
shall confer on any individual any right to continue in the employ of the
Company or any subsidiary or interfere in any way with the right of the Company
or any subsidiary thereof to terminate his or her employment at any time.
11. Death or Disability.
In the event of the death of an individual to whom an option has been
granted under the Plan, while he or she is employed by the Company (or a
subsidiary) or within three (3) months after termination of service (or one (1)
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 (1) year after death, but not after ten (10)
years from the date of granting thereof (five (5) 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 this 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 (1) year of the termination of employment but not after ten
(10) years from the date of the granting thereof (five (5) years in the case of
an option granted to a 10% or more owner of the Company). For this purpose a
person shall 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, as of the
date hereof, 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 shall be considered
disabled only if he or she furnishes such proof of disability as the Committee
may require.
5
<PAGE> 37
12. Non-Transferability of Options.
Each option granted under the Plan shall, 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.
13. Successive Option Grants.
Successive option grants may be made to any holder of options under this
Plan.
14. Investment Purpose.
Each option under the Plan shall be granted only on the condition that all
purchases of Common Stock thereunder shall be for investment purposes, and not
with a view to resale or distribution, except that the Committee may make such
provision with respect to options granted under this Plan as it deems necessary
or advisable for the release of such condition upon the registration with the
Securities and Exchange Commission of Common Stock subject to the option, or
upon the happening of any other contingency warranting the release of such
condition.
15. Adjustments Upon Changes in Capitalization or Corporate Acquisitions.
Notwithstanding any other provisions of the Plan, the option agreements may
contain such provisions as the Committee shall determine to be appropriate for
the adjustment of the number and class of shares subject to each outstanding
option, the option prices 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 Plan
and the maximum number of shares as to which options may be granted to any
individual shall 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 shall be necessary to qualify such grant as a
substitution described in Section 424(a) of the Code.
16. Amendment and Termination.
The Board may at any time terminate the Plan, or make such modifications of
the Plan as it shall deem advisable; provided, however, that the Board or
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 Plan may, without the consent of the optionee to
whom any option shall theretofore have been granted, adversely
6
<PAGE> 38
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 Plan to incorporate the provisions thereof.
17. Effectiveness of the Plan.
The Plan, as amended, shall become effective as of the day it is adopted
by the Board subject, however, to its further approval by the stockholders of
the Company within one (1) year from the date of adoption by the Board. Options
may be granted before such approval by stockholders but none may be exercised
before the approval, and if such approval is not given, such grants shall be
void.
18. Time of Granting of Options.
An option grant under the Plan shall be deemed to be made on the date on
which the Committee, by formal action of its members duly recorded in the
records thereof, makes an award of an option to an eligible employee of the
Company or one of its subsidiaries, provided that such option is evidenced by a
written option agreement duly executed on behalf of the Company and on behalf
of the optionee within a reasonable time after the date of the Committee action.
19. Term of Plan.
This Plan shall terminate ten (10) years after the date on which the
amendments hereto are approved and adopted by the Board as set forth under
Paragraph 17 and no option shall be granted hereunder after the expiration of
such ten-year period. Options outstanding at the termination of the Plan shall
continue in full force and effect and shall not be affected thereby.
7
<PAGE> 39
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 7, 2000, commencing at 2:00 p.m., St. Louis time, at the St. Louis
Marriot West, 660 Maryville Centre 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 7, 2000 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 or adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL SAID NOMINEES AS DIRECTORS 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> 40
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING: PLEASE MARK
--- YOUR VOTES AS [X]
INDICATED IN
1. Election of Two Directors for terms expiring in 2003: THIS EXAMPLE
Nominees: Eugene M. Toombs and M. Stephen Yoakum
FOR WITHHOLD
nominee listed AUTHORITY
to vote for the (Instruction: To withhold authority to
nominee listed vote for any individual nominee,
[ ] [ ] strike a line through the nominee's
name on the list above.)
2. Proposal to approve an amendment of the Company's Amended and Restated
1994 Stock Option Plan, including an increase in the number of authorized
shares thereunder from 930,000 to 1,680,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve an amendment of the Company's 1996 Employee Stock
Purchase Plan, including an increase in the number of authorized shares
thereunder from 200,000 to 500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the appointment of KPMG Peat Marwick LLP as independent
auditor of the Company for the 2001 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE 2000 ANNUAL REPORT TO
SHAREHOLDERS AND THE NOTICE OF SAID ANNUAL MEETING AND ACCOMPANYING PROXY
STATEMENT.
Dated this _______ day of _______________________, 2000
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.
FOLD AND DETACH HERE
