SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
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
14(a)-12
THE SOLOMON-PAGE GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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
<PAGE>
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
THE SOLOMON-PAGE GROUP LTD.
1140 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 31, 1997
-------------
To the Stockholders of The Solomon-Page Group Ltd.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of THE SOLOMON-PAGE GROUP LTD., a Delaware corporation (the
"Company"), will be held at The Penn Club, 30 West 44th Street, New York, New
York 10036 on Monday, March 31, 1997 at 10:00 a.m., local time, for the
following purposes:
1. To elect two (2) Class I directors to the Board of
Directors to serve until the 2000 Annual Meeting of Stockholders;
2. To approve the Company's 1996 Stock Option Plan; and
3. To ratify the appointment of Moore Stephens, P.C.
(successor to Mortenson and Associates, P.C.) as the Company's
independent auditors for the fiscal year ending September 30, 1997; and
4. To transact such other business as may properly be
brought before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Wednesday,
February 19, 1997 as the record date for the Meeting. Only stockholders of
record on the stock transfer books of the Company at the close of business on
that date are entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Directors
ERIC M. DAVIS,
Secretary
New York, New York
February 19, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING,
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
1140 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
--------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 31, 1997
--------------------------
INTRODUCTION
The Proxy accompanying this Proxy Statement is being solicited by the
Board of Directors of The Solomon- Page Group Ltd., a Delaware corporation (the
"Company"), for use at the 1997 Annual Meeting of Stockholders of the Company
(the "Meeting") to be held at The Penn Club, 30 West 44th Street, New York, New
York 10036 on Monday, March 31, 1997 at 10:00 a.m., local time, and at any
adjournments thereof.
The principal executive offices of the Company are located at 1140
Avenue of the Americas, New York, New York 10036. The approximate date on which
this Proxy Statement and the accompanying Proxy will first be sent or given to
stockholders is February 20, 1997.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on February 19,
1997, the record date (the "Record Date") for the Meeting, will be entitled to
notice of, and to vote at, the Meeting and any adjournment(s) thereof. As of the
close of business on the Record Date, there were outstanding 5,129,285 shares of
the Company's common stock, $.001 par value (the "Common Stock"). Each
outstanding share of Common Stock is entitled to one vote. A majority of the
outstanding shares of Common Stock present in person or by Proxy is required for
a quorum.
VOTING OF PROXIES
Shares of Common Stock represented by Proxies that are properly
executed, duly returned and not revoked will be voted in accordance with the
instructions contained therein. If no instructions are contained in a Proxy, the
shares of Common Stock represented thereby will be voted (i) for election as
directors of the persons who have been nominated by the Board of Directors, (ii)
for approval of the 1996 Stock Option Plan, (iii) for ratification of the
appointment of Moore Stephens, P.C. (successor to Mortenson and Associates,
P.C.) as the Company's independent auditors for the fiscal year ending September
30, 1997, and (iv) upon any other matter that may properly be brought before the
Meeting, in accordance with the judgment of the person or persons voting the
Proxy. The execution of a Proxy will in no way affect a stockholder's right to
attend the Meeting and to vote in person. Any Proxy executed and returned by a
stockholder may be revoked at any time thereafter by written notice of
revocation given to the Secretary of the Company prior to the vote to be taken
at the meeting, by execution of a subsequent Proxy that is presented at the
Meeting, or by voting in person at the Meeting, in any such case, except as to
any matter or matters upon which a vote shall have been cast pursuant to the
authority conferred by such Proxy prior to such revocation. Broker "non-votes"
and the shares as to which a stockholder abstains are included for purposes of
determining whether a quorum of shares is present at a meeting. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting
<PAGE>
power with respect to that item and has not received instructions from the
beneficial owner. Broker "non-votes" are not included in the tabulation of the
voting results on the election of directors or issues requiring approval of a
majority of the votes cast and, therefore, do not have the effect of votes in
opposition in such tabulations. Proxies marked as abstaining with respect to the
proposal to ratify the appointment of independent auditors will have the effect
of a vote against such proposal.
The cost of solicitation of the Proxies being solicited on behalf of
the Board of Directors will be borne by the Company. In addition to the use of
the mails, proxy solicitation may be made by telephone, telegraph, overnight
courier and personal interview by officers, directors and employees of the
Company. The Company will, upon request, reimburse brokerage houses and persons
holding Common Stock in the names of their nominees for their reasonable
expenses in sending soliciting material to their principals.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Company's Common Stock as of February 19, 1997 by each person known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, each director, nominee for director and executive officer and by all
directors and executive officers of the Company as a group. Unless otherwise
indicated, the address of each person or entity listed below is the Company's
principal executive offices.
Name and Address(1) Shares Percentage
Of Beneficial Owner Beneficially Owned(2) of Class
- ------------------- --------------------- --------
Herbert Solomon............................. 657,600(3) 12.5%
Lloyd Solomon............................... 950,000(3) 18.0%
Scott Page.................................. 750,000(3) 14.2%
Eric M. Davis............................... 100,000 1.9%
Edward Ehrenberg(4)......................... 6,500(6) *
Joel A. Klarreich(5)........................ 6,500(6) *
All Directors and Executive Officers
as a Group (6 persons)..................... 2,470,600 44.2%
- --------------------------
* Less than 1%.
(1) All of such persons have sole investment and voting power over the shares
listed as being beneficially owned by them.
(2) All persons identified below as holding options are deemed to be
beneficial owners of shares of Common Stock subject to such options by
reason of their right to acquire such shares within 60 days after February
19, 1997.
(3) Includes 150,000 shares subject to options.
(4) Mr. Ehrenberg's address is 76 Sayre Drive, Princeton, New Jersey 08540.
(5) Mr. Klarreich's address is c/o Newman Tannenbaum Helpern Syracuse &
Hirschtritt LLP, 900 Third Avenue, New York, New York 10022.
(6) Includes 6,500 shares subject to options.
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<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
Article Six of the Certificate of Incorporation of the Company provides
for the organization of the Board of Directors into three classes. All directors
are chosen for a full three-year term to succeed those whose terms expire. It is
proposed that two directors be elected as Class I Directors to serve until the
2000 Annual Meeting of Stockholders and until their respective successors are
elected and shall qualify.
Unless otherwise specified, all Proxies received will be voted in favor
of the election of Lloyd Solomon and Joel A. Klarreich as Class I Directors to
serve until the 2000 Annual Meeting of Stockholders. Directors are to be elected
by a plurality of the votes cast, in person or by proxy, at the Meeting. All
nominees for director are currently directors of the Company. Management has no
reason to believe that any of the nominees will not remain a candidate for
election at the date of the Meeting. Should any of the nominees not then remain
a candidate, the Proxies will be voted in favor of those nominees who remain
candidates and may be voted for substitute nominees selected by the Board of
Directors. The following table and the paragraphs following the table set forth
information regarding the current ages, terms of office and business experience
of the current and proposed directors of the Company:
Expiration of
Current Term of
Name Age Office as Director
- ---- --- ------------------
NOMINEES FOR ELECTION AS DIRECTORS:
CLASS I DIRECTORS:
Lloyd Solomon 37 1997
Joel A. Klarreich 50 1997
CONTINUING MEMBERS OF THE BOARD OF
DIRECTORS:
CLASS II DIRECTORS:
Herbert Solomon 66 1998
Eric M. Davis 35 1998
CLASS III DIRECTORS:
Scott Page 31 1999
Edward Ehrenberg 66 1999
LLOYD SOLOMON (Class I) has been the Vice Chairman of the Board of
Directors and the Chief Executive Officer of the Company since June 1995. Prior
to his election to these positions, he had been the President or an Executive
Vice President and a director of the Company since the inception of its business
in 1990. From 1986 through 1990, Mr. Solomon served as an Executive Vice
President of Rand Thomson Consulting Group, a personnel services firm. Mr.
Solomon received an M.B.A. from New York University and a B.A. from Boston
University. He is the son of Herbert Solomon and the brother-in-law of Scott
Page.
JOEL A. KLARREICH (Class I) has been a director of the Company since
June 1995. Mr. Klarreich has been a practicing attorney since 1968 and member of
the law firm of Newman Tannenbaum Halpern Syracuse &
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<PAGE>
Hirschtritt LLP since 1996. He is general counsel to the Association of
Personnel Consultants of New York State, the sole statewide trade association of
permanent placement firms in New York. From 1988 to 1996, Mr. Klarreich was a
member of the law firm of Klein, Heisler & Klarreich, P.C. From 1988 to 1990,
Mr. Klarreich was general counsel of the New York Association of Temporary
Services, the sole statewide trade association of temporary services. From 1984
to 1988, he was Executive Vice President, general counsel and a director of
Cosmopolitan Care Corporation, an American Stock Exchange listed permanent and
temporary staffing firm. He has a B.B.A. from the City College of the City of
New York and J.D. from St. John's University School of Law.
HERBERT SOLOMON (Class II) has been the Chairman of the Board of the
Company since August 1990, shortly after he retired from his previous executive
career in the apparel and retail industries. From 1981 to 1990, Mr. Solomon was
Executive Vice President -- Merchandising of Amcena Corporation, which owned
Ohrbach's, a leading apparel retailer. From 1976 to 1981, he served as Chairman
of the Board and Chief Executive Officer of Ohrbach's. Mr. Solomon received a
B.B.A. degree from Bernard Baruch College of the City of New York. Mr. Solomon
is the father of Lloyd Solomon and the father-in-law of Scott Page.
ERIC M. DAVIS (Class II) has been Vice President and Chief Financial
Officer of the Company since February 1994, and a director of the Company since
September 1994. From 1984 through February 1994, Mr. Davis was employed by
Mortensen and Associates, P.C., a predecessor of Moore Stephens, P.C., the
Company's auditors. Mr. Davis is a Certified Public Accountant and received a
B.S. degree from Davis & Elkins College, Elkins, West Virginia.
SCOTT PAGE (Class III) has been the President of the Company since June
1995. Prior to becoming President, he had been an Executive Vice President of
the Company since August 1991, when he was also elected a director. From 1989 to
1991, Mr. Page served as a managing director of Rand Thomson Consulting Group.
From 1988 to 1989, Mr. Page served as a recruitment and placement counselor for
Dan Roberts Associates. From 1986 to 1988, Mr. Page served as a recruitment and
placement counselor for Lansing Personnel. Mr. Page is the son-in-law of Herbert
Solomon and the brother-in-law of Lloyd Solomon.
EDWARD EHRENBERG (Class III) has been a director of the Company since
June 1995. Mr. Ehrenberg has been the President of E.E. Enterprises, a
consulting firm, since 1988. Mr. Ehrenberg was Vice President and General
Manager of U.S. Operations of Electrocatalytic, Inc., a manufacturer and
marketer of cathodic protection and chlorine generating products, from March
1995 to June 1995. He was Executive Vice President of Enzon, Inc., a public
biotech company in Piscataway, New Jersey from August 1991 to August 1992. Mr.
Ehrenberg has held executive positions with the Ford Motor Company, Xerox,
International Harvester and was Chairman and Chief Executive Officer of CH
Holdings, Chicago, Illinois prior to moving to New Jersey. Mr. Ehrenberg has an
M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. from
New York University.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
For the fiscal year ended September 30, 1996, there were two meetings
of the Board of Directors. In addition, members of the Board of Directors
consulted regularly with each other and from time to time acted by unanimous
written consent pursuant to the laws of the State of Delaware. The Board of
Directors established the three standing committees described below on June 8,
1995. One meeting of the Audit Committee was held during the fiscal year ended
September 30, 1996. No meetings of the Compensation Committee and the Stock
Option Committee were held during the fiscal year ended September 30, 1996.
Prior to establishing these committees, the customary functions of such
committees had been performed by the entire Board of Directors. The Board of
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<PAGE>
Directors does not presently have a standing nominating committee, the customary
functions of such committee being performed by the entire Board of Directors.
The members of the Audit Committee are Lloyd Solomon, Edward Ehrenberg
and Joel A. Klarreich. The Audit Committee reviews, analyzes and makes
recommendations to the Board of Directors with respect to the Company's
accounting policies, controls and statements, consults with the Company's
independent public accountants, reviews filings containing financial information
of the Company to be made with the Securities and Exchange Commission and
reviews for approval proposed transactions in the Company's securities by
officers, directors and employees of the Company in light of applicable
statutes, rules and regulations.
The members of the Compensation Committee are Herbert Solomon, Edward
Ehrenberg and Joel A. Klarreich. The Compensation Committee reviews and approves
the salary and other compensation of officers and employees of the Company,
including non-cash benefits, and designates the employees entitled to
participate in the Company's benefit plans and other arrangements, as from time
to time constituted, exclusive of stock option plans, agreements and
arrangements.
The members of the Stock Option Committee are Edward Ehrenberg and Joel
A. Klarreich. The Stock Option Committee determines the terms of grants of stock
options and the persons to whom such options shall be granted in accordance with
the Company's stock option plans and administers such plans.
EXECUTIVE COMPENSATION
The following table provides summary information concerning cash and
certain other compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officer and each of the other most highly compensated
executive officers of the Company whose compensation exceeded $100,000 for the
three years ended September 30, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- -------------------------
OTHER ANNUAL RESTRICTED
NAME AND COMPENSATION STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS ($) OPTIONS(#) COMPENSATION(2)
------------------ ---- --------- -------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert Solomon
Chairman of the Board.......... 1996 $225,000 -- -- -- 200,000(3) $17,136
1995 200,000 -- -- -- 150,000 13,941
1994 200,000 -- -- 100,000(4) --
Lloyd Solomon
Chief Executive Officer........ 1996 $350,000 $ 32,110 -- -- 200,000(3) $18,238
1995 350,000 -- -- -- 150,000 1,520
1994 200,000 121,416 -- -- 100,000(4) --
Scott Page
President...................... 1996 $200,000 $615,988(5) -- -- 200,000(3) $13,457
1995 200,000 350,818(5) -- -- 150,000 4,486
1994 200,000 277,008(5) -- -- 100,000(4) --
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- -------------------------
OTHER ANNUAL RESTRICTED
NAME AND COMPENSATION STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS ($) OPTIONS(#) COMPENSATION(2)
------------------ ---- --------- -------- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Eric M. Davis
Vice President - Finance
Chief Financial Officer........ 1996 $130,000 $ 25,000 -- -- -- --
1995 109,655 15,000 -- -- 40,000 --
1994(6) 70,115 10,000 -- -- 30,000 --
</TABLE>
- ---------------------
(1) Although the officers receive certain perquisites such as auto allowances
and Company credit cards, the value of such perquisites did not exceed for
any officer the lesser of $50,000 or 10% of the officer's salary and
bonus.
(2) Represents premiums paid by the Company with respect to split-dollar life
insurance obtained for the benefit of the named executive officers.
(3) Represents options issued in consideration for terminating the escrow
share agreement. See "escrow shares below." such options are subject to
stockholder approval of the 1996 Plan.
(4) These options were cancelled by agreement dated January 25, 1996 between
the Company and the executive officers.
(5) Represents commissions payable under Mr. Page's employment agreement equal
to 30% of the revenues generated by his recruitment and placement
activities as a recruitment and placement counselor.
(6) Represents compensation from February 1, 1994, the date of Mr. Davis's
commencement of employment with the Company.
The following table sets forth certain information regarding stock
option grants made to officers of the Company during the fiscal year ended
September 30, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE
---- ------------- ------------ -------- ----
<S> <C> <C> <C> <C> <C>
Herbert Solomon............ 132,156 17.5 $2.27 9/17/01
67,844 9.0 $2.06 9/17/06
Lloyd Solomon.............. 132,156 17.5 $2.27 9/17/01
67,844 9.0 $2.06 9/17/06
Scott Page................. 132,156 17.5 $2.27 9/17/01
67,844 9.0 $2.06 9/17/06
</TABLE>
- --------------------
(1) Such options are subject to stockholder approval of the 1996 Plan and
become exercisable (i) as to one-third of the shares covered thereby
commencing September 18, 1997, (ii) as to an additional one-third of the
shares covered thereby commencing September 18, 1998 and (iii) as to the
remaining one-third of such shares commencing September 18, 1999.
The following table sets forth certain information regarding
unexercised stock options held by officers of the Company as of September 30,
1996. No stock options were exercised by such officers during the fiscal year
ended September 30, 1996.
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<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options at Value of Unexercised in-the-money Options
September 30, 1996(#) at September 30, 1996 ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable (1)
---- ------------------------- -----------------------------
<S> <C> <C>
Herbert Solomon............... 150,000/200,000 112,500/4,410
Lloyd Solomon................. 150,000/200,000 112,500/4,410
Scott Page.................... 150,000/200,000 112,500/4,410
Eric M. Davis................. 0/70,000 0/35,000
</TABLE>
- --------------------
(1) Based on the market value of $2.125 per share of Common Stock at
September 30, 1996 and exercise prices ranging from 1.25 to 2.27 per
share.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Herbert
Solomon, Lloyd Solomon and Scott Page, dated June 14, 1993 and amended June 8,
1995 in the case of Lloyd Solomon and Scott Page, pursuant to which Herbert
Solomon agreed to serve as Chairman of the Board of the Company, Lloyd Solomon
agreed to serve as Vice Chairman of the Board and Chief Executive Officer of the
Company and Scott Page agreed to serve as President of the Company. Pursuant to
his employment agreement, Herbert Solomon receives a base salary of $225,000
(increased from $200,000 effective October 1, 1995), which amount is to be
annually reviewed and may be increased by the Board of Directors and, in
addition, payments equal to 20% of the revenues generated by his recruitment and
placement activities as a recruitment and placement counselor. Pursuant to his
employment agreement, Lloyd Solomon receives a base salary of $350,000, which
amount is to be annually reviewed and may be increased by the Board of
Directors, and, in addition, incentive compensation for each fiscal year during
the term of his employment equal to that percentage of the Company's pre-tax
operating income as equals the percentage of the Company's revenue represented
by the Company's pre-tax operating income. By way of example, in a particular
year, should the Company's pre-tax operating income equal 5% of the Company's
revenue, Lloyd Solomon would be entitled to receive as incentive compensation an
amount equal to 5% of the Company's pre-tax operating income. Pursuant to his
employment agreement, Scott Page receives a base salary of $200,000, which
amount is to be annually reviewed and may be increased by the Board of Directors
and, in addition, payments equal to 30% of the revenues generated by his
recruitment and placement activities as a recruitment and placement counselor.
Each employment agreement provides for an initial term of five years
ending June 13, 1998, which is to be extended automatically from year-to-year
unless terminated by either party. Each employment agreement provides that if
the employee is terminated other than for "cause" (as defined therein), he is to
continue to receive the compensation provided for under his employment
agreement, and that if he becomes disabled (as defined therein), the Company may
elect to place him on disability status, in which event he would be paid
one-half of the compensation provided for under his employment agreement. Each
of these employment agreements provides for a payment of three times the
employee's compensation during the most recent fiscal year in the event of a
change in control of the Company, which is defined therein to mean (a) a change
in control as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (b) a person (as such term is defined in
Sections 13(d) and 14(d) of the Exchange Act) other than a current director or
officer of the Company becoming the beneficial owner, directly or indirectly, of
20% of the voting power of the Company's outstanding securities or (c) the
members of the Board of Directors at the beginning of any two-year period
ceasing to constitute at least a majority of the Board of Directors at any time
during such two-year period unless the election of any new director during such
period has been approved in advance by two-thirds of the directors in office at
the beginning of such two-year period. Each employment agreement prohibits the
employee from competing with the Company's business during the term thereof and
for a period of one year thereafter.
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<PAGE>
ESCROW SHARES
On September 18, 1996, the Company terminated the agreement relating to
the Escrow Shares described below. In consideration for terminating the escrow
share agreement, the Company granted stock options to purchase 200,000 shares of
common stock at not less than current fair market value to each of Herbert
Solomon, Lloyd Solomon and Scott Page. Such options are subject to stockholder
approval of the 1996 Plan.
In connection with the employment agreements between the Company and
each of Herbert Solomon, Lloyd Solomon and Scott Page, these persons placed in
escrow an aggregate of 794,136 shares of Common Stock (the "Escrow Shares"). In
the event the Company's earnings before income tax as reported in the Company's
audited financial statements, subject to adjustment (the "Minimum Pre-Tax
Earnings"), equaled or exceeded the amounts listed below for any fiscal year
ending on or prior to September 30, 1999, the Escrow Shares were to be released
from escrow and delivered to such stockholders in the amounts set forth opposite
the Minimum Pre-Tax Earnings listed below:
Minimum Pre-Tax Earnings Escrow Shares to be Released
------------------------ ----------------------------
$1,000,000 264,712
$2,000,000 264,712
$3,000,000 264,712
In the event that any of the Escrow Shares had been released, the
aggregate fair market value thereof on the date of release would have been
treated for financial reporting purposes as compensation expense to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
One report on Form 4 relating to the grant to each of Herbert Solomon,
Lloyd Solomon and Scott Page of options to acquire 200,000 shares of Common
Stock was filed six days late.
1993 LONG-TERM INCENTIVE PLAN
DESCRIPTION OF PLAN
On August 6, 1993, the Company adopted the 1993 Incentive Plan in order
to motivate qualified employees of the Company, to assist the Company in
attracting employees and to align the interests of such persons with those of
the Company's stockholders. The 1993 Incentive Plan provides for the grant of
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), "non-qualified stock options,"
restricted stock, performance grants and other types of awards to officers, key
employees, consultants and independent contractors of the Company and its
affiliates.
The 1993 Incentive Plan, which is administered by the Stock Option
Committee of the Board of Directors, currently authorizes the issuance of a
maximum of 1,500,000 shares of Common Stock, which may be either newly issued
shares, treasury shares, reacquired shares, shares purchased in the open market
or any combination thereof. If any award under the 1993 Incentive Plan
terminates, expires unexercised, or is cancelled, the shares of Common
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<PAGE>
Stock that would otherwise have been issuable pursuant thereto will be available
for issuance pursuant to the grant of new awards. The number of shares of Common
Stock available under the 1993 Incentive Plan and the terms of any option or
other award granted thereunder are subject to adjustment in the event of a stock
split, combination of shares, stock dividend or certain other events if the
Stock Option Committee determines that such event equitably requires such an
adjustment. In the event of a change in control of the Company (as defined in
the 1993 Incentive Plan), the 1993 Incentive Plan provides among other things
that all stock options outstanding on the date of such change in control shall
become immediately exercisable in full.
As of February 19, 1997, there were options outstanding under the 1993
Incentive Plan with respect to an aggregate of 1,203,500 shares of Common Stock.
Of these, Herbert Solomon, Lloyd Solomon and Scott Page held five-year options
with respect to 150,000 shares of Common Stock each, at an exercise price of
$1.375 per share exercisable as to one-third of the shares covered thereby
commencing July 15, 1995 and as to the remaining shares covered thereby
commencing February 15, 1996. Other employees held options for periods of 10
years with respect to an aggregate of 753,500 shares, at exercise prices ranging
from $.625 to $2.50 per share. Of such options, Eric M. Davis held options to
purchase 30,000 shares exercisable at $2.50 per share and options to purchase
40,000 shares exercisable at $1.25 per share. Each of these options may be
exercised as to one-third of the shares covered thereby commencing on the third
anniversary of the date of the grant, as to a further one-third of such shares
commencing on the fourth anniversary thereof, and as to the remaining shares
covered thereby commencing on the fifth anniversary thereof.
For a discussion of federal income tax consequences under the 1993
Incentive Plan, see Proposal II.
LONG-TERM INCENTIVE AND RETIREMENT PLANS
The Company maintains a 401(k) savings plan, which covers substantially
all employees. Under the plan, employees may elect to defer up to 15% of their
salary, subject to Internal Revenue Code limits. The Company may make a
discretionary match as well as a discretionary contribution. As of September 30,
1996, the Company had not made any contributions to the Plan. Aside from the
1993 Incentive Plan, the 401(k) plan and the 1996 Stock Option Directors' Plans,
both described below, the Company does not have any other long-term incentive
plans and the Company does not have any defined benefit pension plans.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company receive such
compensation for their services as the Board of Directors may from time to time
determine. Currently, directors who are not employees of the Company receive a
fee of $1,000 for each Board of Directors meeting attended, and $1,000 per year
for each committee upon which such director serves, plus reasonable
out-of-pocket expenses. Directors who are officers or employees of the Company
are not entitled to any compensation for their service as a director.
1995 DIRECTORS' STOCK OPTION PLAN
On August 17, 1995 the Company adopted the 1995 Directors' Stock Option
Plan (the "Directors' Plan"), in which each director who is not an officer or
employee of the Company (each an "Eligible Director") is eligible to
participate. The purpose of the Directors' Plan is to secure for the Company and
its stockholders the benefits arising from stock ownership by its Eligible
Directors by providing a means whereby such Directors may purchase shares of
Common Stock pursuant to options granted in accordance with the Directors' Plan.
The Directors' Plan provides that each Eligible Director is to receive the grant
of an option to purchase 10,000 shares of Common Stock on the date such Eligible
Director is first elected as a member of the Board of Directors. To the extent
that shares of Common Stock remain available for the grant of options under the
Directors' Plan, on January 1st of each year commencing January 1, 1996, each
Eligible Director is to be granted an option to purchase 3,000 shares of Common
Stock. Unless terminated earlier by the Board of Directors, the Directors' Plan
will terminate on June 7, 2005.
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The Directors' Plan, which is administered by the Board of Directors,
currently authorizes the issuance of a maximum of 100,000 shares of Common
Stock, subject to adjustment, pursuant to the exercise of options granted
thereunder. Such shares may be authorized but unissued shares or reacquired
shares. The number of shares of Common Stock available under the Directors' Plan
is subject to adjustment to prevent dilution in the event of a stock split,
combination of shares, stock dividend or certain other events. If an option
granted under the Directors' Plan, or any portion thereof, expires or terminates
for any reason without having been exercised in full, the unpurchased shares of
Common Stock covered by such option shall be available for future grants of
options. As of the date hereof, options to purchase an aggregate of 20,000
shares of Common Stock at an exercise price of $2.00 per share, and an aggregate
of 6,000 shares of Common Stock at an exercise price of $0.5625 per share and an
aggregate of 6,000 shares of Common Stock at an exercise price of $1.875 per
share, have been granted pursuant to the Directors' Plan, and are held in equal
proportions by Eligible Directors, as follows:
Edward Ehrenberg........................................16,000
Joel A. Klarreich.......................................16,000
The initial option granted to each director under the Directors' Plan is
exercisable commencing on the first anniversary of the date of grant as to
one-half of the shares covered thereby and commencing on the second anniversary
thereof as to the remaining one-half of such shares.
Options granted annually under the Directors' Plan are exercisable at
such time or times (not earlier than six months after the date of grant) and
subject to such terms and conditions as shall be determined by the Board of
Directors at grant; PROVIDED, HOWEVER, that in the case of an Eligible
Director's death or Permanent Disability (as defined in the Directors' Plan) the
options held thereby will become immediately exercisable, unless a longer
vesting period is otherwise determined by the Board of Directors at grant.
The exercise price of each option is the market value thereof on the
date of grant or on the preceding date on which the Common Stock is traded if no
shares were traded on the date of grant. The term of each option is 10 years
from the date of grant, subject to early termination by the Board of Directors.
The Directors' Plan also provides for the earlier termination of options in the
event a Director's membership on the Board of Directors terminates.
All options granted under the Directors' Plan are non-transferable and
non-assignable except by will or by the laws of descent and distribution and may
be exercised during an Eligible Director's lifetime only by such Eligible
Director, his guardian or legal representative. If an Eligible Director's
membership on the Board of Directors terminates for any reason other than cause,
including death of such Eligible Director, an option held on the date of
termination may be exercised in whole or in part at any time within one year
after the date of such termination (but in no event after the term of such
option expires) and shall thereafter terminate. If an Eligible Director's
membership on the Board of Directors is terminated for cause, which
determination shall be made by the Board of Directors, options held by such
Eligible Director shall terminate concurrently with termination of membership.
The Company intends to file a registration statement under the
Securities Act of 1933, as amended, with respect to the Common Stock issuable
pursuant to the Directors' Plan.
For a discussion of federal income tax consequences under the
Directors' Plan, see Proposal II.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between March 1990 and July 1991, Mr. Herbert Solomon loaned an
aggregate of $215,000 to the Company, of which approximately $54,200 was
outstanding at September 30, 1994 (and was repaid in November 1994). The loan
provided for interest on the outstanding balance thereof at a rate equal to
approximately 7.5% per annum.
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In connection with the Company's initial public offering, the staff of
the National Association of Securities, Inc. Automated Quotation System
("Nasdaq") initially rejected the Company's application for inclusion of the
Company's securities on the Nasdaq SmallCap Market. The Nasdaq staff noted in
its rejection letter that in February 1994, the Commission settled civil fraud
charges against the underwriter of the initial public offering, Stratton
Oakmont, Inc., Jordan Belfort and Daniel Porush, and that in connection
therewith, among other things, Mr. Belfort agreed to be barred from association
with any broker dealer in any capacity and that Mr. Porush was suspended from
associating in a supervisory capacity with a broker dealer for 12 months. The
Nasdaq staff advised the Company that the reason for this rejection was that
Messrs. Belfort and Porush would have a combined ownership of approximately
23.1% of the Company's securities after giving effect to such offering. In view
of this rejection, on September 13, 1994, Solomon Page Group Holdings Inc.,
which acquired 1,050,000 shares of Common Stock (as adjusted for the 3-for-2
stock split effective in June 1994) in June 1993 for a purchase price equal to
$250,000, effected a pro rata distribution of such shares of Common Stock to its
stockholders. As a result thereof, Jordan Belfort, a former principal of the
underwriter, acquired direct ownership of 661,500 shares of Common Stock and
Daniel Porush, President of the underwriter, acquired direct ownership of
283,500 shares of Common Stock. On September 14, 1994 and September 21, 1994,
Jordan Belfort and Daniel Porush sold all of their shares of Common Stock to
Craig Michael Corp., a Delaware corporation owned and controlled by Lloyd
Solomon, the Company's founder, Chief Executive Officer and Director, which
conducts no business operations other than holding such shares of Common Stock.
Pursuant to these transactions, Craig Michael Corp. issued promissory notes to
Jordan Belfort and Daniel Porush in the aggregate principal amounts of
$2,646,000 and $1,134,000, respectively, bearing interest at the rate of 7% per
annum and maturing on the earlier of (a) September 14, 1995 or (b) on demand. In
November 1994, the 945,000 shares of Common Stock owned by Craig Michael Corp.
were sold for $3,898,125 and the notes were repaid. As a result of the sale and
repayment, Messrs. Belfort and Porush received profits on their original
investment in June 1993 of $225,000 in an amount equal to $3,673,125 and no
longer own any shares of Common Stock.
PROPOSAL II - APPROVAL OF 1996 STOCK OPTION PLAN
The Board of Directors has unanimously approved for submission to a
vote of stockholders a proposal to approve the 1996 Stock Option Plan (the "1996
Plan") set forth in Appendix A to this proxy statement. The following discussion
of the 1996 Stock Option Plan is qualified in its entirety by reference to
Appendix A.
The purpose of the 1996 Plan is to provide additional incentive to the
officers, directors and employees of the Company who are primarily responsible
for the management and growth of the Company, and to consultants and advisors to
the Company who otherwise materially contribute to the conduct and direction of
its business, operations and affairs, in order to strengthen their desire to
remain in the employ or retention of the Company and to stimulate their efforts
on behalf of the Company, and to retain and attract to the employ of the Company
persons of competence. The 1996 Plan provides for the grant of both "incentive
stock options" and "nonqualified stock options." Any employee shall be eligible
to receive incentive stock options or nonqualified stock options. Consultants
and advisors to the Company and directors of the Company who are not employees
shall be eligible to receive nonqualified stock options.
ADMINISTRATION
The Stock Option Committee (the "Committee"), composed of two or more
non-management directors that are "non-employee directors" within the meaning of
Rule 16b-3 promulgated under the Exchange Act and "outside directors" under
Section 162(m) of the Code, administers the granting of stock options to
officers, directors and employees of the Company under the 1996 Plan.
COMMON STOCK SUBJECT TO THE 1996 PLAN
The 1996 Plan currently authorizes the issuance of a maximum of
1,000,000 shares of Common Stock. The maximum number of shares that may be
subject to options granted under the 1996 Plan to any individual in any calendar
year may not exceed 200,000 and the method of counting such shares shall conform
to any requirements
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applicable to "performance-based" compensation under Section 162(m) of the Code.
It is intended that compensation realized upon the exercise of an option granted
under the 1996 Plan will therefore be regarded as "performance-based" under
Section 162(m) of the Code and that such compensation may be deductible without
regard to the limits of Section 162(m) of the Code. See Performance Based
Compensation below. If any option under the 1996 Plan 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 1996 Plan.
Options to purchase 600,000 shares of Common Stock previously granted
under the 1996 Plan are subject to stockholder approval of the 1996 Plan. The
1996 Plan will become effective upon such approval.
EXERCISE PRICE AND TERM
The option price per share applicable to options granted under the 1996
Plan shall be determined by the Committee, but (i) as to an incentive stock
option shall not be less than 100% of the fair market value per share of Common
Stock on the date such option is granted and (ii) as to a nonqualified stock
option, shall not be less than 80% of the fair market value on the date such
option is granted. If an option granted to the Company's Chief Executive Officer
or to any of the Company's other four most highly compensated officers is
intended to qualify as "performance-based" compensation under Section 162(m) of
the Code, the exercise price of such option shall not be less than 100% of the
fair market value on the date such option is granted. The Committee shall fix
the term of each option, provided that the maximum length of the term of each
option granted under the 1996 Plan shall be 10 years.
PERFORMANCE-BASED COMPENSATION
Section 162(m) of the Code, in general, disallows the Company a federal
income tax deduction for total remuneration in excess of $1 million paid to the
Company's Chief Executive Officer or to any of the Company's four most highly
compensated officers other than the Chief Executive Officer in any one year.
However, Section 162(m) exempts "performance-based" compensation, such as stock
option based compensation, if it is awarded under a stockholder-approved plan
that meets certain requirements. In accordance with Treasury regulations issued
under Section 162(m), compensation attributable to stock options will qualify as
"performance-based" compensation, provided that (i) the option plan contains a
per-employee limitation on the number of shares for which options may be granted
during a specified period, (ii) the per-employee limitation is approved by the
stockholders, (iii) the option is granted by a compensation committee comprised
solely of "outside directors," and (iv) the exercise price of the option is no
less than the fair market value of the stock on the date of grant. Accordingly,
the 1996 Plan provides that the maximum number of shares that may be subject to
options thereunder to any individual in any calendar year shall not exceed
200,000. It is intended that compensation realized upon the exercise of an
option granted under the 1996 Plan to the Company's Chief Executive Officer or
to any of the Company's other four most highly compensated officers will
therefore be regarded as "performance-based" under Section 162(m) of the Code
and that such compensation may be deductible without regard to the limits of
Section 162(m) of the Code. Grants of options to Herbert Solomon, Lloyd Solomon
and Scott Page in September 1996 under the 1996 Plan are conditioned upon
stockholder approval of the 1996 Plan. Further, there will be no additional
grants to the Company's Chief Executive Officer or to any of the Company's other
four most highly compensated officers under the 1996 Plan unless such plan is
approved by the stockholders.
CHANGE IN CONTROL
In the event of a change in control of the Company, new option rights
may be substituted for the option rights granted under the 1996 Plan, or the
Company's duties as to options outstanding under the 1996 Plan may be assumed,
by the successor to the Company. In the event that new option rights are not
substituted, or are not substantially equivalent to, the option rights granted
under the 1996 Plan, or are not assumed, the option rights granted under the
1996 Plan shall terminate and thereupon become null and void (i) upon
dissolution or liquidation of the Company, or similar occurrence, (ii) upon any
merger, consolidation, acquisition, separation, reorganization,
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or similar occurrence, in which the Company will not be a surviving entity or
(iii) upon a transfer of all or substantially all of the assets of the Company
or more than 80% of the outstanding shares of Common Stock; PROVIDED, HOWEVER,
that each option holder shall have the right immediately prior to or
concurrently with such dissolution, liquidation, merger, consolidation,
acquisition, sale of all or substantially all assets, separation, reorganization
or similar occurrence, to exercise any unexpired option rights granted hereunder
whether or not then exercisable.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. Incentive stock options granted under the 1993
Plan or the 1996 Plan (together with the Directors' Plan, the "Plans") are
intended to be "incentive stock options" within the meaning of Section 422 of
the Code. Under present law, the grantee of an incentive stock option will not
realize taxable income upon the grant or the exercise of the incentive stock
option and the Company will not receive an income tax deduction at either such
time. If the optionee does not sell the Common Stock acquired upon exercise of
an incentive stock option within either (i) two years after the grant of the
incentive stock option or (ii) one year after the date of exercise of the
incentive stock option, the gain upon a subsequent sale of the Common Stock will
be taxed as long-term capital gain. If the optionee, within either of the above
periods, disposes of the Common Stock acquired upon exercise of the incentive
stock option, the optionee will recognize as ordinary income an amount equal to
the lesser of (i) the gain realized by the optionee upon such disposition or
(ii) the difference between the exercise price and the fair market value of the
shares on the date of exercise. In such event, the Company would be entitled to
a corresponding income tax deduction equal to the amount recognized as ordinary
income by the optionee. The gain in excess of such amount recognized by the
optionee as ordinary income would be taxed as long-term capital gain or
short-term capital gain (subject to the holding period requirements for
long-term or short-term capital gain treatment).
The exercise of an incentive stock option will generally result in the
excess of the Common Stock's fair market value on the date of exercise over the
exercise price being included in the optionee's alternative minimum taxable
income ("AMTI"). If the Common Stock is subject to a risk of forfeiture and is
nontransferable, the excess described above will be included in AMTI when the
risk of forfeiture lapses or the shares become transferable, whichever occurs
sooner. Liability for the alternative minimum tax is a complex determination and
depends upon an individual's overall tax situation. Before exercising an
incentive stock option, an optionee should discuss the possible application of
the alternative minimum tax with his tax advisor.
NON-QUALIFIED STOCK OPTIONS. Upon exercise of a non-qualified stock
option granted under the Plans, the optionee will recognize ordinary income in
an amount equal to the excess of the fair market value of the Common Stock
received over the exercise price of such Common Stock. That amount will increase
the optionee's basis in the Common Stock acquired pursuant to the exercise of
the option. Upon a subsequent sale of the Common Stock, the optionee will
recognize short term or long term gain or loss depending upon his holding period
for the Common Stock and upon the subsequent appreciation or depreciation in the
market value of the Common Stock. The Company will be allowed a federal income
tax deduction for the amount recognized as ordinary income by the optionee upon
the optionee's exercise of the option.
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NEW PLAN BENEFITS(1)
1996 Stock Option Plan(2)
Name and Position Dollar Value Number of Units
----------------- ------------ ---------------
Lloyd Solomon N/D 200,000
Chief Executive Officer....... N/D
Executive Group............... N/D 600,000
N/D
Non-Executive Director N/D ----
Group.........................
Non-Executive Employee N/D ----
Group.........................
(1) N/D means that the amount is not determinable.
(2) As benefits are not determinable pursuant to Instruction 3 of Item 10
of Reg. Sec. 240.14a-101 of the Exchange Act, benefits stated are the
number of shares covered by options granted to each of the groups of
employees under the 1996 Plan in 1996. Such grants are subject to
stockholder approval of the 1996 Plan. The future value, if any, is not
determinable. Options become exercisable to the extent of one-third of
the shares covered thereby on each of the first, second and third
anniversaries of the grant.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1996
STOCK OPTION PLAN.
PROPOSAL III - RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has appointed Moore Stephens, P.C. (successor to
Mortenson and Associates, P.C.) as the Company's independent auditors for the
fiscal year ending September 30, 1997. Although the selection of auditors does
not require ratification, the Board of Directors has directed that the
appointment of Moore Stephens, P.C. be submitted to stockholders for
ratification due to the significance of such firm's appointment to the Company.
Approval by holders of the majority of shares of Common Stock represented in
person or by proxy at the Meeting is necessary for stockholder ratification of
the appointment of Moore Stephens, P.C. If stockholders do not ratify the
appointment of Moore Stephens, P.C., the Board of Directors will consider the
appointment of other certified public accountants. A representative of the
auditors is expected to be present at the Meeting, and will have the opportunity
to make such statements as he may care to make and will respond to appropriate
questions from stockholders of the Company.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF MOORE STEPHENS, P.C. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1997.
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ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1996, including financial statements, is enclosed herewith. If,
for any reason, you did not receive your copy of the Annual Report, please
advise the Company and another will be sent to you.
STOCKHOLDER PROPOSALS
Stockholder proposals in respect of matters to be acted upon at the
Company's 1998 Annual Meeting of Stockholders should be received by the Company
on or before October 19, 1997 in order that they may be considered for inclusion
in the Company's proxy materials.
By Order of the Board of Directors
Eric M. Davis, Secretary
New York, New York
February 19, 1997
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APPENDIX A
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THE SOLOMON-PAGE GROUP LTD.
1996 STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of this 1996 Stock Option Plan (the "Plan") is to
provide additional incentive to the officers, directors and employees of the
Company who are primarily responsible for the management and growth of the
Company, and to consultants and advisors to the Company who otherwise materially
contribute to the conduct and direction of its business, operations and affairs,
in order to strengthen their desire to remain in the employ or retention of the
Company and to stimulate their efforts on behalf of the Company, and to retain
and attract to the employ of the Company persons of competence. Each option
granted pursuant to the Plan shall be designated at the time of grant as either
an "incentive stock option" or as a "nonqualified stock option." The terms and
conditions of the Plan shall be set forth or incorporated by reference in the
option agreements evidencing the options.
The Company intends that the Plan meet the requirements of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan be exempt from the operation of Section 16(b)
of the Exchange Act. Further, the Plan is intended to satisfy the
performance-based compensation exception to the limitation on the Company's tax
deductions imposed by Section 162(m) of the Code. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. Definitions
For the purposes of the Plan, unless the context otherwise
requires, the following definitions shall be applicable:
(a) "Board" or "Board of Directors" means the Company's
Board of Directors.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Stock Option Committee
composed of two or more directors who are Non-Employee Directors and Outside
Directors and who shall be elected by, and shall serve at the pleasure of, the
Board of Directors, and shall be responsible for administering the Plan.
(d) "Company" means The Solomon-Page Group Ltd., a
Delaware corporation.
(e) "Employee" means an employee of the Company or of
a Subsidiary (including a director or officer of the Company or a Subsidiary who
is also an employee).
(f) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(g) "Fair Market Value" of the Shares means the closing
price of publicly traded Shares on the national securities exchange on which the
Shares are listed (if the shares are so listed) or on the NASDAQ National Market
or Small Cap Market (if the Shares are regularly quoted on the NASDAQ National
Market or Small Cap Market), or, if not so listed or regularly quoted, the mean
between the closing bid and asked prices of publicly traded Shares in the
over-the-counter market, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company, or as determined by the Committee in a manner consistent with
the provisions of the Code.
<PAGE>
(h) "ISO" means an option intended to qualify as an
incentive stock option under Section 422 of the Code.
(i) "Non-Employee Director" means a non-employee director
as defined in Rule 16b-3.
(j) "NQO" means an option that does not qualify as an
ISO.
(k) "Outside Director" means an outside director as
defined in Section 162(m) of the Code.
(l) "Plan" means the 1996 Stock Option Plan of the
Company.
(m) "Securities Act" means the Securities Act of 1933, as
amended.
(n) "Shares" means shares of the Company's Common Stock,
$.001 par value, including authorized but unissued shares and shares that have
been previously issued and reacquired by the Company.
(o) "Subsidiary" of the Company means and includes a
"Subsidiary Corporation," as that term is defined in Section 424(f) of the Code.
3. Administration
Subject to the express provisions of the Plan, the Committee
shall have authority to interpret and construe the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
conditions of the respective option agreements (which need not be identical) and
to make all other determinations necessary or advisable for the administration
of the Plan. Subject to the express provisions of the Plan, the Committee, in
its sole discretion, shall from time to time determine the persons from among
those eligible under the Plan to whom, and the time or times at which, options
shall be granted, the number of Shares to be subject to each option, whether an
option shall be designated an ISO or an NQO and the manner in and price at which
such option may be exercised. In making such determination, the Committee may
take into account the nature and period of service rendered by the respective
optionees, their level of compensation, their past, present and potential
contributions to the Company and such other factors as the Committee shall in
its discretion deem relevant. The determination of the Committee with respect to
any matter referred to in this Section 3 shall be conclusive.
In the event that for any reason the Committee is unable to
act or if the Committee at the time of any grant, award or other acquisition
under the Plan of an ISO or NQO or Share does not consist of two or more
Non-Employee Directors, then any such grant, award or other acquisition may be
approved or ratified in any other manner contemplated by subparagraph (d) of
Rule 16b-3.
4. Eligibility for Participation
Any Employee shall be eligible to receive ISOs or NQOs granted
under the Plan. Consultants and advisors to the Company and directors of the
Company who are not Employees shall be eligible to receive NQOs.
5. Limitation on Shares Subject to the Plan
Subject to adjustment as hereinafter provided, no more than
1,000,000 Shares may be issued pursuant to the exercise of options granted under
the Plan. 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. The maximum number of Shares that may be
subject to options granted under the Plan to any individual in any calendar year
shall not exceed 200,000, and the method of counting such Shares shall conform
to any requirements applicable to performance-based compensation under Section
162(m) of the Code.
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6. Terms and Conditions of Options
Each option granted under the Plan shall be subject to the
following terms and conditions:
(a) Except as provided in Subsections 6(j) and (k), the option
price per Share shall be determined by the Committee, but (i) as to an ISO shall
not be less than 100% of the Fair Market Value of a Share on the date such ISO
is granted; and (ii) as to an NQO, shall not be less than 80% of the Fair Market
Value of a Share on the date such NQO is granted.
(b) The Committee shall, in its discretion, fix the term of
each option, provided that the maximum length of the term of each option granted
hereunder shall be 10 years and provided further that the provisions of
Subsection 6(j) hereof shall be applicable to the grant of ISOs to Employees
therein identified.
(c) If a holder of an option dies while he is employed by the
Company or a Subsidiary or, if the Committee so determines in its discretion at
the time such option is granted or at any time thereafter, within three months
after the termination of such employment by reason of retirement with the
written consent of the Company or a Subsidiary, such option may, to the extent
that the holder of the option was entitled to exercise such option on the date
of his death, be exercised during a period after his death fixed by the
Committee in its discretion at the time such option is granted or at any time
thereafter, but in no event to exceed one year, by his personal representative
or representatives or by the person or persons to whom the holder's rights under
the option shall pass by will or by the applicable laws of descent and
distribution; provided, however no option granted under the Plan may be
exercised to any extent by anyone after its stated expiration date.
(d) In the event that a holder of an option shall voluntarily
retire or quit his employment without the written consent of the Company or a
Subsidiary or if the Company shall terminate the employment of a holder of an
option for cause, the options held by such holder shall forthwith terminate. If
a holder of an option shall voluntarily retire or quit his employment with the
written consent of the Company or a Subsidiary or if the employment of such
holder shall have been terminated by the Company or a Subsidiary for reasons
other than cause, such holder may unless his option shall have previously
expired pursuant to the provisions hereof, exercise his option at any time prior
to the first to occur of the expiration of the original option period or the
expiration of a period after termination of employment fixed by the Committee in
its discretion at the time the option is granted or at any time thereafter, but
in no event to exceed three months, to the extent of the number of Shares
subject to such option that were purchasable by him on the date of termination
of his employment. Options granted under the Plan shall not be affected by any
change of employment so long as the holder thereof continues to be an Employee.
(e) Anything to the contrary contained herein or in any option
agreement executed and delivered hereunder, no option shall be exercisable
unless and until the Plan shall have been approved by stockholders of the
Company in accordance with Section 13 hereof.
(f) Each option shall be nonassignable and nontransferable by
the option holder otherwise than by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the option holder
solely by him; provided, however, that options may be transferred pursuant to a
qualified domestic relations order (as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules promulgated thereunder).
(g) An option holder desiring to exercise an option shall
exercise such option by delivering to the Company written notice of such
exercise, specifying the number of Shares to be purchased, together with payment
of the purchase price therefor; provided, however that no option may be
exercised in part with respect to fewer than 100 Shares, except to purchase the
remaining Shares purchasable under such option. Payment shall be made as
follows: (i) in United States dollars by cash or by check, certified check, bank
draft or money order payable to the order of the Company; (ii) at the discretion
of the Committee, by delivering to the Company Shares already owned by the
option holder and having a Fair Market Value on the date of exercise equal to
the exercise price or a combination of such Shares and cash; or (iii) by any
other proper method specifically approved by the Committee.
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<PAGE>
(h) In order to assist an option holder with the acquisition
of Shares pursuant to the exercise of an option granted under the Plan, the
Committee may, in its discretion and subject to the requirements of applicable
statutes, rules and regulations, whenever, in its judgment, such assistance may
reasonably be expected to benefit the Company, authorize, either at the time of
the grant of the option or thereafter (i) the extension of a loan to the option
holder by the Company, (ii) the payment by the option holder of the purchase
price of the Shares in installments, or (iii) the guaranty by the Company of a
loan obtained by the option holder from a third party. The Committee shall
determine the terms of any such loan, installment payment arrangement or
guaranty, including the interest rate and other terms of repayment thereof.
Loans, installment payment arrangements and guaranties may be authorized with or
without security and the maximum amount thereof shall be the option price for
the Shares being acquired plus related interest payments.
(i) The aggregate Fair Market Value (determined at the time an
ISO is granted) of the Shares as to which an Employee may first exercise ISOs in
any one calendar year under all incentive stock option plans of the Company and
its Subsidiaries may not exceed $100,000.
(j) An ISO may be granted to an Employee owning, or who is
considered as owning by applying the rules of ownership set forth in Section
424(d) of the Code, over 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary if the option price of such ISO equals
or exceeds 110% of the Fair Market Value of a Share on the date the ISO is
granted and such ISO expires not more than five years after the date of grant.
(k) If an option granted to the Company's Chief Executive
Officer or to any of the Company's other four most highly compensated officers
is intended to qualify as "performance-based" compensation under Section 162(m)
of the Code, the exercise price of such option shall not be less than 100% of
the Fair Market Value of a Share on the date such option is granted.
7. Adjustments Upon Changes in Capitalization
(a) Subject to any required regulatory approval, new option
rights may be substituted for the option rights granted under the Plan, or the
Company's duties as to options outstanding under the Plan may be assumed, by a
corporation other than the Company, or by a parent or subsidiary of the Company
or such corporation, in connection with any merger, consolidation, acquisition,
sale of all or substantially all assets, separation, reorganization, liquidation
or like occurrence in which the Company is involved. Notwithstanding the
foregoing or the provisions of Subsection 7(b) hereof, in the event that such
corporation, or parent or subsidiary of the Company or such corporation, does
not substitute new option rights for, and substantially equivalent to, the
option rights granted hereunder, or assume the option rights granted hereunder,
the option rights granted hereunder shall terminate and thereupon become null
and void (i) upon dissolution or liquidation of the Company, or similar
occurrence, (ii) upon any merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, in which the Company will not be a
surviving entity or (iii) upon a transfer of all or substantially all of the
assets of the Company or more than 80% of the outstanding Shares; provided,
however, that each option holder shall have the right immediately prior to or
concurrently with such dissolution, liquidation, merger, consolidation,
acquisition, sale of all or substantially all assets, separation, reorganization
or similar occurrence, to exercise any unexpired option rights granted hereunder
whether or not then exercisable. If the exercise of the foregoing right by the
holder of an ISO would be deemed to result in a violation of the provisions of
Subsection 6(i) of the Plan, then, without further act on the part of the
Committee or the option holder, such ISO shall be deemed an NQO to the extent
necessary to avoid any such violation.
(b) The existence of outstanding options shall not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issuance of Shares or subscription rights
thereto, or any merger or consolidation of the Company, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or
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<PAGE>
any other corporate act or proceeding, whether of a similar character or
otherwise; provided, however, that if the outstanding Shares shall at any time
be changed or exchanged by declaration of a stock dividend, stock split,
combination of shares or recapitalization, the number and kind of Shares subject
to the Plan or subject to any options theretofore granted, and the option
prices, shall be appropriately and equitably adjusted so as to maintain the
proportionate number of Shares without changing the aggregate option price.
(c) Adjustments under this Section 7 shall be made by the
Committee whose determination as to what adjustments, if any, shall be made, and
the extent thereof, shall be final.
8. Privileges of Stock Ownership
No option holder shall be entitled to the privileges of stock
ownership as to any Shares not actually issued and delivered to him.
9. Securities Regulation
(a) Each option shall be subject to the requirement that if at
any time the Board of Directors or Committee shall in its discretion determine
that the listing, registration or qualification of the Shares subject to such
option upon any securities exchange or under any Federal or state law, or the
approval or consent of any governmental regulatory body, is necessary or
desirable in connection with the issuance or purchase of Shares thereunder, such
option may not be exercised in whole or in part unless such listing,
registration, qualification, approval or consent shall have been effected or
obtained free from any conditions not reasonably acceptable to the Board of
Directors or Committee.
(b) Unless at the time of the exercise of an option and the
issuance of the Shares thereby purchased by any option holder hereunder there
shall be in effect as to such Shares a Registration Statement under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission, or there shall be available an exemption from the registration
requirements of the Securities Act, the option holder exercising such option
shall deliver to the Company at the time of exercise a certificate (i)
acknowledging that the Shares so acquired may be "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act, (ii) certifying
that he is acquiring the Shares issuable to him upon such exercise for the
purpose of investment and not with a view to their sale or distribution; and
(iii) containing such option holder's agreement that such Shares may not be sold
or otherwise disposed of except in accordance with applicable provisions of the
Securities Act. The Company shall not be required to issue or deliver
certificates for Shares until there shall have been compliance with all
applicable laws, rules and regulations, including the rules and regulations of
the Securities and Exchange Commission.
10. Employment or Retention of Option Holders
Nothing contained in the Plan or in any option agreement
executed and delivered thereunder shall confer upon any option holder any right
to continue in the employ or retention of the Company or any Subsidiary or to
interfere with the right of the Company or any Subsidiary to terminate such
employment or retention at any time.
11. Withholding; Disqualifying Disposition
(a) The Company shall deduct and withhold from any salary or
other compensation for employment services of an option holder all amounts
required to satisfy withholding tax liabilities arising from the grant or
exercise of an option under the Plan or the acquisition or disposition of Shares
acquired upon exercise of any such option.
(b) In the case of disposition by an option holder of Shares
acquired upon exercise of an ISO within (i) two years after the date of grant of
such ISO, or (ii) one year after the transfer of such Shares to such option
holder, such option holder shall give written notice to the Company of such
disposition not later than 30 days
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<PAGE>
after the occurrence thereof, which notice shall include all such information as
may be required by the Company to comply with applicable provisions of the Code
and shall be in such form as the Company shall from time to time determine.
(c) In the discretion of the Committee and in lieu of the
deduction and withholding provided for in subsection (a) above, the Company
shall deduct and withhold Shares otherwise issuable to the option holder having
a Fair Market Value on the date income is recognized pursuant to the exercise of
an option equal to the amount required to be withheld.
12. Amendment, Suspension and Termination of the Plan
Subject to any required regulatory approval, the Board of
Directors or Committee may at any time amend, suspend or terminate the Plan,
provided that, except as set forth in Section 7 above, no amendment may be
adopted without the approval of stockholders that would:
(a) increase the number of Shares that may be issued pursuant
to the exercise of options granted under the Plan;
(b) permit the grant of an ISO under the Plan with an option
price less than 100% of the Fair Market Value of the Shares at the time such
option is granted;
(c) change the provisions of Section 4;
(d) extend the term of an option or the period during which an
option may be granted under the Plan; or
(e) decrease an option exercise price (provided that the
foregoing does not preclude the cancellation of an option and a new grant at a
lower exercise price without stockholder approval).
Unless the Plan shall theretofore have been terminated by the Board of Directors
or Committee, the Plan shall terminate on September 16, 2006. No option may be
granted during the term of any suspension of the Plan or after termination of
the Plan. The amendment or termination of the Plan shall not, without the
written consent of the option holder to be affected, alter or impair any rights
or obligations under any option theretofore granted to such option holder under
the Plan.
13. Effective Date
The effective date of the Plan shall be September 17, 1996,
subject to its approval by stockholders of the Company not later than September
16, 1997.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE SOLOMON-PAGE GROUP LTD.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
MARCH 31, 1997
The undersigned, a stockholder of The Solomon-Page Group Ltd., a
Delaware corporation (the "Company"), does hereby constitute and appoint Herbert
Solomon, Lloyd Solomon and Scott Page and each of them, the true and lawful
attorneys and proxies with full power of substitution, for and in the name,
place and stead of the undersigned, to vote all of the shares of Common Stock of
the Company that the undersigned would be entitled to vote if personally present
at the 1997 Annual Meeting of Stockholders of the Company to be held at The Penn
Club, 30 West 44th Street, New York, New York 10036 on March 20, 1996 at 10:00
a.m., local time, or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes as
set forth below.
1. ELECTION OF DIRECTORS:
The election of Lloyd Solomon and Joel A. Klarreich to Class I
of the Board of Directors, to serve until the 2000 Annual
Meeting of Stockholders and until their respective successors
are elected and shall qualify.
TO WITHHOLD
AUTHORITY TO WITHHOLD AUTHORITY
TO VOTE TO VOTE FOR ANY INDIVIDUAL
FOR ALL NOMINEE(S), PRINT NAME(S)
FOR ____ NOMINEES ____ BELOW
__________________________
__________________________
2. APPROVAL OF 1996 STOCK OPTION PLAN:
To approve the 1996 Stock Option Plan.
FOR _____ AGAINST _____ ABSTAIN _____
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS:
To ratify the appointment of Moore Stephens, P.C. as the
independent auditors of the Company for the fiscal year ending
September 30, 1997.
FOR _____ AGAINST _____ ABSTAIN _____
4. DISCRETIONARY AUTHORITY: To vote with discretionary authority
with respect to all other matters that may come before the
Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
NOMINEES AS DIRECTORS, TO APPROVE THE 1996 STOCK OPTION PLAN, TO RATIFY THE
APPOINTMENT OF MOORE STEPHENS, P.C. AS THE COMPANY'S INDEPENDENT AUDITORS AND IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY OTHER
BUSINESS TRANSACTED AT THE ANNUAL MEETING.
<PAGE>
The undersigned hereby revokes any proxy or proxies heretofore given
and ratifies and confirms all that the proxies appointed hereby, or any of them,
or their substitutes, may lawfully do or cause to be done by virtue hereof.
, 1997
_____________________ (L.S.)
_____________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES
APPEAR HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
INDICATE THE CAPACITY IN WHICH SIGNING. WHEN
SIGNING AS JOINT TENANTS, ALL PARTIES IN THE JOINT
TENANCY MUST SIGN. WHEN A PROXY IS GIVEN BY A
CORPORATION, IT SHOULD BE SIGNED WITH FULL
CORPORATE NAME BY A DULY AUTHORIZED OFFICER.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE
ENVELOPE PROVIDED FOR THIS PURPOSE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
