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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.1a-12
Voxware, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO OF VOXWARE]
April 10, 2000
Dear Fellow Stockholder:
You are cordially invited to attend our annual meeting of stockholders to be
held at 9:00 a.m. (local time), on Monday, May 22, 2000, at the Holiday Inn,
4355 Route 1, Princeton, New Jersey.
This year, in addition to the election of three directors to our board of
directors, you are being asked to amend our 1994 Stock Option Plan to increase
the number of shares that may be issued under the plan and to approve an
amendment to our certificate of incorporation to eliminate our classified board
of directors. In addition, I will be pleased to report on the affairs of Voxware
and a discussion period will be provided for questions and comments of general
interest to stockholders.
We look forward to personally greeting those stockholders who are able to be
present at the meeting. However, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Therefore, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ Bathsheba J. Malsheen
Bathsheba J. Malsheen
President and Chief Executive Officer
<PAGE>
VOXWARE, INC.
305 College Road East
Princeton, New Jersey 08540
(609) 514-4100
Notice of Annual Meeting of Stockholders
May 22, 2000
The annual meeting of stockholders of Voxware, Inc. will be held at the
Holiday Inn located at 4355 Route 1, Princeton, New Jersey on May 22, 2000 at
9:00 a.m. (local time) for the following purposes:
1. To elect three directors to serve until the next annual meeting of
stockholders or until their respective successors shall have been duly
elected and qualified.
2. To approve an amendment to Voxware's 1994 Stock Option Plan in order to
increase the number of shares of common stock reserved for issuance under
the plan by 800,000 shares to an aggregate of 4,000,000 shares.
3. To approve an amendment to Voxware's certificate of incorporation to
eliminate the provision for a classified board of directors.
4. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on April 3, 2000 will be
entitled to notice of, and to vote at, the meeting. A list of stockholders
eligible to vote at the meeting will be available for inspection at the meeting
and for a period of ten days prior to the meeting during regular business hours
at the corporate headquarters at the address specified above.
Whether or not you expect to attend the meeting, your proxy vote is important.
To assure your representation at the meeting, please sign and date the enclosed
proxy card and return it promptly in the enclosed envelope, which requires no
additional postage if mailed in the United States or Canada.
By Order of the Board of Directors
/s/Bathsheba J. Malsheen
Bathsheba J. Malsheen
President and Chief Executive Officer
April 10, 2000
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IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE COMPLETED AND
RETURNED PROMPTLY
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<PAGE>
VOXWARE, INC.
PROXY STATEMENT
April 10, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This proxy statement is being furnished to our stockholders in connection with
our annual meeting of stockholders to be held on May 22, 2000 and any
adjournments of the meeting. This proxy statement and the enclosed proxy card
are being mailed to stockholders on or about April 10, 2000.
Execution and return of the enclosed proxy card are being solicited by and on
behalf of our board of directors for the purposes stated in the notice of
meeting. The costs incidental to the solicitation and obtaining of proxies,
including the cost of reimbursing banks and brokers for forwarding proxy
materials to their principals, will be paid by us. Proxies may be solicited,
without extra compensation, by our officers and employees by mail, telephone,
fax, personal interviews and other methods of communication.
Our annual report on Form 10-K for the fiscal year ended June 30, 1999 is
being mailed to stockholders with this proxy statement. The annual report is not
part of this proxy statement.
Voting at the annual meeting; record date
Only holders of record of our common stock at the close of business on April
3, 2000 are entitled to notice of and to vote at the annual meeting. These
stockholders are entitled to cast one vote for each share of common stock held
as of the record date on all matters properly submitted for the vote of
stockholders at the annual meeting. As of the record date, there were
approximately ______ shares of our common stock outstanding and entitled to
be voted at the annual meeting. No shares of preferred stock were outstanding.
For information regarding security ownership by management and by the beneficial
owners of more than 5% of our common stock, see "Security Ownership of
Beneficial Owners and Management."
Quorum; required vote
The presence, in person or by proxy, of the holders of a majority of the
shares entitled to be voted at the annual meeting is necessary to constitute a
quorum at the annual meeting. Voting requirements for the matters to be
presented at the annual meeting are described under each matter.
Proxies
All shares entitled to vote and represented by properly executed proxies
received prior to the annual meeting, and not revoked, will be voted at the
annual meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the board of
directors. If any other matters are properly presented for consideration at the
annual meeting, including consideration of a motion to adjourn the annual
meeting to another time or place for the purpose of soliciting additional
proxies, the persons named in the enclosed proxy and acting under the proxy will
have discretion to vote on those matters in accordance with their best judgment.
We do not currently anticipate that any other matters will be raised at the
annual meeting.
Any proxy given under this solicitation may be revoked by the person giving it
at any time before it is voted. A proxy may be revoked (1) by filing with the
secretary of the meeting, at or before the taking of the vote at the annual
meeting, a written notice of revocation or a duly executed proxy, in either case
later dated than the prior
1
<PAGE>
proxy for the same shares or (2) by attending the annual meeting and voting in
person. Attendance at the annual meeting will not by itself revoke a proxy. Any
written notice of revocation or subsequent proxy must be received by the
secretary of the meeting prior to the taking of the vote at the annual meeting.
The written notice of revocation or subsequent proxy should be hand delivered to
the secretary of the meeting or should be sent so as to be delivered to Voxware,
Inc., 305 College Road East, Princeton, New Jersey 08540, Attention: Nicholas
Narlis, secretary.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
General
Three directors, constituting our entire board of directors, will be
elected at the annual meeting. Our certificate of incorporation provides for our
board of directors to be divided into three classes. Because several members of
our board of directors resigned or declined to stand for re-election to the
board at our last annual meeting of stockholders on September 21, 1999, the
board of directors determined that, notwithstanding the existence of the
classified board of directors, it would be in the best interest of the
stockholders for all continuing members of the board of directors to stand for
re-election at the annual meeting. At the annual meeting, we are seeking
stockholder approval of an amendment to our certificate of incorporation to
eliminate the provision relating to the classified board of directors. See
"Proposal No. 3 -- Amendment to Certificate of Incorporation to Eliminate
Classified Board of Directors." If the stockholders do not vote to approve the
amendment to the certificate of incorporation, the directors elected at the
annual meeting will serve in the classes indicated below for the terms
indicated. Unless otherwise directed, the persons appointed in the accompanying
form of proxy intend to vote at the annual meeting for the election of the three
nominees named below as directors to serve, subject to stockholder approval of
the amendment to the certificate of incorporation to eliminate the classified
board of directors, until the next annual meeting or until their successors are
duly elected and qualified. If any nominee is unable to be a candidate when the
election takes place, the shares represented by valid proxies will be voted in
favor of the remaining nominees. Our board of directors does not currently
anticipate that any nominee will be unable to be a candidate for election.
Information Regarding Nominees for Election as Directors
Our board of directors currently has three members, all of whom are
nominees for re-election. The following information about the principal
occupation or employment, other affiliations, and business experience of each
nominee during the last five years has been furnished to us by each nominee.
The names of the nominees, their ages and the class in which such nominee serves
are listed below.
Name Age Class
---- --- -----
Bathsheba J. Malsheen, Ph.D. ... 49 III
David B. Levi (1)(2)........... 67 II
Eli Porat (1)(2)................ 54 I
___________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Bathsheba J. Malsheen, Ph.D. has served as our president, chief executive
officer and a director since October 1997. She previously served as our chief
operating officer from May 1997 through October 1997, and as our vice president
of OEM licensing since joining us in October 1996 through April 1997. From April
1990 to October 1996, Dr. Malsheen held various executive positions with
Centigram Communications Corporation, a voice messaging company, most recently
as general manager of its technology business unit and was responsible for
licensing of text-to-speech software products. Previously, she worked for Speech
Plus, Inc. where she served as director of speech technology from 1985 to 1990.
Dr. Malsheen holds a Ph.D. and M.A. from Brown University and a B.A. from
Hofstra University.
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David B. Levi has served as a director of Voxware since January 1998. Mr. Levi
served as president of Natural MicroSystems Corporation, a provider of hardware
and software for developers of high-value telecommunications solutions, from
June 1991 to April 1995. In November 1995, Mr. Levi became president of Voice
Processing Corp. Voice Processing Corp. merged with Voice Control Systems, Inc.,
a supplier of telecommunications based speech recognition systems, in November
1996 and Mr. Levi served as chief operating officer of Voice Control Systems
until his retirement in October 1997. Prior to 1991, Mr. Levi held chief
executive officer and chief operating officer positions at Raytheon Data
Systems, which is a division of Raytheon Corp., Centronics Data Computer Corp.
and Raster Technologies Inc. and consulted to regional bell operating companies.
Mr. Levi currently serves on the board of directors of PictureTel, Inc. and
Microlog Corporation. Mr. Levi holds an A.B. from Harvard College and an M.B.A.
from the Harvard Graduate School of Business Administration.
Eli Porat has served as a director of Voxware since August 1998. Mr. Porat has
served as chairman and CEO of Ensemble Solutions Inc., a provider of electronic
distribution through a suite of electronic business products, since August 1997.
From May 1996 to August 1997 he was a general partner of DEFTA Partners, a
venture capital group specializing in Internet telephony investments. From 1991
to May 1996, Mr. Porat was the president and CEO of DSP Group, Inc., a developer
of digital signal processing cores used in a wide range of applications such as
wireless communications, telephony and personal computers. Prior to 1991, Mr.
Porat held various senior-level positions with ZYMOS Computer Systems Inc.,
Sytek Inc. and Intel Corporation. He also serves on the board of directors of
Starfish Software, Inc., a leading supplier of core device, server and desktop
technologies for wireless and wireline connected information devices. Mr. Porat
has an M.S.E.E.C.S. and a B.S.E.E.C.S. from the University of California at
Berkeley.
Unless Proposal No. 3 -- Amendment to the Certificate of Incorporation to
Eliminate Classified Board of Directors, is approved by the stockholders at the
annual meeting, the term of office of Class I directors will expire on the day
of the 2000 annual meeting, which is the first annual meeting of stockholders
following the end of the 2000 fiscal year; the initial term of office of Class
II directors will expire on the day of the annual meeting of stockholders next
succeeding the 2000 annual meeting; and the initial term of office of Class III
directors will expire on the day of the second annual meeting of stockholders
succeeding the 2000 annual meeting. At each annual meeting of stockholders,
directors elected to succeed those directors whose terms expire will be elected
for a term of office to expire at the third succeeding annual meeting of
stockholders after their election.
Vote Required
The three nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote shall be
elected as directors. Only votes cast for a nominee will be counted, except that
the accompanying proxy will be voted for all nominees in the absence of
instructions to the contrary. Abstentions, broker non-votes and instructions on
the accompanying proxy card to withhold authority to vote for one or more
nominees will not be counted as a vote for any such nominee.
The board of directors believes the election as directors of the three
nominees listed above to be in the best interests of Voxware and its
stockholders and recommends a vote FOR their election.
PROPOSAL NO. 2 -- AMENDMENT TO 1994 STOCK OPTION PLAN
General
The Voxware, Inc. 1994 Stock Option Plan currently provides that the total
number of shares of our common stock that may be issued pursuant to options
granted under the plan shall not exceed 3,200,000, subject to adjustment upon
changes in our capitalization. We are proposing that the plan be amended to
increase the number of shares of our common stock that may be issued pursuant to
options granted under the plan by 800,000 shares of common stock to an aggregate
of 4,000,000 shares. The full text of the plan as proposed to be amended is
included as Appendix A, beginning on page A-1. As of April 10, 2000, there were
264,000 shares remaining available for issuance under the plan. We believe that
the proposed increase in shares reserved under the plan will be sufficient to
meet our needs for granting stock options to new and existing employees for
between two and three years from the date of this proxy statement. Our board of
directors has authorized the amendment of the plan to increase the
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<PAGE>
number of shares available for issuance, but the amendment will be effective
only if Proposal No. 2 is approved by our stockholders. See "1994 Stock Option
Plan" below for a description of the material features of the plan, the classes
of persons eligible to participate in the plan, the approximate number of
persons in each class and the basis of participation. Under Section 422 of the
Internal Revenue Code of 1986, stockholder approval of this amendment is
necessary for stock options issuable under the plan to qualify as incentive
stock options. Stockholder approval is also required to qualify compensation
received under the plan as performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code. Stockholder approval of the
amendment is also required under the terms of the plan.
1994 Stock Option Plan
On January 3, 1994, our board of directors adopted, and our stockholders
approved, our 1994 Stock Option Plan. The plan, as amended in 1998, permits the
granting of options to purchase an aggregate of 3,200,000 shares of our common
stock to key employees of, and consultants to, Voxware as well as to directors
of Voxware whether or not employees. As of April 10, 2000, we had approximately
thirty-five employees, two consultants and three directors. Options granted
under the plan may be either incentive stock options or options which do not
qualify as incentive stock options, also called non-qualified stock options.
The plan is administered by the compensation committee of our board of
directors. Subject to the provisions of the plan, our board of directors or the
compensation committee has the authority to determine the individuals to whom
stock options will be granted, the number of shares to be covered by each
option, the option price, the type of option, the option period, the vesting
restrictions on the exercise of the option, the terms for the payment of the
option price and other terms and conditions. In fiscal 1997, our board of
directors and the compensation committee granted to our chief executive officer
the authority to make grants of options under the plan to employees below the
director level in such amounts and on such terms that she, in consultation with
management , deems appropriate, as long as each grant is within the budget and
other guidelines previously approved by our board of directors.
In accordance with the plan, payment for shares acquired upon exercise of an
option may be made in cash, and/or such other form of payment as may be
permitted under the option agreement, including previously owned shares of our
common stock.
The exercise price for shares covered by an incentive stock option may not be
less than 100% of the fair market value of our common stock on the date of
grant. The exercise price for shares covered by a non-qualified stock option may
not be less than the par value of our common stock, which is currently $.001.
Unless otherwise approved by the compensation committee, an option may not be
exercised during the first six months after the date of its grant. All options
must expire no later than ten years from the date of grant. In general, no
option may be exercised more than three months after the termination of the
optionee's service with Voxware and any of its subsidiaries. However, the three
month period is extended to one year if the optionee's service is terminated by
reason of disability or death. No individual may be granted incentive stock
options that become exercisable for the first time in any calendar year for
common stock having a fair market value at the time of grant in excess of
$100,000.
Options may not be transferred during the lifetime of an optionee. Subject to
some limitations in the plan and applicable law, our board of directors may
amend or terminate the plan. By its own terms, the plan will terminate on
January 2, 2004.
At April 3, 2000, 714,000 shares were vested and issuable upon exercise of
outstanding options granted under the plan and 846,000 shares had been purchased
upon exercises of options granted under the plan. In May 1997, we filed a
registration statement on Form S-8 under the Securities Act of 1933 to register
the initial 2,350,000 shares of our common stock that may be issued pursuant to
options granted under the plan. In March 2000, we will file a registration
statement on Form S-8 under the Securities Act of 1933 to register the
additional 850,000 shares of our Common Stock that may be issued pursuant to
options granted under the plan. If Proposal No. 2 is approved, we intend to
file, as soon as practicable after the annual meeting, a registration statement
covering the additional 800,000 shares of our common stock that would be
issuable under the plan.
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The proposed amendment to the plan will not affect the manner in which the
number of options to be received by or allocated to participants in the plan are
determined nor would the proposed amendment, if it had been effective during
fiscal 1999, have affected the determination of these amounts in fiscal 1999.
Because options are granted on a discretionary basis, we are unable to determine
the dollar value and number of options that will be received by or allocated to
(1) any of our executive officers, (2) our current executive officers, as a
group, (3) our current directors who are not executive officers, as a group or
(4) our employees who are not executive officers, as a group, as a result of the
proposed amendment.
Federal Income Tax Information About the 1994 Stock Option Plan
The grantee of a non-qualified stock option recognizes no income for federal
income tax purposes upon grant. On the exercise of a non-qualified stock option,
the difference between the fair market value of the underlying shares of our
common stock on the exercise date and the option exercise price is treated as
compensation to the holder of the option taxable as ordinary income in the year
of exercise, and the fair market value becomes the basis for the underlying
shares used in computing any capital gain or loss upon disposition of the
shares. Subject to some limitations, we may deduct for the year of exercise an
amount equal to the amount recognized by the option holder as ordinary income
upon exercise of a non-qualified stock option.
The grantee of an incentive stock option recognizes no income for federal
income tax purposes upon grant. Except as provided below with respect to the
alternative minimum tax, there is no tax upon exercise of an incentive stock
option. If no disposition of shares acquired upon exercise of the incentive
stock option is made by the option holder within two years from the date of the
grant of the incentive stock option and within one year after exercise of the
incentive stock option, any gain realized by the option holder on the subsequent
sale of the shares is treated as a capital gain for federal income tax purposes.
If the shares are sold prior to the expiration of these periods, the difference
between the lesser of the value of the shares at the date of exercise or at the
date of sale and the exercise price of the incentive stock option is treated as
compensation to the employee taxable as ordinary income and the excess gain, if
any, is treated as capital gain.
The excess of the fair market value of the underlying shares over the option
price at the time of exercise of an incentive stock option will constitute an
item of tax preference for purposes of the alternative minimum tax. An
offsetting basis adjustment would be available for alternative minimum tax
payors on a later sale of the stock.
In connection with the sale of the shares covered by incentive stock options,
we are allowed a deduction for tax purposes only to the extent, and at the time,
the option holder receives ordinary income, subject to some limitations on the
deductibility of compensation paid to executives. For example, we are allowed a
deduction upon the sale of shares by the holder of an incentive stock option
within two years of the date of the granting of the incentive stock option or
one year after the exercise of the incentive stock option.
Vote Required
The affirmative vote of holders of a majority of the shares of our common
stock issued, outstanding and entitled to vote, present or represented at the
annual meeting, a quorum being present, is required for the adoption of this
proposal. Broker non-votes on this matter will be treated as neither a vote for
or a vote against the matter, although they will be counted in determining if a
quorum is present. However, abstentions will be considered in determining the
number of votes required to attain a majority of the shares present or
represented at the meeting and entitled to vote. Therefore, an abstention from
voting by a stockholder present in person or by proxy at the meeting has the
same legal effect as a vote against the matter because it represents a share
present or represented at the meeting and entitled to vote, thereby increasing
the number of affirmative votes required to approve this proposal.
The board of directors believes "Proposal No. 2 -- Amendment to 1994 Stock
Option Plan" to be in the best interests of Voxware and its stockholders and
recommends a vote FOR approval of this proposal.
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PROPOSAL NO. 3 -- AMENDMENT TO CERTIFICATE OF
INCORPORATION TO ELIMINATE CLASSIFIED BOARD OF DIRECTORS
Our board of directors has unanimously approved, subject to stockholder
approval, an amendment to our certificate of incorporation to eliminate Article
Twelfth of the certificate of incorporation which provides for our board of
directors to consist of three classes of directors.
Our certificate of incorporation currently provides that our board of
directors be elected on a staggered basis. Under the terms of our certificate of
incorporation, the members of our board of directors are divided into three
classes (Class I, Class II and Class III). The terms of each class of directors
expire during different years. At each succeeding annual meeting of
stockholders, successors to the class of directors whose term expires at that
annual meeting are elected for a three-year term, so that, generally, only one-
third of the total number of directors stand for election at the same time.
If the amendment is approved, the terms of all directors will expire annually,
and at each annual meeting of stockholders all directors will stand for election
for one-year terms. Our board of directors believes that electing all of the
directors annually, rather than in staggered terms, is generally a more
desirable structure for the board of directors of a public company.
Additionally, we understand that institutional investors view a staggered board
as a mechanism that can tend to lead to the entrenchment of management. The
amendment is not being proposed in response to any specific takeover effort of
which the board of directors is aware. The board of directors believes, however,
that it is desirable for the stockholders to approve the amendment at this time
to provide us with the most flexible method for electing directors.
If the amendment is approved by stockholders, the amendment will be reflected
in our certificate of incorporation, and directors elected at the annual meeting
will stand for reelection at the next annual meeting of stockholders.
Vote Required
In accordance with our certificate of incorporation, the affirmative vote of
the holders of at least 66% of the outstanding shares of our common stock is
required for the adoption of the proposed amendment. Therefore, abstentions and
broker non-votes have the same legal effect as a vote against the matter.
The board of directors deems "Proposal No. 3 -- Amendment to Certificate of
Incorporation to Eliminate Classified Board of Directors" to be in the best
interests of Voxware and its stockholders and recommends a vote FOR approval of
this proposal.
BOARD MEETINGS AND COMMITTEES
During fiscal 1999, our board of directors held nine meetings, and no
incumbent directors attended fewer than 75% of the total number of meetings of
our board of directors and the committees, if any, of which he was a member. Our
board of directors approved some matters by unanimous written consent during the
fiscal year.
Our board of directors currently has two standing committees: an audit
committee and a compensation committee. The audit committee and the compensation
committee currently include Messrs. Levi and Porat.
Audit Committee. The audit committee:
. makes such examinations as are necessary to monitor the corporate
financial reporting and our internal and external audits;
. provides to our board of directors the results of its examinations and
recommendations derived from the examinations;
. outlines to our board of directors improvements made, or to be made, in
internal accounting controls,
. nominates independent auditors; and
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. provides additional information and materials that it believes necessary
to make the board of directors aware of significant financial matters
that require the attention of the board of directors.
The audit committee met once during fiscal 1999.
Compensation Committee. The compensation committee reviews our executive
compensation policy, administers our stock option plans and makes
recommendations to our board of directors regarding these matters. The
compensation committee met once during fiscal 1999.
EXECUTIVE COMPENSATION
The following table provides information concerning compensation paid to or
earned for the fiscal years ended June 30, 1999, 1998 and 1997 by our chief
executive officer, the next most highly compensated executive officer who was
serving as an executive officer at June 30, 1999 and one person who would have
been among the four most highly compensated executive officers of Voxware except
he was not serving as an executive officer at June 30, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------- ------------
Securities
Fiscal Underlying All Other
Name and Principal Position Period Base Salary Bonus Options Compensation (1)
- ---------------------------------------- ---------- --------------- ------------ --------------- ------------------
<S> <C> <C> <C> <C> <C>
Bathsheba J. Malsheen, Ph.D............. 1999 $206,700 $60,813 300,000 $ --
President and chief executive 1998 $198,752 $41,875 200,000 $ --
officer (2) 1997 $113,345 $16,000 160,000 $ --
Nicholas Narlis......................... 1999 $150,000 $43,500 150,000 $ 2,612
Senior vice president, chief financial 1998 $133,538 $21,675 70,000 $ 1,999
officer, secretary and treasurer 1997 $106,667 $20,000 35,000 $ 850
J. Gerard Aguilar....................... 1999 $126,608 $32,800 -- $ --
Vice president, research and 1998 $127,199 $16,380 -- $ 1,584
development (3) 1997 $ 94,925 $30,000 -- $ --
</TABLE>
______________
(1) All other compensation for Mr. Narlis consists of $2,219, $1,999 and $850
in Voxware contributions to Mr. Narlis's account under our 401(k) Plan in
fiscal 1999, 1998 and 1997, respectively, and disability insurance premiums
paid by Voxware totaling $393 in fiscal 1999. All other compensation for Mr.
Aguilar consists of life and disability insurance premiums paid by Voxware
totaling $1,584 in fiscal 1998.
(2) Dr. Malsheen joined Voxware in October 1996, and became an executive officer
in May 1997.
(3) Mr. Aguilar resigned from Voxware effective June 21, 1999.
The following table summarizes stock options granted during fiscal 1999 to the
persons listed above.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------------------------------
Number Potential Realized Value at
of Securities Assumed Annual Rates
Underlying Percentage of of Stock Price
Options Total Options Appreciation for Option Term (3)
--------------------------------
Name Granted (1) Granted (2) Exercise Price Expiration Date 5% 10%
- ---- ----------- ----------- -------------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Bathsheba J. Malsheen, Ph.D..... 300,000 25.4% $1.56 08/13/08 $294,323 $745,871
Nicholas Narlis................. 150,000 12.7% $1.56 08/13/08 $147,161 $372,936
J. Gerard Aguilar (4)........... -- -- -- -- -- --
</TABLE>
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____________
(1) These options vest over a four year period from the date of grant, becoming
exercisable as to 25% on the first anniversary of the date of grant, and at
6.25% per quarter thereafter.
(2) Based on an aggregate of 1,182,500 options granted to employees in fiscal
1999, including options granted to the persons listed above.
(3) Represents the hypothetical gains or option spreads that would exist for the
options at the end of their ten year term. These gains are based on assumed
rates of annual compound stock price appreciation of 5% and 10% from the
date the option was granted to the end of the option term and are calculated
based on the exercise price per share on the date of grant. The 5% and 10%
assumed annual compound rates of stock price appreciation are mandated by
the rules of the Securities and Exchange Commission and do not represent our
estimate or projection of the future price of our common stock.
(4) Mr. Aguilar resigned from Voxware effective June 21, 1999.
The following table provides information about the number and value of
unexercised options held by each of the persons named above.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year-End Options at Fiscal Year-End (1)
-----------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Bathsheba J. Malsheen, Ph.D........................... 316,250 343,750 -- --
Nicholas Narlis....................................... 141,874 138,126 -- --
J. Gerard Aguilar..................................... -- -- -- --
</TABLE>
____________
(1) Based on the difference between $1.031, which was the closing price per
share of our common stock on June 30, 1999, and the exercise price of the
option.
(2) Mr. Aguilar resigned from Voxware effective June 21, 1999.
Employment Agreements
Bathsheba J. Malsheen, Ph.D., our president and chief executive officer, has a
three-year employment agreement that commenced in August 1998. Dr. Malsheen
currently receives an annual base salary of $180,000 and also receives
allowances for residential and vehicle lease payments.
Nicholas Narlis, our vice president, chief financial officer, treasurer and
secretary, has a three-year employment agreement that commenced in August 1998.
Mr. Narlis currently receives an annual base salary of $150,000.
Each of the employment agreements is automatically renewable for successive
one-year terms unless terminated by either party. Under the employment
agreements, if either Dr. Malsheen or Mr. Narlis is dismissed for any reason
other than a valid reason, death or disability, he or she shall be entitled to
receive an amount equal to: in the case of Dr. Malsheen, twelve months salary at
her then current rate; or in the case of Mr. Narlis, nine months salary at his
then current rate.
Each of the employment agreements grant to Voxware the rights to any
information created, discovered or developed by the executive which is related
to or useful in the business of Voxware. The employment agreements prohibit the
executive from disclosing our proprietary information and contain covenants by
the executive not to compete with Voxware.
Director Compensation
Our 1998 Stock Option Plan for Non-Employee Directors was adopted by our board
of directors in October 1997 and approved by our stockholders in January 1998.
The plan provides for the automatic grant of options to purchase shares of our
common stock to directors who are not officers, employees or consultants of
Voxware or any of its subsidiaries. Subject to the provisions of the plan, the
board of directors has the power and authority to
8
<PAGE>
interpret the plan, to prescribe, amend and rescind rules and regulations
relating to the plan and to make all other determinations that are necessary or
advisable for the administration of the plan.
Under the plan, each eligible individual receives an option to purchase 30,000
shares of our common stock on the date of his initial election or appointment to
the board of directors. All outside directors elected at our 1998 annual meeting
of stockholders in January 1998 received this initial option grant whether or
not they served on the board of directors prior to the meeting. In addition, on
the date of an eligible individual's reelection to the board of directors, if he
has attended at least 75% of the meetings of the board of directors that were
held while he was a director in the just completed calendar year, he will be
granted an option to purchase an additional 10,000 shares of our common stock.
All options granted under the plan will have an exercise price equal to the fair
market value of our common stock on the date of grant. Options granted under the
plan vest in 12 equal quarterly installments beginning at the end of the first
three-month period following the date of grant.
In September 1997, we implemented a plan, which was approved by our
stockholders at our 1998 annual meeting of stockholders, pursuant to which we
pay:
. on the last day of the month in which the annual meeting of stockholders
is held in each calendar year commencing with the 1998 meeting, to each
non-employee director elected at the meeting, an annual retainer equal
to a number of shares of our common stock with a fair market value on
that date of $10,000, and
. on the last day of the month in which any newly appointed non-employee
director is appointed, if his appointment is after the annual meeting of
stockholders in any year but at least six months prior to the next
annual meeting of stockholders, to the newly appointed director, a
retainer equal to a number of shares of our common stock with a fair
market value on that date of $10,000.
In addition, we pay $1,000 to each non-employee director attending any regular
or special meeting of our board of directors, and $500 to each non-employee
director attending any regular or special meeting of any committee of our board
of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) under the Securities Exchange Act of 1934 requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our common stock, to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than ten percent beneficial owners are required by the
Securities and Exchange Commission to furnish us with copies of all Section 16
forms they file.
Based upon a review of the copies of these forms furnished to us and written
representations from our executive officers and directors, we believe that the
reporting requirements of Section 16 applicable to our executive officers,
directors and greater than ten percent beneficial owners during fiscal 1999 were
complied with on a timely basis, [except that Juergen C.H. Lemmermann, Vice
President of Operations, failed to timely report one transaction on Form 3. This
transaction has been subsequently reported.]
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership
of our common stock as of April 3, 2000 by (1) each person or group who is known
by us to own beneficially more than 5% of our common stock, (2) each of our
directors, (3) each of our executive officers for whom compensation information
is provided above and (4) all of our executive officers and directors as a
group. Unless indicated otherwise, the address of each of these persons is c/o
Voxware, Inc. 305 College Road East, Princeton, New Jersey 08540.
9
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage of Shares
Name and Address of Beneficial Owner Beneficially Owned (1) Beneficially Owned
------------------------------------ ---------------------- ------------------
(2)
---
<S> <C> <C>
Advent International Group (3)............................................ 999,999 7.0%
75 State Street
Boston, MA 02109
Bathsheba J. Malsheen, Ph.D. (4).......................................... 421,500 2.9%
Nicholas Narlis (5)....................................................... 182,438 1.3%
David B. Levi (6)......................................................... 34,629 *
Eli Porat (7)............................................................. 26,667 *
All directors and executive officers as a group (9 persons)............... 774,196 5.4%
</TABLE>
_______________
* Less than 1% of outstanding shares of our common stock.
(1) Number of shares beneficially owned is determined by assuming that options
that are held by such person (but not those held by any other person) and
which are exercisable or convertible within 60 days have been exercised or
converted.
(2) Unless otherwise noted, we believe that all persons named in the table have
sole voting and investment power with respect to all shares beneficially
owned by them.
(3) Includes the ownership by the following venture capital funds managed by
Advent International Corporation: 2,500 shares owned by Advent International
Investors II Limited Partnership, 250,000 shares owned by Adtel Limited
Partnership, 400,000 shares owned by Advent Crown Fund C.V., 175,000 shares
owned by Adwest Limited Partnership, 13,512 shares owned by Advent Israel
(Bermuda) Limited Partnership, 111,487 shares owned by Advent Israel Limited
Partnership and 47,500 shares owned by Advent Partners Limited Partnership.
In its capacity as manager of these funds, Advent International Corporation
exercises sole voting and investment power over all shares held by these
funds. Advent International Corporation exercises its voting and investment
power through a group of three persons, Douglas R. Brown, president and
chief executive officer, Dennis R. Costello, senior vice president
responsible for managing North American investment activities and Janet L.
Hennessey, vice president responsible for monitoring public securities, none
of whom may act independently and a majority of whom must act in concert to
exercise voting or investment power over the beneficial holdings of Advent
International Corporation. Therefore, no individual in this group shares
voting or investment power.
(4) Includes 417,500 shares of our common stock issuable upon the exercise of
stock options.
(5) Includes 178,438 shares of our common stock issuable upon the exercise of
stock options.
(6) Includes 34,629 shares issuable upon the exercise of stock options.
(7) Includes 26,667 shares issuable upon the exercise of stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of our board of directors is currently composed of
Messrs. Levi and Porat. No interlocking relationship exists between any member
of the compensation committee and any member of the compensation committee of
any other company, nor has any interlocking relationship of this type existed in
the past. No member of the compensation committee is or was formerly an officer
or an employee of Voxware.
COMPENSATION COMMITTEE REPORT
The compensation committee of our board of directors advises our chief
executive officer and our board of directors on compensation matters, determines
the compensation of the president and chief executive officer, reviews and takes
action on the recommendation of the chief executive officer as to the
appropriate compensation of other officers and key personnel and approves the
grants of bonuses to officers and key personnel. The compensation committee is
also responsible for the administration of our 1994 Stock Option Plan and 1998
Stock Option Plan for Outside Directors.
10
<PAGE>
General Compensation Policy for Executive Officers. The fundamental policy of
the compensation committee is to provide our executive officers with competitive
compensation opportunities based upon their contribution to our development and
financial success and their personal performance. It is the compensation
committee's objective to have a portion of each executive officer's compensation
contingent upon our performance as well as upon each executive officer's own
level of performance. Therefore, the compensation package for each executive
officer is comprised of three elements: (1) base salary which reflects
individual performance and is designed primarily to be competitive with salary
levels in the industry, (2) cash bonuses which reflect the achievement of
performance objectives and goals and (3) long-term stock-based incentive awards
which strengthen the mutuality of interests between the executive officers and
our stockholders.
Factors. The principal factors that the compensation committee considered with
respect to each executive officer's compensation for fiscal 1999 are summarized
below. The compensation committee may, however, in its discretion, apply
entirely different factors for executive compensation in future years.
. Base Salary. The base salary for each executive officer is determined on
the basis of the following factors: experience, personal performance,
the salary levels in effect for comparable positions within and without
the industry and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to
individual, as the compensation committee believes appropriate. Base
salaries are reviewed on an annual basis, with adjustments made in
accordance with the factors indicated above. The compensation committee
utilized specific compensation information available for similar
positions at competitor companies for comparative compensation purposes
in determining base salaries for fiscal 1999.
. Bonus. The incentive compensation of executive officers is closely
related to our performance, taking into account our change in business
focus in February 1999. A portion of the cash compensation of executive
officers consists of contingent compensation. Bonus awards are based on
performance objectives and goals that are tailored to the
responsibilities and functions of key executives, including qualitative
measures of our performance such as progress in the development,
marketing and adaptation of our technologies to our target markets, the
establishment of key strategic relationships with customers in our
target markets and proficient usage of our available resources.
. Long-Term Incentive Compensation. Long-term incentives are provided
through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage Voxware
from the perspective of an owner with an equity stake. Each option grant
allows the individual to acquire shares of our common stock at a fixed
price per share over a specified period of time up to ten years. Each
option generally becomes exercisable in installments over a four-year
period, contingent upon the executive officer's continued employment
with Voxware. Therefore, the option grant will provide a return to the
executive officer only if the executive officer remains employed by
Voxware during the vesting period, and then only if the market price of
the underlying shares appreciates.
The number of shares subject to each option grant is set at a level
intended to create meaningful opportunity for appreciation based on the
executive officer's current position with Voxware, the base salary
associated with that position, the size of comparable awards made to
individuals in similar positions within the industry and the
individual's personal performance in recent periods. The compensation
committee also considers the number of unvested options held by the
executive officer in order to maintain an appropriate level of equity
incentive for that individual. However, the compensation committee does
not adhere to any specific guidelines as to the relative option holdings
of our executive officers. Options to acquire an aggregate of 695,000
shares of our common stock were granted to executive officers in fiscal
1999.
CEO Compensation. In determining the compensation payable to our chief
executive officer, the compensation committee considered the CEO's performance
in fiscal 1999 and our performance taking into account our change in business
focus in February 1999.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code generally denies a federal income tax deduction for
compensation exceeding $1,000,000 paid to the CEO or any of
11
<PAGE>
the four other highest paid executive officers, excluding performance-based
compensation. Through June 30, 1999, this provision has not affected our tax
deductions, but the compensation committee will continue to monitor the
potential impact of Section 162(m) on our ability to deduct executive
compensation.
Summary. The compensation committee believes that its compensation philosophy
of paying its executive officers well by means of competitive base salaries and
cash bonus and long-term incentives, as described in this report, serves the
interests of Voxware and its stockholders.
The Compensation Committee
David B. Levi
Eli Porat
12
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on our common
stock with the cumulative total stockholder return of (1) the Nasdaq National
Market -- U.S. Index and (2) the Hambrecht & Quist Technology Index, assuming an
investment in each of $100 on October 31, 1996. The graph commences on the date
our common stock became publicly traded.
[GRAPH APPEARS HERE]
H&Q
Date Voxware, Inc. NASDAQ U.S Technology
---- ------------- ---------- ----------
10/31/96 $100.00 $100.00 $100.00
12/31/96 100.00 106.11 108.93
3/31/97 55.00 100.36 103.83
6/30/97 66.67 118.75 124.98
9/30/97 75.00 138.84 151.46
12/31/97 47.50 130.20 127.71
3/31/98 37.50 152.30 154.64
6/30/98 29.17 156.75 158.31
9/30/98 10.00 141.23 140.73
12/31/98 12.92 183.23 198.65
3/31/99 10.00 204.81 216.35
6/30/99 13.75 223.64 256.23
13
<PAGE>
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and Exchange
Commission, stockholder proposals intended for presentation at our fiscal 2000
annual meeting of stockholders must be received by our corporate secretary by no
later than August 21, 2000 if they are to be considered for inclusion in our
proxy statement for that meeting.
OTHER MATTERS
We know of no matters that are to be presented for action at the annual
meeting other than those described above. If any other matters properly come
before the annual meeting, the persons named in the enclosed form of proxy will
vote the shares represented by proxies in accordance with their best judgment on
these matters.
By Order of the Board of Directors
/s/Bathsheba J. Malsheen
Bathsheba J. Malsheen
President and Chief Executive Officer
Princeton, New Jersey
April 10, 2000
A copy of our annual report on Form 10-K will be sent without charge to any
stockholder requesting it in writing from: Voxware, Inc., Attention: Nicholas
Narlis, 305 College Road East, Princeton, New Jersey 08540.
14
<PAGE>
APPENDIX A
----------
Below is the text of Voxware's 1994 Stock Option Plan as proposed to be amended
pursuant to Proposal No. 2. Language proposed to be added to the 1994 Stock
Option Plan is set forth in bold print and language proposed to be deleted is
set forth in brackets.
VOXWARE, INC.
1994 STOCK OPTION PLAN, AS AMENDED
1. PURPOSE. The purpose of the Voxware, Inc. 1994 Stock Option Plan (the
--------
"Plan") is to enable Voxware, Inc. (the "Company") and its stockholders to
secure the benefits of common stock ownership by key personnel of the Company
and its subsidiaries. The Board of Directors of the Company (the "Board")
believes that the granting of options under the Plan will foster the Company's
ability to attract, retain and motivate those individuals who will be largely
responsible for the profitability and long-term future growth of the Company.
2. STOCK SUBJECT TO THE PLAN. The Company may issue and sell a total of
--------------------------
4,000,000 [3,200,000] shares of its common stock (the "Common Stock") pursuant
to the Plan. Such shares may be either authorized and unissued or held by the
Company in its treasury. New options may be granted under the Plan with respect
to shares of Common Stock which are covered by the unexercised portion of an
option which has terminated or expired by its terms, by cancellation or
otherwise.
3. ADMINISTRATION. The Plan will be administered by the Board or a
---------------
committee (the "Committee") consisting of at least two directors appointed by
and serving at the pleasure of the Board (or, if there is only one director, the
Committee shall consist of the sole director). Subject to the provisions of the
Plan, the Board or the Committee, as the case may be, acting in its sole and
absolute discretion, will have full power and authority to grant options under
the Plan, to interpret the provisions of the Plan, to fix and interpret the
provisions of option agreements made under the Plan, to supervise the
administration of the Plan, and to take such other action as may be necessary or
desirable in order to carry out the provisions of the Plan. A majority of the
members of the Committee will constitute a quorum. The Committee may act by the
vote of a majority of its members present at a meeting at which there is a
quorum or by unanimous written consent. The decision of the Board or the
Committee, as the case may be, as to any disputed question, including questions
of construction, interpretation and administration, will be final and conclusive
on all persons. The Committee will keep a record of its proceedings and acts
and will keep or cause to be kept such books and records as may be necessary in
connection with the proper administration of the Plan.
4. ELIGIBILITY. Options may be granted under the Plan to present or
------------
future key employees of the Company or a subsidiary of the Company (a
"Subsidiary") within the meaning of Section 424(f) of the Internal Revenue Code
of 1986 (the "Code"), and to directors of and consultants to the Company or a
Subsidiary who are not employees. Subject to the provisions of the Plan, the
Board or the Committee, as the case may be, may from time to time select the
persons to
A-1
<PAGE>
whom options will be granted, and will fix the number of shares covered by each
such option and establish the terms and conditions thereof (including, without
limitation, the exercise price, restrictions on exercisability of the option
and/or on the disposition of the shares of Common Stock issued upon exercise
thereof, and whether or not the option is to be treated as an incentive stock
option within the meaning of Section 422 of the Code (an "Incentive Stock
Option").
5. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan
--------------------------------
will be evidenced by a written agreement in a form approved by the Board or the
Committee. Each such option will be subject to the terms and conditions set
forth in this paragraph and such additional terms and conditions not
inconsistent with the Plan as the Board or the Committee deems appropriate.
A. OPTION EXERCISE PRICE. In the case of an option which is not treated
----------------------
as an Incentive Stock Option, the exercise price per share may not be less than
the par value of a share of Common Stock on the date the option is granted; and,
in the case of an Incentive Stock Option, the exercise price per share may not
be less than 100% of the fair market value of a share of Common Stock on the
date the option is granted (110% in the case of an optionee who, at the time the
option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or a Subsidiary (a "ten
percent shareholder")). For purposes hereof, the fair market value of a share,
of Common Stock on any date will be equal to the closing sale price per share as
published by a national securities exchange on which shares of the Common Stock
are traded on such date or, if there is no sale of Common Stock on such date,
the average of the bid and asked prices on such exchange at the closing of
trading on such date or, if shares of the Common Stock are not listed on a
national securities exchange on such date, the closing price or, if none, the
average of the bid and asked prices in the over the counter market at the close
of trading on such date, or if the Common Stock is not traded on a national
securities exchange or the over the counter market, the fair market value of a
share of the Common Stock on such date as determined in good faith by the Board
or the Committee.
B. OPTION PERIOD. The period during which an option may be exercised
--------------
will be fixed by the Board or the Committee and will not exceed ten years from
the date the option is granted (five years in the case of an Incentive Stock
Option granted to a "ten percent shareholder").
C. EXERCISE OF OPTIONS. Except as otherwise determined by the Board or
--------------------
the Committee, no option will become exercisable unless the person to whom the
option was granted remains in the continuous employ or service of the Company or
a Subsidiary for at least six months from the date the option is granted. The
Board or the Committee may determine and set forth in the option agreement any
vesting or other restrictions on the exercisability of an option, subject to
earlier termination of the option as provided herein. All or part of the
exercisable portion of an option may be exercised at any time during the option
period. An option may be exercised by transmitting to the Company (a) a written
notice specifying the number of shares to be purchased, and (b) payment of the
exercise price (or, if applicable, delivery of a secured obligation therefor),
together with the amount, if any, deemed necessary by the Board or the Committee
to enable the Company to satisfy
A-2
<PAGE>
its income tax withholding obligations with respect to such exercise (unless
other arrangements acceptable to the Company are made with respect to the
satisfaction of such withholding obligations).
D. PAYMENT OF EXERCISE PRICE. The purchase price of shares of Common
--------------------------
Stock acquired pursuant to the exercise of an option granted under the Plan may
be paid in cash and/or such other form of payment as may be permitted under the
option agreement, including, without limitation, previously-owned shares of
Common Stock. The Board or the Committee may permit the payment of all or a
portion of the purchase price in installments (together with interest) over a
period of not more than five years.
E. RIGHTS AS A STOCKHOLDER. No shares of Common Stock will be issued in
------------------------
respect of the exercise of an option granted under the Plan until full payment
therefor has been made (and/or provided for where all or a portion of the
purchase price is being paid in installments). The holder of an option will
have no rights as a stockholder with respect to any shares covered by an option
until the date a stock certificate for such shares is issued to him or her.
Except as otherwise provided herein, no adjustments shall be made for dividends
or distributions of other rights for which the record date is prior to the date
such stock certificate is issued.
F. NONTRANSFERABILITY OF OPTIONS. No option shall be assignable or
------------------------------
transferrable except upon the optionee's death to a beneficiary designated by
the optionee in accordance with procedures established by the Committee or, if
no designated beneficiary shall survive the optionee, pursuant to the optionee's
will or by the laws of descent and distribution. During an optionee's lifetime,
options may be exercised only by the optionee or the optionee's guardian or
legal representative.
G. TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless otherwise
-------------------------------------------
determined by the Board or the Committee, if an optionee ceases to be employed
by or to perform services for the Company and any Subsidiary for any reason
other than death or disability (defined below), then each outstanding option
granted to him or her under the Plan will terminate on the date three months
after the date of such termination of employment or service, provided, however,
that, if the optionee's employment or service is terminated by the Company for
cause (defined below), then the option will terminate upon the date of such
termination of employment or service. If an optionee's employment or service is
terminated by reason of the optionee's death or disability (or if the optionee's
employment or service is terminated by reason of his or her disability and the
optionee dies within one year after such termination of employment or service),
then each outstanding option granted to the optionee under the Plan will
terminate on the date one year after the date of such termination of employment
or service (or one year after the later death of a disabled optionee) or, if
earlier, the date specified in the option agreement. For purposes hereof, unless
otherwise agreed by the Board or the Committee in an option agreement, the term
"disability" means the inability of an optionee to perform the customary duties
of his or her employment or other service for the Company or a Subsidiary by
reason of a physical or mental incapacity which is expected to result in death
or be of indefinite duration; and, unless otherwise agreed by the Board or the
Committee
A-3
<PAGE>
in an option agreement, the term "cause" means (1) failure or refusalby optionee
to perform the duties of his or her employment with the Company, (2) commission
by the optionee of a crime involving moral turpitude, or (3) the optionee's
dishonesty or willful engagement in conduct which is injurious to the business
or reputation of the Company, all as determined by the Board in its sole
discretion.
H. OTHER PROVISIONS. The Board or the Committee may impose such other
-----------------
conditions with respect to the exercise of options, including, without
limitation, any conditions relating to the application of federal or state
securities laws, as it may deem necessary or advisable.
6. CHANGE IN CONTROL; CAPITAL CHANGES.
-----------------------------------
a. Unless otherwise determined by the Board in an option agreement with
respect to any particular option, if any event constituting a "Change in Control
of the Company" shall occur, all options granted under the Plan which are
outstanding at the time a Change of Control of the Company shall occur shall
immediately become exercisable. Unless otherwise determined by the Board in an
option agreement with respect to any particular option, a "Change in Control of
the Company" shall be deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% of
the Company's outstanding Common Stock other than pursuant to a plan or
arrangement entered into by such person and the Company, or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; provided, however, that stock
ownership changes and changes in the composition of the Board will not
constitute a "change in control" for purposes hereunder if and to the extent any
such change occurs as a result of or in connection with a public offering of the
Company's stock.
b. In the event of any stock split, stock dividend or similar transaction
which increases or decreases the number of outstanding shares of Common Stock,
appropriate adjustment shall be made by the Board to the number and option
exercise price per share of Common Stock which may be purchased under any
outstanding options. In the case of a merger, consolidation or similar
transaction which results in a replacement of the Company's Common Stock with
stock of another
A-4
<PAGE>
corporation but does not constitute Change in Control of the Company, the
Company will make a reasonable effort, but shall not be required, to replace any
outstanding options granted under the Plan with comparable options to purchase
the stock of such other corporation, or will, unless otherwise determined by the
Committee or the Board in an option agreement with respect to any particular
option, the Company will provide for immediate maturity of all outstanding
options, with all options not being exercised within the time period specified
by the Board being terminated.
c. In the event of any adjustment in the number of shares covered by any
option pursuant to the provisions hereof, any fractional shares resulting from
such adjustment will be disregarded and each such option will cover only the
number of full shares resulting from the adjustment.
d. All adjustments under this paragraph 6 shall be made by the Board, and
its determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
7. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or
--------------------------------------
terminate the Plan. Except as otherwise provided in the Plan with respect to
equity changes, any amendment which would increase the aggregate number of
shares of Common Stock as to which options may be granted under the Plan, change
the minimum option price for options, materially increase the benefits under the
Plan, or modify the class of persons eligible to receive options under the Plan
shall be subject to the approval of the Company's stockholders. No amendment or
termination may affect adversely any outstanding option without the written
consent of the optionee.
8. NO RIGHTS CONFERRED. Nothing contained herein will be deemed to give
--------------------
any individual any right to receive an option under the Plan or to be retained
in the employ or service of the Company or any Subsidiary.
9. GOVERNING LAW. The Plan and each option agreement shall be governed
--------------
by the laws of the State of Delaware.
10. DECISIONS AND DETERMINATIONS OF COMMITTEE TO BE FINAL. Except to the
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extent rights or powers under this Plan are reserved specifically to the
discretion of the Board, all decisions and determinations of the Committee are
final and binding.
11. TERM OF THE PLAN. The Plan shall be effective as of the date on which
-----------------
it is adopted by the Board, subject to the approval of the stockholders of the
Company within one year from the date of adoption by the Board. The Plan will
terminate on the date ten years after the date of adoption by the Board, unless
sooner terminated by the Board. The rights of optionees under options
outstanding at the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in accordance with the
terms of the option (as then in effect or thereafter amended).
A-5
<PAGE>
VOXWARE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2000
Bathsheba J. Malsheen and Nicholas Narlis, and each of them, as the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Voxware, Inc. held of record by the undersigned on April 3,
2000, at the Annual Meeting of Stockholders to be held at 9:00 a.m. (local time)
on May 22, 2000, at the Holiday Inn, 4355 Route 1, Princeton, New Jersey and any
adjournment thereof. Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR EACH OF THE
NOMINEES FOR PROPOSAL NO. 1 AND FOR PROPOSAL NOS. 2 AND 3.
Proposal No. 1 - Election of Directors - Nominees are:
Bathsheba J. Malsheen, David B. Levi and Eli Porat
[_] FOR all listed nominees (except do not vote for the nominee(s)
whose name(s) appears(s) below):
______________________________________________________________________
[_] WITHHOLD AUTHORITY to vote for the listed nominees.
Proposal No. 2 - Proposal to amend Voxware's 1994 Stock Option Plan to increase
the number of shares reserved for issuance under the plan by 800,000 shares of
common stock to 4,000,000 shares of common stock.
[_] FOR
[_] AGAINST
[_] ABSTAIN
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Proposal No. 3 - Proposal to approve an amendment to Voxware's certificate of
incorporation to eliminate the provision for a classified board of directors.
[_] FOR
[_] AGAINST
[_] ABSTAIN
Discretionary authority is hereby granted with respect to such other matters as
may properly come before the meeting.
IMPORTANT: PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHALL
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD GIVE FULL TITLE AS SUCH.
IF SIGNOR IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME BY DULY AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
DATED ____________________, 2000
________________________________
SIGNATURE
________________________________
SIGNATURE IF HELD JOINTLY
THE ABOVE-SIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT
FURNISHED THEREWITH.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
