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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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) 240.14a-12
Languageware.net
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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)(4) 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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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LANGUAGEWARE.NET (COMPANY) LTD.
C/O Yigal Arnon & Co.
22 Rivlin Street
Jerusalem 91000, Israel
With copy to: Todd Oseth
LanguageWare.net (Company) Ltd.
102 South Tejon Street, Suite 320
Colorado Springs, CO 80903
Fax: 719-955-0282
NOTICE OF ANNUAL GENERAL AND
EXTRAORDINARY MEETING OF SHAREHOLDERS
To Be Held June 7, 2000
-------------------------------------------
May 2, 2000
To Our Shareholders:
You are cordially invited to attend the Annual General and Extraordinary
Meeting of Shareholders to be held June 7, 2000, beginning at 10:00 A.M., at the
Antler's Adams Mark Hotel, 4 S. Cascade Street, Colorado Springs, Colorado,
U.S.A. The principal items of business will be:
1. To elect the Board of Directors;
2. To increase authorized share capital by New Israel Shekels (NIS)
600,000, divided into 60,000,000 Ordinary Shares with nominal value
NIS 0.01 each, following which the total number of authorized
Ordinary Shares shall be 190,000,000 by approving a corresponding
amendment to the Company's Memorandum of Association and Articles
of Association;
3. To increase the number of options to purchase Ordinary Shares which
may be granted under the Employee Share Option Plan (1995) by
7,000,000, from 2,500,000 to 9,500,000;
4. To increase the number of options to purchase Ordinary Shares
which may be granted under the CEO Share Option Plan (1999) by
3,000,000, from 2,000,000 to 5,000,000;
5. To increase the number of options to purchase Ordinary Shares
which may be granted under the Non-Employee Share Option Plan
(1998) by 1,000,000, from 600,000 to 1,600,000;
6. To approve the compensation of Todd Oseth, the Company's Chief
Executive Officer;
7. To approve the compensation of Fred Snow, the Company's Chairman;
8. To appoint BDO Seidman, LLP as independent auditors of the
Company; and
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9. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Israel Companies Ordinance confers upon the shareholders of an
Israeli company limited rights to receive and deliberate with respect to the
Company's financial statements for the year ended and as of December 31, 1999.
Concurrently herewith, the Company is mailing to its shareholders its Annual
Report to Shareholders which includes the audited financial statements referred
to above.
Only holders of record of the Series C Preferred Shares, Series D
Preferred Shares and Ordinary Shares, whether directly or as part of the
Company's outstanding Units, at the close of business on May 1, 2000, will
be entitled to notice of and to vote at the Meeting. Please sign, date and
mail the enclosed proxy so that your shares may be represented at the Meeting
if you are unable to attend and vote in person.
By Order of the Board of Directors.
Thomas B. Foster
Secretary
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LANGUAGEWARE.NET (COMPANY) LTD.
C/O Yigal Arnon & Co.
22 Rivlin Street
Jerusalem 91000, Israel
With copy to: Todd Oseth
LanguageWare.net (Company) Ltd.
102 South Tejon Street, Suite 320
Colorado Springs, CO 80903
Fax: 719-955-0282
PROXY STATEMENT
Annual General and Extraordinary Meeting of Shareholders
May 2, 2000
This Proxy Statement is being furnished to shareholders of LanguageWare.net
(Company) Ltd., a company organized under the laws of the State of Israel (the
"Company"). The Board of Directors of the Company is soliciting your proxy on
the proxy card included with this proxy statement to be voted at the Annual
General and Extraordinary Meeting of Shareholders (the "Meeting") to be held on
June 7, 2000, beginning at 10:00 A.M., and at any adjournments thereof.
At the Meeting, Shareholders will be asked:
1. To elect nine (9) individuals to the Board of Directors;
2. To increase authorized share capital by New Israel Shekels (NIS)
600,000, divided into 60,000,000 Ordinary Shares with nominal value
NIS 0.01 each, following which the total number of Ordinary Shares,
nominal value NIS 0.01 per share (the "Ordinary Shares") shall be
190,000,000, and to approve a corresponding amendment to the Company's
Memorandum of Association and Articles of Association;
3. To increase the number of options to purchase Ordinary Shares which may
be granted under the Employee Share Option Plan (1995) by 7,000,000,
from 2,500,000 to 9,500,000;
4. To increase the number of options to purchase Ordinary Shares which may
be granted under the CEO Share Option Plan (1999) by 3,000,000, from
2,000,000 to 5,000,000;
5. To increase the number of options to purchase Ordinary Shares which may
be granted under the Non-Employee Share Option Plan (1998) by
1,000,000, from 600,000 to 1,600,000;
6. To approve the compensation of Todd Oseth, the Company's Chief Executive
Officer;
7. To approve the compensation of Fred Snow, the Company's Chairman;
8. To appoint BDO Seidman, LLP as independent auditors of the Company; and
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9. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Israel Companies Ordinance confers upon the shareholders of an
Israeli company limited rights to receive and deliberate with respect to the
Company's financial statements for the year ended and as of December 31, 1999.
Concurrently herewith, the Company is mailing to its shareholders its Annual
Report to Shareholders which includes the audited financial statements referred
to above.
The Board of Directors has fixed the close of business on May 1, 2000,
as the record date (the "Record Date") for the determination of the holders of
the Series C Preferred Shares, Series D Preferred Shares and Ordinary Shares,
whether directly or as part of the Company's outstanding Units, entitled to
notice of and to vote at the Meeting. Each Shareholder of Series C Preferred
Shares will be entitled to 2222.22 votes for each Series C Preferred Share held
on all matters to come before the Meeting. Each Shareholder of Ordinary Shares
and Series D Preferred Shares will be entitled to one vote for each Ordinary
Share or Series D Preferred Share held on all matters to come before the
Meeting. Holders of the Series C Preferred Shares, Series D Preferred Shares
and Ordinary Shares may vote in person or by proxy authorized in writing. At
the close of business on May 1, 2000, there were:
. 85,694,107 Ordinary Shares outstanding and entitled to vote;
. 4,000 Series C Preferred Shares outstanding and entitled to vote on
the basis that all Series C Preferred Shares had been converted into an
aggregate of 8,888,889 Ordinary Shares; and
. 2,884,874 Series D Preferred Shares outstanding and entitled to vote
on the basis that all Series D Preferred Shares had been converted into an
aggregate of 2,884,874 Ordinary Shares.
This Proxy Statement and the accompanying form of proxy are first being
sent to holders of the Series C Preferred Shares, Series D Preferred Shares and
Ordinary Shares on or about May 5, 2000.
THE MEETING
Date, Time and Place
The Meeting will be held June 7, 2000, beginning at 10:00 A.M., at the
Antler's Adams Mark Hotel, 4 S. Cascade Street, Colorado Springs, Colorado,
U.S.A.
Matters To Be Considered
At the Meeting, Shareholders will be asked to consider and vote upon:
(i) the election of the Board of Directors (See "PROPOSAL 1: ELECTION
OF DIRECTORS");
(ii) the increase in the authorized share capital and in the number of
Ordinary Shares which are authorized and available for issuance
(See "PROPOSAL 2: CAPITALIZATION AMENDMENT");
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(iii) the increase in the number of shares which may be granted under
the Employee Share Option Plan (1995). (See "PROPOSAL 3:
APPROVAL OF AN INCREASE IN THE TOTAL NUMBER OF OPTIONS TO
PURCHASE ORDINARY SHARES WHICH MAY BE GRANTED UNDER THE
COMPANY'S EMPLOYEE SHARE OPTION PLAN (1995)");
(iv) the increase in the number of shares which may be granted under
the CEO Share Option Plan (1999); (See "PROPOSAL 4: APPROVAL OF
AN INCREASE IN THE TOTAL NUMBER OF OPTIONS TO PURCHASE ORDINARY
SHARES WHICH MAY BE GRANTED UNDER THE CEO SHARE OPTION PLAN
(1999)");
(v) the increase in the number of shares which may be granted under
the Non-Employee Share Option Plan (1998); (See "PROPOSAL 5:
APPROVAL OF AN INCREASE IN THE TOTAL NUMBER OF OPTIONS TO
PURCHASE ORDINARY SHARES WHICH MAY BE GRANTED UNDER THE
NON-EMPLOYEE SHARE OPTION PLAN (1998)");
(vi) the compensation of Todd Oseth, the Company's Chief Executive
Officer; (See "PROPOSAL 6: APPROVAL OF THE COMPENSATION OF THE
COMPANY'S CHIEF EXECUTIVE OFFICER");
(vii) the compensation of Fred Snow, the Company's Chairman; (See
"PROPOSAL 7: APPROVAL OF THE COMPENSATION OF THE COMPANY'S
CHAIRMAN"); and
(viii) the appointment of independent auditors (See "PROPOSAL 6:
APPOINTMENT OF INDEPENDENT AUDITORS").
The Board of Directors knows of no matters that are to be brought before
the Meeting other than as set forth in the Notice of Meeting and this Proxy
Statement. If any other matters properly come before the Meeting or at any
adjournment thereof, the persons named in the enclosed form of proxy or their
substitutes will vote in accordance with their best judgment on such matters.
Record Date; Quorum; Shares Outstanding and Entitled to Vote
Shareholders as of the Record Date are entitled to notice of and to vote at
the Meeting. As of the Record Date, there were 85,694,107 Ordinary Shares
outstanding and entitled to vote, with each Ordinary Share entitled to one vote.
As of the Record Date, there were 4,000 Series C Preferred Shares outstanding
and entitled to vote with each Series C Preferred Share entitled to 2222.22
votes as Ordinary Shares. As of the Record Date, there were 2,884,874 Series D
Preferred Shares outstanding and entitled to vote with each Series D Preferred
Share entitled to one vote as Ordinary Shares. At the Meeting, the holders of
the Series C Preferred Shares and Series D Preferred Shares have the right to
vote with the holders of the Ordinary Shares as a single class on all matters
with a number of votes equal to the number of Ordinary Shares into which the
Series C Preferred Shares and Series D Preferred Shares are convertible.
Pursuant to the Company's Articles of Association, the presence, in person
or by proxy, of two persons entitled to vote upon the business to be transacted
in the Annual General and Extraordinary Meeting, each being a shareholder, a
proxy for a shareholder or a representative of a corporate
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shareholder, holding together more than 33-1/3% of the outstanding Ordinary
Shares, Series C Preferred Shares and Series D Preferred Shares as if converted
to Ordinary Shares, is necessary to constitute a quorum at the Annual General
and Extraordinary Meeting with respect to all matters apart from item (ii) on
page 5. With respect to item (ii), the presence, in person or by proxy, of two
persons entitled to vote upon the business to be transacted in the Annual
General and Extraordinary Meeting, each being a shareholder, a proxy for a
shareholder or a representative of a corporate shareholder, holding together
more than 51% of the outstanding Ordinary Shares Series C Preferred Shares and
Series D Preferred Shares as if converted to Ordinary Shares, is necessary to
constitute a quorum.
Required Votes
The affirmative vote of the holders of a majority of the Ordinary Shares
and Ordinary Shares issuable upon conversion of the Series C Preferred Shares
and Series D Preferred Shares present and voting at the Meeting is required to
approve each of the matters upon which the Shareholders will be asked to vote
apart from item (ii) on page 5. The affirmative vote of the holders of at least
75% of the Ordinary Shares and Ordinary Shares issuable upon conversion of the
Series C Preferred Shares and Series D Preferred Shares present and voting at
the meeting is required to approve the matter set out in item (ii).
Voting and Revocation of Proxies
Shareholders are requested to complete, date, sign and promptly return the
accompanying form of proxy in the enclosed envelope. Ordinary Shares, Units and
Preferred Shares represented by properly executed proxies received by the
Company and not revoked will be voted at the Meeting in accordance with the
instructions contained therein. If instructions are not given, proxies will be
voted FOR the election of each nominee for director named herein, FOR the
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increase in the total number of authorized Ordinary Shares, FOR the increase in
---
the total number of options available for grant under the Employee Share Option
Plan (1995), FOR the increase in the total number of options available for grant
---
under the CEO Share Option Plan (1999), FOR the increase in the total number of
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options available for grant under the Non-Employee Share Option Plan (1998); FOR
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the approval of the compensation of Todd Oseth; FOR the approval of the
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compensation of Fred Snow; and FOR the appointment of the selection of
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independent auditors.
Any proxy signed and returned by a Shareholder may be revoked at any time
before it is voted by filing with the President of the Company, at the address
102 South Tejon Street, Suite 320, Colorado Springs, CO 80903, U.S.A., written
notice of such revocation or a duly executed proxy bearing a later date or by
attending the Meeting and voting in person. Attendance at the Meeting will not
in and of itself constitute revocation of a proxy.
Proxy Solicitation
The Company will bear the costs of solicitation of proxies for the Meeting.
In addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies from Shareholders by telephone, telegram, personal
interview or otherwise. Such directors, officers and employees will not receive
additional compensation, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Brokers, nominees, fiduciaries and other
custodians have been requested to forward soliciting material to the beneficial
owners of Ordinary Shares and Units held of record by them, and such custodians
will be reimbursed for their reasonable expenses.
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Independent Auditors
The Company has been advised that a representative of BDO Seidman, LLP, the
Company's independent auditors for 1999, will be present at the Meeting. The
representative will be available to answer questions and he will be able to make
a statement if he so desires.
PROPOSAL 1: ELECTION OF DIRECTORS
Directors are to be elected to serve until the next Annual General Meeting
or until their successors are elected and qualified. Unless authority to vote
is withheld, the proxies will be voted FOR the nine (9) nominees named and
---
described below, all of whom have consented to being named in this proxy
statement and to serve if elected. The Board of Directors does not expect that
any of the nominees will be unavailable for election as a director. However,
if, by reason of an unexpected occurrence, one or more of the nominees is not
available for election, the persons named in the form of proxy have advised that
they will vote for such substitute nominees as the Board of Directors of the
Company may propose. The following information is current and correct as of
May 1, 2000.
Fred A. Snow Mr. Snow, 62, was appointed Chairman of the Board on
January 21, 2000. For the past year, he has been a
venture partner with Singapore-based venture capital
fund TDF Management. For a year and a half prior to
that, Mr. Snow was Executive Vice President of Field
Operations for Adobe Systems, Inc. For a year and a
half preceding his position at Adobe Systems, Inc.,
Mr. Snow was the founding partner of Kenwood Management
Group, a privately held consulting firm
providing management services to companies in the
high-tech industry. Mr. Snow has held senior
management positions in high technology companies
operating in the USA, Europe, Asia and Latin America
for the past 30 years, including Vector Graphic Inc.,
TransImage Corporation, TechData Corporation and
Businessland.
Todd A. Oseth Mr. Oseth, 38, was appointed President and Chief
Executive Officer of the Company on February 6, 1997.
He also served as Chairman of the Company from
October 8, 1998 until Mr.Snow's appointment in January.
Prior to joining the Company, Mr. Oseth served as Vice
President, Business Development of Sony Information
Technologies of America. From 1989 to 1995,
he served in various senior managerial capacities,
including two years as President of Enhanced Memory
Systems, Inc., a subsidiary of Ramtron International
Corp. He holds a B.S. degree in Electrical Engineering
and Computer Science from the University of Minnesota
and an M.B.A. degree from the University of St. Thomas.
Esther Dyson Ms. Dyson, 45, has served as a Director of the Company
since June 1996. Ms. Dyson has been President of
EDventure Holdings, Inc., a diversified holding company
which publishes newsletters and sponsors conferences
for the software industry, for more than the past five
years. Ms. Dyson is a member of the advisory boards of
the Software Entrepreneurs Forum, the Poynter Institute
for Media Studies, the
<PAGE>
Institute for Research on Learning and the Cyberspace
Law Institute. Ms. Dyson is a limited partner of the
Mayfield Software Fund. Ms. Dyson is also a Director of
Thinking Tools, Inc.
Francis Vanderhoydonck Mr. Vanderhoydonck, 41, has served as a Director of the
Company since March 1999. Mr. Vanderhoydonck serves as
President and Managing Director of Lernout & Hauspie
Investment Company ("LHIC") since its incorporation in
1998. Prior to joining LHIC, Francis Vanderhoydonck
worked at the Generale Bank, Belgium's largest bank,
since 1986 where he became the head of Corporate &
Investment Banking in 1995.
Thomas Denys Mr. Denys, 32, has served as a Director of the Company
since January 21, 2000. Mr. Denys has served as a
Managing Director and Partner of L&H Investment Company
N.V. ("LHIC") since its inception in 1998. LHIC is the
reference shareholder of speech and language software
leader Lernout & Hauspie and holds several other
strategic investments in IT companies. Mr. Denys serves
on the board of directors of GRIC (NASDAQ: GRIC) and
Mediaring.com Ltd. From September 1992 to July 1998, he
was a Senior Associate for Business and Finance at the
European law firm of Loeff Claeys Verbeke. He was an
Assistant Professor at the Catholic University of
Leuven, Belgium between 1995 and 1998. Mr. Denys holds
a Master of Law and a Postgraduate Degree in Finance
from the Catholic University of Leuven, a Master in
German Law from the University of Tubingen and DAAD and
a Degree in Advanced Corporate Finance from the
Amsterdam Institute of Finance.
Juzar Motiwalla Dr. Motiwalla, 49, (PhD, Wisconsin) has served as a
Director of the Company since January 21, 2000. Since
1998 Dr. Motiwalla has been Chief Executive Officer of
Kent Ridge Digital Labs ("KRDL"), a 350 person high-
tech incubator in Singapore. Since 1983 prior to
joining KRDL, Dr. Motiwalla held the position of
Director, Institute of Systems Science in Singapore, an
organization engaged in information technology research
Dr. Motiwalla is a member of the board of directors of
several ventures, including ThirdVoice, PixAround.com,
KRIS Informatics and DigiSafe, and he has led the
development of several international research ventures,
including those with Apple, Ericsson, HP, IBM, and
Johns Hopkins. Dr. Motiwalla was instrumental in the
development of the Singapore Information Technology
Plan and is leading Singapore's research efforts in new
information and networking technologies.
Harold L. Covert Mr. Covert, 53, has served as a Director of the Company
since February 17, 2000. He is a finance veteran who
recently assumed the position of Chief Financial
Officer of RedHat.com. Mr. Covert brings more than
twenty years of experience in strategic management,
operations, and information systems. Prior to joining
RedHat, Mr. Covert was Executive Vice President and
Chief Financial Officer for Adobe Systems, Inc. from
<PAGE>
April 1998 to March 2000. From July 1997 to April 1998, Mr.
Covert was Vice President and Chief Financial Officer of
Philips Components NAFTA, an operating entity of Philips
Electronic NV. From January 1991 to June 1997, Mr. Covert
was a Partner in the firm of DHJ & Associates, Inc.,
Consultants and Certified Public Accountants. During the
last two and a half years of this period he acted in a full
time capacity as Chief Financial Officer for two companies.
Prior to that time Mr. Covert held senior financial
management positions with ISC Systems Corporation and
Northern Telecom Inc.
Daniel Forcart Mr. Forcart, 36, has not previously served as a Director of
the Company. Since January 1998, Mr. Forcart has been a
private investor taking equity positions in predominantly
high-tech companies throughout the world. For a year prior
to becoming a private investor, Mr. Forcart was responsible
for client acquisition and marketing at La Roche & Co
Banquiers, Basel, Switzerland, a closely-held business of
Mr. Forcart's family. For approximately a year prior to his
position at La Roche & Co Banquiers, Mr. Forcart was Vice
President, Sales and Marketing at Arnhold & S. Bleichroeder
("ASB"), a New York based fund management company; and for
five years prior to that he served as a Vice President of
Bank Julius Baer, a New York, New York and Zurich,
Switzerland based firm providing investment advisory
services to selected private clients and independent
investment portfolio managers.
John O'Neil Mr. O'Neil, 69, has not previously served as a Director of
the Company. Mr. O'Neil, since 1997, in his capacity as
President of The Center for Leadership Renewal has served as
an advisor to diverse leaders and as a speaker for
organizations and associations around the world advising
senior officers and directors on planning, strategy,
leadership development and organizational issues. From 1978
to 1996 he was the President of the California School of
Professional Psychology, a four campus graduate school
devoted to research, service and education on global human
development. Mr. O'Neil has authored two books: Leadership
Aikido and The Paradox of Success and he has written several
articles appearing in dozens of magazines.
Jonathan Thomas, a current member of the Company's Board of Directors has
declined a nomination to stand for re-election to the Board of Directors.
The Board of Directors recommends a vote FOR the above named nominees.
---
PROPOSAL 2: CAPITALIZATION AMENDMENT
On April 17, 2000, the Board of Directors unanimously adopted a resolution
recommending that the shareholders approve an amendment to the Articles of
Association of the Company which increases the authorized share capital of the
Company by NIS 600,000, divided into 60,000,000 Ordinary Shares,
<PAGE>
each with a nominal value of NIS 0.01 per share, so that the Company's
authorized share capital shall consist of 190,000,000 Ordinary Shares (together
with 10,000,000 authorized Preferred Shares).
The funds raised during 1999 are essentially exhausted and the Company is
dependent on new sources of revenue, further cost reduction initiatives, an
infusion of additional external capital, or some combination of these actions if
it is to have adequate working capital to meet its operating requirements. Any
failure on the part of the Company to obtain adequate working capital will have
a material adverse impact on the Company and may cause the Company to cease
operations.
As of April 17, 2000, the Company had 85,694,107 Ordinary Shares issued and
outstanding. It also had 14,894,194 shares reserved for issuance upon the
exercise of outstanding warrants, 7,178,639 shares reserved for issuance upon
the exercise of outstanding options; 2,448,240 shares reserved for issuance
under the provisions of a stock purchase agreement; 8,888,889 shares reserved
for the conversion of its Series C Preferred Shares; and 2,884,874 shares
reserved for the conversion of its Series D Preferred Shares. Thus, of the
current authorized number of Ordinary Shares of 130,000,000 only 8,011,057
shares remained available for further issuance by the Company in pursuit of its
business activities.
Furthermore, the Company has been having discussions with potential financial
and strategic investors regarding possible investments in the Company.
The proposed amendment will give the Company a sufficient number of
unreserved and unissued shares to allow the Company to pursue equity financing
transactions, strategic alliances or acquisitions, to compensate consultants and
employees, and for other transactions which the Board of Directors believes may
be in the best interest of the Company's shareholders, including, potentially,
the use of equity to satisfy the claims of the Company's creditors. Any unissued
authorized shares may be issued in the future by the Board of Directors, without
further shareholder approval (except in those situations where shareholder
approval is required by applicable laws, regulations, rules or contract), for
such corporate purposes as the Board may deem in the best interest of the
Company.
The increase in the authorized shares proposed by the Board is substantial
and is designed to provide flexibility to the Company. If, in the future, a
significant amount of additional shares are issued, significant dilution of the
beneficial ownership interests and/or voting power of the Company's current
shareholders will occur.
Although the Company does not currently contemplate using any of the
authorized shares for such purpose, the additional authorized shares could be
used for purposes that might be deemed to be in defense of a potential takeover
threat. For example, Ordinary Shares could be issued to persons favoring the
Board of Directors, thereby making removal of the incumbent Board more difficult
and making acquisition of a sufficient number of shares to accomplish a takeover
more costly. Moreover, the additional shares could be used as part of a "rights"
or "poison pill" plan to deter future takeovers.
Vote Required
Pursuant to the terms of the Israeli Companies Ordinance, the increase in the
share capital by NIS 600,000 divided into 60,000,000 Ordinary Shares, nominal
value NIS 0.01 per share, must be approved by 75% of Shares outstanding present
and voting at a duly convened meeting of the shareholders of the
<PAGE>
Company. Consequently, the shareholders of the Company are requested to adopt
the following special resolution:
"RESOLVED, that the authorized share capital of the Company be increased by
NIS 600,000, divided into 60,000,000 Ordinary Shares, nominal value 0.01 per
share, and that the Articles of Association and Memorandum of Association be
amended to increase the number of authorized shares by an additional 60,000,000
Ordinary Shares."
The Board of Directors recommends a vote FOR this proposal.
---
PROPOSAL 3: INCREASE IN THE TOTAL NUMBER OF OPTIONS TO PURCHASE ORDINARY SHARES
WHICH MAY BE GRANTED UNDER THE COMPANY'S EMPLOYEE SHARE OPTION PLAN
(1995)
In order to attract, retain and motivate employees (including officers) who
perform for or on behalf of the Company, in May 1995, the Board of Directors of
the Company adopted, and the shareholders approved, the Employee Share Option
Plan (1995) (the "Employee Share Option Plan"). The Employee Share Option Plan
currently authorizes the granting of options to purchase up to 2,500,000
ordinary shares, consisting of options intended to qualify as "incentive stock
options" within the meaning of Section 422 of the United States Internal Revenue
Code of 1986, as amended (the "Code") and options not intended to satisfy the
requirements for incentive stock options.
Stock options have been and will continue to be an important aspect of the
compensation arrangements for both existing and new employees. To date, the
Company has granted options to purchase all available Ordinary Shares under the
Employee Share Option Plan and has no options currently available to be granted
thereunder. Thus, the Board of Directors has proposed that the total number of
options which may be granted under the Employee Share Option Plan be increased
by 7,000,000 from 2,500,000 to 9,500,000.
Description of the Plan
The Employee Share Option Plan is administered by a committee of the Board of
Directors consisting of at least two directors appointed by the Board of
Directors ("Share Option Committee"). To serve as a member of the committee, a
director must be a "disinterested person" within the meaning of Rule 16b-3 of
the Securities and Exchange Act of 1934, as amended. The committee is vested
with complete authority to administer and interpret the Employee Share Option
Plan, including determining the persons to whom options will be granted, the
number of options to be granted and the terms of such option grants. Current
members of the Compensation Committee are Fred Snow, Esther Dyson and Thomas
Denys.
Options granted under the Employee Share Option Plan shall be for no more than
a ten-year term, provided, however, that options that are intended to qualify as
incentive stock options and that are granted to an employee who on the date of
grant is a 10% shareholder in the Company or any subsidiary corporation or
parent corporation shall be for no more than a five-year term. The exercise
price of options granted under the Employee Share Option Plan is determined by
the Committee but may not be less than the fair market value of the Ordinary
Shares on the date of the grant. In the case of options that
<PAGE>
are intended to be incentive stock options granted to an employee who, at the
date of such grant, is a 10% shareholder in the Company or any subsidiary
corporation or parent corporation, the exercise price for such options may not
be less than 110% of the fair market value of the Ordinary Shares on the date of
such grant. The number of shares covered by an option granted under the Employee
Share Option Plan is subject to adjustment for stock splits, mergers,
consolidations, reorganizations and recapitalizations. Options are non-
assignable except by will or by the laws of descent and distribution. Options
which have vested may be exercised at any time until their expiration, so long
as the grantee is still employed by the Company. Should the grantee's employment
with the Company be terminated, any vested options must be exercised within 90
days of such termination, unless otherwise determined by the Board of Directors
of the Company. If the optionee dies, becomes disabled or retires, the right to
exercise the option will be determined by the Committee in its sole discretion.
The optionee is responsible for all personal tax consequences of the grant and
the exercise thereof.
Proposal
The shareholders of the Company are requested to adopt the following
resolution:
"RESOLVED, that the increase of 7,000,000 in the number of options which may
be granted under the Company's Employee Share Option Plan (1995), from 2,500,000
to 9,500,000, is hereby approved."
The Board of Directors recommends a vote FOR this proposal.
---
PROPOSAL 4: INCREASE IN THE TOTAL NUMBER OF OPTIONS TO PURCHASE ORDINARY
SHARES WHICH MAY BE GRANTED UNDER THE COMPANY'S CEO SHARE OPTION
PLAN (1999)
In order to attract, retain and motivate the Company's Chief Executive
Officer, in April 1999, the Board of Directors of the Company adopted, and the
shareholders subsequently approved, the CEO Share Option Plan (1999) (the "CEO
Share Option Plan"). The CEO Share Option Plan currently authorizes the
granting of options to purchase up to 2,000,000 ordinary shares, consisting of
options intended to qualify as "incentive stock options" within the meaning of
Section 422 of the United States Internal Revenue Code of 1986, as amended (the
"Code") and options not intended to satisfy the requirements for incentive stock
options.
Stock options have been and will continue to be an important aspect of the
compensation arrangements for the company's CEO. To date, the Company has
granted options to purchase 1,812,000 ordinary shares under the CEO Share Option
Plan and thus only 188,000 options are currently available to be granted
thereunder. Thus, the Board of Directors has proposed that the total number of
options which may be granted under the Employee Share Option Plan be increased
by 3,000,000 from 2,000,000 to 5,000,000.
<PAGE>
Description of the Plan
Options granted under the CEO Share Option Plan shall be for no more than a
ten-year term, provided, however, that options that are intended to qualify as
incentive stock options and that are granted to an employee who on the date of
grant is a 10% shareholder in the Company or any subsidiary corporation or
parent corporation shall be for no more than a five-year term. The exercise
price of options granted under the CEO Share Option Plan is determined by the
Committee but may not be less than the fair market value of the Ordinary Shares
on the date of the grant. In the case of options that are intended to be
incentive stock options granted to the CEO who, at the date of such grant, is a
10% shareholder in the Company or any subsidiary corporation or parent
corporation, the exercise price for such options may not be less than 110% of
the fair market value of the Ordinary Shares on the date of such grant. The
number of shares covered by an option granted under the CEO Share Option Plan is
subject to adjustment for stock splits, mergers, consolidations, reorganizations
and recapitalizations. Options are non-assignable except by will or by the laws
of descent and distribution. Options which have vested may be exercised at any
time until their expiration, so long as the grantee is still employed by the
Company. Should the grantee's employment with the Company be terminated, any
vested options must be exercised within 90 days of such termination, unless
otherwise determined by the Board of Directors of the Company. If the optionee
dies, becomes disabled or retires, the right to exercise the option will be
determined by the Committee in its sole discretion. The optionee is responsible
for all personal tax consequences of the grant and the exercise thereof. For so
long as the Company is not a U.S. taxpayer, the Company believes that no tax
consequences will result to the Company in connection with the grant or exercise
of options pursuant to the CEO Share Option Plan.
Proposal
The shareholders of the Company are requested to adopt the following
resolution:
"RESOLVED, that the increase of 3,000,000 in the number of options which may
be granted under the Company's CEO Share Option Plan (1999), from 2,000,000 to
5,000,000, is hereby approved."
The Board of Directors recommends a vote FOR this proposal.
---
PROPOSAL 5: INCREASE IN THE TOTAL NUMBER OF OPTIONS TO PURCHASE ORDINARY SHARES
WHICH MAY BE GRANTED UNDER THE COMPANY'S NON-EMPLOYEE SHARE OPTION
PLAN (1995)
In order to attract and retain the services of non-employee members of the
Board of Directors and to provide them with increased motivation and incentive,
on April 23, 1998, the Board of Directors of the Company adopted, and the
shareholders subsequently approved the Non-Employee Share Option Plan (1998)
(the "Non-Employee Share Option Plan"). The Non-Employee Share Option Plan is
administered by the Share Option Committee.
Stock options have been and will continue to be an important aspect of the
compensation arrangements for the company's Board of Directors. To date, the
Company has granted options to purchase 252,000 ordinary shares under the Non-
Employee Share Option Plan and thus only 348,000 options are currently available
to be granted thereunder. Thus, the Board of Directors has proposed that the
total number of options which may be granted under the Non-Employee Share Option
Plan be increased by 1,000,000 from 600,000 to 1,600,000.
<PAGE>
DESCRIPTION OF THE PLAN
Under the Non-Employee Share Option Plan, a non-employee who becomes a
director of the Company shall be entitled an initial grant of options to
purchase 50,000 Ordinary Shares, which shall vest as to the entire grant one
year after the date of grant. Also, upon each anniversary of an initial grant,
each non-employee director who is still serving as a director of the Company
will automatically receive an annual grant of options to purchase 25,000
ordinary shares, vesting six months after the date of grant. Under the Non-
Employee Share Option Plan, options may be granted to any consultant of the
Company.
Options granted under the Non-Employee Share Option Plan are for a five-
year term. The exercise price of options granted to non-employee directors
under the Non-Employee Share Option Plan may not be less than the fair market
value of the Ordinary Shares on the date of the grant, as determined by the
Share Option Committee. The exercise price and vesting schedule of options
granted to consultants of the Company under the Non-Employee Share Option Plan
are set at the discretion of the Committee. The number of shares covered by an
option granted under the Non-Employee Share Option Plan is subject to adjustment
for stock splits, mergers, consolidations, reorganizations and
recapitalizations. Options are non-assignable except by will or by the laws of
descent and distribution. Options which have vested may be exercised at any
time until their expiration, so long as the grantee continues to be a director
of, or consultant to, the Company. Should the grantee's directorship or
consultancy with the Company be terminated, any vested options must be exercised
within 90 days of such termination, unless otherwise determined by the Board of
Directors. If the optionee dies or becomes disabled, the right to exercise the
option, to the extent then vested, continues for specified periods. The
optionee is responsible for all personal tax consequences of the grant and the
exercise thereof.
Proposal
The shareholders of the Company are requested to adopt the following
resolution:
"RESOLVED, that the increase of 1,000,000 in the number of options which may
be granted under the Company's Non-Employee Share Option Plan (1998), from
600,000 to 1,600,000, is hereby approved."
The Board of Directors recommends a vote FOR this proposal.
---
PROPOSAL 6: APPROVAL OF THE COMPENSATION OF TODD OSETH
Todd A. Oseth was appointed as President and Chief Executive Officer of the
Company, effective February 6, 1997. He is also a nominee for appointment to the
Company's Board of Directors. Israeli law requires shareholder approval of the
compensation of directors, including compensation received by a director in his
role as officer of the Company. The Board of Directors recommends that the
shareholders approve the compensation of Mr. Oseth as set forth below.
<PAGE>
Annual Compensation
Since approval by the Company's shareholders in 1997, Mr. Oseth's compensation
has been set at $200,000. In February 2000, the Company's Board of Directors
voted to increase Mr. Oseth's salary to $250,000 per year.
Grant of Options
Subject to the approval by the Company's shareholders of the increase in the
number of options which may be granted under the CEO Share Option Plan (1999)
(See Proposal 4 above), the Share Option Committee intends to immediately grant
3,000,000 options to the Company's current CEO, Todd A. Oseth. The exercise
price of the options will be the fair market value of the Company's ordinary
shares on the date of approval of the grant by the Company's shareholders. The
Share Option Committee also contemplates that these options will vest over three
years and will be granted with a provision that any unvested options will
immediately vest upon a change in control of the Company.
Proposal
The shareholders of the Company are requested to adopt the following
resolution:
"RESOLVED, that the annual salary of Todd A. Oseth , the Company's current
Chief Executive Officer, of $250,000 is hereby approved and the immediate grant
of up to 3,000,000 options to Mr. Oseth is also approved."
The Board of Directors recommends a vote FOR this proposal.
---
PROPOSAL 7: APPROVAL OF THE COMPENSATION OF FRED SNOW
Fred A. Snow was appointed Chairman of the Company's Board of Directors on
January 21, 2000. Israeli law requires shareholder approval of the compensation
of directors, including compensation received by a director in his role as
officer of the Company. The Board of Directors recommends that the shareholders
approve the compensation of Mr. Snow as set forth below.
Annual Compensation
In April 2000, the Company's Board of Directors voted to set Mr. Snow's annual
salary as Chairman at $150,000 per year.
Grant of Options
Subject to the approval by the Company's shareholders of the increase in the
number of options which may be granted under the Employee Share Option Plan
(1995) (See Proposal 3 above), the Share Option Committee intends to immediately
grant 2,000,000 options to the Company's current Chairman, Fred A. Snow. The
exercise price of the options will be the fair market value of the Company's
ordinary shares on the date of approval of the grant by the Company's
shareholders. The Share Option Committee also contemplates that these options
will vest over three years and will be granted with a provision that any
unvested options will immediately vest upon a change in control of the Company.
<PAGE>
Proposal
The shareholders of the Company are requested to adopt the following
resolution:
"RESOLVED, that the annual salary of Fred A. Snow, the Company's current
Chairman, of $150,000 is hereby approved and the immediate grant of up to
2,000,000 options to Mr. Snow is also approved."
PROPOSAL 8: APPOINTMENT OF INDEPENDENT AUDITORS
At the Meeting, stockholders will be asked to ratify the appointment BDO
Seidman, LLP as the Company's independent auditors for the fiscal year ended
December 31, 2000. Management recommends that BDO Seidman, LLP be ratified as
the principal accounting firm to be utilized by the Company for the year ending
December 31, 2000.
Luboshitz Kasierer & Co., a member firm of Arthur Andersen and the
Company's independent auditors for the year ended December 31, 1998, resigned
effective February 14, 2000. Luboshitz Kasierer's reports on the Company's
financial statements for the fiscal years ended December 31, 1998 and December
31, 1997, did not contain an adverse opinion or a disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles, except as to the going concern nature of the Company.
During the Company's two most recent fiscal years and through February 14,
2000, there were no disagreements with Luboshitz Kasierer on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction
Luboshitz Kasierer, would have caused it to make reference to the subject matter
of the disagreement in connection with its report. During the Company's two most
recent fiscal years and through February 14, 2000, Luboshitz Kasierer did not
advise the Company of any "reportable events" as defined in Item 304(a)(1)(v) of
Regulation S-K.
Luboshitz Kasierer furnished the Company with a letter addressed to the
Securities and Exchange Commission stating that they agree with the statements
in the preceding two paragraphs.
The Company retained BDO Seidman, LLP as its independent certified public
accountants to audit the consolidated financial statements of the Company for
the year ended December 31, 1999, and BDO Shlomo Ziv & Co. was engaged to re-
audit the consolidated financial statements of the Company for the years ended
December 31, 1998 and 1997. The Company's Audit Committee and Board of
Directors approved the change in auditors.
During the fiscal year ended December 31, 1998, and through February 14,
2000, the Company had not consulted with BDO Seidman, LLP regarding (1) the
application of accounting principals to any transaction; (2) the type of audit
opinion that might be rendered on the Company's financial statements; (3) any
disagreement or reportable event as those items are described or defined in
Items 304(a)(1)(iv) and 304(a)(1)(v) of Regulation S-K; or (4) any other matter
set forth in Item 304(a)(2) of Regulation S-K.
The Company anticipates that representatives of BDO Seidman, LLP will
attend the Meeting for the purpose of responding to appropriate questions. At
the Meeting, the representatives of BDO Seidman, LLP will be afforded an
opportunity to make a statement if they so desire.
<PAGE>
The Board of Directors recommends a vote FOR this proposal.
---
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company as of the date of this
filing and their respective ages and positions with the Company are set forth
below. Biographical information for those officers not included on page 7
through 9 is also set forth below. The officers hold office until the next
Annual Meeting or until their successors are appointed by the Board of
Directors.
Name Age Position
- ---- --- --------
Fred A. Snow 62 Chairman of the Board
Todd A. Oseth 38 President, Chief Executive Officer, Director
Esther Dyson 46 Director
Francis Vanderhoydonck 41 Director
Thomas Denys 32 Director
Jonathan M. Thomas 45 Director
Juzar Motiwalla 49 Director
Harold L. Covert 53 Director
Robert V. Antionazzi 44 Vice President - Marketing
Wilson Lee 42 Vice President - Research & Development
Thomas B. Foster 53 Chief Financial Officer and Secretary
Robert V. Antoniazzi has been Vice President of Marketing for the Company since
June 1997. Prior to joining the Company, he was the Managing Director and Co-
founder of GlobalKey Inc., an Internet-based secure communications technology
developer and provider. In addition, he has served in senior sales, marketing,
and general management positions for several start-up companies to establish
their European offices and operations.
Wilson Lee has been Vice President of Research and Development since the
acquisition of Star+Globe Technologies Pte Ltd. on January 14, 2000 where he was
the chief architect and visionary. Previously, Mr. Lee was Manager of
Development and Support for SingaLab Pte Ltd., a joint venture company from the
Institute of Systems Science (now known as Kent Ridge Digital Labs) and was the
senior systems specialist at Nixdorf Computers. Lee has a Master of Science
degree in Computer Science from Oklahoma State University.
Thomas B. Foster was appointed Chief Financial Officer of the Company on January
3, 2000. For two years prior to joining the Company, Mr. Foster was a financial
and accounting systems consultant for the service and energy industries. In
addition, he has served in various senior management positions for The Concord
Group of Companies, a privately held company, which generated annual sales of
$500 million. With subsidiaries of The Concord Group of Companies, Mr. Foster
served two years as President of Colorado Incineration Services, Inc., and six
years as Vice President of Finance of Greenwood Holdings
<PAGE>
Inc. He is a CPA and holds a B.S. degree in Business Administration-Accounting
from Colorado State University.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
Meetings and Committees
During 1999, the Board of Directors held 8 meetings and took actions by
unanimous consent 8 times. Robert Kutnick missed 3 meetings prior to his
resignation on January 21, 2000. There were a number of changes to the board
within the last year. Robert Rosenschein and Mark Tebbe resigned from the board
on January 26, 1999, and Chantal Mestdagh and Robert Kutnick resigned from the
board on January 21, 2000 to pursue other personal and business commitments.
Francis Vanderhoydonck was appointed on March 3, 1999 as the Lernout & Hauspie
Investment Company representatives after its March 3, 1999 short-term loan to
the Company. Fred Snow was appointed Chairman of the Board on January 21, 2000.
Thomas Denys was appointed January 21, 2000 to replace Robert Kutnick as the
Lernout & Hauspie Speech Products representative. Jonathan Thomas was appointed
January 21, 2000.
During 1998, the Board of Directors combined its three special committees
into one Executive, Audit and Compensation Committee. The members appointed to
this committee were Roger Cloutier, Esther Dyson and Mark Tebbe. Upon the
resignations of Roger Cloutier in October 1998 and Mark Tebbe in January 1999,
Robert Kutnick was appointed to this committee. The committee met one time
during 1999.
The current members of the Executive, Audit and Compensation Committee are
Fred Snow, Esther Dyson, and Thomas Denys. The role of the committee is:
1. To be a board level resource for the management of the Company between
formal board meetings and from time to time, to take on other tasks that were
delegated by the full Board.
2. To recommend to the Board independent auditors for the Company, to review
financial statements and transactions between the Company and interested
parties, to analyze and review internal audit procedures and controls.
3. To determine and review the compensation of the Company's executive
officers, and to establish and review the Company's employee benefit plans and
to present and make recommendations to the Board. To administer the Company's
share option grants and the terms associated with each of the grants under the
Company's share option plans.
The Board of Directors does not have a nominating committee. Nominees for
the Board of Directors are selected by the entire Board.
PRESENT BENEFICIAL OWNERSHIP OF ORDINARY SHARES
Security Ownership of Certain Beneficial Owners and Management
<PAGE>
Set forth below is certain information with respect to the beneficial
ownership of the Company's voting securities as of April 17, 2000 by (i) each
person who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the outstanding Series C Preferred Shares, Series D Preferred Shares,
and Ordinary Shares and Units, all of which comprise the Company's voting
securities, (ii) each director and named executive officer of the Company and
(iii) all executive officers and directors of the Company as a group. As of
April 17, 2000, there were 4,000 Series C Preferred Shares outstanding
convertible at any time into 8,888,889 Ordinary Shares, 2,884,874 Series D
Preferred Shares outstanding convertible at any time into 2,884,874 Ordinary
Shares, and 85,694,107 Ordinary Shares outstanding (including 2,000 Ordinary
Shares that are part of Units).
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------
Name of Beneficial Owner(1)(2) Number Percent
- ------------------------------ ------ -------
<S> <C> <C>
Lernout & Hauspie Investment Company N.V.
Sint- Krispijnstraat 7 14,060,062(3) 14.1%
8900 Ieper, Belgium
Lernout & Hauspie Speech Products, N.V 13,333,333(4) 13.5%
Sint- Krispijnstraat 7
8900 Ieper, Belgium
Fund II Pte Ltd 7,082,051(5) 7.6%
9 Scotts Road, #06-01 Pacific Plaza
Singapore 228210
Technology Fund Pte Ltd 6,420,249(6) 7.0%
9 Scotts Road, #06-01 Pacific Plaza
Singapore 228210
KRDL Holdings Pte Ltd 6,420,249 7.0%
21 Heng Mui Keng Terrace
Singapore 119613
Vertex Technology Fund Ltd 5,313,712 5.8%
77 Science Park Drive, #01-15 Cintech III
Singapore 118256
Jonathan M. Thomas 3,915,520 (7) 4.4%
1601 Arapahoe Road, #700
Denver, Colorado 80202
Todd A. Oseth 924,000(8) 1.1%
Fred A. Snow 225,000(9) 0.3%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
--------------------
Name of Beneficial Owner(1)(2) Number Percent
- ------------------------------ ------ -------
<S> <C> <C>
Esther Dyson 77,000(10) 0.1%
Edventure Holdings, Inc.
104 Fifth Avenue
New York, New York 10011
Francis Vanderhoydonck *(11) 0%
Sint- Krispijnstraat 7
8900 Ieper, Belgium
Thomas Denys *(12) 0%
Sint- Krispijnstraat 7
8900 Ieper, Belgium
Juzar Motiwalla 0 0%
Harold Covert 0 0%
Robert V. Antionazzi 226,667(13) 0.3%
Wilson Lee 513,620(14) 0.6%
Thomas B. Foster 0 0%
All Executive Officers and Directors as a Group 5,931,807(15) 6.5%
(11 persons)
- -----------------------------------------------------------------------
</TABLE>
(1) Unless otherwise indicated the address of each beneficial owner identified
is 102 South Tejon Street, Suite 320, Colorado Springs, Colorado 80903.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all Ordinary
Shares beneficially owned by them. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants or Series C and
D Preferred Shares convertible into Ordinary Shares that are held by such
person (but not those held by any other person) and which are exercisable
or convertible within 60 days of April 17, 2000 have been exercised or
converted.
(3) Includes warrants to purchase 3,000,000 Ordinary Shares; options to
purchase 100,000 Ordinary Shares granted to two of its employees who sit on
the Company's Board of Directors (Ms. Mestdagh, who resigned January 21,
2000, and Mr. Vanderhoydonck); assumes conversion of 2,884,874 Series D
Preferred Shares which would be convertible at any time into 2,884,874
Ordinary Shares.
(4) Assumes conversion of 4,000 Series C Preferred Shares into 8,888,889
Ordinary Shares and includes warrants to purchase an aggregate of 4,444,444
Ordinary Shares.
<PAGE>
(5) Venture TDF Pte Ltd. is the investment manager of Technology Fund II Pte
Ltd. and Technology Fund Pte Ltd. and may be deemed to share with these
Funds the power to vote or direct the vote and to dispose or to direct the
disposition of the Ordinary Shares of which the Funds are beneficial
owners.
(6) Venture TDF Pte Ltd. is the investment manager of Technology Fund Pte Ltd.
and Technology Fund II Pte Ltd. and may be deemed to share with these Funds
the power to vote or direct the vote and to dispose or to direct the
disposition of the Ordinary Shares of which the Funds are beneficial
owners.
(7) Mr. Thomas is the President of Vulcan Investments, Inc., which owns 740,917
Ordinary Shares of the Company and, as an affiliate of Mr. Thomas, are
included in the beneficial interest of Mr. Thomas.
(8) Includes options to purchase 908,000 Ordinary Shares representing the
exercisable portion of options granted to Mr. Oseth by the Board of
Directors and approved by the shareholders.
(9) Includes options to purchase 225,000 Ordinary Shares representing the
exercisable portion of options granted to Mr. Snow by the Board of
Directors.
(10) Includes options to purchase 77,000 Ordinary Shares.
(11) Mr. Vanderhoydonck is the President and Managing Director of and one of the
two designees to the Company's Board of Directors for Lernout & Hauspie
Investment Company. In connection with being appointed to the Board of
Directors, Mr. Vanderhoydonck was granted options to purchase 50,000
Ordinary Shares, the options of which have been issued in the name of
Lernout & Hauspie Investment Company in accordance with Belgian law. Mr.
Vanderhoydonck disclaims beneficial ownership of the equity securities
owned by Lernout & Hauspie Investment Company.
(12) Mr. Denys was appointed to the Board of Directors on January 21, 2000,
replacing Ms. Chantal Mestdagh, who resigned on the same date, as one of
the two designees to the Company's Board of Directors for Lernout & Hauspie
Investment Company.
(13) Includes options to purchase 226,667 Ordinary Shares.
(14) Includes options to purchase 513,620 Ordinary Shares.
(15) Includes options to purchase 2,000,287 Ordinary Shares.
As of April 17, 2000, Cede & Co. held of record 29,080,935 Ordinary Shares
and Units approximately 34% of the total number of Ordinary Shares outstanding
including Ordinary Shares which are part of Units). Cede & Co. held such shares
as a nominee for broker-dealer members of The Depository Trust Company, which
conducts clearing and settlement operations for securities transactions
involving its members.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information in respect to the compensation
of the Chief Executive Officer and the Company's other most highly compensated
executive officer who had annual compensation in 1999 in excess of $100,000.
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
---------------
Annual Compensation Number of
-------------------------------- Securities
Other Annual Underlying All Other
Year Salary Bonus Compensation Options Compensation
---- ----------- ----- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Todd A. Oseth 1999 $200,000(1) $ - $ - 1,000,000(2) -
President & CEO 1998 $199,998 $ - $ - 812,000(2) -
1997 $181,153 $ - $ - - $102,905(4)
Robert V. Antoniazzi 1999 $114,750 $ - $ - 300,000(3) -
Vice President, Marketing 1998 $120,000 $ - $ - 45,000 -
1997 $ 90,000 $ - $ - 40,000 -
</TABLE>
- --------------------------------------------------------------
(1) The Board of Directors, at a meeting held February 17, 2000, extended the
employment contract of Mr. Oseth for a period of one year at an annual
salary of $250,000 with an immediate bonus of $75,000. In addition, the
Board of Directors approved an increase in the number of ordinary shares to
be issued under the CEO Share Option Plan (1999) from 2,000,000 shares to
5,000,000 shares and approved a grant of options to Mr. Oseth to purchase
3,000,000 ordinary shares at an exercise price equal to the fair market
value on the date of approval by the shareholders. The increase in the
authorized shares of the CEO Share Option Plan and the grant of options to
Mr. Oseth are subject to the approval of the shareholders of the Company at
the annual meeting to be held on June 7, 2000.
(2) Options to purchase 1,812,000 Ordinary Shares were granted to Mr. Oseth by
the Board of Directors on July 20, 1998 and March 23, 1999 respectively and
approved by shareholders at the Company's 1999 Annual Shareholders' Meeting
(3) Options to purchase ordinary shares were granted to Mr. Antoniazzi in the
years indicated under the Company's Employee Share Option Plan (1995),
which grants were approved by the Board of Directors.
(4) Includes reimbursement of expenses associated with the relocation of Mr.
Oseth's household in accordance with his employment agreement.
The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's Employee Share Option Plan (1995)
and CEO Share Option Plan (1999) during 1999 to each of the named executive
officers and the potential realizable value for the stock options based on
future appreciation assumptions. There can be no assurance that the values shown
in this table will be achieved. No stock appreciation rights ("SARs") were
granted in 1999.
<TABLE>
<CAPTION>
Option Grants in 1999
Potential Realizable Value
--------------------------
Assumed Annual Rates of
Number of % of Total Stock Price Appreciation
Securities Underlying Options Granted Exercise for Option Term (1)
Options Granted to Employees Price Expiration --------------------------
(#) in 1999 ($) Date 5%($) 10%($)
------- -------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Todd A. Oseth 1,000,000 25.2% $0.16 03/22/2004 $47,900 $101,300
Robert V. Antoniazzi 300,000 7.6% $0.16 03/22/2004 $14,370 $ 30,390
</TABLE>
<PAGE>
_____________________
(1) Amounts reported in these columns show hypothetical gains that may be
realized upon exercise of the options, assuming the market price of common
stock appreciates at the specified annual rates of appreciation,
compounded annually over the term of the options. These numbers are
calculated based upon rules promulgated by the SEC. Actual gains, if any,
depend on the future performance of the Company's Ordinary Shares and
overall market conditions.
The following table summarizes for each of the named executive officers,
the total number of unexercised outstanding options to purchase Ordinary Shares
as of December 31, 1999, and the aggregate dollar value of unexercised in-the-
money options to purchase Ordinary Shares, if any, held by them at December 31,
1999. The value of unexercised in-the-money options at fiscal year-end is the
difference between the exercise price of such options and the market value of
the underlying Ordinary Shares at the close of business on December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options
Year-End Fiscal Year-End
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Todd A. Oseth 874,667 937,333 $499,867 $593,733
Robert V. Antoniazzi 171,667 213,333 $104,594 $144,187
</TABLE>
Employment Agreements
The Company has an employment agreement with Todd A. Oseth for a three-year
term beginning on February 6, 1997, which is terminable upon three months notice
at the option of the Company. The agreement provides that Mr. Oseth receive an
annual salary of $200,000, together with employee benefits granted by the
Company to its senior managerial personnel. The Board of Directors, on February
17, 2000, extended the employment agreement for a period of one year at an
annual base salary of $250,000 with an immediate bonus of $75,000. The agreement
contains provisions prohibiting Mr. Oseth from competing with the Company for a
two-year period following termination of employment and requiring him not to
disclose confidential or proprietary information of the Company for a six-year
period following termination of employment.
Compensation of Directors
All Directors hold office until the next annual meeting of shareholders and
the election and qualification of their successors. Directors receive no cash
compensation for serving on the Board of Directors other than reimbursement of
reasonable expenses incurred in attending meetings. The Company has also agreed
to reimburse non-employee directors for their reasonable out-of-pocket expenses
incurred in performing various services on behalf of the Company.
In addition, the Company has granted to its non-employee directors options
to purchase Ordinary Shares pursuant to the Company's Non-Employee Share Option
Plan (1998). Under the Non-Employee Share Option Plan (1998), (i) each non-
employee who served as a director of the Company upon
<PAGE>
adoption of the Non-Employee Share Plan (1998) automatically received an initial
grant of immediately vested options equal to the number of options which had
been granted under the Non-Employee Share Option Plan (1995), which plan was
replaced by the Non-Employee Share Option Plan (1998) in May 1998, (ii) each
non-employee who served as a director of the Company upon adoption of the Non-
Employee Share Plan (1998) automatically received an initial grant of options to
purchase 25,000 Ordinary Shares which vested six (6) months after the date of
grant, (iii) each non-employee who became a member of the Board of Directors
after the adoption of the Non-Employee Share Option Plan (1998) automatically
received an initial grant of options to purchase 50,000 Ordinary Shares, vesting
one year from the date of grant and (iv) upon each anniversary of an initial
grant, each non-employee who served as a director of the Company automatically
received an annual grant of options to purchase 25,000 Ordinary Shares, vesting
six months after the date of grant. Options granted under the Non-Employee Share
Option Plan (1998) are for a five-year term.
As of December 31, 1999, there are 600,000 Ordinary Shares reserved
for issuance under the Company's Non-Employee Share Options Plan (1998). As of
April 17, 2000, options to purchase 402,000 Ordinary Shares are outstanding
under the Company's Non-Employee Share Option Plan (1998). On February 17, 2000,
the Board of Directors approved an increase in the number of ordinary shares
authorized to be issued under the Non-Employee Share Option Plan (1998) from
600,000 shares to 1,600,000 shares, and approved a grant of stock options to its
current Chairman, Fred Snow, to purchase 2,000,000 ordinary shares under the
Employee Share Option Plan (1995) at fair market value on the date of approval
by the shareholders. The increase in the number of authorized shares of the Non-
Employee Share Option Plan (1998) and the grant of options to Mr. Snow are
subject to the approval of the shareholders of the Company at the shareholders
meeting to be held on June 7, 2000.
Certain Relationships and Related Transactions
On February 19, 1999, Lernout & Hauspie Investment Company, N.V. ("LHIC"),
an affiliate of Lernout & Hauspie Speech Products, N.V. which is a beneficial
owner of more than 5% of the Company's Ordinary Shares, made a short term loan
to the Company in the amount of $600,000. The loan matured on June 30, 1999 at
which time LHIC elected to convert the principal and accrued interest into
Series D Preferred Shares of the Company at a price per share of eighty-five
percent (85%) of the average closing bid price of the Company's Ordinary Shares
for twenty (20) trading days prior to March 12, 1999. Additionally, in
connection with the short-term loan the Company issued to LHIC warrants to
purchase 3.0 million Ordinary Shares of the Company at a price equal to the
average trading price for twenty (20) trading days prior to February 19, 1999.
On November 15, 1999, LHIC, an affiliate of Lernout & Hauspie Speech
Products, N.V. which is a beneficial owner of more than 5% of the Company's
Ordinary Shares, purchased two convertible debentures from the Company in the
amount of $500,000 each for a total of $1,000,000. LHIC had the right to assign
one of the $500,000 debentures, which it elected to do February 3, 2000. The
assignment of the debenture by LHIC to the assignees, some of which are holders
of 5% or greater of the Company's voting securities, is described in the table
presented below. The convertible debentures were to mature on May 31, 2000
accruing interest at an annual percentage rate equal to two (2) percent above
prime rate as determined by the Wall Street Journal. At any time after March 1,
2000, LHIC had a right to convert all or any portion of the outstanding
principal amount of the debentures and any accrued but unpaid interest on the
debentures into the Company's Ordinary Shares at a price per share of $0.15. In
addition, under terms of the debenture, if LHIC and its assigns elected to
convert, they would receive warrants to purchase a number of Ordinary Shares
equal to fifty percent (50%) of the number of shares issuable upon the
conversion of the debentures, also at a price per share of $0.15. On February
15, 2000 the Company offered to allow LHIC and its assigns the option to convert
all outstanding principal and accrued interest
<PAGE>
into Ordinary Shares on such date only if the warrants were exercised concurrent
with such conversion. LHIC and its assigns agreed to the Company's offer and
converted all principal and the accrued interest of $1,014,928 into 6,776,187
Ordinary Shares of the Company's stock. Simultaneously, pursuant to the terms of
the debentures and the election of LHIC and its assigns, the Company issued
3,383,094 Ordinary Shares to LHIC and its assigns for the exercise of warrants
for which the Company received $507,464. The following table sets forth the
conversion transaction described in the above paragraph with LHIC and the
assigns, some of which, as indicated, are beneficial owners of 5% or greater of
the Company's voting securities:
<TABLE>
<CAPTION>
Conversion of Exercise of
Debenture Principal & Interest Warrants
------------------------------ --------
Assignee Amount Shares Amount Shares
-------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Lernout & Hauspie Investment
Company, N.V.(1) $ 600,432 4,002,878 $300,216 2,001,439
Vertex Technology Fund Ltd.(1) $ 106,781 711,872 $ 53,390 355,936
Technology Fund II Pte Ltd (1) $ 85,425 569,498 $ 42,712 284,749
Seed Ventures II Limited $ 59,085 393,900 $ 29,542 196,950
InfoTech Ventures Limited $ 59,085 393,900 $ 29,542 196,950
WIIG Global Ventures Pte Ltd. $ 42,001 280,008 $ 21,001 140,004
NIF Asian Pre-IPO Fund Limited $ 26,695 177,968 $ 13,348 88,984
Asia Pacific Ventures II Ltd. $ 26,695 177,968 $ 13,348 88,984
James L. Kelly $ 8,729 58,195 $ 4,365 29,098
----------------- --------------- --------------- ---------------
Total $1,014,928 6,766,187 $507,464 3,383,094
(1) Beneficial owners of more than 5% of the Company's Ordinary Shares.
</TABLE>
On November 15, 1999 the Company entered into an agreement for the sale of
a $250,000 convertible debenture to Technology Fund II Pte Ltd. ("Tech Fund
II"), an affiliate of Technology Fund Pte Ltd which is a beneficial owner of
more than 5% of the Company's Ordinary Shares at April 17, 2000, on
substantially the same terms and conditions as the convertible debenture with
LHIC. Tech Fund II was not obligated to remit the $250,000 to the Company until
February 2, 2000, on which date it paid the Company the $250,000. On February
15, 2000 the Company offered to allow Tech Fund II the option to convert all
outstanding principal and accrued interest into Ordinary Shares on such date
only if the warrants were exercised concurrent with such conversion. Tech Fund
II agreed to the Company's offer and converted all principal and the accrued
interest, the total of which was $251,007, into 1,673,379 Ordinary Shares of the
Company. Simultaneously, pursuant to the terms of the debenture agreement and
upon the election of Tech Fund II, the Company issued 836,690 Ordinary Shares to
Tech Fund II for the exercise of warrants for which the Company received
$125,504 from Tech Fund II.
On July 14, 1999, the Company entered into a stock purchase agreement with
a group of three investors whereby the investors purchased 2.4 million Ordinary
Shares of the Company for $500,000. One of the investors was Jonathan M. Thomas
who was appointed to the Company's Board of Directors on January 21, 2000, and
together with his affiliated company, Vulcan Investments, Inc., is a less than
5% beneficial owner of the Company's Ordinary Shares at April 17, 2000. Pursuant
to the terms of the agreement, Mr. Thomas and his assigns, were required to
purchase an additional 7.1 million shares for $1,500,000 upon the Company
obtaining a strategic partner and entering into a strategic alliance with such
partner. In February 2000, the Company fulfilled its obligations under the terms
of the agreement,
<PAGE>
and Mr. Thomas and his assigns purchased the remaining 7.1 million Ordinary
Shares for $1,500,000, for which Mr. Thomas individually paid the Company
$500,000 for 2,380,953 Ordinary Shares.
Mr. Jonathan Thomas is the President of Vulcan Investments, Inc., which
loaned the Company $100,000 on October 12, 1999, evidenced by a Convertible
Promissory Note (the "Note"). The principal balance of the Note accrued interest
at the prime rate at the date of the Note plus 200 basis points. The principal
balance, plus all accrued and unpaid interest was due and payable on December
31, 1999. Pursuant to the terms of the Note, Vulcan Investments, Inc. had the
right at any time to convert all or any portion of the outstanding principal and
unpaid interest into Ordinary Shares of the Company based on the average of the
five (5) lowest closing trading prices of the Company's Ordinary Shares between
the date of the Note and the conversion date. On December 30, 1999, Vulcan
Investments, Inc. converted all the unpaid principal and accrued interest
totaling $102,247 into 740,917 Ordinary Shares of the Company.
The Company believes that the transactions referred to above were on terms no
less favorable to the Company than terms that could have been obtained from
unrelated third parties. Any future transactions between the Company and
affiliated parties will be approved by a majority of the independent and
disinterested directors, and under certain circumstances, by the audit committee
or the shareholders, and will be on terms no less favorable than those that
could have been obtained from unrelated third parties.
REPORT OF THE COMPENSATION AND SHARE OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation and Share Option Committee was responsible for overseeing
and administering executive compensation decisions, for administering the
Company's Employee Share Option Plans, and for making option grants to employees
of the Company thereunder. During 1998, the Compensation and Share Option
Committee of the Board of Directors was composed of Esther Dyson and Robert
Kutnick, both independent, outside directors. During 1999, the duties and
responsibilities of the Compensation and Share Option Committee was assumed by a
combined Executive, Audit and Compensation Committee whose current members are
Fred Snow, Esther Dyson and Thomas Denys (the "Committee").
Executive compensation decisions are made by the Committee and are designed
to serve the interest of the Company and its shareholders and to encourage and
reward management initiative and good performance. Specifically, executive
compensation decisions are made to:
(1) implement compensation practices which allow the Company to attract and
retain highly qualified executives and maintain a competitive position in the
executive marketplace with employers of comparable size and in similar lines of
business;
(2) enhance the compensation potential of executives who are in the best
position to contribute to the development and success of the Company by
providing the flexibility to compensate individual performance; and
(3) directly align the interests of the executives with the long-term
interest of the shareholders and the Company through compensation opportunities
in the form of share option grants vesting over a three-year period.
<PAGE>
These objectives are met through a combination of base salary, annual cash
incentive awards based upon the annual operating performance of the Company, and
long-term incentive opportunities which, to date, have been in the form of
incentive share option grants.
Salary
The Committee considers, on an annual basis, salary for the Company's
executive officers, including those named in the Summary Compensation Table. Any
salary adjustments are designed to reflect internal comparability and
organizational considerations, as well as competitive data provided by
independent external information.
Incentive Awards
Executive officers are eligible for cash awards annually based upon financial
and non-financial results. For the year ended December 31, 1999, no cash
incentive awards were granted. On February 17, 2000 the Board of Directors
approved a cash incentive to Todd A. Oseth, President and CEO, in the amount of
$75,000. Any further cash incentive awards during 2000 will be based upon pre-
established performance targets and objectives.
Share Option Grants
Executive officers may receive grants of options pursuant to the Company's
Employee Share Option Plan (1995) and the CEO Share Option Plan (1999). During
1999 executive officers were granted options as set forth in the Summary
Compensation Table.
Chief Executive Officer Compensation
During 1999, Todd Oseth received annual compensation as President and Chief
Executive Officer, pursuant to the terms of an employment agreement, as set
forth in the Summary Compensation Table.
THE COMPENSATION AND
SHARE OPTION COMMITTEE
Fred Snow (Chairperson)
Esther Dyson
Thomas Denys
Compensation Committee Interlocks and Insider Participation
Mr. Snow, Ms. Dyson and Mr. Denys each served as a member of the Compensation
and Share Option Committee. Neither Mr. Snow, Ms. Dyson nor Mr. Denys served as
a member of the compensation committee of another entity so as to create any
compensation committee interlock or served as an officer of the Company or any
of its subsidiaries so as to create any insider participation.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Executive officers, directors and greater than 10% beneficial
shareholders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers,
directors and greater than 10% beneficial shareholders, the Company believes
that during the year ended December 31, 1999, all persons subject to the
reporting requirements of Section 16(a) filed the required reports timely.
SHAREHOLDER RETURN PERFORMANCE GRAPH*
The following graph compares the cumulative total shareholder return of the
Ordinary Shares against the cumulative total return of the Russell 2000 Index
and the Russell 2000 Technology Index for the period commencing as of the close
of trading on July 20, 1995 (the effective date of the registration of the
Ordinary Shares under Section 12 of the Exchange Act). As the Ordinary Shares
began trading on July 21, 1995, the price of the Ordinary Shares in the graph
below as of the close of trading on July 20, 1995 is assumed to be the initial
public offering price.
The graph assumes that $100 was invested July 20, 1995 in each of the
Ordinary Shares, the Russell 2000 Index and the Russell 2000 Technology Index
and that all dividends, if any, were reinvested. Figures for the Company have
been restated to show the effect of the 3 for 2 stock split in June, 1996.
Comparison of Total Return of LanguageWare.net, Russell 2000 Index and Russell
2000 Technology Index
[PERFORMANCE GRAPH]
Index Index
Language Russell Russell
Ware.net 2000 Technology
100.00 100.00 100.00
116.13 101.60 106.45
122.58 103.49 108.21
135.48 105.21 112.48
124.77 100.42 106.57
225.81 104.60 113.36
202.19 107.11 106.22
206.45 106.91 100.71
292.52 110.15 110.44
331.23 112.13 108.20
378.45 118.06 123.53
409.68 122.66 133.36
396.77 117.49 114.40
297.58 107.12 97.18
249.19 113.18 105.14
266.13 117.42 115.35
152.42 115.45 111.84
157.26 120.04 118.79
123.39 122.92 120.28
143.95 125.24 124.53
79.84 122.05 109.32
42.34 116.12 96.41
36.29 116.27 97.56
39.92 129.07 118.66
33.27 134.36 119.62
30.24 140.50 132.48
48.39 143.54 138.29
51.41 153.84 143.89
45.36 146.87 128.89
33.27 145.74 125.10
8.47 148.14 121.47
8.77 145.78 121.15
12.70 156.55 132.53
11.49 162.94 134.21
9.07 163.69 138.49
8.47 154.79 124.73
9.68 155.05 127.48
8.47 142.29 115.24
4.23 114.56 89.02
5.44 123.25 101.36
5.44 128.19 109.21
3.63 134.83 122.91
3.02 143.04 136.00
4.84 144.82 141.72
4.84 132.97 127.63
3.48 134.79 132.07
6.05 146.72 138.62
5.75 148.71 144.89
5.14 155.15 159.96
5.14 150.77 159.95
4.23 145.03 162.53
3.93 144.85 169.99
3.02 145.30 185.56
6.65 153.93 220.85
12/31/99 16.33 171.10 278.83
01/31/00 42.94 168.21 278.73
02/29/00 38.11 195.83 388.98
The chart is presented in accordance with the requirements of the U.S.
securities laws. Shareholders are cautioned against drawing any conclusion from
the data contained therein, as past
<PAGE>
results are not necessarily indicative of future performance. This chart in no
way reflects the Company's forecast of future financial performance.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders is being furnished to
shareholders on or about May 5, 2000, with this Proxy Statement.
PROPOSALS BY SHAREHOLDERS
Proposals that Shareholders wish to include in the Company's Proxy Statement
and form of proxy for presentation at the Company's 2001 Annual Meeting of
Shareholders that meet the requirements of the Securities and Exchange
Commission relating to shareholders' proposals must be received by the Company
at 102 S. Tejon Street, Suite 320, Colorado Springs, CO 80903, Attention: Todd
Oseth, President, no later than December 31, 2000.
By Order of the Board of Directors
Fred A. Snow
Chairman
<PAGE>
REVOCABLE PROXY
LANGUAGEWARE.NET (COMPANY) LTD.
Solicited by the Board of Directors for
Annual General and Extraordinary Meeting of Shareholders
June 7, 2000
The undersigned holder of ordinary shares of LanguageWare.net (Company)
Ltd., an Israel corporation (the "Company"), acknowledges receipt of a copy of
the Notice of Annual General and Extraordinary Meeting of Shareholders dated May
2, 2000, and, revoking any proxy heretofore given, hereby appoints Todd A. Oseth
and Deborah Park, and each of them, with full power to each of substitution as
attorneys and proxies to appear and vote all shares of ordinary shares of the
Company registered in the name(s) of the undersigned and held by the undersigned
of record as of May 1, 2000, at the Annual General and Extraordinary Meeting of
Shareholders of the Company to be held at the Antler's Adams Mark Hotel, 4 S.
Cascade Street, Colorado Springs, Colorado, U.S.A., on June 7, 2000, at 10:00
a.m., and at any postponements and adjournments thereof, upon the following
items as set forth in the Notice of Annual Meeting and to vote according to
their discretion on all other matters which may be properly presented for action
at the meeting. All properly executed proxies will be voted as indicated.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS:
(1) To elect as directors the nominees listed below.
____ FOR ALL nominees listed below (except as marked to the
contrary).
____ WITHHOLD AUTHORITY to vote for all nominees listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Fred A. Snow, Todd A. Oseth, Esther Dyson, Francis Vanderhoydonck,
Thomas Denys, Juzar Motiwalla, Harold Covert, John O'Neil, Daniel
Forcart
(2) To increase authorized share capital by New Israel Shekels (NIS)
600,000, divided into 60,000,000 Ordinary Shares with nominal
value NIS 0.01 each, following which the total number of
authorized Ordinary Shares shall be 190,000,000 by approving a
corresponding amendment to the Company's Memorandum of Association
and Articles of Association.
____ FOR ____ AGAINST ____ ABSTAIN
(3) To increase the number of options to purchase Ordinary Shares
which may be granted under the Employee Share Option Plan (1995)
by 7,000,000, from 2,500,000 to 9,500,000.
____ FOR ____ AGAINST ____ ABSTAIN
(4) To increase the number of options to purchase Ordinary Shares
which may be granted under the CEO Share Option Plan (1999) by
3,000,000, from 2,000,000 to 5,000,000.
____ FOR ____ AGAINST ____ ABSTAIN
(5) To increase the number of options to purchase Ordinary Shares
which may be granted under the Non-Employee Share Option Plan
(1998) by 1,000,000, from 600,000 to 1,600,000.
____ FOR ____ AGAINST ____ ABSTAIN
(6) To approve the compensation of Todd Oseth, the Company's Chief
Executive Officer.
____ FOR ____ AGAINST ____ ABSTAIN
(7) To approve the compensation of Fred Snow, the Company' Chairman.
____ FOR ____ AGAINST ____ ABSTAIN
(8) To appoint BDO Seidman LLP, as independent auditors of the
Company.
____ FOR ____ AGAINST ____ ABSTAIN
(9) In their discretion, the proxy holders are authorized to vote upon
such other business as may properly come before the meeting or
matters incidental to the conduct of the meeting.
____ FOR ____ AGAINST ____ ABSTAIN
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1 THROUGH 9. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS MADE IT WILL BE VOTED "FOR" PROPOSALS 1 THROUGH 9.
<PAGE>
WITNESS my hand this _______ day of ____________________, 2000.
<TABLE>
<S> <C>
- ---------------------------------------------
Name and Address of (Please sign exactly as name appears hereon.
Company Shareholder(s) When signing as attorney, executor,
administrator, trustee or guardian, give full
title as such. If a corporation, please
affix corporate seal. If a partnership,
please sign in partnership name by authorized
persons. If joint tenants, each joint tenant
should sign.)
- ---------------------------------------------
-----------------------------------------------
-----------------------------------------------
Signature of Shareholder(s)
</TABLE>
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY BY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
I/WE DO ____ DO NOT ___ EXPECT TO ATTEND THIS ANNUAL MEETING OF SHAREHOLDERS.
