One factor that was taken into account in determining base salary for our executive officers was the compensation policies of other companies comparable in size to and within substantially the same industry as Trio-Tech. Keeping our executivesexecutive officers’ salarysalaries in line with the market ensures the Company’s competitiveness in the marketplace in which the Company competes for talent.
The other factor that was taken into account in determining base salary for our executive officers was salaries paid by us to our named executive officers during the immediately preceding year and increases in the cost of living.
Singapore executive officers’ base salaries are credited with a compulsory contribution ranging from 1.3%0.8% to 4.9%5.2% of base salary as required under Singapore’s provident pension fund.
Mr. S.W.S. W. Yong serves as the Chief Executive Officer and as a director of the Company. Biographical information regarding Mr. Yong is set forth under the section entitled “Election of Directors.”
Mr. Victor H. M. Ting, age 53,55, first joined Trio-Tech as the Financial Controller for the Company’s Singapore subsidiary in 1980. He was promoted to the level of Business Manager from 1985-1989. In December 1989 he became the Director of Finance and Sales & Marketing and later, the General Manager of the Singapore subsidiary. Mr. Ting was elected Vice-President and Chief Financial Officer of Trio-Tech International in November 1992. Mr. Ting holds a Bachelor of Accountancy Degree and Masters Degree in Business Administration.
Mr. Hwee Poh Lim, age 48,49, joined Trio-Tech in 1982 and became the Quality Assurance Manager in 1985. He was promoted to the position of Operations Manager in 1988. In 1990 he was promoted to Business Manager and was responsible for the Malaysian operations in Penang and Kuala Lumpur. Mr. Lim became the General Manager of the Company’s Malaysia subsidiary in 1991. In February 1993, all test facilities in Southeast Asia came under Mr. Lim’s responsibility. He holds diplomas in Electronics & Communications and Industrial Management and a Masters Degree in Business Administration. He was elected Corporate Vice-President-Testing in July 1998.
The following table shows compensation information concerning compensation awarded to, earned by or paid for services to the Company in all capacities during the fiscal yearyears ended June 30, 2007 and 2008 by our Chief Executive Officer, our Chief Financial Officer, and our one other executive officer who had annual compensation in excess of $100,000 for the fiscal year ended June 30, 2008 and 2007 (the “Named Executive Officers”). The Company has no other executive officers.
Section 16(a) of the Exchange Act requires that directors, certain officers of the Company and ten percent shareholders file reports of ownership and changes in ownership with the SEC as to the Company’s securities beneficially owned by them. Such persons are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by the Company, or on written representations from certain reporting persons, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with during the fiscal year ended June 30, 2007,2008, except for (a) two Form 4s filed late for a director of the Company, Richard M. Horowitz, each of which late filing reported one transaction, (b) one Form 4 filed late for a director, Jason Adelman, which filing reported one transaction and (c) one Form 4 filed late by onetransaction.
require further specific pre-approval by the Audit Committee. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to pre-approve audit and non-audit services proposed to be performed by the independent accountants. Since June 30, 2004, all services provided by BDO required pre-approval by the Audit Committee. The policy has not been waived in any instance.
ADDITIONAL MEETING INFORMATION
Shareholder Proposals
Shareholders who wish to present proposals at the Annual Meeting to be held following the end of the fiscal year ended June 30, 20082009 should submit their proposals in writing to the Secretary of the Company at the address set forth on the first page of this Proxy Statement. Proposals must be received no later than July 9, 20082009 for inclusion in next year’s Proxy Statement and Proxy Card. If a shareholder intends to present a proposal at the next Annual Meeting but does not seek inclusion of that proposal in the proxy statement for that meeting, the holders of proxies for that meeting will be entitled to exercise their discretionary authority on that proposal if the Company does not have notice of the proposal by September 22, 2008.2009.
Proxy Solicitation
The cost of soliciting the enclosed form of Proxy will be borne by the Company. In addition, the Company will reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Directors, officers and regular employees of the Company may, for no additional compensation, also solicit proxies personally or by telephone, electronic transmission, telegram or special letter.
Annual Report
The Company’s Annual Report to Shareholders for the year ended June 30, 20072008 is being mailed with this proxy statement to shareholders entitled to notice of the meeting. The Annual Report includes the consolidated financial statements, unaudited selected consolidated financial data and management’s discussion and analysis of financial condition and results of operations.
Upon the written request of any shareholder, the Company will provide, without charge, a copy of the Company’s Annual Report on Form 10-K filed with the Commission for the year ended June 30, 2007.2008. This request should be directed to the Corporate Secretary, Trio-Tech International, 14731 Califa Street,16139 Wyandotte St., Van Nuys, California 91411.
OTHER MATTERSCA 91406.
The shareholders and any other persons who would like to communicate with the Board, can access the website www.triotech.com and fill in the contact form for any enquiresenquiries or information. The form will be sent directly to the Secretary and the communications for specified individual directors orof the Board will be given to them personally by the Secretary. In addition, the contact number is listed on the website and the messages will be passed to the Board accordingly.
At this time, the Board knows of no other business that will come before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, the persons named as Proxy holders will vote on them in accordance with their best judgment.
By Order of the Board of Directors
A. CHARLES WILSON
Chairman
- 24 -
2007 EMPLOYEE STOCK OPTION PLAN-18-
OF
Appendix A
TRIO-TECH INTERNATIONAL AUDIT COMMITTEE CHARTER
1.PURPOSES OF THE PLAN
This 2007 Employee Stock Option Plan (the “Plan”) of Trio-Tech International, a California corporation (the “Company”), is hereby established effective as of September 24, 2007, the date that the Plan was approved and adopted by the Company’s Board of Directors. The purposes
One committee of the Plan are to:
(a) Encourage selected employees (includingboard of directors who are also employees), consultants and advisers to improve operations and increase profits ofwill be known as the Company;
(b) Encourage selected employees (includingaudit committee. Only independent directors who are also employees), consultants and advisers to accept or continue employment or association withwill serve on the Company or its Affiliates; and
(c) Increase the interest of selected employees (including directors who are also employees), consultants and advisers in the Company’s welfare through participation in the growth in value of the common stock of the Company (the “Common Stock”).
Options granted under this Plan (“Options”) may be “incentive stock options” (“ISOs”) intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or “nonqualified options” (“NQOs”). The Company shall have no liability to any optionee hereunder with respect to the tax treatmentaudit committee. An independent director is free of any Option granted and in effect under the Plan. The Plan is designed to be exempt from Code Section 409A.
2.ELIGIBLE PERSONS
Every person who at the date of grant of an Option is a full-time employee of the Companyrelationship that could influence his or of any Affiliate (as defined below) of the Company is eligible to receive NQOs or ISOs under this Plan. Every person who at the date of grant is a consultant to the Company or any Affiliate (as defined below) of the Company is eligible to receive NQOs under this Plan. The term “Affiliate”her judgment as used in the Plan means a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Code. The term “employee” includes an officer or director who is an employee of the Company. The term “consultant” includes persons employed by, or otherwise affiliated with, a consultant.
3.STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
Subject to the provisions of Section 6.1.1 of the Plan, the total number of shares of stock which may be issued under Options granted pursuant to this Plan shall not exceed 300,000 shares of Common Stock. The shares covered by the portion of any grant under the Plan which expires unexercised shall become available again for grants under the Plan. No eligible person shall be granted Options during any twelve-month period covering more than 100,000 shares.
4.ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of the Company (the “Board”) or by a committee (the “Committee”) to which administration of the Plan, or of part of the Plan, is delegated by the Board (in either case, the “Administrator”). The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws. If necessary in order to comply with Rule 16b-3 promulgated by the Securities and Exchange Commission (“Rule 16b-3”), or any successor rule thereto, and Section 162(m) of the Code, the Committee shall, in the Board’s discretion, be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 and “outside directors” within the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the Administrator may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan.
(b) Subject to the other provisions of this Plan, the Administrator shall have the authority, in its discretion: (i) to grant Options; (ii) to determine the fair market value of the Common Stock subject to Options; (iii) to determine the exercise price of Options granted; (iv) to determine the persons to whom, and the time or times at which, Options shall be granted, and the number of shares subject to each Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind rules and regulations relating to this Plan; (vii) to determine the terms and provisions of each Option granted (which need not be identical), including but not limited to, the time or times at which Options shall vest and be exercisable; (viii) with the consent of the optionee, to modify, amend, terminate or replace any Option; (ix) to defer (with the consent of the optionee) the exercise date of any Option; (x) to authorize any person to execute on behalf of the Company any instrument evidencing the grant of an Option; and (xi) to make all other determinations deemed necessary or advisable for the administration of this Plan. The Administrator may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper.
(c) All questions of interpretation, implementation, and application of this Plan shall be determined by the Administrator. Such determinations shall be final and binding on all persons.
5.GRANTING OF OPTIONS; OPTION AGREEMENT
(a) No Options shall be granted under this Plan after ten years from the date of adoption of this Plan by the Board and, if not sooner terminated by action of the Company’s Board of Directors, the Plan shall terminate automatically as of such tenth anniversary date.
(b) Each Option shall be evidenced by a written stock option agreement, in form satisfactory to the Administrator, executed by the Company and the person to whom such Option is granted; provided, however, that the failure by the Company, the optionee, or both to execute such an agreement shall not invalidate the granting of an Option in accordance with the terms of such written option agreement as offered under the Plan, although the exercise of each Option shall be subject to Section 6.1.3.
(c) The stock option agreement shall specify whether each Option it evidences is an NQO or an ISO.
(d) Subject to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant of Options under this Plan to persons who are expected to become employees or consultants of the Company, but are not employees or consultants at the date of approval, and the date of approval shall be deemed to be the date of grant unless otherwise specified by the Administrator. However, no such Options approved in anticipation of hire by the Company shall be exercisable or validly existing and in effect before the actual date of hire.
6.TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the terms and conditions set forth in Section 6.1. NQOs shall be also subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall also be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2.
6.1Terms and Conditions to which All Options Are Subject. All Options granted under this Plan shall be subject to the following terms and conditions:
6.1.1Changes in Capital Structure. In the event of changes in the outstanding Common Stock by reason of stock dividends, stock splits, reverse stock splits, split ups, consolidations, recapitalizations, reorganizations or like events, an appropriate adjustment shall be made in the number of shares reserved under the Plan, in the number of shares set forth in Section 3 hereof, and in the number of shares and the option price per share specified in any stock option agreement with respect to any unpurchased shares; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments but may make such adjustment as the Administrator deems appropriate. The Company shall give prompt notice to all optionees of any adjustment pursuant to this Section.
6.1.2Corporate Transactions. Section 6.1.1 above to the contrary notwithstanding, in the event of any merger, consolidation or other reorganization of the Company in which the Company is not the surviving or continuing corporation or in the event of the liquidation or dissolution of the Company, all options granted hereunder shall terminate on the effective date of the merger, consolidation, reorganization, liquidation, or dissolution unless the agreement with respect thereto provides for the assumption of such options by the continuing or surviving corporation. Any other provision of this Plan or the applicable stock option agreement to the contrary notwithstanding, all
outstanding options granted hereunder shall be fully exercisable for a period of 30 days prior to the effective date of any such merger, consolidation, reorganization, liquidation, or dissolution unless such options are assumed by the continuing or surviving corporation. The Committee shall notify the holders of all outstanding options in advance of any such window period for exercising options.
6.1.3Time of Option Exercise. Subject to Section 5 and Section 6.3.4, Options granted under this Plan shall be exercisable (a) immediately as of the effective date of the stock option agreement granting the Option, or (b) in accordance with a schedule related to the date of the grant of the Option, the date of first employment, or such other date as may be set by the Administrator (in any case, the “Vesting Base Date”) and specified in the written stock option agreement relating to such Option. In any case, no Option shall be exercisable until a written stock option agreement in form satisfactory to the Company is executed by the Company and the optionee.
6.1.4Option Grant Date. Except in the case of advance approvals described in Section 5(d), the date of grant of an Option under this Plan shall be the date as of which the Administrator approves the grant with respect to at least the following determinable features: the identity of the grantee, type of grant, number of shares, exercise price, vesting schedule and expiration date. For this purpose, the default provisions of the Plan shall be deemed incorporated into any grant to the extent that other terms are not specified for the grant.
6.1.5Nontransferability of Option Rights. No Option granted under this Plan shall be assignable or otherwise transferable by the optionee except by will or by the laws of descent and distribution. During the life of the optionee, an Option shall be exercisable only by (or on behalf of) the optionee.
6.1.6Payment. Except as provided below, payment in full, in cash, of the exercise price shall be made for all stock purchased at the time written notice of exercise of an Option is given to the Company, and proceeds of any payment shall constitute general funds of the Company. At the time an Option is granted or exercised, the Administrator, in the exercise of its absolute discretion after considering any tax, accounting and financial consequences, may authorize any one or more of the following additional methods of payment:
(a) Acceptance of the optionee’s full recourse promissory note for all or part of the Option exercise price, payable on such terms and bearing such interest rate as determined by the Administrator (but in no event less than the minimum interest rate specified under the Code at which no additional interest would be imputed), which promissory note may be either secured or unsecured in such manner as the Administrator shall approve (including, without limitation, by a security interest in the shares of the Company); and
(b) Subject to the discretion of the Administrator and the terms of the stock option agreement granting the Option, delivery by the optionee of Common Stock already owned by the optionee for all or part of the Option exercise price, provided the value (determined as set forth in Section 6.1.10) of such Common Stock is equal on the date of exercise to the Option exercise price, or such portion thereof as the optionee is authorized to pay by delivery of such stock. In such case, prior to the acceptance of such shares of Common Stock, the optionee shall supply the
Board with written representations and warranties, including without limitation a representation and warranty that the optionee has good and marketable title to such shares free and clear of liens and encumbrances. No share of Common Stock shall be issued until full payment therefor has been made, and until any tax withholding obligations have been satisfied in a manner acceptable to the Company.
6.1.7Termination of Employment. If for any reason other than death or permanent and total disability, an optionee ceases to be employed by the Company or any of its Affiliates (such event being called a “Termination”), Options held at the date of Termination (to the extent then exercisable) may be exercised in whole or in part at any time within three months of the date of such Termination, or such other period of not less than 30 days after the date of such Termination as is specified in the Option Agreement (but in no event after the Expiration Date); provided, however, that if such exercise of the Option would result in liability for the optionee under Section 16(b) of the Exchange Act, then such three-month period automatically shall be extended until the tenth day following the last date upon which optionee has any liability under Section 16(b) (but in no event after the Expiration Date). If an optionee dies or becomes permanently and totally disabled (within the meaning of Section 22(e)(3) of the Code) while employed by the Company or an Affiliate or within the period that the Option remains exercisable after Termination, Options then held (to the extent then exercisable) may be exercised, in whole or in part, by the optionee, by the optionee’s personal representative or by the person to whom the Option is transferred by devise or the laws of descent and distribution, at any time within six months after the death or six months after the permanent and total disability of the optionee or any longer period specified in the Option Agreement (but in no event after the Expiration Date). For purposes of this Section 6.1.7, “employment” includes service as a consultant for the Company or an Affiliate. For purposes of this Section 6.1.7, an optionee’s employment shall not be deemed to terminate by reason of sick leave, military leave or other leave of absence approved by the Company, for as long as the period of any such leave does not exceed 90 days or, if longer, the duration of the optionee’s right to reemployment by the Company or any Affiliate as guaranteed either contractually or by statute.
6.1.8Withholding and Employment Taxes. At the time of exercise of an Option and as a condition thereto, or at such other time as the amount of such obligations becomes determinable (the “Tax Date”), the optionee shall remit to the Company in cash all applicable federal and state withholding and employment taxes. Such obligation to remit may be satisfied, if authorized by the Administrator in its sole discretion, after considering any tax, accounting and financial consequences, by the optionee’s (i) delivery of a promissory note in the required amount on such terms as the Administrator deems appropriate, (ii) tendering to the Company previously owned shares of Stock or other securities of the Company with a fair market value equal to the required amount, or (iii) agreeing to have shares of Common Stock (with a fair market value equal to the required amount) which are acquired upon exercise of the Option withheld by the Company, subject to the following limitations:
(a) Any election pursuant to clause (iii) above by an optionee subject to Section 16 of the Exchange Act shall either (x) be made at least six months before the Tax Date and shall be irrevocable; or (y) shall be made in (or made earlier to take effect in) any 10-day period beginning on the third business day following the date of release for publication of the Company’s quarterly
or annual summary statements of earnings and shall be subject to approval by the Administrator, which approval may be given at any time after such election has been made. In addition, in the case of (y), the Option shall be held at least six months prior to the Tax Date.
(b) Any election pursuant to clause (ii) above, where the optionee is tendering Common Stock issued pursuant to the exercise of an Option, shall require that such shares be held at least six months prior to the Tax Date.
Any of the foregoing limitations may be waived (or additional limitations may be imposed) by the Administrator, in its sole discretion, if the Administrator determines that such foregoing limitations are not required (or that such additional limitations are required) in order that the transaction shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3, or any successor rule thereto. In addition, any of the foregoing limitations may be waived by the Administrator, in its sole discretion, if the Administrator determines that Rule 16b-3, or any successor rule thereto, is not applicable to the exercise of the Option by the optionee or for any other reason.
Any securities tendered or withheld in accordance with this Section 6.1.8 shall be valued by the Company as of the Tax Date.
6.1.9Other Provisions. Each Option granted under this Plan may contain such other terms, provisions, and conditions not inconsistent with this Plan as may be determined by the Administrator, and each ISO granted under this Plan shall include such provisions and conditions as are necessary to qualify the Option as an “incentive stock option” within the meaning of Section 422 of the Code.
6.1.10Determination of Value. For purposes of the Plan, the value of Common Stock or other securities of the Company shall be determined as follows:
(a) If the Common Stock (or other security) is readily tradable on an established securities market, its fair market value shall be determined, in accordance with regulations under Code Section 409A, by any of the following methods selected and consistently followed by the Administrator from time to time: (i) the last sale before or the first sale after the grant; (ii) the closing price on the trading day before or the trading day of the grant; (iii) the arithmetic mean of the high and low prices on the trading day before or the trading day of the grant; or (iv) any other reasonable method using actual transactions in the Common Stock (or other security) as reported by such market.
(b) If the Common Stock (or other security) is not readily tradable on an established securities market, its fair market value shall be determined in good faith by the Administrator by a reasonable application of a reasonable valuation method, taking into consideration all relevant factors as provided in regulations under Code Section 409A, or the Administrator may consistently apply, from time to time, one of the valuation methods presumed to be reasonable as set forth in said regulations.
6.1.11Option Term. Subject to Section 6.3.5, no Option shall be exercisable more than ten years after the date of grant, or such lesser period of time as is set forth in the stock option agreement (the end of the maximum exercise period stated in the stock option agreement is referred to in this Plan as the “Expiration Date”).
6.2Terms and Conditions to Which Only NQOs Are Subject. Options granted under this Plan which are designated as NQOs shall be subject to the following terms and conditions:
6.2.1Exercise Price. The exercise price of a NQO shall be not less than the fair market value (determined in accordance with Section 6.1.10) of the stock subject to the Option on the date of grant. NQOs granted under this Plan shall not be discounted; accordingly they are intended to be exempt from Code Section 409A.
6.3Terms and Conditions to Which Only ISOs Are Subject. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions:
6.3.1Exercise Price. (a) Except as set forth in Section 6.3.1(b), the exercise price of an ISO shall be determined in accordance with the applicable provisions of the Code and shall in no event be less than the fair market value (determined in accordance with Section 6.1.10) of the stock covered by the Option at the time the Option is granted.
(b) The exercise price of an ISO granted to any person who owns, directly or by attribution under the Code (currently Section 424(d)), stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of any Affiliate (a “Ten Percent Shareholder”) shall in no event be less than 110% of the fair market value (determined in accordance with Section 6.1.10) of the stock covered by the Option at the time the Option is granted.
6.3.2Disqualifying Dispositions. If stock acquired by exercise of an ISO granted pursuant to this Plan is disposed of in a “disqualifying disposition” within the meaning of Section 422 of the Code, the holder of the stock immediately before the disposition shall promptly notify the Administrator in writing of the date and terms of the disposition and shall provide such other information regarding the Option as the Administrator may reasonably require.
6.3.3Grant Date. If an ISO is granted in anticipation of employment as provided in Section 5(d), the Option shall be deemed granted, without further approval, on the date the grantee assumes the employment relationship forming the basis for such grant, and, in addition, satisfies all requirements of this Plan for Options granted on that date.
6.3.4Vesting. Notwithstanding any other provision of this Plan, ISOs granted for any particular optionee under all incentive stock option plans of the Company and its subsidiaries may not “vest” for more than $100,000 in fair market value of stock (measured on the grant dates(s)) in any calendar year. For purposes of the preceding sentence, an Option “vests” when it first becomes exercisable. If, by their terms, such ISOs taken together would vest to a greater extent than the foregoing vesting limit in a calendar year, and unless otherwise provided by the Administrator, the
vesting limitation described above shall be applied by deferring (only to the extent necessary to satisfy the $100,000 limit) the exercisability of those ISOs or portions of ISOs which have the highest per share exercise prices. The ISOs or portions of ISOs whose exercisability is so deferred shall become exercisable on the first day of the first subsequent calendar year during which they may be exercised, as determined by applying these same principles and all other provisions of this Plan including those relating to the expiration and termination of ISOs. In no event, however, will the operation of this Section 6.3.4 cause an ISO to vest before its terms or, having vested, cease to be vested. To the extent that any portion of an ISO cannot be deferred to any later calendar year, then the portion of such ISO that exceeds the foregoing annual vesting limit for the last calendar year in which any portion of that ISO is permitted to vest as an ISO, shall be converted and treated thereafter as an NQO under the Plan and the optionee shall be notified of that conversion.
6.3.5Term. Notwithstanding Section 6.1.11, no ISO granted to any Ten Percent Shareholder shall be exercisable more than five years after the date of grant.
7.MANNER OF EXERCISE
(a)member. An optionee wishing to exercise an Option shall give written notice to the Company at its principal executive office, to the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price and withholding taxes as provided in Sections 6.1.6 and 6.1.8. The date the Company receives written notice of an exercise hereunder accompanied by full payment or satisfaction of the exercise price will be considered as the date such Option was exercised.
(b) Promptly after receipt of written notice of exercise of an Option and all payments called for by Section 7(a), the Company shall, without stock issue or transfer taxes to the optionee or other person entitled to exercise the Option, deliver to the optionee or such other person a certificate or certificates for the requisite number of shares of stock. An optionee or permitted transferee of an optionee shall not have any privileges as a shareholder with respect to any shares of stock covered by the Option until the date of issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of such shares.
(c) Unless exempted by the Administrator, if an officer orindependent director who is subject to the provisions of Section 16(b) of the Exchange Act exercises an Option within six months of the grant of such Option, the shares acquired upon exercise of such Option may not be disposed of until six months after the date of grant of such Option.
8.EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in this Planassociated with a major vendor to, or any Option granted hereunder shall interfere with or limit in any way the rightcustomer of, the Company or of any of its Affiliates to terminate any optionee’s employment or consulting at any time, nor confer upon any optionee any right to continue in the employ of, or consult with, the Company or any of its Affiliates.
9.CONDITIONS UPON ISSUANCE OF SHARES
Shares of Common Stock shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933,company. When there is some doubt about independence, as amended (the “Securities Act”).
10.NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any limitations on the power of the Company to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options other than under the Plan.
11.AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or discontinue this Plan. Without the consent of an optionee, no amendment, alteration, suspension or discontinuance may adversely affect outstanding Options except to conform this Plan and Options granted under this Plan to the requirements of federal or other tax laws relating to such stock Options. No amendment, alteration, suspension or discontinuance shall require shareholder approval unless (a) shareholder approval is required to preserve incentive stock option treatment for federal income tax purposes, or (b) the Board otherwise concludes that shareholder approval is advisable; provided, however, that no such amendment shall, without the approval of the shareholders of the Company, effectuate a change for which shareholder approval is required in order for the Plan to continue to qualify under Rule 16b-3 (while it is in effect) or any successor rule thereto.
12.EFFECTIVE DATE OF PLAN
No Option shall be exercisable unless and until written consent of the shareholders of the Company, or approval of shareholders of the Company voting at a validly called shareholders’ meeting, is obtained within twelve months after adoption of the Plan by the Board. If such shareholder approval is not obtained within such time, Options granted hereunder shall terminate and be of no force and effect from and after expiration of such twelve-month period to the extent required by applicable law; otherwise such Options (if ISOs) shall be converted to NQOs if such conversion would allow them to remain in effect. Options may be granted and exercised under this Plan only after there has been compliance with all applicable federal and state securities laws.
IN WITNESS WHEREOF, this Plan, having been first duly adopted by the Board of Directors, is hereby executed below by a duly authorized officer of the Company on this 24th day of September, 2007, to take effect as of such date as provided herein.
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| | TRIO-TECH INTERNATIONAL | | |
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| | By: | | /s/ A. Charles Wilson | | |
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| | | | A. Charles Wilson, Director | | |
| | | | | | | | |
| | | | Chairman of the Board | | |
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Exhibit 2
TRIO-TECH INTERNATIONAL
2007 DIRECTORS EQUITY INCENTIVE PLAN
1. Purpose. This Trio-Tech International 2007 Directors Equity Incentive Plan (the “Plan”) is hereby established to grant to directors of Trio-Tech International (the “Company”) a favorable opportunity to acquire or receive Common Stock of the Company and to create an incentive for such persons to serve on the Board of Directors of the Company and to contribute to its long-term growth and profitability objectives. The Plan is established effective as of September 24, 2007. The Plan is designed to be exempt from Code Section 409A.
As used in the Plan, the term “Code” shall mean the Internal Revenue Code of 1986, as amended. The term “Participant” shall meanwhen a member of the Board of Directorscommittee has short-term consulting contract with a major customer, the director should excuse himself from any decisions that might be influenced by that relationship.
The primary function of the Company whoaudit committee is not an officer or full-time salaried employee ofto assist the Company. Masculine terms used herein mayboard in fulfilling its oversight responsibilities by reviewing the financial information that will be read as feminine, singular terms as plural and plural terms as singular, as necessary to give effectprovided to the Plan.
2. Administration. The Plan shall be administered byshareholders and others, the Boardsystems of Directors of the Company (the “Board”) or by a committee from time to time constituted (the “Committee”) to which administration of the Plan is delegated by the Board (in either case, the “Administrator”). The Administrator shall determine the meaning and application of the provisions of the Plan and all option agreements executed and restricted stock awards granted pursuant thereto, and its decisions shall be conclusive and binding upon all interested persons. Subject to the provisions of the Plan, the Administrator shall have the sole authority to grant options and award restricted shares of stock hereunder, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine and modify the terms and conditions of each stock option or restricted stock grant entered into between the Company and any Participant, and to make all other determinations necessary or advisable in the implementation and administration of the Plan.
To the extent necessary to permit any grants or awards made under the Plan to be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, the Committee authorized to grant and administer such grants or awards to Participants who are subject to Section 16 of said Securities Exchange Act shall consist solely of two or more “Non-Employee Directors” (as defined for purposes of Rule 16b-3 under said Act) and shall carry out its responsibilities in a manner consistent with said Rule 16b-3. Any member of the Committee shall not take part in the Committee’s consideration of matters involving grants or awards to such member.
3. Eligibility; Status as Shareholder. All directors of the Company shall participate in the Plan. No person shall have any rights of a shareholder by virtue of a grant of an option except with respect to shares actually issued to that person upon the exercise thereof.
4. Stock Subject to Plan. There shall be reserved for issue upon the exercise of options granted, or restricted stock awarded, under the Plan 200,000 shares of Common Stock or the number of shares of Common Stock which, in accordance with the provisions of Section 9 hereof, shall be substituted therefor. Such shares may be authorized but unissued shares or treasury shares. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in full, unpurchased shares subject thereto shall again be available for the purposes of the Plan.
5. Terms of Options. Each option granted under the Plan shall be evidenced by a stock option agreement between the person to whom such option is granted and the Company. Such stock option agreement shall provide that the option is subject to the following terms and conditions and to such other terms and conditions not inconsistent therewith as the Administrator may deem appropriate in each case:
(a)Option Exercise Price. The exercise price to be paid for each share of Common Stock upon the exercise of an option shall be 100% of the fair market value of the shares on the date the option is granted. As used in this Plan, the term “date the option is granted” means the date when the corporate action necessary to create a legally binding option is completed and the number of shares, exercise price, class of underlying stock and identity of the option recipient are determinable. Fair market value of the shares shall be (i) the mean of the high and the low prices of shares of Common Stock sold on an established securities market on the date the option is granted (or, if there was no sale on such date, such mean for the next preceding trading day on which there was such a sale) or (ii) if the Common Stock is not readily tradable on an established securities market on the date the option is granted, then fair market value shall be determined by a reasonable application of a reasonable valuation method, in accordance with the regulations under Code Section 409A, taking into consideration all relevant factors or, if the Administrator so chooses from time to time, by applying any valuation method presumed reasonable under those regulations.
(b)Grants. Each Option granted under the Plan shall be exercisable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Board shall specify in the specific option. No option shall be granted under this Plan more than ten (10) years after the effective date of the Plan or any earlier termination date of the Plan.
(c)Period of Option. Options granted hereunder shall have a term of five years from the date of grant.
(d)Exercisability. Each option granted under the Plan shall be 100% vested and exercisable in full at any time and from time to time commencing as of the date of grant, unless otherwise provided in the stock option agreement.
(e)Payment for Stock. The option exercise price for Common Stock purchased under an option shall be paid in full at the time of purchase. The option agreement
may provide that the exercise price may be payable, at the election of the holder of the option, in whole or in part either in cash or by delivery of Common Stock in transferable form, such Common Stock to be valued for such purpose at its fair market value (as determined under Section 5(a) above) as of the date on which the option is exercised (c) and that, in that case and prior to the acceptance of shares of Common Stock as provided in this Section 5(e), the Participant shall supply the Board with written representations and warranties, including without limitation a representation and warranty that the Participant has good and marketable title to such shares free and clear of liens and encumbrances. No share of Common Stock shall be issued until full payment therefor has been made, and until any tax withholding obligation arising under Section 11 below has been satisfied in a manner acceptable to the Company. No Participant shall have any rights as an owner of shares of Common Stock until the date of issuance to him of the stock certificate evidencing such Common Stock.
(f)Nonqualified Options. All options granted under the Plan shall be non-qualified options, meaning they do not qualify as “incentive stock options” under Code Section 422.
6. Stock Awards. With the approval of the Company’s Board of Directors or an appropriate Section 16b-3 Committee (as described in Section 2 above), a Participant may be granted one or more Common Stock awards under the Plan. Such awards shall be grants of shares of Common Stock on such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Board of Directors or the Section 16b-3 Committee and set forth in a Restricted Stock Agreement with the Participant. The Participant will have all voting, dividend, liquidation and other rights with respect to the shares of Common Stock issued to the Participant as a Common Stock award under this Section 6 upon the Participant becoming both the holder of record of such shares; provided, however, that the Committee may impose such restrictions on the vesting, assignment and transfer of a Common Stock award as it deems appropriate. In the event of a Participant’s termination of service on the Company’s Board of Directors, any unvested shares of Common Stock awarded under the Plan shall vest, continue to vest, be forfeited and become subject to repurchase as and to the extent provided in the applicable Restricted Stock Agreement.
7. Nontransferability. Options granted pursuant to the Plan shall be nontransferable except by will or the laws of descent and distribution, and shall be exercisable during the optionee’s lifetime only by him, and after his death, by his personal representative or by the person entitled thereto under his will or the laws of intestate succession. Shares of Common Stock awarded under Section 6 of the Plan shall be nontransferable the same as options, except as may be permitted by the Company’s Board of Directors in connection with certain events described in Sections 9(a) or (b) below.
8. Termination of Service. Upon termination of the optionee’s service on the Board of Directors (“Termination of Service”), his rights to exercise options then held by him shall be terminated (and his outstanding unexercised options shall be forfeited and cancelled) as of an
earlier date than the scheduled expiration date of such outstanding options, in accordance with the following provisions as applicable:
(a)Death or Disability. Upon the death or disability (as defined in Section 22(e)(3) of the Code) of any person holding options granted under this Plan, his options shall be exercisable, by the holder’s legal representative or by the person entitled thereto under his will or the laws of intestate succession, only if and to the extent they are exercisable on the date of his death or disability, and such options shall terminate twelve months after the date of his death or disability (i.e., on the anniversary date of his death or disability) or on the originally scheduled expiration date of such options, whichever date is earlier.
(b)Termination for Cause. A Participant’s right to exercise stock options shall be rescinded effective as of the date of termination of his service as a director if the Participant has been found to be engaged directly or indirectly in any conduct or activity which is in competition with the Company or is otherwise adverse to or not in the best interest of the Company.
(c)Termination of Service. In the case of a Participant who has served as a non-employee on the Company’s Board of Directors for less than five years, upon his Termination of Service for any reason other than as set forth in Section 7(a) or 7(b) hereof, his options shall be exercisable only if and to the extent they are exercisable on the date of his Termination of Service and such options shall terminate 30 days after the date of his Termination of Service unless the holder of the options dies prior thereto, in which event he shall be deemed to have died on the date of his Termination of Service; provided, however, in no event shall such options be exercised more than five years from the date they are granted. Nothing contained in the Plan or in any option granted pursuant to the Plan shall obligate the Company or its parent or subsidiary corporations to continue to engage any director in such or in any other capacity with the Company, nor confer upon any director any right to continue as a director of or in any other capacity with the Company or its parent or subsidiary corporations, if any, nor limit in any way such right as the Company or its parent or subsidiary corporations may have to amend, modify or terminate any person’s compensation, employment, directorship or consulting or advising agreement at any time.
9. Adjustment of Shares.
(a) In the event of changes in the outstanding Common Stock by reason of stock dividends, stock splits, reverse stock splits, split-ups, consolidations, recapitalizations, reorganizations or like events, an appropriate adjustment shall be made in the number of shares reserved under the Plan, in the number of shares set forth in Section 4 hereof, and in the number of shares and the option price per share specified in any stock option agreement with respect to any unpurchased shares; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments but may make such adjustment as the Administrator deems appropriate. The Company shall give prompt notice to all optionees of any adjustment pursuant to this Section.
(b) Section 9(a) above to the contrary notwithstanding, in the event of any merger, consolidation or other reorganization of the Company in which the Company is not the surviving or continuing corporation or in the event of the liquidation or dissolution of the Company, all options granted hereunder shall terminate on the effective date of the merger, consolidation, reorganization, liquidation, or dissolution unless the agreement with respect thereto provides for the assumption of such options by the continuing or surviving corporation. Any other provision of this Plan or the applicable stock option agreement to the contrary notwithstanding, all outstanding options granted hereunder shall be fully exercisable for a period of 30 days prior to the effective date of any such merger, consolidation, reorganization, liquidation, or dissolution unless such options are assumed by the continuing or surviving corporation. The Committee shall notify the holders of all outstanding options in advance of any such window period for exercising options.
10. Securities Law Requirements. The Company may require prospective optionees, as a condition of either the grant or the exercise of an option, to represent and establish to the satisfaction of legal counsel to the Company that all shares of Common Stock acquired upon the exercise of such option will be acquired for investment and not for resale. The Company may refuse to permit the sale or other disposition of any shares acquired pursuant to any such representation until it is satisfied that such sale or other disposition would not be in contravention of applicable state or federal securities law.
11. Tax Withholding. As a condition for issuing shares of Common Stock upon exercise of an option or the grant of a Common Stock award, the Company may require an optionee to pay to the Company all applicable federal, state and local taxes which the Company is required to withhold with respect to such option exercise or Common Stock award.
12. Amendment. The Board of Directors may amend the Plan at any time, except that without shareholder approval:
(a) The number of shares of Common Stock which may be reserved for issuance under the Plan shall not be increased except as provided in Section 9 hereof;
(b) The option price per share of Common Stock may not be fixed at less than the price specified in Section 5(a) hereof;
(c) The maximum period during which the options may be exercised may not be extended;
(d) The class of persons eligible to receive options or restricted stock awards under the Plan as set forth in Section 3 shall not be changed;
(e) This Section 12 may not be amended in a manner that limits or reduces the amendments which require shareholder approval; and
(f) The provisions of the Plan shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act (if applicable), or the rules thereunder.
13. Termination. The Plan shall terminate automatically on September 24, 2017. The Board of Directors may terminate the Plan at any earlier time. The termination of the Plan shall not affect the validity of any option agreement outstanding at the date of such termination, but no option shall be granted after such date.
14. Effective Date. The Plan shall be effective upon its adoption by the Board of Directors of the Company. Options may be granted but not exercised prior to shareholder approval of the Plan. If any options are so granted and shareholder approval shall not have been obtained on or before September 24, 2008, such options shall terminate retroactively as of the date they were granted. Common Stock awards under Section 6 shall not be granted prior to shareholder approval of the Plan.
IN WITNESS WHEREOF, this Plan, having been first duly adopted by the Board of Directors, is hereby executed below by a duly authorized officer of the Company on this 24th day of September, 2007, to take effect as of such date as provided herein.
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| | TRIO-TECH INTERNATIONAL | | |
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| | By: | | /s/ A. Charles Wilson | | |
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| | | | A. Charles Wilson, Director | | |
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| | | | Chairman of the Board | | |
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Appendix A
COMPENSATION COMMITTEE CHARTER
of the Compensation Committee
of TRIO-TECH INTERNATIONAL
This Compensation Committee Charter (the “Charter”) was adopted by the Board of Directors (the “Board”) of Trio-Tech International (the “Company”) on June 29, 2004, and amended on March 5, 2007.
Section 1: Purpose
The purpose of the Compensation Committee (the “Committee”) of the Board of the Company is (1) to discharge the Board’s responsibilities relating to compensation of the Company’s executives, including by designing (in consultation withinternal controls management and the Board, as appropriate),board of directors have established and evaluating the compensation plans, policies and programs of the Company as they relate to executives and (2) to produce an annual report on executive compensation for inclusion in the Company’s proxy materials in accordance with applicable rules and regulations of the Securities and Exchange Commission.all audit processes.
Section 2: Membership
The Committee shall be comprised of two or more directors, as determined by the Board, each of whom (1) satisfies the independence requirements of the American Stock Exchange, (2) is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and (3) is an “outside director” under the regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
The members of the Committee, including the Chair of the Committee, shall be appointed by the Board. Committee members may be removed from the Committee, with or without cause, by the Board.
Section 3: Meetings and Procedures· | General responsibilities |
The Chair (or in his or her absence, a member designated by the Chair) shall preside at each meeting of the Committee and set the agendas for Committee meetings. The Committee shall have the authority to establish its own rules and procedures for notice and conduct of its meetings so long as they are not inconsistent with any provisions of the Company’s Articles of Incorporation or bylaws that are applicable to the Committee.
The Committee shall meet on a regularly scheduled basis at least two times per year and more frequently as the Committee deems necessary or desirable.
All non-management directors that are not members of the Committee may attend and observe meetings of the Committee, but shall not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event shall not be entitled to vote. The Committee may, at its discretion, include in its meetings members of the Company’s management; representatives of the independent auditor and any other financial personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate; provided, however that the Chief Executive Officer may not be present during voting or deliberation as and to the extent set forth in the rules of the American Stock Exchange. The Committee may also exclude from its meetings any persons it deems appropriate, including but not limited to, any non-management director that is not a member of the Committee.
The Committee shall have the sole authority, to retain and/or replace, as it deems appropriate, any independent counsel, compensation and benefits consultants and other outside experts or advisors as the Committee believes to be necessary, desirable or appropriate. The Committee may also utilize the services of the Company’s regular legal counsel or other advisors to the Company. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to any such persons retained by the Committee and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The Chair shall report to the Board following meetings of the Committee and as otherwise requested by the Chairman of the Board.
Section 4: Duties and Responsibilities
1. | | The Committee shall, at least once each calendar year, reviewaudit committee provides open avenues of communication among the compensation philosophyinternal auditors, the independent accountant and the board of the Company.directors. |
2. | | The Committee shall have sole authorityaudit committee must report committee actions to determine the Chief Executive Officer’s compensation. full board of directors and may make appropriate recommendations. |
3. | The Committee shall,audit committee has the power to conduct or authorize investigations into matters within the committee’s scope of responsibilities. The committee is authorized to retain independent counsel, accountants or others it needs to assist in an investigation. |
4. | The committee will meet at least oncefour times each calendar year, more frequently if circumstances make that preferable. |
5. | The audit committee chairman has the power to call a committee meeting whenever he or she thinks there is a need. An audit committee member should not vote on any matter in which he or she is not independent. The committee may ask members of management or others to attend the meeting and is authorized to receive all pertinent information from management. |
6. | The committee will do whatever else the law, the company’s charter or bylaws or the board of directors require. |
· | Responsibilities for engaging independent accountants and appointing the internal auditor |
1. | The audit committee will select the independent accountants for company audits. The committee’s selection is subject to approval by the full board of directors. The audit committee also will review and set any fees paid to the independent accountants and review and approve corporate goals and objectives relating to the compensationdismissal of the Chief Executive Officerindependent accountants. |
2. | The audit committee will review and shall, with input fromhave veto power over the Chief Executive Officer, annually establish the performance criteria (including both long-term and short-term goals) to be considered in light of those goals and objectives in connection with the Chief Executive Officer’s next annual performance evaluation. At the end of each year, the Chief Executive Officer shall make a presentationappointment, replacement, reassignment or furnish a written report to the Committee indicating his or her progress against such established performance criteria. Thereafter, with the Chief Executive Officer absent, the Committee shall meet to review the Chief Executive Officer’s performance, determine and approve the compensationdismissal of the Chief Executive Officer based on such evaluation and report thereon to the Board. The resultsdirector of the review and evaluation shall be communicated to the Chief Executive Officer by the Chairman of the Board of Directors and the Chair of the Committee.internal audit. |
3. | | The Committee shall, at least once each calendar year, reviewaudit committee will confirm and approve all compensation for all officers (as such term is defined in Rule 16a-1 promulgated underassure the 1934 Act), directors and other employeesindependence of the Company or its subsidiaries withinternal auditor and the independent accountant, including a base salary greater than or equal to $250,000. In addition,review of management consulting services provided by the Committee shall reviewindependent accountant and approve all officers’ employment agreements and severance arrangements.the fees paid for them. |
4. | | WithThe audit committee will consider, in consultation with the inputindependent accountant and the director of internal auditing, the Chief Executive Officer,audit scope and procedural plans made by the Committee shall, at least once each calendar year, reviewinternal auditors and the performance of principal senior executives.independent accountant. |
5. | | The Committee shall manageaudit committee will listen to management and periodically review, the Company’s executive officers annual bonuses; long-term incentive compensation, stock options, employee pensionprimary independent auditor if either thinks there might be a need to engage additional auditors. The audit committee will decide whether to engage an additional firm and, welfare benefit plans e.g., 401(k), employee stock purchase plan, etc.) and with respect to each plan shall have responsibility for:if so, which one. |
| a. | | general administration as provided in each such plan; |
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| b. | | setting performance targets under all annual bonus and long-term incentive compensation plans as appropriate and committing to writing any and all performance targets for all executive officers who may be “covered employees” under Section 162(m) of the Code within the first 90 days of the performance period to which such target relates or, if shorter, within the period provided by Section 162(m) of the Code in order for such target to be “pre-established” within the meaning of Section 162(m); |
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| c. | | certifying that any and all performance targets used for any performance based equity compensation plans have been met before payment of any executive bonus or compensation or exercise of any executive award granted under any such plan(s); |
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| d. | | approving all amendments to, and terminations of, all compensation plans and any awards under such plans; |
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| e. | | granting any awards under any performance-based annual bonus, long-term incentive compensation and equity compensation plans to executive officers or current employees with the potential to become the CEO or a “covered employee” under Section 162(m) of the Code, including stock options and other equity rights (e.g.,restricted stock, stock purchase rights); |
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| f. | | approving which executive officers are entitled to awards under the Company’s stock option plan(s); and |
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| g. | | repurchasing securities from terminated employees. |
6. | | | All plan reviews should include reviewingThe audit committee will make sure that the plan’s administrative costs, reviewing current plan features relative to any proposed new features,director of internal auditing and assessing the performance ofindependent accountant coordinate the plan’s internal and external administrators ifaudits. The purpose of coordinating these efforts is to assure completeness of coverage, reduce redundancy and use audit resources effectively. |
· | Responsibilities for reviewing internal audits, the annual external audit and the review of quarterly and annual financial statements |
1. | The audit committee will ascertain that the independent accountantviews the board of directors as its client, that it will be available tothe full board of directors at least annually and that it will provide the committee the committee with a timely analysis of significant financial reporting issues. |
2. | The audit committee will ask management, the director of internal auditing and the independent accountant about significant risks and exposures and will assess management’s steps to minimize them. |
3. | The audit committee will review the following with the independent accountant and the director of internal auditing: |
a. | The adequacy of the company’s internal controls, including computerized information system controls and security. |
b. | Any significant findings and recommendations made by the independent accountant or internal auditing, together with management’s responses to them. |
4. | Shortly after the annual examination is completed, the audit committee will review the following with management and the independent accountant. |
a. | The company’s annual financial statements and related footnotes. |
b. | The independent accountant’s audit of and report on the financial statements. |
c. | The auditor’s qualitative judgments about the appropriateness, not just the acceptability, of accounting principles and financial disclosures and how aggressive (or conservative) the accounting principles and underlying estimates are. |
d. | Any serious difficulties or disputes with management encountered during the course of the audit. |
e. | Anything else about the audit procedures or findings that GAAS requires the auditors to discuss with the committee. |
5. | The audit committee will consider and review with management and the director of Internal auditing. |
a. | Any significant findings during the year and management’s responses to them. |
b. | Any difficulties the internal auditor encountered while conducting audits, including any duties have been delegated.restrictions on the scope of their work or access to required information. |
c. | Any changes to the planned scope of management’s internal audit plan that the committee thinks advisable. |
d. | The internal auditing department’s charter. |
e. | Whether the internal auditing department has complied with the Institute of Internal Auditing’s Standards for the Professional Practice of Internal Auditing. |
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6. | | The Committee shall determineaudit committee will review annual filings with the Company’s policy with respect to change of control or “parachute” payments.SEC and other published documents containing the company’s financial statements. |
7. | | The Committee shallaudit committee will review the interim financial reports with management, the independent accountant and approve executive officer andthe director indemnification and insurance matters.of internal auditing before those interim reports are released to the public or filed with the SEC or other regulators. |
8. | | The Committee shallaudit committee will prepare a letter for inclusion in the annual report that describes the committee’s composition and approveresponsibilities and how the Compensation Committee report to be included as part of the Company’s annual proxy statement.responsibilities were fulfilled. |
9.· | | The Committee shall review and reassess this Charter at least once each fiscal Year and submit any recommended changes to the Board for its consideration.Periodic responsibilities |
Section 5: Delegation of Duties
In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee, to the extent consistent with the Company’s Articles of incorporation, bylaws and applicable law and rules of markets in which the Company’s securities then trade, except that it shall not delegate its responsibilities for any matters that involve executive compensation or any matters where it has determined such compensation is intended to comply with Section 162(m) of the Code or is intended to be exempt from Section 16(b) under the 1934 Act pursuant to Rule 16b-3 by virtue of being approved by a committee of “outside directors.”
Section 6: Disclosure of Charter
This Charter shall be made available to any stockholder who otherwise requests a copy. The Company’s Annual Report to Stockholders shall state the foregoing.
EXECUTIVE COMPENSATION
Trio-Tech’s Compensation Committee of the Board of Directors, is responsible for, among other duties, giving suggestions to the Board on administration of policies and procedures regarding executive compensation and criteria for the amounts of such compensation.
Compensation Objectives:
• | | Attract, motivate and retain executives who drive Trio-Tech’s success and industry leadership. |
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• | | Provide each executive, from Vice-President to Chief Executive Officer, with a base salary based on the market value of the role, and the individual’s demonstrated ability to perform the role. |
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• | | Motivate executives to create sustained shareholder value by ensuring all executives have an “at risk” component of total compensation that reflects their ability to influence business outcomes and financial performance |
Components of Executive Compensation:
The compensation program has three elements:
1. | | Base annual salary;Review and update the committee’s charter annually. |
2. | | Potential annual cash incentive awards that are based primarily on financial performanceReview policies and procedures covering officers’ expense accounts and perquisites including their use of corporate assets, and consider the Companyresults of any review of those areas by the internal auditor or its relevant business operating units; andthe independent accountant. |
3. | Review, with the director of internal auditing and the independent accountant, the results of their examination of compliance with the company’s code of conduct. |
Directors’ Compensation:
Non-employee directors’ base compensation consists of a reasonable fee and also of potential annual cash incentive awards. In addition, directors will be reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at such meetings.
TRIO-TECH INTERNATIONALProxy Solicited on Behalf of the Board of Directors of the Company for Annual Meeting of Shareholders on December 3, 2007The undersigned hereby appoints S. W. Yong4. | Review legal and A. Charles Wilson or either of them as his/her true and lawful agents and proxies with full power of substitution to represent the undersigned at the Annual Meeting of Shareholders of Trio-Tech International to be held at our principal executive offices at 14731 Califa Street, Van Nuys, California on Monday, December 3, 2007 at 10:00 A.M., and at any adjournments thereof, and to vote all sharesregulatory matters that he/she is entitled to vote thereat, on all matters coming before said meeting. The undersigned directs that his/her proxy be voted as follows:(Continued and to be signedmay have a material effect on the reverse side)organization’s financial statements, compliance policies and programs and reports from regulators. |
ANNUAL MEETING OF SHAREHOLDERS OFTRIO-TECH INTERNATIONALDecember 3, 2007Please date, sign5. | Meet with the director of internal auditing, the independent accountant and mail your proxy cardmanagement in separate executive sessions to discuss any matters the envelope provided as soon as possible.Please detach along perforated line and mail incommittee or these groups believe should be discussed privately with the envelope provided.20433000000000000000 5 120307PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERExFOR AGAINST ABSTAIN1.ELECTION OF DIRECTORS:2.TO APPROVE THE COMPANY’S 2007 EMPLOYEE STOCKOPTION PLAN:NOMINEES:FOR ALL NOMINEESO Jason T. Adelman 3.TO APPROVE THE COMPANY’S 2007 DIRECTORS EQUITYO Richard M. HorowitzINCENTIVE PLAN:WITHHOLD AUTHORITYO A. Charles WilsonFOR ALL NOMINEESO S.W. Yong 4. In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the Annual Meeting and any adjournment thereof.FOR ALL EXCEPT(See instructions below)THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNERDIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE NOMINEES FOR DIRECTORS LISTED IN ITEM 1 AND “FOR” THE PROPOSAL DESCRIBED IN EACH OF ITEM 2 AND ITEM 3.PLEASE MARK, DATE, SIGN AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.INSTRUCTION:To withhold authority to vote for any individual nominee(s), mark“FOR ALL EXCEPT”and fill in the circle next to each nominee you wish to withhold, as shown here:To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.Signature of Shareholder Date: Signature of Shareholder Date:Note:Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.audit committee. |