EXHIBIT 10.1
THE CHILDREN'S PLACE RETAIL STORES, INC.
SERVICE AGREEMENT, BETWEEN THE
COMPANY AND AST STOCKPLAN, INC.
JUNE 8, 1998
SERVICE AGREEMENT
This SERVICE AGREEMENT ("Agreement") is entered into, as of June 8,
1998, between The Children's Place Retail Stores, Inc. ("the Company") a
corporation, having its principal place of business at One Dodge Drive, West
Caldwell, New Jersey 07006, and AST StockPlan, Inc., ("StockPlan"), a Delaware
corporation, having its principal place of business at 250 Broadway, New York,
New York, 10007. This Agreement is subject to the Company successfully
terminating the Employee Stock Purchase Plan Servicing Agreement and Corporate
Stock Ownership Agreement with Merrill Lynch.
1. STOCKPLAN SERVICE OBLIGATION
A. Stock Administration Services. StockPlan agrees to perform, on
behalf of the Company, the stock administration services described in Exhibit A
hereto ("Services") and such other services as mutually agreed upon from time to
time by StockPlan and the Company.
B. Employee Stock Purchase Plan Services. StockPlan agrees to perform,
on behalf of the Company, the employee stock purchase plan administration
services described in Exhibit B hereto ("Services") and such other services as
mutually agreed upon from time to time by StockPlan and the Company.
C. StockPlan Software. In providing the Services, StockPlan shall
utilize StockPlan proprietary computer software, ("StockPlan Software"),
including any enhancements, modifications or customizations made specifically
for or at the request of the Company.
D. Reports. StockPlan shall produce and deliver to the Company such
reports as are described in Exhibits A and B hereto.
2. FEES FOR SERVICES
The Company shall pay StockPlan for the Services in accordance with
the fees agreed to and described in Exhibit C hereto. Payments shall be due and
payable thirty (30) days following receipt of an invoice from StockPlan. The fee
shall remain fixed for the initial term of this Agreement. Thereafter, StockPlan
may, but not more frequently than once in each twelve (12) month period, amend
or alter the fee schedule, upon consultation with the Company, at least ninety
(90) days prior to the proposed effective date of the fee change.
3. SUPPORT FROM THE COMPANY
At no cost to StockPlan, the Company shall provide StockPlan on a
timely basis with copies of its Plans, stock option grants, vesting schedules
and such other information as may be required by StockPlan to provide the
Services ("Stock Information").
4. INDEMNIFICATION AND INSURANCE
A. StockPlan Indemnity.
(a) Subject to Section 5 below, StockPlan shall indemnify and
hold harmless the Company, its employees, officers, directors and agents from
any and all costs, liabilities and damages (including reasonable attorneys'
fees), finally awarded to any third party by a court of competent jurisdiction,
caused by or arising out of (i) the performance of the Services, or (ii) the
conduct of StockPlan's agents or employees in relation thereto. The foregoing
shall not apply to the extent such claim or cause of action arises out of an
event or occurrence resulting from StockPlan complying with instructions from
the Company or any error, omission, fault or defect in the Stock Information.
(b) StockPlan shall defend or, at its option, settle, any such
claim, suit, or proceeding and have sole control of any such action or
settlement proceeding insofar as it relates to StockPlans' performance of the
Services or the conduct of its employees or agents in relation thereto. The
Company shall notify StockPlan promptly of any such claim, suit, or proceeding
and shall cooperate reasonably with StockPlan in the defense or settlement
thereof.
(c) StockPlan will maintain appropriate business insurance at
all times during the term of this Agreement.
B. Company Indemnity.
(a) The Company shall indemnify and hold harmless StockPlan,
its employees, officers, directors and agents from any and all costs,
liabilities and damages (including reasonable attorneys' fees), finally awarded
to any third party by a court of competent jurisdiction, relating to any claim
or cause of action which arises from or relates to the performance of the
Services and which claim or cause of action results from StockPlan complying
with instructions from the Company or any person acting on its behalf or any
error, omission, fault or defect in the Stock Information.
(b) The Company shall defend or, at its option, settle, any
such claim, suit, or proceeding and have sole control of any such action or
settlement proceeding insofar as it relates to the Company's procedures or Stock
Information. StockPlan shall notify the Company in a timely manner of any such
claim, suit, or proceeding and shall cooperate reasonably with the Company in
the defense or settlement thereof.
5. LIMITATION OF LIABILITY
A. Subject to the provisions of this Section, StockPlan shall only be
liable to the Company, to the extent the Company may be entitled to
indemnification pursuant to Section 4 hereof and for personal injury, damages to
real property or tangible personal property caused by StockPlan's gross
negligence or intentional wrongdoing.
B. Waiver of Consequential Damages. IN NO EVENT WILL EITHER PARTY BE
LIABLE TO THE OTHER OR TO ANY THIRD PARTY FOR ANY LOST PROFIT, LOST TAX BENEFIT,
LOST SAVING, OR OTHER INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGE
RELATED TO OR ARISING OUT OF THIS AGREEMENT OR, EXCEPT PURSUANT TO
INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 4 HEREOF, FOR ANY CLAIM BY ANY
OTHER PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE, ARISING
OUT OF OR IN CONNECTION WITH THE SERVICES PROVIDED HEREUNDER.
C. Limitation of Liability. The Company agrees that regardless of the
claim or the form in which any legal or equitable action may be brought by the
Company, or by any other party, against StockPlan as a result of this Agreement
or any work performed or services rendered by StockPlan, hereunder, including
any machine or human error except as to gross negligence, StockPlan's liability
hereunder shall be limited to compensatory damages only in an amount not to
exceed the amount paid to StockPlan by the Company for the service which gave
rise to the claim asserted.
Should StockPlan fail to furnish the Company with any report or
document pursuant to this Agreement within the time period required, the
exclusive liability or responsibility of StockPlan shall be to furnish such
report or document to the Company as soon as reasonably practicable. StockPlan
shall not be liable or responsible to the Company or any other party for any
loss or damage which any of them may suffer or incur by reason of StockPlan's
failure to furnish such report or document within the time period required.
6. PROPERTY RIGHTS AND CONFIDENTIALITY
A. Property Rights. The Company acknowledges that the StockPlan
Software, and any modification thereto, and all documentation therefore, are
proprietary to StockPlan and StockPlan retains all right, title and interest in
and to such StockPlan Software and documentation. Except as specified in this
Agreement, StockPlan does not grant to the Company any right in or to any
intellectual property related to the StockPlan Software or to any materials
furnished hereunder.
B. Confidential Information. StockPlan acknowledges that by reason of
its relationship to the Company hereunder it may have access to certain
proprietary information concerning the Company business and employment matters,
whether in oral, written, graphic or electronic form ("Confidential
Information"), which is confidential. StockPlan agrees that it will not use in
any way for its own account, except as contemplated in this Agreement, or the
account of any third party, nor disclose to any third party, any such
Confidential Information revealed to it by the Company. StockPlan shall use its
best efforts to protect the confidentiality of such information. In the event of
termination of this Agreement, StockPlan shall not use or disclose any
Confidential Information of the Company and StockPlan shall not market or sell
to a third party any products, algorithm or computer program or software
utilizing any of the Company's Confidential Information. The term "Confidential
Information" shall not be deemed to include information which StockPlan can
demonstrate: (a) is now, or hereafter becomes, through no act or failure to act
on the part of StockPlan, generally known or available; (b) is known by
StockPlan at the time of receiving such information; (c) is hereafter furnished
to StockPlan by a third party, as a matter of right and without restriction on
disclosure; or (d) is the subject of a written permission to disclose provided
by the Company.
7. TERM AND TERMINATION
A. Term. The initial term of this Agreement shall commence on the
signing of this Agreement and end one year one (1) year following the date
hereof, unless terminated earlier under the provisions of this Section. At the
end of the initial term, this Agreement shall be renewed automatically for
successive terms of one (1) year each, unless at least ninety (90) days prior to
the expiration of the initial term or any renewal term, the Agreement is
terminated in writing by either party.
B. Termination for Cause. If either party defaults in the performance
of any material provision of this Agreement, then the non-defaulting party may
give written notice to the defaulting party that if the default is not cured
within thirty (30) days, the Agreement may be terminated. If the non-defaulting
party gives such notice and the default is not cured during the thirty (30) day
period, then the Agreement shall terminate at the option of the non-defaulting
party at the end of that period, provided that any amount owing to StockPlan
shall not be affected by any such termination.
C. Termination for Insolvency. This Agreement shall terminate, without
notice, (i) upon the institution by or against either party of any insolvency,
receivership, or bankruptcy proceeding, (ii) upon the insolvent party's making
an assignment for the benefit of creditors, or (iii) upon insolvent party's
dissolution or ceasing to do business.
D. Return of Information. All of the Company's Confidential
Information of every kind including, without limitation, the Stock Information,
shall remain the property of the Company, subject to the Company not being in
default of any payment obligation hereunder. Within thirty (30) days after the
termination of this Agreement, StockPlan shall return all the Company property
in its possession to the Company. StockPlan shall not make or retain any copies
of any Confidential Information entrusted to it.
E. Survival of Certain Terms. The provisions of Sections 4, 5, 6, 7, 8
and 9 shall survive the termination of this Agreement for any reason. All other
rights and obligations of the parties shall cease upon termination of this
Agreement.
F. Right to Terminate. Upon thirty days written notice.
8. COOPERATION AND GOOD FAITH
Notwithstanding the remedies available under this Agreement to either
party against the other party for any failure or claim as specified in Section 4
and prior to any notice given by the parties pursuant to Section 7.B, the
Company and StockPlan shall cooperate and negotiate in good faith to resolve any
situation giving rise to such failure or claim. However, failure of the parties
to resolve such situation shall not preclude either party from then exercising
its rights and remedies under this Agreement.
StockPlan may rely on written or oral instructions received from any
person it believes in good faith to be an officer, authorized agent or employee
of the Company, unless prior thereto the Company shall have advised StockPlan in
writing of designated officers, authorized agents or employees of the Company.
StockPlan may also rely on advice, opinions, or instructions received from the
Company's legal counsel. StockPlan may also rely on any writing believed by it
to have been furnished by or on behalf of the Company as having actual authority
to the extent of such apparent authority; on the authenticity of any signature
(manual or facsimile) appearing on any writing; and on the conformity to
original of any copy.
9. GENERAL PROVISIONS
A. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed under the laws of the State of New York, without regard to its
conflict of law provisions.
B. Entire Agreement. This Agreement and the exhibits hereto set forth
the entire agreement and understanding of the parties relating to the subject
matter herein and merges all prior discussions between them. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party to be
charged.
C. Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address shown at the
beginning of this Agreement or at such other address for which such party gives
notice hereunder. Such notice shall be deemed to have been given three (3) days
after deposit in the mail.
D. Force Majeure. Nonperformance of either party shall be excused to
the extent that performance is rendered impossible by strike, fire, flood,
governmental act or order or restriction, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control of the
non-performing party.
E. Assignment. Neither party may assign this Agreement or any of its
rights, duties or obligations under this Agreement to any third party without
the other party's prior written consent, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, either party may assign its rights and
delegate its obligations under this Agreement without the consent of the other
party to a purchaser of all or substantially all of its voting stock or capital
assets or to an entity with which such party merges or is consolidated.
F. Taxes. Each party is solely responsible for all taxes, duties,
tariffs, including, but not limited to, sales, use, transfer or similar tax or
other charges by any governmental authority levied upon the party.
G. Independent Contractors. The relationship of the Company and
StockPlan established by this Agreement is that of independent contractors, and
nothing contained in this Agreement shall be construed to (i) give either party
the power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners, or other
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other for any purpose
whatsoever. All financial obligations associated with each party's business are
the sole responsibility of that party.
H. No Third Party Beneficiaries. This Agreement is intended solely for
the benefit of the parties hereto and shall not be construed to create any
benefit for any other person or firm.
I. Severability. Whenever possible, each provision of the Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of the Agreement.
J. Headings. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe
or describe the scope or intent of any such section nor in any way affect this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, including the Exhibits attached hereto and incorporated herein by
reference.
THE CHILDREN'S PLACE RETAIL STORES, INC. AST STOCKPLAN, INC.
Name: STEVEN BALASIANO Name: SHAI STERN
- -------------------------------------- -------------------------------
Title: VICE PRESIDENT, GENERAL COUNSEL Title: SENIOR ACCOUNT EXECUTIVE
AND SECRETARY
Signature: /S/ STEVEN BALASIANO Signature: /S/ SHAI STERN
- --------------------------------------- -------------------------------
EXHIBIT A
STOCK OPTION PLAN MANAGEMENT SERVICES
The Stock Option Plan Management Services AST StockPlan can provide to your
company cover three major areas:
1) DATA CONVERSION
2) INFORMATION MANAGEMENT
3) PROFESSIONAL CONSULTING
1) DATA CONVERSION
o READ, REVIEW AND UNDERSTAND YOUR PLAN AST StockPlan starts by
reading, reviewing and understanding your plan.
o MEET WITH PROPER CONSTITUENCIES
After reading and reviewing the plan, questions will arise. By
seeking answers from the proper constituencies within your company,
AST StockPlan can tailor its services to meet the specific needs of
your employees, plan and company.
o DATA CONVERSION
Once we have a clear understanding of your plan, AST StockPlan will
enter into its proprietary software each plan's parameters, optionee
information and historical activity.
o BALANCING SHARES
AST StockPlan will reconcile shares outstanding between our records,
your records and the records of the transfer agent. This initial
reconciliation of shares outstanding is crucial to continued
accurate tracking of fully diluted shares outstanding by AST
StockPlan.
o COMPANY CONTACT
After you designate a contact person within your company, AST
StockPlan will work with the liaison to establish procedures for
communicating necessary optionee information regarding new grants,
terminations, address changes, etc. AST StockPlan will also provide
training so the liaison can access your company's plan information
through our on-line computer capability.
o EMPLOYEE "WELCOME" PACKAGES
Once the data conversion process is completed, we will work with
your company to develop a "Welcome" package to introduce AST
StockPlan to your employees, explain the services we will be
providing to them, distribute reports showing the status of their
grants and explain any new forms or procedures.
2) INFORMATION MANAGEMENT
o PROVIDE INFORMATION TO AN IVR SYSTEM ("IVRS") Using upload files,
AST StockPlan supplies the IVRS with current stock option data on a
daily basis (e.g., grants with shares vested and exercisable, grant
dates, exercise cost, etc.) so that employees have 24-hour access to
their grant information.
o PROVIDE PROMPT, FRIENDLY, PROFESSIONAL SERVICE TO YOUR PARTICIPANTS
Our Client Services Department is open between 9:00 a.m. and 7:00
p.m. Eastern Time, every day the stock market is open. Optionees who
call will speak with an AST StockPlan Client Services Representative
who will have instant on-line access to the optionee's stock option
information.
o PROCESS GRANTS
AST StockPlan can enter grant information from hard copy or through
an electronic file. We will send a report to you showing options
granted for final approval and then prepare new grant packages,
either for delivery to your company or for mailing. Once the grant
packages are delivered, we will track the return of completed
agreements.
o MAINTAIN OPTIONEE UPDATES
Using an upload file created by the company, AST StockPlan will
maintain data on all optionees including: name, address, taxpayer
identification number, department, location and tax withholding to
date. Maintaining up-to-date tax withholding information eliminates
over-withholding on an exercise.
o PROCESS EXERCISES (cash, cashless, shares withheld from exercise)
AST StockPlan will work in conjunction with brokers selected by your
company to facilitate a cashless, same-day-sale exercise program. In
order to facilitate the entire exercise process, we recommend that
your company do the following:
- Enter into a formal relationship to establish a cashless,
same-day-sale program with from one to three brokers.
- Implement either AST StockPlan's Standing Letter of Authorization
(SLOA) or the broker's SLOA, thus eliminating the need for
employees to submit an original signed exercise notice each time
they do a cashless, same-day-sale exercise.
o TRACK AND REPORT DISQUALIFYING DISPOSITIONS For ISO grants, AST
StockPlan will track both qualifying and disqualifying dispositions
of cash exercises, as well as calculate and report disqualifying
dispositions resulting from a same-day-sale. The process for
tracking dispositions of cash exercises will involve:
- Your transfer agent or broker reporting to AST StockPlan the first
transfer of the shares;
- AST StockPlan surveying the optionee to determine whether the
transfer was a disqualifying disposition; and
- If the transfer was not a disqualifying disposition, at your
request, AST StockPlan will continue to survey the optionee until
the optionee has disposed of the shares.
2) INFORMATION MANAGEMENT (CONTINUED)
o PROCESS TERMINATIONS
Your company will send to AST StockPlan a terminations upload file
on a regular basis. This file will list all plan terminations and
the reason for termination. AST StockPlan should be notified
separately in writing of any special circumstances. We will prepare,
for optionees with shares vested and exercisable, a termination
package which shows the shares exercisable and the last date to
exercise.
o PREPARE CALENDAR YEAR-END REPORTS FOR EMPLOYEES Calendar year-end can
be a confusing time for optionees. As a result, this is a good time
to summarize their activity during the past year and to advise them
of actions they may want to take in the upcoming year, based on
future vestings and expirations. This is also the time when they
receive W2s from the company and any 1099s from their brokers. AST
StockPlan has designed year-end reports to assist optionees with
their tax preparation. Each calendar year-end, your company can
choose to have optionees receive any or all of the following standard
reports from AST StockPlan:
- Income and Tax Reconciliation. Period Activity.
- Personal Activity Forecast.
- Option Valuation Statement.
o PROVIDE SECURE, 24-HOUR, ON-LINE ACCESS FOR MANAGEMENT Your data will
be securely stored on our system with 24-hour, password-protected
access available to authorized personnel at your company. This
allows your management unlimited access to any reports it might
need. Information can be downloaded for use in spreadsheet
preparation, or reports can easily be printed on your local printer.
o PREPARE MONTH-END REPORTS
Each month, AST StockPlan prepares a set of reports for your company
liaison. In addition to reporting activity during the month, these
reports can assist various departments within your company with their
internal audit and reconciliation procedures. Our standard month-end
package includes the following reports:
- Directors and Officers Period Activity.
- Plan Activity Detail (Grants, Exercises, Cancellations/
Expirations, Repurchases).
- Terminations.
- Tax Withholding.
- Accounts Receivable.
- Fair Market Valuation.
o PREPARE QUARTER-END REPORTS
The process at quarter-end includes the full month-end process with
the addition of the following standard reports:
- Common Stock Equivalent.
- Disqualifying Dispositions.
- Optionee Activity Summary.
2) INFORMATION MANAGEMENT (CONTINUED)
o PREPARE FISCAL YEAR-END REPORTS
For the company's fiscal year-end, AST StockPlan prepares all usual
quarter-end reports, with the addition of standard proxy reports
designed to the SEC's specifications.
o MANAGEMENT REQUESTS AND TROUBLESHOOTING
AST StockPlan will provide the following services on an on-going
basis:
- Audit and reconciliation of monthly, quarterly, and fiscal and
calendar year-end reports.
- Meet with your company liaison.
- Answer inquiries from company personnel.
- Audit of period transactions.
- Reconcile common shares outstanding with your transfer agent.
- Reconcile with your company's accounting, legal and payroll
departments.
- Report stock activity to your company's legal department for
directors and officers subject to Section 16 for Forms 3, 4 & 5
filings.
- Assist your company's outside accounting firm during the annual
audit.
- Assist your company with annual proxy reporting requirements.
3) PROFESSIONAL CONSULTING
o RELEASE OF SHARES EXERCISED PRIOR TO VESTING On the day of the
election, AST StockPlan calculates the taxes due for each participant
and processes each participant's released stock in accordance with
that participant's election. When any early-exercise stock vests, AST
StockPlan verifies that any tax withholding requirement is met and
instructs the transfer agent to remove the restriction and deliver
the participant's vested stock.
o RESTRICTED STOCK PLAN MANAGEMENT
- PROCESS RESTRICTED STOCK AWARDS
AST StockPlan will enter award information manually or through
an electronic file. We will send your company a report showing
restricted stock awarded for final approval and then prepare new
award packages, either for delivery to the company or for
mailing. Once the award packages are delivered, we will track
the return of completed agreements and any payment for the stock
that might be required. AST StockPlan can, if desired, collect a
check from the participant for forwarding to the company.
- PRE-RELEASE OR ELECTION NOTICE Prior to a vesting date, AST
StockPlan sends participants a pre-release or election notice
alerting them of the upcoming vesting and setting out the
available choices to pay for the taxes that will be due. If the
plan is structured so that no election is needed (e.g., if taxes
are automatically withheld from salary), then this pre-release
notice is for "information purposes only" and is strictly
optional. The election notice or pre-release notification will
contain an estimate (based on the current stock price) of the
taxes that will be due on vesting.
- VESTING RELEASE
Whenever restricted stock vests, AST StockPlan is responsible
for making sure that any tax withholding requirement is met and
that the transfer agent is instructed where to send each
participant's vested stock. On the day of the election, we will
calculate the exact taxes due for each participant and process
each participant's released stock in accordance with the
participant's election.
o SPECIAL REQUESTS
AST StockPlan will provide your management with ad hoc reports that
meet your specifications. If you want to evaluate an anticipated
event, we will work with you to prepare a "what if" analysis and
reporting. If necessary, we will prepare special timelines or
procedures to your specifications.
o FAS 123 ANALYSIS AND REPORTING
- Provide consulting to determine parameters for the options' fair
value calculation.
- Provide FAS 123 reporting regarding the fair value calculation.
o SPECIAL PROJECTS
- Prepare and deliver employee education seminars.
- Process stock splits.
- Process grant repricings.
- Convert data for mergers or spin-offs.
o TECHNICAL INFORMATION SYSTEMS SUPPORT
AST StockPlan will provide technical assistance to various
departments within your company (such as human resources, payroll,
accounting, etc.) and/or to outside vendors (such as brokers,
transfer agents, payroll vendors) in the following areas:
- Customize our software to provide you with unique functions and
reports.
- Produce electronic files to feed IVRS and for participant updates,
terminations, tax withholdings and sales of stock.
- Assist your company in preparing upload files to AST StockPlan
specifications and/or correcting files not received to our
specifications.
- Set up an electronic interface to facilitate on-line access for
your management.
o PLAN DESIGN AND REVIEW
Our in-house consultants will assist you in designing new option,
restricted stock or employee stock purchase plans. We can also
review existing plans and make suggestions for improvements and
updates which will help ensure that each plan achieves the goals set
by your company.
EXHIBIT B
AST STOCKPLAN, INC.
EMPLOYEE STOCK PURCHASE PLAN
ADMINISTRATION SERVICES
250 BROADWAY
NEW YORK, NEW YORK 10007
TEL: (718) 921-8100
EMPLOYEE STOCK PURCHASE PLAN
ADMINISTRATION SERVICES
The Employee Stock Purchase Plan Administration Services AST StockPlan can
provide to your company cover three major areas:
1) INITIAL SET-UP
2) TRANSACTIONAL SERVICES
3) PROFESSIONAL SERVICES
1) INITIAL SET-UP
* READ, REVIEW AND UNDERSTAND YOUR PLAN
AST StockPlan, Inc., starts by reading, reviewing and
understanding your Employee Stock Purchase Plan.
* MEET WITH PROPER CONSTITUENCIES
After reading and reviewing the plan, questions will arise. By
seeking the answers from the proper constituencies within your
company, AST StockPlan can tailor its services to meet the
specific needs both of your employees and your plan. In
particular, the company must decide whether to stress high
participation (which means allowing a quick-sale and encouraging
direct deposit) or stock retention.
* DATA CONVERSION
Once we have a clear understanding of your plan, AST StockPlan
will enter into its proprietary software the plan's parameters,
participant information and historical activity.
* COMPANY LIAISON TRAINING
After you designate a contact person within your company, AST
StockPlan will train the liaison to access information through
our on-line system and to communicate necessary optionee
information regarding new enrollments, withdrawals, address
changes and other data which we will need to properly administer
the plan.
* CONTACTING AND EDUCATING PARTICIPANTS
AST StockPlan will work with you to develop information pamphlets
and enrollment material for each eligible participant.
2) TRANSACTIONAL SERVICES
* PRE-PURCHASE PREPARATION
Approximately 8 WEEKS before a purchase, if your plan is set up
to allow direct-deposit and/or quick-sale, AST StockPlan will
send out Deposit Election Forms to participants who do not yet
have a form on file. This will allow participants to choose
whether to receive certificates, have shares deposited in book
form with the transfer agent, or have their shares deposited
directly with their brokers. We will track the receipt of these
forms and record the participants' choices.
Approximately 4 WEEKS before the purchase, we will process the
file provided by you and return a report showing current
participants for your company to verify.
Approximately 2 WEEKS before the purchase, we will process
another file provided by you and return a report to your company
confirming the planned contributions for final verification. We
will perform any necessary currency conversions for foreign
contributions and run a preliminary purchase report for audit
purposes.
AST StockPlan will then enter any corrections or last-minute
changes and send a complete set of preliminary reports to your
company.
* PROCESS PURCHASE TRANSACTION
On the day of the purchase, as soon as the market closes, AST
StockPlan determines the purchase price. The price is confirmed
with an approved broker, an on-line database and your company. We
then validate the purchase and fax share issuance instructions to
the transfer agent and share deposit/quick-sale instructions to
the approved broker(s). Overnight packages with original
documents are sent to the company, the transfer agent and the
broker(s).
On the following day, we will mail to each participant an
individual Purchase Confirmation Statement.
* DISQUALIFYING DISPOSITION TRACKING
AST StockPlan tracks disqualifying dispositions in the following
ways:
REPORT FROM BROKER OF SALE OR TRANSFER.
We can receive this information in file format or hard copy, and
can either apply the disposition on a first-in, first-out (FIFO)
basis or survey the participant.
REPORT FROM TRANSFER AGENT OF CERTIFICATE CANCELLATION.
Since AST StockPlan can't be certain whether this is a
disposition, as it may simply be a transfer to a brokerage
account or trust, AST StockPlan will survey the participant for
clarification.
PERIODIC SURVEY OF PARTICIPANTS.
We can also send surveys on a periodic basis to all participants,
if your company desires.
* PROVIDE PROMPT, FRIENDLY, PROFESSIONAL SERVICE TO YOUR
PARTICIPANTS
Our Client Services Department is open between 8:00 a.m. and 8:00
p.m., Eastern Time, every day the stock market is open.
Participants who call will speak with an AST StockPlan Client
Services Representative who will have instant on-line access to
participant stock purchase information.
* PROVIDE SECURE, 24-HOUR, ON-LINE ACCESS FOR MANAGEMENT
Your data will be securely stored on our system with 24-hour,
password- protected access available to authorized personnel at
your company. This allows your management unlimited access to any
reports it might need. Reports can easily be printed in your
office.
* PREPARE PURCHASE REPORTS
ESP Plan Activity.
Contribution/Purchase Report.
Payroll Contribution Reconciliation Report.
Employee Stock Purchase Plan Statements.
Transfer Agent Instructions.
Broker Deposit and Quick-sale Elections.
Quarterly Disqualifying Disposition Report.
* PREPARE CALENDAR YEAR-END REPORTS FOR PARTICIPANTS
Year-end can be a confusing time for participants. They are
receiving W2s from the company as well as 1099s from their
brokers. AST StockPlan has designed reports to assist
participants with their tax preparation. Calendar year-end is
also a good time to summarize participants' activity during the
year. Each calendar year-end, participants receive the following
reports from AST StockPlan:
Income and Tax Reconciliation.
Period Activity.
ESPP Historical Summary.
3) PROFESSIONAL SERVICES
* PROVIDE RECONCILING, AUDITING AND INQUIRY SERVICES
AST StockPlan will provide the following services on an on-going
basis:
Audit and reconcile purchase reports.
Meet with your company's liaison.
Answer inquiries from company personnel.
Reconcile with your company's accounting, legal and payroll
departments.
Report stock activity to your company's legal department for
directors and officers subject to Section 16 for Forms 3, 4
& 5 filings.
Assist your company's outside accounting firm during the
annual audit.
Assist your company with annual proxy reporting
requirements.
* TECHNICAL INFORMATION SYSTEMS SUPPORT
AST StockPlan will provide technical assistance to various
departments within your company (such as human resources,
payroll, accounting, etc.) and/or to outside vendors (such as
brokers, transfer agents, payroll vendors) in the following
areas:
Produce electronic files for participant updates,
terminations, payroll contributions and sales of stock by
brokers, etc.
Assist your company in preparing upload files to
AST StockPlan specifications and/or correcting files to AST
StockPlan specifications.
Set up an electronic interface to facilitate on-line access
for your management.
* CUSTOM REPORTING
Customize our software to provide you with the unique functions
and reports you require.
Provide ad-hoc reports to your specifications.
* FAS 123 CONSULTING/REPORTING
Provide consulting to determine volatility numbers for the ESPP
fair value calculation.
Provide FAS 123 reporting regarding the ESPP fair value
calculation.
* PLAN DESIGN AND REVIEW
Our in-house consultants will assist you in designing new option,
restricted stock or employee stock purchase plans. We can also
review existing plans and make suggestions for improvements and
updates which will help ensure that each plan achieves the goals
set by your company.
EXHIBIT C
SCHEDULE OF FEES
$1,500.00 per month
PLUS
$2,000.00 Set-up Fee
NOTE: "Special Projects" shown on page five (5) of Exhibit A are to be priced
upon appraisal and are not included in services provided under the flat
rate monthly fees shown above.