<PAGE> 1
As filed with the Securities and Exchange Commission on May 13, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
K-TRON INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 22-1759452
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Routes 55 and 553
Pitman, New Jersey 08071-0888
(Address of Principal Executive Offices) (Zip Code)
AMENDED AND RESTATED
K-TRON INTERNATIONAL, INC.
1996 EQUITY COMPENSATION PLAN
(Full Title of the Plan)
EDWARD B. CLOUES, II
Chief Executive Officer
K-Tron International, Inc.
Routes 55 and 553
Pitman, New Jersey 08071-0888
(Name and Address of Agent for Service)
(609) 589-0500
(Telephone Number, Including Area Code, of Agent For Service)
-----------
Copy of all communications to:
TIMOTHY MAXWELL
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
(215) 963-5000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Proposed
Title of maximum
securities Proposed maximum aggregate
to be Amount to be offering price offering price Amount of
registered registered per share (1) (1) registration fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 150,000 $19.25 $2,887,500 $852
par value shares(2)
================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(h) solely for the purpose of calculating
the registration fee, based upon the average of the high and low sales
prices of shares of Common Stock on May 7, 1998, as reported on the
Nasdaq National Market.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement also covers such additional shares as may hereafter
be offered or issued to prevent dilution resulting from stock splits,
stock dividends, recapitalizations or certain other capital adjustments.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents as filed by K-Tron International, Inc. (the
"Registrant") with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are incorporated by reference in this registration statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended January 3, 1998.
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 4, 1998.
(c) The description of the Registrant's shares of common stock, $.01
par value (the "Common Stock"), set forth in the Registrant's registration
statement on Form 8-A, filed by the Registrant with the Commission on
March 19, 1981 to register such securities under the Exchange Act, as
updated by Item 5 of the Registrant's current report on Form 8-K, dated
October 3, 1991.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, after the date of this registration statement
and prior to the filing of a post-effective amendment to this registration
statement that indicates that all securities offered hereby have been sold or
that deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is also incorporated by reference herein)
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part hereof.
Experts.
The consolidated financial statements of the Registrant and its
subsidiaries as of January 3, 1998 and for the fiscal years ended January 3,
1998, December 28, 1996 and December 30, 1995 included in the Registrant's
Annual Report on Form 10-K for the fiscal year ended January 3, 1998
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. Future consolidated
financial statements of the Registrant and the reports thereon of Arthur
Andersen LLP also will be incorporated by reference in this registration
statement in reliance upon the authority of that firm as experts in giving those
reports to the extent that said firm has audited those consolidated financial
statements and consented to the use of their reports thereon.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
1
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Registrant generally provide for the mandatory
indemnification of directors, officers and other corporate agents to the fullest
extent permitted by the New Jersey Business Corporation Act, as amended
("NJBCA"), as do various indemnification agreements entered into by the Company
and its directors and certain officers.
The NJBCA generally provides that a New Jersey corporation has the power
to indemnify a director, officer or other agent against his or her expenses and
liabilities in connection with any proceedings involving the director, officer
or agent by reason of his or her being or having been such a director, officer
or agent other than proceedings by or in the right of the corporation, if such
director, officer or agent acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation; and with respect to any criminal proceeding, such director, officer
or agent had no reasonable cause to believe that his or her conduct was
unlawful.
The indemnification and advancement of expenses shall not exclude any
other rights, including the right to be indemnified against liabilities and
expenses incurred in proceedings by or in the right of the corporation, to which
a director, officer or agent may be entitled under a certificate of
incorporation, bylaw, agreement, vote of shareholders or otherwise; provided
that no indemnification shall be made to or on behalf of a director, officer or
agent if a judgment or other final adjudication adverse to the director, officer
or agent establishes that his or her acts or omissions (a) were in breach of his
or her duty of loyalty to the corporation or its shareholders, (b) were not in
good faith or involved a knowing violation of law or (c) resulted in receipt by
the director, officer or agent of an improper personal benefit.
In addition, the Registrant's Restated Certificate of Incorporation
provides that directors and officers of the Registrant shall not be personally
liable to the Registrant or its shareholders for damages for breach of any duty
owed to the Registrant or its shareholders, except that a director or officer
shall not be relieved from liability for any breach of duty based upon an act or
omission (a) in breach of such person's duty of loyalty to the Registrant or its
shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such person of an improper personal benefit.
The Registrant has purchased directors and officers indemnity insurance
coverage.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
2
<PAGE> 4
ITEM 8. EXHIBITS.
The following is a list of exhibits filed as part of this registration
statement. Where so indicated by footnote, exhibits which were previously filed
are incorporated by reference. For exhibits incorporated by reference, the
location of the exhibit in the previous filing is indicated in parentheses.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
4 Rights Agreement dated as of October 3, 1991 with First Interstate
Bank of Arizona, N.A., as Rights Agent (Filed as Exhibit 1 to the
Company's report on Form 8-K dated October 3, 1991 and incorporated
herein by reference)
5 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24 Power of Attorney (included on signature page of this registration
statement)
99 Amended and Restated K-Tron International, Inc. 1996
Equity Compensation Plan
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the information required to be included in a
post-effective amendment by those subparagraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section
3
<PAGE> 5
15(d) of the Exchange Act (and each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
4
<PAGE> 6
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Pitman, New Jersey, on this 12th day of May, 1998.
K-TRON INTERNATIONAL, INC.
By: \s\ Edward B. Cloues, II
------------------------
Edward B. Cloues, II
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edward B. Cloues, II and Robert L.Weinberg, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this registration
statement, and to file the same, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act 1933, this registration
statement and Power of Attorney have been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
\s\ Edward B. Cloues, II Chief Executive Officer May 12, 1998
- -------------------------- (principal executive officer) and
Edward B. Cloues, II Chairman of the Board of Directors
\s\ Robert L. Weinberg Senior Executive Vice President, Chief May 12, 1998
- -------------------------- Financial Officer and Treasurer (principal
Robert L. Weinberg financial officer)
\s\ Alan R. Sukoneck Vice President, Chief Accounting and Tax May 12, 1998
- --------------------- Officer (principal accounting officer)
Alan R. Sukoneck
\s\ Leo C. Beebe Director May 12, 1998
- ---------------------
Leo C. Beebe
\s\ Norman Cohen Director May 12, 1998
- ---------------------
Norman Cohen
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
\s\ Richard J. Pinola Director May 12, 1998
- ------------------------
Richard J. Pinola
\s\ Hans-Jurg Schurmann Director May 12, 1998
- ------------------------
Hans-Jurg Schurmann
\s\ Jean Head Sisco Director May 12, 1998
- ------------------------
Jean Head Sisco
\s\ Johannes Wirth
- ------------------------
Johannes Wirth Director May 12, 1998
</TABLE>
6
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<S> <C>
4 Rights Agreement dated as of October 3, 1991 with First Interstate
Bank of Arizona, N.A., as Rights Agent (Filed as Exhibit 1 to the
Company's report on Form 8-K dated October 3, 1991 and incorporated
herein by reference)
5 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24 Power of Attorney (included on signature page of this registration
statement)
99 Amended and Restated K-Tron International, Inc. 1996
Equity Compensation Plan
</TABLE>
<PAGE> 1
Exhibit 5
May 12, 1998
K-Tron International, Inc.
Routes 55 and 553
Pitman, NJ 08071-0888
Re: K-Tron International, Inc.
Registration Statement on Form S-8
Relating to the Amended and Restated K-Tron International,
Inc. 1996 Equity Compensation Plan
Ladies and Gentlemen:
We have acted as counsel to K-Tron International, Inc., a New Jersey corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-8 (the "Registration Statement") to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to 150,000 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), issuable under the Amended and Restated K-Tron
International, Inc. 1996 Equity Compensation Plan (the "Plan"). We have examined
such certificates, records, statutes and other documents as we have deemed
relevant in rendering this opinion. As to matters of fact, we have relied on
representations of officers of the Company. In our examination, we have assumed
the genuineness of documents submitted to us as originals and the conformity
with the original of all documents submitted to us as copies thereof.
Based on the foregoing, it is our opinion that the shares of Common Stock
issuable under the Plan will be, when issued in accordance with the terms of the
Plan, validly issued, fully paid and nonassessable shares of Common Stock.
The opinion set forth above is limited to the New Jersey Business Corporation
Act, as amended.
We hereby consent to the use of this opinion as Exhibit 5 to the Registration
Statement. In giving such opinion, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To K-Tron International, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our report dated
February 10, 1998 in K-Tron International, Inc.'s Form 10-K for the year ended
January 3, 1998 and to all references to our firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
May 12, 1998
<PAGE> 1
Exhibit 99
AMENDED AND RESTATED
K-TRON INTERNATIONAL, INC.
1996 EQUITY COMPENSATION PLAN
(March 13, 1998)
The purpose of the K-Tron International, Inc. 1996 Equity Compensation
Plan (the "Plan") is (i) to provide officers and other employees of K-Tron
International, Inc. (the "Company") and its subsidiaries with the opportunity to
receive grants of incentive stock options, nonqualified stock options, stock
appreciation rights and restricted stock and (ii) to provide members of the
Board of Directors of the Company (the "Board") who are not employees of the
Company and its subsidiaries ("Non-Employee Directors") with the opportunity to
receive grants of nonqualified stock options. The Company believes that the Plan
will provide an incentive to the participants to contribute materially to the
long-term growth of the Company, will align the economic interests of the
participants with those of the Company's shareholders and will aid the Company
and its subsidiaries in attracting and retaining officers, employees and Board
members of outstanding ability.
1. Administration
The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of two or more persons appointed by the Board,
all of whom may be "non-employee directors" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and "outside directors" as
defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), and related Treasury regulations.
The Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting and (iv) deal with any other matters arising
under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
the conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in its
sole discretion, in the best interest of the Company and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
2. Grants
Incentives under the Plan shall consist of incentive stock options,
nonqualified stock options, stock appreciation rights and restricted stock
(hereinafter collectively referred to as "Grants"). All Grants shall be subject
to the terms and conditions set forth herein and to those other terms and
conditions consistent with the Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in a grant letter
(the "Grant Letter") or an amendment thereto. The Committee shall approve the
form and provisions of each Grant Letter or amendment. Grants under a particular
Section of the Plan need not be uniform as among the grantees.
3. Shares Subject to the Plan
(a) Subject to the adjustments specified in Section 3(b), the aggregate
number of shares of common stock of the Company (the "Company Stock") that may
be issued or transferred pursuant to Grants or otherwise under the Plan is
600,000 shares. Notwithstanding anything in the Plan to the contrary, the
maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any single employee during any one year period
shall be 100,000 shares. The shares may be authorized but unissued shares of
Company
<PAGE> 2
Stock or reacquired shares of Company Stock, including shares purchased by the
Company on the open market for purposes of the Plan. If and to the extent
options granted under the Plan terminate, expire or are canceled, forfeited,
exchanged or surrendered without having been exercised, or if any shares of
restricted stock are forfeited, the shares subject to such Grants shall again be
available for purposes of the Plan.
(b) If there is any change in the number or kind of shares of Company
Stock outstanding by reason of (i) a stock dividend, (ii) a recapitalization,
(iii) a stock split, combination or exchange of shares, (iv) a merger,
reorganization or consolidation in which the Company is the surviving
corporation, (v) a reclassification or (vi) any other extraordinary or unusual
event affecting the outstanding Company Stock as a class without in any of such
cases the Company's receipt of consideration, or if in the opinion of the
Committee the value of outstanding shares of Company Stock is substantially
reduced due to the Company's payment of an extraordinary dividend or
distribution, the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock which any one individual
participating in the Plan may be granted during any one year, the number of
shares covered by outstanding Grants and the price per share or the applicable
market value of such Grants shall be proportionately adjusted by the Committee
to reflect any increase or decrease in the number or kind of issued shares of
Company Stock to preclude the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated. The adjustments determined by the Committee
shall be final, binding and conclusive. Notwithstanding the foregoing, no
adjustment shall be authorized or made pursuant to this Section if such
authorization or adjustment would cause any Incentive Stock Option to fail to
comply with Section 422 of the Code.
4. Eligibility for Participation
All employees employed by the Company or any subsidiary ("Employees")
(including Employees who are officers or members of the Board) shall be eligible
to participate in the Plan. The Committee shall select the Employees to receive
Grants and determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee determines. Non-Employee
Directors shall be eligible to receive options pursuant to Section 5(i) of the
Plan. Employees and Non-Employee Directors who receive Grants under this Plan
shall hereinafter be referred to as "Grantees". The term "Company" as used
hereinafter when referring to Grantees or matters involving Grantees (such as
termination of employment or the withholding of taxes) shall include the
Company's subsidiaries.
Nothing contained in this Plan shall be construed to limit the right of
the Company to make Grants in connection with the acquisition, by purchase,
lease, merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including options granted to employees or
directors thereof who become Employees or Non-Employee Directors of the Company,
or for any other proper corporate purpose.
5. Granting of Stock Options
(a) Number of Shares. The Committee, in its sole discretion, shall
determine the number of shares of Company Stock that will be subject to each
Grant of stock options.
(b) Type of Option and Price. The Committee may grant options intended to
qualify as incentive stock options ("Incentive Stock Options") within the
meaning of Section 422 of the Code or options which are not intended so to
qualify ("Nonqualified Stock Options") (hereinafter collectively referred to as
"Stock Options") or any combination of Incentive Stock Options and Nonqualified
Stock Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may only be granted to Employees.
The per share purchase price of Company Stock subject to a Stock Option
shall be determined by the Committee and may be equal to, greater than or less
than the Fair Market Value (as defined in the next paragraph) of a share of such
Stock on the date such Stock Option is granted; provided, however, that (i) the
per share purchase price of Company Stock subject to an Incentive Stock Option
shall be equal to, or greater than, the Fair Market Value of a share of such
Stock on the date such Stock Option is granted and (ii) an Incentive Stock
Option may not be granted to an Employee who, at the time of grant, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or any parent or subsidiary of the Company,
unless
<PAGE> 3
the purchase price per share is not less than one hundred ten percent (110%) of
the Fair Market Value of a share of such Stock on the date of grant.
If the Company Stock is traded in a public market, then the Fair Market
Value per share shall be determined as follows: (i) if the principal trading
market for the Company Stock is a national securities exchange or the National
Market segment of The Nasdaq Stock Market, the last reported sale price thereof
on the relevant date or, if there were no trades on that date, the latest
preceding date upon which a sale was reported, or (ii) if the Company Stock is
not principally traded on any such exchange or market, the mean between the last
reported "bid" and "asked" prices thereof on the relevant date, as reported on
Nasdaq or, if not so reported, as reported by the National Daily Quotation
Bureau, Inc. or as reported in a customary financial reporting service, as
applicable and as the Committee determines. If the Company Stock is not traded
in a public market or subject to reported transactions or "bid" and "asked"
quotations as set forth above, the Fair Market Value per share shall be as
determined by the Committee.
(c) Exercise Period. The Committee shall determine the exercise period of
each Stock Option. The exercise period shall not exceed ten (10) years from the
date of grant. However, an Incentive Stock Option that is granted to an Employee
who, at the time of grant, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, or any
parent or subsidiary of the Company, may not have a term that exceeds five (5)
years from the date of grant.
(d) Vesting and Exercisability of Options. Stock Options shall become
vested and exercisable in accordance with the terms and conditions determined by
the Committee, in its sole discretion and as specified in the applicable Grant
Letter. The Committee, in its sole discretion, may accelerate the exercisability
of any or all outstanding Stock Options at any time for any reason. In addition,
all outstanding Stock Options shall vest upon a Change of Control (as defined in
Section 9) unless the Committee determines otherwise pursuant to Section 10.
(e) Manner of Exercise. A Grantee may exercise a Stock Option which has
become exercisable, in whole or in part, by delivering a written notice of
exercise to the Committee or other recipient designated by the Committee for
this purpose, with accompanying payment of the option price in accordance with
Section 5(g). Such notice may instruct the Company to deliver shares of Company
Stock due upon the exercise of the Stock Option to any registered broker or
dealer designated by the Committee in lieu of delivery to the Grantee, in which
case such instructions must also designate the account into which the shares are
to be deposited.
(f) Termination of Employment, Disability or Death.
(1) In the event that a Grantee ceases to be an employee of the
Company for any reason other than "disability", death or "termination for
cause", any Stock Option which is otherwise vested and exercisable by the
Grantee shall terminate unless exercised within thirty (30) days of the date on
which the Grantee ceases to be an employee of the Company (or within such other
period of time as may be specified in the Grant Letter), but in any event no
later than the date of expiration of the option exercise period. Any of the
Grantee's Stock Options which are not otherwise vested and exercisable as of the
date on which the Grantee ceases to be an employee of the Company shall
terminate as of such date.
(2) In the event that a Grantee ceases to be an employee of the
Company on account of a "termination for cause" by the Company, any Stock Option
held by the Grantee shall terminate as of the date the Grantee ceases to be an
employee of the Company.
(3) In the event that a Grantee ceases to be an employee of the
Company because the Grantee is "disabled", any Stock Option which is otherwise
vested and exercisable by the Grantee shall terminate unless exercised within
one (1) year of the date on which the Grantee ceases to be an employee of the
Company (or within such other period of time as may be specified in the Grant
Letter), but in any event no later than the date of expiration of the option
exercise period. Any of the Grantee's Stock Options which are not otherwise
vested and exercisable as of the date on which the Grantee ceases to be an
employee of the Company shall terminate as of such date.
<PAGE> 4
(4) In the event of the death of a Grantee while the Grantee is an
employee of the Company or within not more than thirty (30) days of the date on
which the Grantee ceases to be an employee of the Company on account of a
termination of employment for any reason other than "termination for cause" or
"disability" (or within such other period of time as may be specified in the
Grant Letter), any Stock Option which is otherwise vested and exercisable by the
Grantee shall terminate unless exercised within one (1) year of the date on
which the Grantee ceases to be an employee of the Company (or within such other
period of time as may be specified in the Grant Letter), but in any event no
later than the date of expiration of the option exercise period. Any of the
Grantee's Stock Options which are not otherwise vested and exercisable as of the
date on which the Grantee ceases to be an employee of the Company shall
terminate as of such date.
(5) For purposes of this Section 5(f), the following terms shall be
defined as follows: (A) "disability" shall mean a Grantee's becoming disabled
within the meaning of section 22(e)(3) of the Code and (B) "termination for
cause" shall mean, except to the extent otherwise provided in a Grantee's Grant
Letter, a finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Grantee, that the Grantee has
(i) breached his or her employment or service contract with the Company, or (ii)
has engaged in disloyalty to the Company, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment by or
service to the Company, or (iii) has disclosed trade secrets or other
confidential information of the Company to persons not entitled to receive the
same. In the event of a finding by the Committee of "termination for cause" with
respect to a Grantee, in addition to the immediate termination of all Stock
Options held by such Grantee, the Grantee shall automatically forfeit all option
shares for any exercised portion of a Stock Option for which the Company has not
yet delivered the share certificates upon refund by the Company of the option
price paid by the Grantee for such option shares.
(g) Satisfaction of Option Price. The Grantee shall pay the option price
specified in the Grant Letter in (i) cash, (ii) with the approval of the
Committee, by delivering shares of Company Stock owned by the Grantee (including
Company Stock acquired in connection with the exercise of a Stock Option),
subject to such restrictions as the Committee deems appropriate, and having a
Fair Market Value on the date of exercise equal to the option price or (iii)
through any combination of (i) and (ii). The Grantee shall pay the option price
and the amount of withholding tax due, if any, at the time of exercise. Shares
of Company Stock shall not be issued or transferred upon exercise of a Stock
Option until the option price is fully paid and any required withholding is
made.
(h) Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value on the date of the Grant of the
Company Stock with respect to which Incentive Stock Options are exercisable for
the first time by a Grantee during any calendar year (under the Plan or any
other stock option plan of the Company or a parent or subsidiary corporation)
exceeds $100,000, then such option, as to the excess, shall be treated as a
Nonqualified Stock Option.
(i) Option Grants to Non-Employee Directors. The Committee may grant such
Nonqualified Stock Options as it deems appropriate to Non-Employee Directors.
Unless the Committee determines otherwise, Nonqualified Stock Options shall be
granted annually to Non-Employee Directors with the following terms:
(i) On the date of each annual meeting of the shareholders of the
Company, beginning with the 1998 annual meeting, each Non-Employee Director who
is elected to the Board or who continues his or her term on the Board on that
date shall receive a Nonqualified Stock Option to purchase 1,000 shares of
Company Stock. The option price for the Stock Options shall be equal to the Fair
Market Value of a share of Company Stock on the date of the annual shareholders'
meeting. The Stock Options shall be fully vested on the date of grant and shall
have a term of ten years.
(ii) If a Grantee ceases to be a member of the Board for any reason
other than "disability" (as defined in subsection (f) above), death or becoming
an employee of the Company, the Grantee's Stock Options shall terminate unless
exercised within ninety (90) days of the date on which the Grantee ceases to be
a member of the Board (or within such other period of time as may be specified
in the Grant Letter), but in any event no later than the date of expiration of
the option exercise period. If the Grantee ceases to be a member of the Board
because he or she is "disabled," the Grantee's Stock Options shall terminate
unless exercised within one year of the date on which the Grantee ceases to be a
member of the Board (or within such other period of time as may be specified in
<PAGE> 5
the Grant Letter), but in any event no later than the expiration of the option
exercise period. In the event of the death of a Grantee while the Grantee is a
member of the Board or within not more than ninety (90) days of the date on
which the Grantee ceases to be a member of the Board for any reason other than
"disability" (or within such other period of time as may be specified in the
Grant Letter), the Grantee's Stock Options shall terminate unless exercised
within one year of the date on which the Grantee ceases to be a member of the
Board (or within such other period of time as may be specified in the Grant
Letter), but in any event no later than the date of expiration of the option
exercise period. If the Grantee ceases to be a member of the Board but becomes
or remains an Employee of the Company, the Grantee's Stock Options shall remain
in effect until the Grantee is no longer an Employee or member of the Board (but
not later than the expiration date of the option exercise period), at which time
the foregoing provisions shall apply as if the Grantee had then ceased to be a
member of the Board.
(iii) In other respects, the provisions of the foregoing paragraphs
of this Section 5 applicable to Nonqualified Stock Options shall apply to Stock
Options granted to Non-Employee Directors.
6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to an Employee
under a Grant (a "Restricted Stock Grant"), upon such terms as the Committee
deems appropriate. The following provisions are applicable to Restricted Stock
Grants:
(a) General Requirements. Shares of Company Stock issued or transferred
pursuant to Restricted Stock Grants may be issued or transferred for
consideration or for no consideration, at the sole discretion of the Committee.
The Committee shall establish conditions under which restrictions on the
transfer of shares of Company Stock shall lapse over a period of time or
according to such other criteria as the Committee deems appropriate. The period
of years during which the Restricted Stock Grant will remain subject to
restrictions will be designated in the Grant Letter as the "Restriction Period."
(b) Number of Shares. The Committee shall issue or transfer to each
Grantee of a Restricted Stock Grant such number of shares of restricted Company
Stock as the Committee deems appropriate.
(c) Requirement of Employment. If a Grantee's employment terminates during
the period designated in the Grant Letter as the Restriction Period, or if other
specified conditions are not met, the Restricted Stock Grant shall terminate as
to all shares covered by the Grant as to which the restrictions on transfer have
not lapsed, and those shares of Company Stock must be immediately returned to
the Company. The Committee may, however, provide for complete or partial
exceptions to this requirement as it deems equitable.
(d) Restrictions on Transfer and Legend on Share Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee under Section 8(a). Each
certificate for shares issued or transferred under a Restricted Stock Grant
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the share
certificate covering any of the shares subject to restrictions when all
restrictions on such shares have lapsed. The Committee, in its sole discretion,
may determine that the Company will not issue certificates for shares of
Restricted Stock until all restrictions on such shares have lapsed, or that the
Company will retain possession of certificates for shares of Restricted Stock
until all restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. During the Restriction Period,
unless the Committee determines otherwise, the Grantee shall have the right to
vote shares subject to the Restricted Stock Grant and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed under a Restricted
Stock Grant shall lapse upon the expiration of the applicable Restriction Period
and the satisfaction of any conditions imposed by the Committee. The Committee
may determine, as to any or all Restricted Stock Grants, that all the
restrictions shall lapse without regard to any Restriction Period. All
outstanding Restricted Stock Grants shall vest upon a Change of Control,
<PAGE> 6
unless the Committee determines otherwise pursuant to Section 10.
7. Stock Appreciation Rights
(a) The Committee may grant stock appreciation rights ("SARs") to any
Grantee in tandem with any Stock Option, for all or a portion of the applicable
Stock Option, either at the time the Stock Option is granted or at any time
thereafter while the Stock Option remains outstanding; provided, however, that
in the case of an Incentive Stock Option, such rights may be granted only at the
time of the Grant of such Incentive Stock Option. Unless the Committee
determines otherwise, the base price of each SAR shall be equal to the greater
of (i) the exercise price of the related Stock Option or (ii) the Fair Market
Value of a share of Company Stock as of the date of Grant of such SAR.
(b) The number of SARs granted to a Grantee which shall be exercisable
during any given period of time shall not exceed the number of shares of Company
Stock which the Grantee may purchase upon the exercise of the related Stock
Option during such period of time. Upon the exercise of a Stock Option, the SARs
relating to the Company Stock covered by such Stock Option shall terminate. Upon
the exercise of SARs, the related Stock Option shall terminate to the extent of
an equal number of shares of Company Stock.
(c) Upon a Grantee's exercise of some or all of the Grantee's SARs, the
Grantee shall receive in settlement of such SARs an amount equal to the value of
the stock appreciation for the number of SARs exercised, payable in cash,
Company Stock or a combination thereof. The stock appreciation for an SAR is the
difference between the base price of the SAR as described in Section 7(a) and
the Fair Market Value of the underlying Company Stock on the date of exercise of
such SAR.
(d) At the time of such exercise, the Grantee shall have the right to
elect the portion of the amount to be received that shall consist of cash and
the portion that shall consist of Company Stock, which, for purposes of
calculating the number of shares of Company Stock to be received, shall be
valued at their Fair Market Value on the date of exercise of such SARs. The
Committee shall have the right to disapprove a Grantee's election to receive
cash in full or partial settlement of the SARs exercised and to require that
shares of Company Stock be delivered in lieu of cash. If shares of Company Stock
are to be received upon exercise of an SAR, cash shall be delivered in lieu of
any fractional share. A SAR shall be exercisable only during the period when the
Stock Option to which it is related is also exercisable.
8. Transferability of Grants
(a) Only the Grantee or a Successor Grantee (as defined below) may
exercise rights under a Grant. Such persons may not transfer those rights,
except that a Grantee may transfer rights under a Grant by will or by the laws
of descent and distribution or, with respect to Grants other than Incentive
Stock Options, if permitted under Rule 16b-3 of the Exchange Act and if
permitted in any specific case by the Committee in its sole discretion, pursuant
to a domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the regulations
thereunder. When a Grantee dies, the representative or other person entitled to
succeed to the rights of the Grantee ("Successor Grantee") may exercise such
rights. A Successor Grantee must furnish proof satisfactory to the Company of
his or her right to receive the Grant under the Grantee's will or under the
applicable laws of descent and distribution.
(b) Notwithstanding the foregoing, the Committee may provide, in a Grant
Letter, that a Grantee may transfer Nonqualified Stock Options to family members
or other persons or entities according to such terms as the Committee may
determine.
9. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred if:
(a) A liquidation or dissolution of the Company or the sale (excluding
transfers to subsidiaries) of all or substantially all of the Company's assets
occurs;
<PAGE> 7
(b) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split or sale or
transfer of assets, any person or group (as such terms are used in and under
Section 13(d) of the Exchange Act) becomes the beneficial owner (as defined in
Rule 13-d under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 20% of the common stock of the Company or the
combined voting power of the Company's then outstanding securities; or
(c) During any period of two consecutive years, individuals who, at the
beginning of such period, constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's shareholders, of at least two-thirds of the
directors who were not directors at the beginning of such period was approved by
a vote of at least two-thirds of the directors then still in office who were
either directors at the beginning of the period or who, in connection with their
election or nomination, received the foregoing two-thirds approval.
10. Consequences of a Change of Control
(a) Upon a Change of Control, unless the Committee determines otherwise,
(i) the Company shall provide to each Grantee who holds an outstanding Grant
written notice of such Change of Control, (ii) all outstanding Stock Options and
SARs shall automatically accelerate and become fully exercisable, and (iii) the
restrictions and conditions on all outstanding Restricted Stock shall
immediately lapse. Notwithstanding the foregoing, if a Change of Control
described in Section 9(a) will occur, or if a Change of Control described in
Section 9(b) will occur and the Company will not be the surviving corporation
(or will survive only as a subsidiary of another corporation), then the
provisions of this Section 10(a) shall be mandatory, subject to the provisions
of Section 10(d) below.
(b) In the event of a Change of Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation),
unless the Committee determines otherwise, all outstanding Stock Options and
SARs that are not exercised shall be assumed by, or replaced with comparable
options or rights by, the surviving corporation.
(c) In addition, in the event of a Change of Control, the Committee may
take one or both of the following actions: the Committee may (i) require that
Grantees surrender their outstanding Stock Options and SARs in exchange for a
payment by the Company, in cash or Company Stock as determined by the Committee,
in an amount equal to the amount by which the then Fair Market Value of the
shares of Company Stock subject to the Grantee's outstanding Stock Options and
SARs exceeds the purchase price of the Options or the base price of the SARs, as
applicable, or (ii) after giving Grantees an opportunity to exercise their
outstanding Stock Options and SARs, terminate any or all outstanding Stock
Options and SARs at such time as the Committee deems appropriate. Such surrender
or termination shall take place as of the date of the Change of Control or such
other date as the Committee may specify.
(d) Notwithstanding anything in the Plan to the contrary, in the event of
a Change of Control, the Committee shall not have the right to take any actions
described in the Plan (including without limitation actions described in Section
10(c) above) that would make the Change of Control ineligible for pooling of
interest accounting treatment or that would make the Change of Control
ineligible for desired tax treatment if, in the absence of such right, the
Change of Control would qualify for such treatment and the Company intends to
use such treatment with respect to the Change of Control.
(e) The Committee may make determinations under this Section 10 prior to
the Change of Control or, if the Committee making such determinations following
a Change of Control is comprised of the same members as served on the Committee
immediately prior to such Change of Control, within twenty (20) days following
such Change of Control.
11. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that
<PAGE> 8
any amendment that increases the aggregate number (or individual limit for any
single Grantee) of shares of Company Stock that may be issued or transferred
under the Plan (other than by operation of Section 3(b)), or modifies the
requirements as to eligibility for participation in the Plan, shall be subject
to approval by the shareholders of the Company and provided, further, that the
Board shall not amend the Plan without shareholder approval if such approval is
required by Section 162(m) of the Code.
(b) Termination of Plan. The Plan shall terminate on May 9, 2006 unless
terminated earlier by the Board or unless extended by the Board with the
approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee under such Grant unless the Grantee consents or
unless the Committee acts under Section 19(b). The termination of the Plan
shall not impair the power and authority of the Committee with respect to any
outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant
may be terminated or amended under Section 19(b) or may be amended by agreement
of the Company and the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
12. Funding of the Plan
The Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under the Plan. In no event shall interest be
paid or accrued on any Grant, including unpaid installments of Grants.
13. Rights of Participants
Nothing in the Plan shall entitle any Employee or other person to any
claim or right to be granted a Grant under the Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any individual any rights to
be retained by or in the employ of the Company or any other employment rights.
14. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether cash,
other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
15. Withholding of Taxes
(a) The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to a Grantee, any federal, state or local taxes
required by law to be withheld with respect to such cash awards and, in the case
of Grants paid in Company Stock, the Grantee or other person receiving such
shares shall be required to pay to the Company the amount of any such taxes
which the Company is required to withhold with respect to such Grants or the
Company shall have the right to deduct from other wages paid to the Grantee by
the Company the amount of any withholding due with respect to such Grants.
(b) If the Committee so permits, a Grantee may elect to satisfy the
Company's income tax withholding obligation with respect to a Grant paid in
Company Stock by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The election must be in a form and manner prescribed by
the Committee and shall be subject to the prior approval of the Committee.
<PAGE> 9
16. Requirements for Issuance or Transfer of Shares
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.
17. Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control. References herein to a Section or a Subsection are references to
Sections or Subsections of the Plan unless otherwise noted.
18. Effective Date of the Plan
The Plan became effective on May 10, 1996 when it was approved by the
Company's shareholders.
19. Miscellaneous
(a) Substitute Grants. The Committee may make a Grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the substitute
grants.
(b) Compliance with Law. The Plan, the exercise of Stock Options and the
obligation of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section 19(b).
(c) Ownership of Stock. A Grantee or Successor Grantee shall have no
rights as a shareholder with respect to any shares of Company Stock covered by a
Grant until the shares are issued or transferred to the Grantee or Successor
Grantee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Letters issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the State of New
Jersey.
