<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BIOMERICA, INC.
-----------------------------------------------------------------
(Name of Registrant as specified in Its Charter)
-----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i) (3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
aid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
BIOMERICA, INC.
NOTICE OF ANNUAL MEETING
TO BE HELD ON
November 9, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
BIOMERICA, INC., a Delaware corporation (herein called the "Company"), will be
held at the offices of the Company, 1533 Monrovia Avenue, Newport Beach,
California 92663 on November 9, 1995, at 10:30 A.M. for the following purposes:
1. To elect a Board of three Directors;
2. To consider and act upon a proposal to ratify and approve the 1995
Stock Option and Restricted Stock Plan; and
3. To consider and act upon any other matters which may properly come
before the Meeting and any adjournment thereof.
In accordance with the provisions of the By-Laws, the Board of Directors has
fixed the close of business on September 28, 1995, as the record date for the
determination of the holders of Common Stock entitled to notice of and to vote
at said Annual Meeting.
A list of the stockholders entitled to vote at the Annual Meeting will be
open for examination by any stockholder for any purpose germane to the meeting
during ordinary business hours for a period of ten days prior to the meeting at
the offices of the Company, which address is set forth above, and will also be
available for examination at the Annual meeting until its adjournment.
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT. STOCKHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO DATE, SIGN
AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
JOSEPH H. IRANI,
President
Newport Beach, California
September 15, 1995
<PAGE>
PROXY STATEMENT
BIOMERICA, INC.
1533 MONROVIA AVENUE
NEWPORT BEACH, CALIFORNIA 92663
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOVEMBER 9, 1995
I. PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors of
BIOMERICA, INC., a Delaware corporation (the "Company"), for use at the
Company's 1995 Annual Meeting of Stockholders to be held on November 9, 1995, at
the offices of the Company, 1533 Monrovia Avenue, Newport Beach, California
92663 at 10:30 a.m., and at any and all adjournments thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. Any Stockholder has the power to revoke his or her
proxy at any time before it is voted. A proxy may be revoked by delivering
written notice of revocation to the Company at its principal office, 1533
Monrovia Avenue, Newport Beach, California 92663, by a subsequent proxy executed
by the person executing the prior proxy and presented to the meeting, or by
attendance of the meeting and voting in person by the person executing the
proxy. The solicitation of proxies is being made only by use of the mails and
the cost thereof will be borne by the Company. This Proxy Statement and the
Annual Report of the Company for the year ended May 31, 1995, will be mailed on
or about September 29, 1995 to each stockholder of record as of the close of
business on September 28, 1995.
The cost of preparing, assembling and mailing these proxy materials will be
paid by the Company. Following the mailing of this Proxy Statement, directors,
officers and regular employees of the Company may solicit proxies by mail,
telephone, telegraph or personal interview. Such persons will receive no
additional compensation for such services. Brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of the Company's common
stock of record will be requested to forward proxy soliciting material to the
beneficial owners of such shares, and will be reimbursed by the Company for
their reasonable charges and expenses in connection therewith.
When your proxy is returned properly signed, the shares represented will be
voted in accordance with your directions. Where specific choices are not
indicated, proxies will be voted in favor of the three persons nominated to be
directors in proposal 1 and in favor of proposal 2. If a proxy or ballot
indicates that a stockholder or nominee abstains from voting or that shares are
not be voted on a particular proposal, the shares will not be counted as having
been voted on that proposal, and those shares will not be reflected in the final
tally of the votes cast with regard to that proposal, although such shares will
be counted as in attendance at the meeting for purposes of determining a quorum.
The required quorum for the meeting is greater than 50% in interest of the
shares outstanding and entitled to vote at the meeting. A plurality of the
votes properly cast for the election of directors by the stockholders attending
the meeting in person or by proxy will elect directors to office.
<PAGE>
II. VOTING SECURITIES
The Company had 3,444,569 shares of Common Stock, par value $.08 per share
(the "Common Stock"), outstanding as of September 15, 1995. Holders of record
of shares of the Common Stock at the close of business on September 28, 1995
will be entitled to notice of and to vote at the Annual Meeting and will be
entitled to one vote for each such share so held of record.
The following table sets forth, as of September 15, 1995, certain information
as to shares of the Common Stock owned by (i) each person known by management to
beneficially own more than 5% of the outstanding Common Stock, (ii) each of the
Company's nominees for reelection as directors, and (iii) all executive officers
and directors of the Company as a group:
NUMBER OF
SHARES
NAME (AND ADDRESS) OF BENEFICIALLY
BENEFICIAL OWNER (1) OWNED (2) PERCENT
---------------------- --------- -------
Joseph H. Irani 707,695(3) 20.0
Dr. Philip B. Kaplan 11,500(4) 0.3
Dr. Robert A. Orlando 43,000(5) 1.3
All executive officers and directors
as a group (three persons) 762,195(6) 21.5
(1) Mr. Irani's address is 1533 Monrovia Ave., Newport Beach, CA 92663; Dr.
Kaplan's address 17822 Beach Blvd., Huntington Beach, CA 92647; Dr. Orlando's
address is 947 West 30th St., Los Angeles, CA 92034.
(2) Unless otherwise noted, all shares listed are owned of record and the
record owner has sole voting and investment power, subject to community property
laws where applicable and the information contained in the footnotes to this
table.
(3) Includes 19,035 shares owned by Mr. Irani's spouse and 8,250 shares owned
by Mr. Irani's sons, as to all of which shares Mr. Irani disclaims beneficial
ownership. Includes 85,000 shares of common stock which may be purchased or
acquired by Mr. Irani pursuant to a currently exercisable stock option. It also
includes 10,000 shares of common stock that may be purchased by Mr. Irani's
spouse pursuant to a currently exercisable stock option.
(4) Includes 5,000 shares of common stock which may be purchased by Dr.
Kaplan pursuant to a currently exercisable stock option.
(5) Includes 5,000 shares of common stock which may be purchased by Dr.
Orlando pursuant to a currently exercisable stock option.
(6) Includes 105,000 shares of common stock which may be purchased by the
named individuals pursuant to currently exercisable stock options.
Mr. Joseph H. Irani may be deemed a control person of the Company by virtue of
his Common Stock ownership.
III. ELECTION OF DIRECTORS
The persons named below have been nominated by management for election as
directors of the Company to serve until the 1996 Annual Meeting of Stockholders
or until their respective successors are duly elected and qualify. All of the
nominees were elected directors at the 1994 Annual Meeting of Stockholders.
<PAGE>
Unless otherwise instructed, the enclosed proxy will be voted for election of
the nominees listed below, except that the persons designated as proxies reserve
full discretion to cast their votes for another person recommended by management
in the unanticipated event that any nominee is unable to or declines to serve.
Director
Name of Nominee Age Since Position with the Company
--------------- --- ----- -------------------------
Joseph H. Irani 68 1971 President, Chief Executive
Officer, Treasurer &
Director
Dr. Philip B. Kaplan 64 1971 Director
Dr. Robert A. Orlando 57 1986 Director
Joseph H. Irani has served as the Company's Chief Executive Officer and
Treasurer and as a director since its inception in 1971. Mr. Irani also serves
as a director of Allergy Immuno Technologies, Inc., a 73.5% owned subsidiary of
the Company, and of Lancer Orthodontics, Inc., a publicly held corporation, of
which approximately 30.5% of the issued and outstanding common stock is owned by
the Company.
Dr. Philip B. Kaplan has been engaged in a private medical practice in
Huntington Beach, California, for more than five years.
Robert A. Orlando, M.D., Ph.D., is a professor of pathology and has served as
a Chief Pathologist of various hospitals since 1981. Dr. Orlando also serves as
a director of Lancer Orthodontics, Inc.
There is no family relationship between any of the Company's directors and
officers, other than between Joseph H. Irani and Janet C. Moore, an officer, who
are husband and wife. There are no arrangements or understandings between any
director or executive officer and any other person pursuant to which any person
has been elected or nominated as a director or executive officer. All directors
and executive officers serve for a term of one year until the next annual
meeting of stockholders.
During the year ended May 31, 1995, the Board of Directors held 6 meetings.
Dr. Philip B. Kaplan, who attended two of such meetings, is the only director
who attended less than 75% of those meetings. The Company presently has a
compensation committee of the Board of Directors consisting of Drs. Philip B.
Kaplan and Robert A. Orlando. The Compensation Committee's basic function is to
set the salary for employees and promotions.
IV. EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table presents, for each of the last three fiscal years, the
annual compensation earned by the chief executive officer.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ---------------------------- -----------
OTHER SECURITIES
NAME AND ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ PAYOUTS COMPEN-
POSITION YEAR SALARY ($) BONUS ($) SATION(1) AWARDS ($) SARS ($) ($) SATION
- -------------------------- ------------ ------------------------- ------------- -------------- ---------- ----------
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Joseph Irani, 1995 $60,925 0 $54,540 (2) 0 85,000 0 0
Chairman of
Board, Chief 1994 60,925 0 $107,652 0 0 0 0
Executive Officer
and Treasurer 1993 60,925 0 103,248 0 20,000 (3) 0 0
<FN>
(1) Represents accrued wages payable pursuant to Mr. Irani's employment agreement but not paid in order to conserve capital. Mr.
Irani, at his discretion, may accept shares of common stock as payment in lieu of this accrual.
(2) Mr. Irani accepted a stock option for 60,000 shares exercisable at $.85 per share in lieu of another $54,540 that would have
accrued in fiscal 1995.
(3) The stock option dated May 28, 1993 was canceled during the fiscal year.
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE MARKET PRICE
UNDERLYING GRANTED TO OR BASE ON DATE EXPIRATION
NAME OPTIONS/SARS EMPLOYEES IN 1995 PRICE ($/SH) OF GRANT DATE
- -------------------------------------- ---------------------- --------------- ----------------- ------------------
<C> <S> <S> <S> <S> <S>
Joseph H. Irani, 60,000 30.4 $.85 $1.00 Jan. 4, 2002
Chairman of
the Board, 25,000 12.7 .80 .875 Apr. 11, 2000
Chief Executive
Officer and
Treasurer
- -------------------------------------- ---------------------- --------------- -----------------
<FN>
(1) All stock options awarded previous to this fiscal year have been canceled.
</TABLE>
The amounts described above do not include other compensation and benefits
provided to Mr. Irani during the year ended May 31, 1995 that in the aggregate
did not exceed the lesser of $50,000 or 10% of the executive's annual salary and
bonus.
<PAGE>
COMPENSATION OF DIRECTORS
Directors receive no payment for their services as directors, although the
Company's By-Laws permit such payment. Each director received during fiscal
1995 and 1994, 6,000 and 12,000 shares of common stock, respectively, for his
services. The compensation of officers and directors is subject to review and
adjustment from time to time by the Board of Directors.
EMPLOYMENT AGREEMENT
Joseph H. Irani serves as the President and Chief Executive Officer of the
Company pursuant to a written employment agreement which expired on May 31,
1993, and was renewed for an additional three years and then further extended to
May 1998. The employment agreement provides for a base annual salary, set
initially at $125,000 and adjusted annually to reflect cost of living increases,
plus an annual bonus equal to 20% of the annual base salary for each fiscal year
during the term of the agreement in which the Company's income before taxes
exceeds $500,000. The agreement also provides that the Company is obligated to
(i) provide Mr. Irani with the use of an automobile and certain automobile
insurance coverages (currently Mr. Irani is utilizing his own car), (ii) pay Mr.
Irani's medical and dental bills during his tenure to the extent such expenses
are not covered by its group health insurance plan and (iii) maintain a term
life insurance policy in Mr. Irani's name in the face amount of $1,500,000 for
the benefit of his designated beneficiaries which term life insurance has not
yet been obtained at the request of Mr. Irani in order not to incur the expense
of such a policy at this time. If Mr. Irani becomes disabled during the term of
the agreement, the Company is obligated to pay him 75% of his base salary for
the balance of the term in semi-monthly installments. In addition, the
employment agreement requires that certain severance benefits be provided in the
event his employment terminates other than for cause. Such severance benefits
will include, depending on the reason for Mr. Irani's termination, either
payment of all compensation and fringe benefits payable to him through the term
of the employment agreement or a lump sum equal to three times the amount of the
average of annualized compensation from the Company during the five preceding
calendar years.
Had Mr. Irani's employment been terminated (i) other than for cause or by
reason of death or disability or (ii) for Good Reason (as defined in Mr. Irani's
employment agreement) as of June 1, 1995, his lump-sum severance payment would
have been $483,113 (assuming he elected that alternative where an election is
afforded).
STOCK OPTIONS
Under the now expired 1980 Employee Stock Option Plan (the "1980 Plan"), the
Company was authorized to grant stock options to full-time and part-time
employees of, and consultants to, the Company, subject to certain limitations.
Options granted under the 1980 Plan could be granted at prices not less than 90%
of the then fair market value of the Common Stock and expire not more than five
years after the date of grant. All options were granted at 90% of fair market
value on the date of grant. As of September 9, 1995, there were no options to
purchase shares of Common Stock under the 1980 Plan.
Under the 1991 Stock Option and Restricted Stock Plan (the "1991 Plan"), the
Company is authorized to grant stock options and issue restricted stock to
employees, consultants, advisers, independent contractors and agents of the
Company or any of its subsidiaries, through December 3, 2001. Under the plan
350,000 shares have been authorized for grant or issuance. Stock Options
granted under the 1991 Plan shall be granted at an option price not less than
100%, in the case of Incentive Stock Options, and not less than 85%, in the case
of Non-qualified Stock Options, of the fair market value of the stock on the
date of the award of the stock option. Most options granted under the 1991 plan
to date expire five years from the date of their respective grant and all were
granted at 85% of fair market value on the date of grant. As of September 9,
1995, options to purchase 259,250 shares of Common Stock were outstanding, at
exercise prices ranging from $.80 to $2.00 per share with an average exercise
price of $.85 per share. During the year ended May 31, 1995, no board member or
executive officer exercised any options to purchase Common Stock.
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table presents information for the named officer in the Summary
Compensation Table with respect to options exercised during fiscal 1995 and
unexercised options held as of the end of the fiscal year.
<TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
SHARES NUMBER OF UNEXERCISED IN-THE MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
NAME EXERCISES REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<C> <S> <S> <S> <S> <S> <S>
Joseph H. Irani none none 85,000 none 85,000 none
<FN>
(1) Based on closing price for the last business day of the fiscal year.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10% beneficial owners are required by
applicable regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company and information involving securities transactions of which the Company
is aware, the Company believes that during the fiscal year ending May 31, 1995,
all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial stockholders were complied with.
V. CERTAIN TRANSACTIONS
OFFICE LEASE
The Company leases 13,500 square feet of office and laboratory space located
at 1531-1533 Monrovia Avenue, Newport Beach, California, pursuant to a written
lease agreement with Joseph H. Irani and another individual, as lessors. The
lease was scheduled to expire on May 31, 1993, but was extended for an
additional five years. Pursuant to the lease, the Company pays an annual base
rent, set initially at $143,880 and adjusted annually to reflect cost of living
increases, plus all real estate taxes and insurance costs. During the year
ended May 31, 1995, the Company paid $128,640 in rent under the terms of the
lease. This amount constitutes all that is due per agreement with the landlord.
In the opinion of the unaffiliated members of the Board of Directors of the
Company, the above transactions were fair to the Company and were made upon
terms which were no less favorable to the Company than would have been obtained
if negotiated with unaffiliated third parties.
<PAGE>
VI. APPROVAL OF 1995 STOCK OPTION AND RESTRICTED STOCK PLAN
The Board of Directors of the Company believes that a key element of
executive compensation is stock-based incentive compensation. Such compensation
advances the interests of the Company by encouraging and providing for the
acquisition of equity interests in the Company by officers and other key
employees, consultants and agents, thereby providing substantial motivation for
superior performance. In order to provide the Board with greater flexibility to
adapt to changing economic and competitive conditions and to implement stock-
based compensation strategies which will attract and retain those employees and
independent contractors who are important to the long-term success of the
Company, the Board has adopted, subject to stockholder approval, the 1995 Stock
Option and Restricted Stock Plan (The `1995 Plan''). If approved by the
stockholders, the 1995 Plan will become effective as of the date of such
approval. A summary of the 1995 Plan follows, but is qualified in its entirety
by reference to the full text of the 1995 Plan, which is attached as Appendix 2
to this Proxy Statement.
SHARES
There will be 500,000 shares of the Common Stock authorized under the 1995
Plan. Shares awarded under the 1995 Plan may be composed of, in whole or in
part, authorized and unissued shares or treasury shares. If shares subject to
an option under the 1995 Plan cease to be subject to such option, or if shares
awarded under the 1995 Plan are forfeited, such shares will again be available
for future distribution under the 1995 Plan. At no time during the term of the
1995 Plan, however, may the total number of shares of Common Stock subject to
outstanding options under the 1995 Plan, any other stock option plan or any
stock purchase plan, stock bonus plan or similar plan of the Company in the
aggregate exceed 30% of the total number of shares of Common Stock outstanding
on the date of the grant of any option under the 1995 Plan.
ADMINISTRATION
The 1995 Plan will be administered by a compensation committee or such other
committee designated by the Board of Directors consisting of not less than two
directors, each of whom is a `disinterested person'' within the meaning of rule
16b-3 of the Securities and Exchange Commission, or if there are not at least
two disinterested persons on the Board of Directors willing to serve on such
compensation committee or other committee, by the Board of Directors (in any
case, the `Committee''). Subject to the provisions of the 1995 Plan, the
Committee will have the authority, among other things, to set the terms of stock
options and restricted stock granted thereunder, establish rules and regulations
which it may deem appropriate for the proper administration of the 1995 Plan and
interpret and make determinations under the 1995 Plan.
PARTICIPATION
Non-Qualified Options (as defined below) and restricted stock may be granted
to any person who is or has agreed to become an officer or other employee,
consultant, adviser, independent contractor or agent (each of which
relationships is hereinafter referred to as a `Relationship'') of the Company
or any of its Subsidiaries (as defined in the 1995 Plan). Incentive Options (as
defined below) may be granted to any officer or other employee of the Company or
a Subsidiary. The participants under the Plan shall be selected from time to
time by the Committee, in its sole discretion, from among those eligible.
Notwithstanding the foregoing, no optionee may receive in any year, whether
under the 1995 Plan or any other plan of the Company, Incentive Options if the
aggregate fair market value (determined at the time the Incentive Option is
granted) of Common Stock for which Incentive Options are exercisable for the
first time during any calendar year exceeds $100,000.
AWARDS UNDER THE 1995 PLAN
The Committee will have the authority to grant stock options and restricted
stock under the 1995 Plan.
<PAGE>
STOCK OPTIONS
Options issued under the 1995 Plan may be either incentive stock options
(`Incentive Options'') under Section 422 of the Internal Revenue Code of 1986,
as amended (the `Code''), or non-qualified stock options (``Non-Qualified
Options').
Incentive Options and Non-Qualified Options granted under the 1995 Plan
expire on such date as is determined by the Committee, unless earlier terminated
as provided in the 1995 Plan; provided, however, that options granted under the
1995 Plan must expire within 10 years after the grant date. Notwithstanding the
previous sentence, with respect to Incentive Options, if an optionee owns, or
would be considered to own by reason of Section 424(d) of the Code, more than
10% of the outstanding Common Stock of the Company on the grant date and if the
Committee fails to fix an earlier termination date, Incentive Options expire
five years after the grant date. An option is exercisable at such times as are
determined on the grant date by the Committee. An optionee may exercise a part
of the option from the date that part first becomes exercisable until the option
expires or is otherwise terminated.
The purchase price for shares to be issued to an optionee with respect to an
Incentive Option will be not less than 100% of the fair market value (as defined
in the 1995 Plan) of the Common Stock on the grant date (110% of the fair market
value in the case of Incentive Options granted to a person who on the grant date
owns or is considered to own more than 10% of the outstanding Common Stock).
The purchase price for shares issued with respect to a Non-Qualified Option will
be not less than 85% of the fair market value of the Common Stock on the grant
date. The exercise price of an option, plus an applicable withholding tax, is
payable in full at the time of delivery of the shares, in cash or, at the option
of the Committee, in shares of the Common Stock.
Options granted under the 1995 Plan are not transferable or assignable other
than by will or by the laws of descent and distribution. Upon the termination
of an optionee's Relationship with the Company or a Subsidiary by reason other
than death or disability, any options granted to him shall terminate 30 days
from the date on which such Relationship terminates unless such optionee has
resumed or initiated a Relationship and has a Relationship on such date. During
such 30-day period, the optionee may exercise any option granted to him to the
extent such option was exercisable on the date of termination of his
Relationship and provided that such option has not expired or otherwise
terminated. Except as the Committee may expressly determine otherwise, upon the
termination of an optionee's Relationship by reason of death or disability, any
option granted to him shall terminate six months after the date of termination
of his Relationship unless by its terms the option shall expire before such
date, and shall only be exercisable to the extent exercisable on its terms the
option shall expire before such date, and shall only be exercisable to the
extent exercisable on the date of termination of his Relationship. In the case
of termination by reason of death, the option may be exercised by the person to
whom the optionee's rights under the option shall pass by will or by the laws of
descent and distribution. These and other terms and conditions of the options
will be set forth in an agreement entered into between the Company and the
optionee at the time an option is granted to such optionee.
RESTRICTED STOCK
Restricted stock may be conditioned upon one or more of the completion of a
specified period of service with the Company or a Subsidiary, the attainment of
specific performance goals or such other factors as the Committee may determine.
The provisions attendant to a grant of restricted stock may vary from
participant to participant.
In making an award of restricted stock the Committee will determine the
conditions under and the period during which the stock is subject to forfeiture,
and the purchase price, if any, for the stock. During the restricted period,
the recipient of restricted stock may not sell, transfer, pledge or assign the
restricted stock, except as may be permitted by the Committee. The certificate
evidencing the restricted stock will be registered in the recipient's name,
although the Committee may direct that it remain in the possession of the
Company until the restrictions have lapsed. Except as may otherwise be provided
by the Committee, upon the termination of the recipient's Relationship for any
reasons during the restricted period, before all restricted stock has vested, or
in the event the conditions to vesting are not satisfied, all restricted stock
that has not vested will be subject to forfeiture and the
<PAGE>
Committee may provide that any purchase price paid by the recipient shall be
returned to the recipient or a cash payment equal to the restricted stock's fair
market value on the date of forfeiture, if lower, shall be paid to the
recipient. During the restricted period, the recipient will have the right to
vote the restricted stock and to receive any cash dividends, if so provided by
the Committee. Stock dividends will be treated as additional shares of
restricted stock and will be subject to the same terms and conditions as the
initial grant, if so provided by the Committee.
TERM
The 1995 Plan will become effective upon stockholder approval and will expire
by its terms 10 years thereafter.
AMENDMENT
The 1995 Plan may be discontinued or amended by the Board of Directors,
except that no amendment or discontinuation may adversely affect any outstanding
award without the written consent of the recipient of such award. Amendments
may be made without stockholder approval except amendments which would (i)
materially increase the benefits accruing to participants under the 1995 Plan,
(ii) increase the number of shares of Common Stock which may be issued under the
1995 Plan, except as permitted under the adjustment provisions described below,
or (iii) materially modify the requirements as to eligibility for participation
in the 1995 Plan, provided, however, that the Board may amend the 1995 Plan
without stockholder approval as may be required to comply with federal and state
securities laws.
ADJUSTMENTS
If the number of outstanding shares of Common Stock is increased or
decreased, or if such shares are exchanged for a different number or kind of
shares or securities of the company through reorganization, merger,
recapitalization, reclassification, stock dividend, stock split, combination of
shares or other similar transaction the aggregate number of shares of Common
Stock subject to the 1995 Plan and the shares of Common Stock subject to issued
and outstanding options under the 1995 Plan will be appropriately and
proportionately adjusted by the Committee. Any such adjustment in the
outstanding options will be made without change in the aggregate purchase price
applicable to the unexercised portion of the option but with an appropriate
adjustment in the price for each share or other unit of any security covered by
the option.
Notwithstanding the foregoing, upon the dissolution or liquidation of the
Company or upon any reorganization, merger or consolidation with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the assets of the company to
another corporation or entity, the 1995 Plan and each outstanding option shall
terminate; provided, however, that: (i) each option for which no option has been
tendered by the surviving or acquiring corporation, if any, in accordance with
all of the terms of provision (ii) immediately below will become fully
exercisable 30 days before the effective date of such dissolution, liquidation,
merger, consolidation or sale of assets in which the Company is not the
surviving or acquiring corporation; (iii) in its sole and absolute discretion,
the surviving or acquiring corporation may, but will not be obligated to, tender
to any optionee holding an option, an option or options to purchase shares of
the surviving or acquiring corporation, and such new option or options will
contain such terms and provisions as shall be required substantially to preserve
the rights and benefits of any option then outstanding under the 1995 Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Incentive Options. The Company believes that Incentive Options which are
granted under the 1995 Plan will qualify as incentive stock options within the
purview of Section 422 of the Code. The following is a summary of the principal
federal income tax aspects of Incentive Options.
<PAGE>
No income is recognized by an optionee at the time an Incentive Option is
granted, and no income is recognized by an optionee upon his exercise of the
option (although the difference between the fair market value of the shares on
the date of exercise and the option price is an item of tax preference or
purposes of the alternative minimum tax). If the optionee makes no disposition
of the shares received upon exercise of the option within two years from the
date the option was granted and one year from the date the shares were issued to
him upon exercise of the option, he will recognize long-term capital gain or
loss when he disposes of his shares. Such gain or loss will be measured by the
difference between the option price and the amount received for the shares at
the time of disposition.
If the optionee disposes of shares acquired upon exercise of an Incentive
Option before the expiration of the applicable holding periods, any amount
realized from such disqualifying disposition will be taxable as ordinary income
in the year of disposition generally to the extent that the lesser of the fair
market value of the shares on the date the option was exercised or the fair
market value at the time of such disposition exceeds the option price. Any
amount realized upon such a disposition in excess of the fair market value of
the shares on the date of exercise will be treated as long-term or short-term
capital gain, depending upon whether the shares have been held for more than one
year.
The tax consequences may vary if an Incentive Option is exercised by paying
the exercise price, in whole or in part, by the transfer to the Company of
shares of common stock. If the optionee transfers shares of common stock which
he or she received through the exercise of an incentive stock option and which
he or she had not held for the requisite holding period prior to the transfer,
the optionee will recognize income as if the shares had been sold or exchanged.
The basis of the new shares received pursuant to the exercise would be the
optionee's basis in the tendered shares, plus the amount of income recognized,
plus the amount of cash paid, if any.
The Company will not be allowed a deduction for federal income tax purposes
at the time of the grant or exercise of an Incentive Option. At the time of a
disqualifying disposition by an optionee, the Company generally will be entitled
to a deduction to the extent that the optionee recognizes ordinary income.
Non-Qualified Options. An optionee recognizes no income at the time a Non-
Qualified Option is granted under the 1995 Plan. An optionee will recognize
ordinary income at the time a Non-Qualified Option is exercised in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price; provided, however, that if an optionee who is
subject to the provisions of Section 16(b) of the Securities Exchange Act of
1934 (an officer, director or 10% stockholder) exercises a Non-Qualified Option
within six months of the date of grant, the optionee will recognize ordinary
income on the date that is six months after the date of grant unless the
optionee makes an election under Section 83(b) of the Code to recognize income
at the time of the exercise. The Company generally will be entitled to a
deduction for federal income tax purposes in the year and in the same amount as
the optionee is considered to have recognized ordinary income in connection with
the exercise of a Non-Qualified Option if provision is made for withholding of
federal income taxes, where applicable.
An optionee will recognize gain or loss on the subsequent sale of shares
acquired upon exercise of a Non-Qualified Option in an amount equal to the
difference between the amount realized and the tax basis of such shares, which
will equal the option price paid plus the amount included in the employee's
income by reason of the exercise of the option. Provided such shares are held
as a capital asset, such gain or loss will be long-term or short-term capital
gain or loss depending upon whether the shares have been held for more than one
year.
The Company has the right to deduct any sums required by federal, state or
local tax laws to be withheld with respect to the exercise of any Non-Qualified
Option from sums owing to the person exercising the option or, in the
alternative, may require the person exercising the option to pay such sums to
the Company prior to or in connection with such exercise.
<PAGE>
Restricted Stock. A participant receiving restricted stock generally will
recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Code, to recognize ordinary income on the date of grant
equal to the excess of the fair market value of the shares (determined without
regard to the restrictions) over their purchase price. With respect to the sale
of shares after the forfeiture period has expired, the holding period to
determine whether the participant has long-term or short-term capital gain
generally begins when the restriction period expires, and the tax basis for such
shares will generally be based on the fair market value of such shares on such
date. However, if the participant makes an election under Section 83(b), the
holding period will commence on the date of grant, and the tax basis will be
equal to the fair market value of shares on such date (determined without regard
to restrictions). The Company generally will be entitled to a deduction equal
to the amount that is taxable as ordinary income to the participant in the year
that such income is taxable.
VOTE REQUIRED
Approval of the 1995 Plan requires the affirmative vote of the holders of at
least a majority of the outstanding shares of Common Stock present, or
represented, and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
1995 PLAN.
VII. INDEPENDENT PUBLIC ACCOUNTANTS
Corbin and Wertz has acted as the Company's independent public accountants
since the fiscal year ending May 31, 1993. The Company intends to engage their
services again to perform the 1996 audit. Corbin and Wertz has advised the
Company that they had no direct or indirect financial interest in the Company
and its subsidiaries. Corbin and Wertz has not indicated to the Company that it
is unwilling to serve again as the Company's independent public accountants.
In connection with its audits for the two most recent years ended May 31,
1995 and 1994 and the subsequent interim period through July 21, 1995, there
have been no disagreements with Corbin and Wertz on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement.
The Company expects that a representative of Corbin and Wertz will be present
at the Annual Meeting and that their representative will have the opportunity to
make a statement if he so desires and will also be available to answer
questions.
VIII. DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Any proposal relating to a proper subject which a stockholder may intend to
present for action at the 1996 Annual Meeting of Stockholders and which such
stockholder may wish to have included in the Company's proxy materials for such
meeting must, in accordance with the provisions of Rule 14a-8 promulgated under
the Securities Exchange Act of 1934, be received in proper form by the Company
at its principal executive office not later than May 25, 1996. It is suggested
that any such proposal be submitted by certified mail, return receipt requested.
<PAGE>
IX. OTHER BUSINESS
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as matters
of which management is not now aware may come before the meeting or any
adjournment thereof, the proxies confer discretionary authority with respect to
acting thereon, and the persons named in such proxies intend to vote, act, and
consent in accordance with their best judgment with respect thereto. Upon
receipt of such proxies (in the form enclosed and properly signed) in time for
voting, the shares represented thereby will be voted as indicated thereon and in
this Proxy Statement.
By Order of the Board of Directors,
JOSEPH H. IRANI,
President
Newport Beach, California
September 15, 1995
<PAGE>
APPENDIX 1
----------
REVOCABLE PROXY BIOMERICA, INC. ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 9, 1995
The undersigned stockholder(s) of Biomerica, Inc. (the "Company") hereby
nominates, constitutes and appoints Joseph H. Irani and James Cohen, and each of
them, the attorney, agent and proxy of the undersigned, with full power of
substitution, to vote all stock of Biomerica, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at the Company's offices at 1533 Monrovia Avenue, Newport Beach, California
92663 on November 9, 1995, at 10:30 a.m.., and any and all adjournments thereof,
with respect to the matter described in the accompanying Proxy Statement, and,
in their discretion, on such other matters which properly come before the
Meeting, as fully and with the same force and effect as the undersigned might or
could do if personally present thereat, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1.Election of Directors
VOTE FOR all nominees listed below (except as indicated to the contrary
---
below)
VOTE WITHHELD from all nominees
---
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Joseph H. Irani Dr. Philip B. Kaplan Dr. Robert A. Orlando
2.Approval of 1995 Stock Option and Restricted Stock Plan
[ ] FOR [ ] AGAINST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE. PLEASE SIGN AND DATE ON REVERSE SIDE.
<PAGE>
THE PROXY CONFERS AUTHORITY TO VOTE AND UNLESS SPECIFIED OTHERWISE SHALL
BE VOTED FOR PROPOSALS 1 AND 2 AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR
DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING.
Dated:
---------------------------
- ----------------------------
(Please Print Name)
- ----------------------------
(Signature of Stockholder)
- ----------------------------
(Please Print Name)
- ----------------------------
(Signature of Stockholder)
(Please date this Proxy and sign your name as it appears on your stock
certificates. Executors, administrators, trustees, etc., should give their full
titles. All joint owners should sign.)
I (We) do do not expect to attend the meeting.
------ -------
Number of persons
-----------------
<PAGE>
APPENDIX 2
----------
BIOMERICA, INC.
1995 STOCK OPTION AND RESTRICTED STOCK PLAN
1. Purpose.
-------
The purpose of the Biomerica, Inc. 1995 Stock Option and Restricted Stock
Plan (the "Plan") is to enable Biomerica, Inc. (the "Company") and its
Subsidiaries (as defined below) to attract and retain employees who contribute
to the Company's success by their ability, ingenuity and industry, and to enable
such employees to participate in the long-term success and growth of the Company
by giving them an equity interest in the Company. For purposes of the Plan,
"Subsidiary" shall have the meaning set forth in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Types of Awards.
---------------
Awards under the Plan may be in the form of (i) stock options ("Stock
Options") and/or (ii) restricted stock ("Restricted Stock").
3. Administration.
--------------
3.1. The Plan shall be administered by a Compensation Committee of the
Company's Board of Directors (the "Board") or such other committee of directors
as the Board shall designate, which shall consist of not less than two
disinterested persons (as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934 or any successor rule) who shall serve at the
pleasure of the Board; provided, however, that if there are not at least two
directors who are disinterested persons and willing to serve on the Compensation
Committee or such other committee designated by the Board, the Plan shall be
administered by the Board (such Compensation Committee, other committee, or the
Board being hereinafter referred to as the "Committee").
3.2. The Committee shall have the authority to grant awards to eligible
employees under the Plan; to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall deem advisable; to
interpret the terms and provisions of the Plan and any award granted under the
Plan; and to otherwise supervise the administration of the Plan. In particular,
and without limiting its authority and powers, the Committee shall have the
authority:
3.2.1. to determine whether and to what extent any award or combination
of awards will be granted hereunder;
3.2.2. to select the employees to whom awards will be granted;
3.2.3. to determine the number of shares of the common stock of the
company (the "Stock") to be covered by each award granted hereunder;
3.2.4. to determine the terms and conditions of any award granted
hereunder, including, but not limited to, any vesting or other restrictions
based on performance and such other factors as the Committee may determine, and
to determine whether the terms and conditions of the award are satisfied;
3.2.5. to determine the treatment of awards upon an employee's
retirement, disability, death, termination for cause or other termination of
employment;
3.2.6. to determine pursuant to a formula or otherwise the fair market
value of the Stock on a given date; provided, however, that if the Committee
fails to make such a determination, fair market value shall mean the closing
sale price (or closing bid quotation if there is no closing sale price reported)
of the Stock on a given date;
<PAGE>
3.2.7. to determine what portions of any dividends declared with
respect to the number of shares covered by a Restricted Stock award (i) will be
paid to the employee currently or (ii) will be deferred and deemed to be
reinvested or (iii) will otherwise be credited to the employee, or that the
employee has no rights with respect to such dividends;
3.2.8. to amend the terms of any award, prospectively or retroactively;
provided, however, that no amendment shall impair the rights of the award holder
without his or her consent; and
3.2.9. to substitute new Stock Options for previously granted Stock
Options, or for options granted under other plans, in each case including
previously granted options having higher option prices.
3.3. Any action of the Committee with respect to the administration of the
Plan shall be taken by majority vote or by written consent of a majority of its
members.
3.4. All determinations made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.
4. Stock Subject to Plan.
---------------------
4.1. The total number of shares of Stock reserved and available for
distribution under the Plan shall be 500,000, subject to the restriction in
Section 4.3 and the adjustment provisions in Section 10. Such shares may
consist of authorized but unissued shares or treasury shares.
4.2. To the extent an option terminates without having been exercised or
shares awarded are forfeited, the shares subject to such award shall again be
available for distribution in connection with future awards under the Plan.
4.3. At no time during the term of the Plan shall the total number of
shares of Stock subject to outstanding options under the Plan, any other stock
option plan or any stock purchase plan, stock bonus or similar plan of the
Company in the aggregate exceed 30% of the total number of shares of Stock of
the Company outstanding on the date of the award of any option under the Plan.
5. Eligibility.
-----------
Non-Qualified Options (as defined in Section 6) and Restricted Stock may be
granted to any person who is or has agreed to become an officer or other
employee, consultant, adviser, independent contractor or agent (each of which
relationships shall constitute a "Relationship") of the Company or a Subsidiary.
Incentive Stock Options (as defined in Section 6) may be granted to any officer
or other employee of the Company or a Subsidiary. The participants under the
Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible.
6. Stock Options.
-------------
6.1. The Stock Options awarded under the Plan may be of two types: (i)
Incentive Stock Options within the meaning of Section 422 of the Code or any
successor provision thereto; and (ii) Non-Qualified Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option.
6.2. Subject to the following provisions, Stock Options awarded under the
Plan shall be in such form and shall have such terms and conditions as the
Committee may determine:
6.2.1. Option Price. The option price per share of Stock purchasable
------------
under a Stock Option shall be determined by the Committee; provided, however,
that the option price shall not be less than 85% of the fair market value of the
Stock on the date of the award of the Stock Option.
6.2.2. Option Term. The term of each Stock Option shall be fixed by
-----------
the Committee, but shall not exceed 10 years from the date of award.
<PAGE>
6.2.3. Exercisability. Stock Options shall be exercisable at such time
--------------
or times and subject to such terms and conditions as shall be determined by the
Committee, provided that each grant of Stock Options shall vest at a rate of not
less than 20% per year and, as a result, be exercisable in full five years after
the date such Stock Options are granted. If the Committee provides that any
Stock Option is exercisable only in installments, the Committee may waive such
installment exercise provisions at any time in whole or in part.
6.2.4. Method of Exercise. Stock Options may be exercised in whole or
------------------
in part at any time during the option period by giving written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment of the purchase price. Payment of the purchase price
shall be made in such manner as the Committee may provide in the award, which
may include cash (including cash equivalents), delivery of shares of Stock
already owned by the optionee or subject to awards hereunder, any other manner
permitted by law determined by the Committee, or any combination of the
foregoing. The Committee may provide that all or part of the shares received
upon the exercise of a Stock Option which are paid for using Restricted Stock
shall be restricted in accordance with the original terms of the award in
question.
6.2.5. No Stockholder Rights. An optionee shall have neither rights to
---------------------
dividends nor other rights of a stockholder with respect to shares subject to a
Stock Option until the optionee has given written notice of exercise and has
paid for such shares.
6.2.6. Non-transferability. No Stock Option shall be transferable by
-------------------
the optionee other than by will or by the laws of descent and distribution.
During the optionee's lifetime, all Stock Options shall be exercisable only by
the optionee.
6.2.7. Termination of Employment. Upon the termination of an
-------------------------
optionee's Relationship with the Company or a Subsidiary by reason other than
death or disability, any options granted to him shall terminate 30 days from the
date on which such Relationship terminates unless such optionee has resumed or
initiated a Relationship and has a Relationship on such date. During such 30-
day period, the optionee may exercise any option granted to him to the extent
such option was exercisable on the date of termination of his Relationship and
provided that such option has not expired or otherwise terminated. Except as
the Committee may expressly determine otherwise, upon the termination of an
optionee's Relationship by reason of death or disability, any option granted to
him shall terminate six months after the date of termination of the
Relationship unless by its terms the option shall expire before such date, and
shall only be exercisable to the extent exercisable on the date of termination
of the Relationship. In the case of termination of the Relationship by reason
of death, the option may be exercised by the person to whom the optionee's
rights under the option shall pass by will or by the laws of descent and
distribution.
6.3. Notwithstanding the provisions of Section 6.2, (A) no Incentive Stock
Option shall (i) have an option price which is less than 100% of the fair market
value of the Stock on the date of the award of the Stock Option; provided,
however, that if at the time an Incentive Stock Option is awarded the optionee
owns or would be considered to own by reason of Section 424(d) of the Code more
than 10% of the total combined voting power of all classes of stock of the
Company or a Subsidiary, the purchase price of the shares covered by such
Incentive Stock Option shall not be less than 110% of the fair market value of
the Stock on the date of the award of the Incentive Stock Option, (ii) be
exercisable more than five years after the date such Incentive Stock Option is
awarded if awarded to an optionee who owns or would be considered to own by
reason of Section 424(d) of the Code more than 10% of the total combined voting
power of all classes of stock of the Company or a Subsidiary or (iii) be awarded
more than 10 years after the effective date of the Plan, and (B) in no event
shall the aggregate fair market value (determined as of the time the Stock
Option is awarded) of the Stock with respect to which Incentive Stock Options
(granted under the Plan or any other plans of the Company or a Subsidiary) are
exercisable for the first time by an optionee in any calendar year exceed
$100,000.
7 Restricted Stock.
----------------
Subject to the following provisions, all awards of Restricted Stock shall be
in such form and shall have such terms and conditions as the Committee may
determine:
<PAGE>
7.1. The Restricted Stock award shall specify the number of shares of
restricted Stock to be awarded, the price, if any, to be paid by the recipient
of the Restricted Stock and the date or dates on which, or the conditions upon
the satisfaction of which, the Restricted Stock will vest. The vesting of
Restricted Stock may be conditioned upon one or more of the completion of a
specified period of service with the Company or a Subsidiary, upon the
attainment of specified performance goals or upon such other criteria as the
Committee may determine.
7.2. Stock certificates representing the Restricted Stock awarded to an
employee shall be registered in the employee's name, but the Committee may
direct that such certificates be held by the Company on behalf of the employee.
Except as may be permitted by the Committee, no shares of Restricted Stock may
be sold, transferred, assigned, pledged or otherwise encumbered by the employee
until such share has vested in accordance with the terms of the Restricted Stock
award. At the time Restricted Stock vests, a certificate for such vested shares
shall be delivered to the employee (or his or her designated beneficiary in the
event of death), free of all restrictions.
7.3. The Committee may provide that the employee shall have the right to
vote or receive dividends on Restricted Stock. The Committee may provide that
Stock received as a dividend on, or in connection with a stock split of,
Restricted Stock shall be subject to the same restrictions as the Restricted
Stock.
7.4. Except as may be provided by the Committee, in the event of any
employee's termination of employment before all of his or her Restricted Stock
has vested, or in the event any conditions to the vesting of Restricted Stock
have not been satisfied prior to any deadline for the satisfaction of such
conditions set forth in the award, the shares of Restricted Stock which have not
vested shall be forfeited, and the Committee may provide that (i) any purchase
price paid by the employee shall be returned to the employee or (ii) a cash
payment equal to the Restricted Stock's fair market value on the date of
forfeiture, if lower, shall be paid to the employee.
7.5. The Committee may waive, in whole or in part, any or all of the
conditions to receipt of, or restrictions with respect to, any or all of the
employee's Restricted Stock.
8. Tax Withholding.
---------------
8.1. Each employee shall, no later than the date as of which the value of
an award first becomes includible in the employee's gross income for applicable
tax purposes, pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state, local or other taxes of any
kind required by law to be withheld with respect to the award. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company (and, where applicable, any Subsidiary), shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the employee.
8.2. To the extent permitted by the Committee, and subject to such terms
and conditions as the Committee may provide, an employee may irrevocably elect
to have the withholding tax obligation, or any additional tax obligation with
respect to any awards hereunder, satisfied by (i) having the Company withhold
shares of Stock otherwise deliverable to the employee with respect to the award
or (ii) delivering to the Company shares of unrestricted Stock.
9. Amendments and Termination.
--------------------------
The Board may discontinue the Plan at any time and may amend it from time to
time. No amendment or discontinuation of the Plan shall adversely affect any
award previously granted without the employee's written consent. Amendments may
be made without stockholder approval except amendments which would (i)
materially increase the benefits accruing to participants under the Plan, (ii)
increase the number of shares of Stock which may be issued under the Plan,
except as permitted under the provisions of Section 10, or (iii) materially
modify the requirements as to eligibility for participation in the Plan;
provided, however, that the Board may amend the Plan without stockholder
approval as may be required to comply with state securities laws.
<PAGE>
10. Adjustment.
----------
10.1. If the number of outstanding shares of Stock is increased or
decreased, or if such shares are exchanged for a different number or kind of
shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock dividend, stock split, combination of
shares or other similar transaction, the aggregate number of shares of Stock
subject to the Plan as provided in Section 4 hereof and the shares of Stock
subject to issued and outstanding options under the Plan shall be appropriately
and proportionately adjusted by the Committee. Any such adjustment in the
outstanding options shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the option but with an appropriate
adjustment in the price for each share or other unit of any security covered by
the option.
10.2. Notwithstanding the provisions of Section 10.1, upon the dissolution
or liquidation of the Company or upon any reorganization, merger or
consolidation with one or more corporations as a result of which the Company is
not the surviving corporation, or upon a sale of all or substantially all of the
assets of the Company to another corporation or entity, the Plan and each
outstanding option shall terminate.
10.3. Adjustments under this Section 10 shall be made by the Committee,
whose determination as to which adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under the Plan or in connection with any such adjustment.
11. Information.
-----------
The Company will provide promptly to each optionee during the period in
which any of his options are outstanding copies of all financial and other
reports provided to shareholders of the Company generally.
12. General Provisions.
------------------
12.1. Each award under the Plan shall be subject to the requirement that,
if at any time the Committee shall determine that (i) the listing, registration
or qualification of the Stock subject or related thereto upon any securities or
exchange or under any state or federal law, or (ii) the consent or approval of
any government regulatory body or (iii) an agreement by the recipient of an
award with respect to the disposition of Stock is necessary or desirable (in
connection with any requirement or interpretation of any federal or state
securities law, rule or regulation) as a condition of, or in connection with,
the granting of such award or the issuance, purchase or delivery of Stock
thereunder, such award shall not be granted or exercised, in whole or in part,
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
12.2. Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements. Neither the adoption of the Plan
nor any award hereunder shall confer upon any employee of the Company, or of a
Subsidiary, any right to continued employment.
12.3. Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of awards need not be uniform, and may be made
selectively among persons who receive or are eligible to receive awards under
the Plan, whether or not such persons are similarly situated.
12.4. No member of the Board or the Committee, nor any officer or employee
of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or the Committee and all
officers or employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
13. Effective Date and Term of Plan.
-------------------------------
The Plan shall become effective upon approval by the Company's Stockholders
