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 / / Confidential, for use of the
/X/ Definitive proxy statement Commission Only (as permitted
/ / Definitive additional materials by Rule 14a-6(e)(2)).
/ / 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-
11.
(1) Title of each class of securities to which transaction applies:
(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:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1)Amount previously paid:
(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 10, 1997
-------------------------
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 10, 1997, at 11:00 A.M. for the following purposes:
1. To elect a Board of four Directors;
2. To consider and act upon a proposal to ratify and approve the amendment
to 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 25, 1997, 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,
ZACKARY S. IRANI,
President
Newport Beach, California
October 1, 1997
<PAGE>
PROXY STATEMENT
BIOMERICA, INC.
1533 MONROVIA AVENUE
NEWPORT BEACH, CALIFORNIA 92663
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOVEMBER 10, 1997
------------------------------
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 1997 Annual Meeting of Stockholders to be held on November 10, 1997,
at the offices of the Company, 1533 Monrovia Avenue, Newport Beach, California
92663 at 11:00 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, 1997, will be mailed on
or about October 2, 1997 to each stockholder of record as of the close of
business on September 25, 1997.
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 four persons nominated to be
directors in proposal 1. If a proxy or ballot indicates that a stockholder or
nominee abstains from voting or that shares are not to 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.
Shareholders may have cumulative voting rights with respect to the election
of the four directors. No shareholder may cumulate votes unless a shareholder
has announced at the Annual Meeting his intention to do so. If any shareholder
makes such an announcement, all shareholders may cumulate votes. Cumulative
voting rights entitle a shareholder to give one nominee as many votes as are
equal to the number (four) of Directors to be elected, multiplied by the number
of shares owned by the shareholder, or to distribute such votes among two or
more nominees on the same principle, up to the total number of nominees to be
elected.
<PAGE>
II. VOTING SECURITIES
The Company had 3,893,302 shares of Common Stock, par value $.08 per share
(the "Common Stock"), outstanding as of September 4, 1997. Holders of record of
shares of the Common Stock at the close of business on September 30, 1997 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 25, 1997, 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 directors, and (iii) all executive officers and directors of the
Company as a group:
NUMBER OF
SHARES PERCENT
NAME (AND ADDRESS) OF BENEFICIALLY OF
BENEFICIAL OWNER (1) OWNED (2) CLASS
---------------------- --------- -----
Dr. Philip Kaplan 4,250 .1
Dr. Robert A. Orlando 19,000(3) .5
Zackary Irani 19,500(4) .4
Janet Moore 665,195(5) 16.6
All executive officers and directors
as a group (four persons) 707,945(6) 17.6
- ----------------
(1) Mr. Irani's address is 1533 Monrovia Ave., Newport Beach, CA 92663; Dr.
Orlando's address is 947 West 30th St., Los Angeles, CA 92034; Janet Moore's
address is 1533 Monrovia Ave., Newport Beach, CA 92663; Dr. Kaplan's address is
17822 Beach Blvd., Huntington Beach, CA 92647.
(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 5,000 shares of common stock which may be purchased by Dr. Orlando
pursuant to a currently exercisable stock option.
(4) Includes 17,500 shares of common stock which may be purchased by Mr. Irani
pursuant to currently exercisable options.
(5) Includes 7,500 shares of common stock which may be purchased by Ms. Moore
pursuant to a currently exercisably option and 8,250 shares owned by Ms. Moore's
sons. Also includes 549,410 shares of stock in the Estate of Mr. Joseph Irani
of which Janet Moore is the executor and 85,000 of common stock which may be
purchased by the estate pursuant to a currently exercisable option, which
expires on October 28, 1997.
(6) The denominator used in Percent of Class is 4,005,802, which consists of
3,893,302 issued and outstanding shares of common stock, and 112,500 shares of
common stock which may be purchased under currently exercisable options.
III. ELECTION OF DIRECTORS
The persons named below have been nominated by management for election as
directors of the Company to serve until the 1998 Annual Meeting of Stockholders
or until their respective successors are duly elected and qualify. Drs. Orlando
and Kaplan were elected at the 1996 Annual Meeting of Shareholders. Mr. Irani
and Ms. Moore were appointed as directors by the Board on April 29, 1997.
<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
--------------- --- ----- -------------------------
Zackary S. Irani 31 1997 President, Chief Executive
Officer, Treasurer & Director
Dr. Philip B. Kaplan 65 1971 Director
Dr. Robert A. Orlando 58 1986 Director
Janet Moore 46 1997 Secretary, Controller and Director
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.
Zackary Irani has most recently served as Vice President of Business
Development of Biomerica. He has been an employee of the Company since 1986.
Janet Moore is the Secretary and Controller of Biomerica. She has been an
employee of the Company since 1976.
There is no family relationship between any of the Company's directors and
officers. 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, 1997, the Board of Directors held 4 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. The Company does not have an audit
or nominating committee.
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 ($) SATION(2) AWARDS ($) SARS ($) ($) SATION
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph Irani, (1) 1997 $53,423 0 $21,024 0 0 0 0
Chairman of
Board, Chief 1996 60,925 0 65,080 0 0 0 0
Executive Officer
and Treasurer 1995 60,925 0 54,540 (2) 0 85,000 (3) 0 0
Zackary Irani (4) 1997 4,000 0 0 0 30,000 (4) 0 0
Chief Executive
Officer
<FN>
(1) Includes wages paid or accrued to Mr. Irani through April 28, 1997.
(2) Represents accrued wages payable pursuant to Mr. Irani's employment agreement but not paid in order to conserve capital.
(3) Mr. J. 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. He received an additional option for 25,000 shares at $.80 per share in fiscal 1995.
(4) Only includes wages paid to Mr. Z. Irani since he was Company Chief Executive Officer. Mr. Z. Irani received a stock option on
April 29, 1997, for 30,000 shares.
</TABLE>
The amounts described above do not include other compensation and benefits
provided to Mr. Z. Irani or Mr. J. Irani during the year ended May 31, 1997 that
in the aggregate did not exceed the lesser of $50,000 or 10% of the executive's
annual salary and bonus.
COMPENSATION OF DIRECTORS
Directors receive no payment for their services as directors, although the
Company's By-Laws permit such payment. 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 had an employment agreement which would have expired in May
1998. Due to his death, the agreement has terminated with no further liability
to the Company.
STOCK OPTIONS
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 4,
1997, options to purchase 100,350 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. Under the 1995 Stock Option and Restricted Stock Plan
(the `1995 Plan''), which expires November 9, 2005, and is a plan similar in
format to the 1991 Plan, 500,000 shares may be authorized for grant or issuance.
As of September 4, 1997, options to purchase 167,250 shares of Common Stock were
outstanding under the 1995 Plan at exercise prices ranging from $1.90 to $3.00
per share with an average exercise price of $2.07 per share. During the year
<PAGE>
ended May 31, 1997, Dr. Philip Kaplan exercised a stock option to purchase 3,000
shares of Common Stock. Prior to becoming a board member, Zackary Irani
exercised an option for 10,000 shares.
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 1997 and
unexercised options held as of the end of the fiscal year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
VALUE OF
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
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Estate of None None 85,000 None $199,938 None
Joseph H. Irani
Zackary Irani 10,000 $57,000 17,500 32,500 $27,881 $46,894
<FN>
(1) Based on closing price for the last business day of the fiscal year.
</TABLE>
SECTION 16(A) - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than 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, 1997,
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 15,500 square feet of office and laboratory space located
at 1531-1533 Monrovia Avenue, Newport Beach, California, pursuant to a written
lease agreement with the estate of 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, 1997, the Company paid $128,640 in rent under the terms of
the lease. An additional $4,000 of rent has been accrued for additional space
the Company is utilizing. This will accrue at the rate of $2,000 per month.
This amount constitutes all that is due per agreement with the landlord.
In the opinion of the disinterested 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 THE AMENDMENT TO THE 1995
STOCK OPTION AND RESTRICTED STOCK PLAN
The Board of Directors of the Company recommends that the shareholders adopt
the following amendment to the 1995 Stock Option and Restricted Stock Plan to
provide for administration of the Plan under the terms of the new Rule 16b-3
under the Securities Exchange Act of 1934 (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 A to this Proxy Statement.
SHARES
There are 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 the Company's Board of Directors or, to
the extent provided by the Board, a committee ("Committee") appointed by the
Board. Members of the Committee shall serve for such term as the Board may
determine. If applicable, the composition of the Committee may comply with the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act of
1934. 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 Board or the Committee, in its sole discretion, from
among those eligible.
Notwithstanding the foregoing, no participant 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 Board or the Committee will have the authority to grant stock options and
restricted stock under the 1995 Plan.
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 Board or 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
participant owns, or would be
<PAGE>
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 Board or
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 Board or the Committee. A
participant 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 a participant 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 Board or 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 a participant'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 participant has resumed or initiated a Relationship and has a Relationship
on such date. During such 30-day period, the participant 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 Board or the Committee may expressly
determine otherwise, upon the termination of a participant'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 participant'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 participant at the time an option is granted to
such participant.
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 Board or 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 Board or 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 Board
or the Committee. The certificate evidencing the restricted stock will be
registered in the recipient's name, although the Board or 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 Board or 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 Board or the 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 Board or 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 Board or the Committee.
TERM
The 1995 Plan will expire by its terms on November 9, 2005.
<PAGE>
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 Board or 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 participant 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.
No income is recognized by a participant at the time an Incentive Option
is granted, and no income is recognized by a participant 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 participant 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 participant 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 participant 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
<PAGE>
transfer, the participant 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 participant'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 a participant, the Company generally will
be entitled to a deduction to the extent that the participant recognizes
ordinary income.
Non-Qualified Options. A participant recognizes no income at the time a Non-
Qualified Option is granted under the 1995 Plan. A participant 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 a participant
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 participant will recognize
ordinary income on the date that is six months after the date of grant unless
the participant 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 participant 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.
A participant 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.
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 amendment to 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 AMENDMENT TO THE 1995 PLAN.
<PAGE>
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 1998 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,
1997 and 1996 and the subsequent interim period through July 22, 1997, 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 1998 ANNUAL MEETING
Any proposal relating to a proper subject which a stockholder may intend to
present for action at the 1998 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 July 15, 1998. It is suggested
that any such proposal be submitted by certified mail, return receipt requested.
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,
ZACKARY S. IRANI,
President
Newport Beach, California
October 1, 1997
<PAGE>
APPENDIX 1
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REVOCABLE PROXY BIOMERICA, INC. ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 10, 1997
The undersigned stockholder(s) of Biomerica, Inc. (the "Company") hereby
nominates, constitutes and appoints Zackary S. Irani and Janet Moore, 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 10, 1997, at 11:00 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.)
Zackary S. Irani Dr. Philip B. Kaplan Dr. Robert A. Orlando Janet Moore
2. VOTE FOR approval of amendment to the 1995 Stock Option and Restricted
---
Stock Plan to provide for administration of the Plan under the terms
of the new Rule 16b-3 under the Securities Exchange Act of 1934.
VOTE AGAINST approval of amendment to the 1995 Stock Option and
---
Restricted Stock Plan.
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 A
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BIOMERICA, INC.
1995 STOCK OPTION AND RESTRICTED STOCK PLAN
(AMENDED SEPTEMBER 29, 1997)
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.
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 the Company's Board of Directors
("Board") or, to the extent provided by the Board, a committee ("Committee")
appointed by the Board. Members of the Committee shall serve for such term as
the Board may determine. If applicable, the composition of the Committee may
comply with the requirements of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934.
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;
<PAGE>
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;
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.
<PAGE>
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.
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.
<PAGE>
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:
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.
<PAGE>
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.
<PAGE>
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.
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
<PAGE>
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.
