As filed with the Securities and Exchange Commission on October 24, 1996
Registration No. 33-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
MICROFRAME, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 22-2413505
------------------------------ -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
21 Meridian Road, Edison, New Jersey 08820
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
1994 STOCK OPTION PLAN
----------------------
(Full Title of the Plan)
Stephen B. Gray
President and Chief Operating Officer
MicroFrame, Inc.
21 Meridian Road, Edison, New Jersey 08820
------------------------------------------
(Name and Address of Agent for Service)
(908) 494-4440
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
With a copy to:
James Alterbaum, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(4) Per Share(1) Price(1) Fee
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Common Stock, 10,000 shares $1.78(2) $ 17,800(2) $ 5.39
$.001 par value 23,196 shares $1.94(2) $ 45,000(2) $ 13.64
40,000 shares $1.50(2) $ 60,000(2) $ 18.18
455,088 shares $1.31(2) $ 596,165(2) $ 180.66
471,716 shares $1.56(3) $ 735,877(3) $ 222.99
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Total 1,000,000 shares $1,454,842 $ 440.86
================================================================================
(1) Estimated solely for purposes of calculating the registration fee.
(2) Based, pursuant to Rule 457(h), on the exercise price of the related
option.
(3) Based, pursuant to Rule 457(c), on $1.56 per share, which was the average
of the high and low selling prices of the Registrant's Common Stock on the
Nasdaq Small Cap Market on October 18, 1996.
(4) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this
Registration Statement also covers an indeterminate number of additional
shares which may become issuable by operation of the antidilution
provisions of the Plan.
<PAGE>
PART I
INFORMATION NOT REQUIRED
IN THE REGISTRATION STATEMENT
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The contents of the Registration Statement of MicroFrame, Inc. on
Form S-8, File No. 33-61837 filed with the Securities and Exchange Commission on
August 15, 1995 and hereby incorporated by the reference with the exception of
Exhibits 5.1, 23.1, 23.2, 23.3 and 99.1 which are provided herewith.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8 and has duly caused this Form S-8
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Edison, New Jersey on the 23rd day of October 1996.
MICROFRAME, INC.
By: /s/ Stephen B. Gray
--------------------------
Stephen B. Gray, President and
Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this Form
S-8 registration statement has been signed by the following persons in the
capacities and on the dates indicated. By so signing, each of the undersigned,
in his or her capacity as a director or officer, or both, as the case may be,
the registrant does hereby appoint Stephen M. Deixler and Stephen B. Gray, and
each of them severally, his or her true and lawful attorneys or attorney to
execute in his or her name, place and stead, in his or her capacity as a
director or officer or both, as the case may be, of the registrant, any and all
amendments to said registration statement and all instruments necessary or
incidental in connection therewith, and to file the same with the Securities and
Exchange Commission. Each of said attorneys shall have full power and authority
to do and perform in the name and on behalf of each of the undersigned, in any
and all capacities, every act whatsoever requisite or necessary to be done in
the premises as fully and to all intents and purposes as each of the undersigned
might or could do in person, hereby ratifying and approving the acts of said
attorneys and each of them.
Signature Title Date
- --------- ----- ----
/s/ Stephen B. Gray President and Chief October 23,1996
- -------------------------- Operating Officer, Director
Stephen B. Gray (Principal Executive
Officer)
/s/ Mark A. Simmons Vice President - October 23, 1996
- -------------------------- Operations, Chief Financial
Mark A. Simmons Officer (Principal Financial
Officer and Principal Accounting
Officer)
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<PAGE>
/s/ Stephen M. Deixler Chairman of the Board of October 23, 1996
- -------------------------- Directors, Chief Executive
Stephen M. Deixler Officer, Treasurer
/s/ Michael Radomsky Executive Vice President, October 23, 1996
- -------------------------- Secretary and Director
Michael Radomsky
/s/ William H. Whitney Vice President of Research October 23, 1996
- -------------------------- & Development-Chief
William H. Whitney Technology Officer, Assistant
Secretary, Director
/s/ Stephen P. Roma Director October 23, 1996
- --------------------------
Stephen P. Roma
/s/ David I. Gould Director October 23, 1996
- --------------------------
David I. Gould
By: /s/ Stephen B. Gray
- --------------------------
* Stephen B. Gray
Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Page No.
4.1(a) Certificate of Incorporation of the Company, as amended, filed
June 3, 1982 (Incorporated by reference to Exhibit 3.2 to the
Company's Form 10-K for the fiscal year ended March 31, 1992).
4.1(b) Amendment to Certificate of Incorporation filed October 14, 1992
(Incorporated by reference to Exhibit 3.3 of the Form 10- KSB for
the fiscal year ended March 31, 1993).
4.1(c) Amendment to Certificate of Incorporation filed October 20, 1993
(Incorporated by reference to Exhibit 3.4 of Amendment No. 1 to
the Company's Registration Statement on Form SB-2 (No. 33-66688)
dated October 26, 1993).
4.2(a) By-Laws of the Company (Incorporated by reference to Exhibit 3.2
of Amendment 1 to the Company's Registration Statement on Form
SB-2 (No. 33-66688) dated October 26, 1993).
4.2(b) Amendment No. 2 of the Company's By-Laws (Incorporated by
reference to Exhibit 3.3 to the Form 10-KSB for the fiscal year
ended March 31, 1996).
*5.1 Opinion and consent of Parker Chapin Flattau & Klimpl, LLP,
counsel to the Company, as to the legality of the Common Stock
being registered.
*23.1 Consent of Coopers & Lybrand L.L.P., independent public
accountants of the Company.
*23.2 Consent of Price Waterhouse LLP, former independent public
accountants of the Company.
*23.3 Consent of Parker Chapin Flattau & Klimpl, LLP (contained in
Exhibit 5.1).
*24.1 Power of Attorney (contained in Signature Page). 4 *99.1 1994
Stock Option Plan of the Company, as amended and restated.
- -------------------------------
* Filed herewith.
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[PARKER CHAPIN FLATTAU & KLIMPL, LLP]
LETTERHEAD
October 23, 1996
MicroFrame, Inc.
21 Meridian Road
Edison, New Jersey 08820
Gentlemen:
We have acted as counsel to MicroFrame, Inc., a New Jersey
corporation (the "Company"), in connection with a registration statement on Form
S-8 (the "Registration Statement") being filed with the Securities and Exchange
Commission under the Securities Act of 1933 relating to the offering of
1,000,000 shares (the "Option Shares") of the Company's common stock, par value
$.001 per share, to certain employees, directors and consultants of the Company,
issuable upon exercise of options that either have been or may from time to time
be granted by the Company under its 1994 Stock Option Plan, as amended on July
17, 1995, and as further amended on August 16, 1996 (the "1994 Plan").
In connection with the foregoing, we have examined originals or
copies, satisfactory to us, of all such corporate records and of all such
agreements, certificates and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with the original
documents of all documents submitted to us as copies or facsimiles. As to any
facts material to such opinion, we have, to the extent that relevant facts were
not independently established by us, relied on certificates of public offi cials
and certificates of officers or other representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that
the Option Shares, when issued and paid for in accordance with the 1994 Plan and
the applicable options granted thereunder, will be legally issued, fully paid
and non-assessable.
<PAGE>
We hereby consent to filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Parker Chapin Flattau & Klimpl, LLP
PARKER CHAPIN FLATTAU & KLIMPL, LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated June 21, 1996 appearing on page F1 of
MicroFrame, Inc.'s Annual Report on Form 10-KSB for the year ended March 31,
1996.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
October 21, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated May 19, 1995 appearing on page F-1.1
of MicroFrame, Inc.'s Annual Report on Form 10-KSB for the year ended March 31,
1996.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
New York, New York
October 21, 1996
1994 STOCK OPTION PLAN
of
MICROFRAME, INC.
(as amended on August 16, 1996)
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan")
is designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of MicroFrame, Inc., a New Jersey corporation (the "Company"), and its
present and future subsidiary corporations, as defined in Paragraph 19
("Subsidiaries"), and to offer an additional inducement in obtaining the
services of such individuals. The Plan provides for the grant of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("NQSOs"), but the Company makes no warranty as to the qualification of any
option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Paragraph 12, the aggregate number of shares of Common Stock, $.001 par value
per share, of the Company ("Common Stock") for which options may be granted
under the Plan shall not exceed 1,250,000. Such shares of Common Stock may, in
the discretion of the Board of Directors of the Company (the "Board of
Directors"), consist either in whole or in part of authorized but unissued
shares of Common Stock or shares of Common Stock held in the treasury of the
Company. The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of the Plan. Subject to the provisions of Paragraph 13,
any shares of Common Stock subject to an option which for any reason expires, is
cancelled or is terminated unexercised or which ceases for any reason to be
exercisable shall again become available for the granting of options under the
Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by a committee of the Board of Directors (the "Committee") consisting of not
less than two directors, each of whom shall be a "non-employee director" within
the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all members without a meeting,
shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall
have the authority, in its sole discretion, with respect to Employee Options and
Consultant Options (each
<PAGE>
as defined in Paragraph 19): to determine the key employees who shall receive
Employee Options and the consultants who shall receive Consultant Options; the
times when they shall receive options; whether an Employee Option shall be an
ISO or a NQSO; the number of shares of Common Stock to be subject to each
option; the term of each option; the date each option shall become exercisable;
whether an option shall be exercisable in whole, in part or in installments,
and, if in installments, the number of shares of Common Stock to be subject to
each installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any installment; whether shares of Common
Stock may be issued upon the exercise of an option as partly paid, and, if so,
the dates when future installments of the exercise price shall become due and
the amounts of such installments; the exercise price of each option; the form of
payment of the exercise price; whether to restrict the sale or other disposition
of the shares of Common Stock acquired upon the exercise of an option and to
waive any such restriction; whether to subject the exercise of all or any
portion of an option to the fulfillment of contingencies as specified in the
contract referred to in Paragraph 11 (the "Contract"), including without
limitation, contingencies relating to entering into a covenant not to compete
with the Company and its Parent (as defined in Paragraph 19) and Subsidiaries,
to financial objectives for the Company, a Subsidiary, a division, a product
line or other category, and/or the period of continued relationship of the
optionee with the Company or its Subsidiaries, and to determine whether such
contingencies have been met; and with respect to Employee Options, Consultant
Options and Non-Employee Director Options (as defined in Paragraph 19): to
determine the amount, if any, necessary to satisfy the Company's obligation to
withhold taxes or other amounts; the fair market value of a share of Common
Stock; to construe the respective Contracts and the Plan; with the consent of
the optionee, to cancel or modify an option, provided such option as modified
would be permitted to be granted on such date under the terms of the Plan; to
approve any provision of the Plan or any option granted under the Plan, or any
amendment to either, which under Rule 16b-3 requires the approval of the Board
of Directors, a committee of non-employee directors or the shareholders to be
exempt (unless otherwise specifically provided herein; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make all other
determinations necessary or advisable for administering the Plan. The
determinations of the Committee on the matters referred to in this Paragraph 3
shall be conclusive.
No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan or any option hereunder. In addition, the Company shall indemnify and hold
each member and former member of the Committee harmless from and against any
liability, claim for damages and expenses in connection therewith by reason of
any action, failure to act or determination made in good faith under or in
connection with the Plan or any option hereunder to the fullest extent permitted
with respect to directors under the Company's certificate of incorporation,
by-laws or applicable law.
4. ELIGIBILITY; GRANTS. The Committee may from time to time,
consistent with the purposes of the Plan, grant Employee Options to key
employees (including
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<PAGE>
officers and directors who are key employees), and Consultant Options to
consultants, of the Company or any of its Subsidiaries. Such options granted
shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that the maximum number of shares subject to
Employee Options that may be granted to any individual during any calendar year
under the Plan (the "162(m) Maximum") shall be 75,000 shares; and further
provided that the aggregate market value (determined at the time the option is
granted) of the shares of Common Stock for which any eligible employee may be
granted ISOs under the Plan or any other plan of the Company, or of a Parent or
a Subsidiary of the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. The $100,000 ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option (or the portion thereof) granted in excess of such
amount shall be treated as a NQSO.
Immediately following each annual meeting of shareholders of the
Company at which directors are elected (each an "Annual Meeting") during the
term of the Plan, every individual who is a Non-Employee Director (as defined in
Paragraph 19) at such time, whether or not elected at such meeting, shall be
granted a Non-Employee Director Option to purchase 10,000 shares of Common
Stock. In addition, on the day an individual first becomes a Non-Employee
Director if other than at an Annual Meeting, such Non-Employee Director shall be
granted an option to purchase a number of shares of Common Stock equal to 2,500
multiplied by the number of full three-month periods remaining until the first
anniversary of the immediately preceding Annual Meeting. Each Non-Employee
Director Option shall become exercisable as to 2,500 shares of Common Stock upon
each three-month anniversary of the date of grant, provided that the holder
continues to serve as a Non-Employee Director on such date; and further
provided, that if the next Annual Meeting is held on or before the first
anniversary of the immediately preceding Annual Meeting, the last 2,500 shares
of Common Stock under such Non-Employee Director Option shall become exercisable
on the day preceding the next Annual Meeting (if he continues to be a
Non-Employee Director on such date). In the event the remaining shares available
for grant under the Plan are not sufficient to grant the Non-Employee Director
Options to each such Non-Employee Director on any date, the number of shares
subject to the Non-Employee Director Options to be granted on such date shall be
reduced proportionately. The Committee shall not have any discretion with
respect to the selection of directors to receive Non-Employee Director Options
or the amount, the price or the timing with respect thereto.
5. EXERCISE PRICE. The exercise price of the shares of Common
Stock under each Employee Option and Consultant Option shall be determined by
the Committee; provided, however, that the exercise price of an ISO shall not be
less than the fair market value of the Common Stock subject to such option on
the date of grant; and further provided, that if, at the time an ISO is granted,
the optionee owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the exercise
price of such ISO shall not be less than 110% of the fair market value of the
Common Stock subject to such ISO on the date
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<PAGE>
of grant. The exercise price of the shares of Common Stock under each
Non-Employee Director Option shall be equal to the fair market value of the
Common Stock subject to such option on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of Common
Stock on such day as reported by such exchange or on a composite tape reflecting
transactions on such exchange, (b) if the principal market for the Common Stock
is not a national securities exchange and the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System
("NASDAQ"), and (i) if actual sales price information is available with respect
to the Common Stock, the average of the highest and lowest sales prices per
share of Common Stock on such day on NASDAQ, or (ii) if such information is not
available, the average of the highest bid and lowest asked prices per share of
Common Stock on such day on NASDAQ, or (c) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is not
quoted on NASDAQ, the average of the highest bid and lowest asked prices per
share of Common Stock on such day as reported on the NASDAQ OTC Bulletin Board
Service or by National Quotation Bureau, Incorporated or a comparable service;
provided, however, that if clauses (a), (b) and (c) of this Paragraph are all
inapplicable, or if no trades have been made or no quotes are available for such
day, the fair market value of the Common Stock shall be determined by the Board
by any method consistent with applicable regulations adopted by the Treasury
Department relating to stock options.
6. TERM. The term of each Employee Option and Consultant
Option granted pursuant to the Plan shall be such term as is established by the
Committee, in its sole discretion, at or before the time such option is granted;
provided, however, that the term of each ISO granted pursuant to the Plan shall
be for a period not exceeding 10 years from the date of grant thereof; and
further, provided, that if, at the time an ISO is granted, the optionee owns (or
is deemed to own under Section 424(d) of the Code) stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
of any of its Subsidiaries or of a Parent, the term of the ISO shall be for a
period not exceeding five years from the date of grant. Employee Options and
Consultant Options shall be subject to earlier termination as hereinafter
provided. Subject to earlier termination as hereinafter provided, each
Non-Employee Director Option shall have a term of five years commencing on the
date of grant.
7. EXERCISE. An option (or any part or installment thereof),
to the extent then exercisable, shall be exercised by giving written notice to
the Company at its principal office stating which option is being exercised,
specifying the number of shares of Common Stock as to which such option is being
exercised and accompanied by payment in full of the aggregate exercise price
therefor (or the amount due on exercise if the Contract with respect to an
Employee Option permits installment payments) (a) in cash or by certified check
or (b) in the case of an Employee Option or a Consultant Option, if the
applicable Contract permits, with previously
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<PAGE>
acquired shares of Common Stock having an aggregate fair market value, on the
date of exercise, equal to the aggregate exercise price of all options being
exercised, or with any combination of cash, certified check or shares of Common
Stock. In such case, the fair market value of the Common Stock shall be
determined in accordance with Paragraph 5.
The Committee may, in its discretion, permit payment of the exercise
price of an option by delivery by the optionee of a properly executed notice,
together with a copy of his irrevocable instructions to a broker acceptable to
the Committee to deliver promptly to the Company the amount of sale or loan
proceeds sufficient to pay such exercise price. In connection therewith, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a shareholder with respect to such shares of
Common Stock until the date of issuance of a stock certificate to him for such
shares; provided, however, that until such stock certificate is issued, any
option holder using previously acquired shares of Common Stock in payment of an
option exercise price shall continue to have the rights of a shareholder with
respect to such previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be
expressly provided in the applicable Contract, any holder of an Employee Option
whose employment with the Company (and its Parent and Subsidiaries) has
terminated for any reason other than his death or Disability (as defined in
Paragraph 19) may exercise such option, to the extent exercisable on the date of
such termination, at any time within three months after the date of termination,
but not thereafter and in no event after the date the option would otherwise
have expired; provided, however, that if his employment is terminated either (a)
for cause, or (b) without the consent of the Company, such option shall
terminate immediately. Except as may otherwise be expressly provided in the
applicable Contract, Employee Options granted under the Plan shall not be
affected by any change in the status of the holder so long as he continues to be
an employee or a consultant of the Company, its Parent or any of the
Subsidiaries (regardless of having been transferred from one corporation to
another).
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be consid ered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave
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<PAGE>
exceeds 90 days and the individual's right to reemployment is not guaranteed by
statute or by contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, the holder of a Consultant Option whose consulting relationship with
the Company (and its Parent and Subsidiaries) has terminated for any reason may
exercise such option, to the extent exercisable on the date of such termination,
at any time within three months after the date of termination, but not
thereafter and in no event after the date the option would otherwise have
expired; provided, however, that if such relationship was terminated either (a)
for cause or (b) without the consent of the Company (other than as a result of
the death or Disability of the holder or a key employee of the holder), the
option shall terminate immediately. Except as may otherwise be expressly
provided in the applicable Contract, Consultant Options granted under the Plan
shall not be affected by a change in the relationship, so long as the holder of
the option continues to be a consultant of the Company, its Parent or any of its
Subsidiaries (regardless of having ceased to be a consultant for any of such
corporations).
The holder of an Non-Employee Director Option who ceases to be a Non-
Employee Director for any reason may exercise such option, to the extent
exercisable on the date of such termination, at any time during its term;
provided, however, that if the Non-Employee Director is removed as a director of
the Company for cause, the option shall terminate immediately.
Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ or as a consultant
of the Company, its Parent or any of its Subsidiaries, or as a director of the
Company, or interfere in any way with any right of the Company, its Parent or
any of its Subsidiaries to terminate the holder's relationship at any time for
any reason whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies
(a) while he is employed by the Company, its Parent or any of its Subsidiaries,
(b) within three months after the termination of his employment (unless such
termination was for cause or without the consent of the Company) or (c) within
one year following the termination of his employment by reason of Disability,
his Employee Option may be exercised, to the extent exercisable on the date of
his death, by his executor, administrator or other person at the time entitled
by law to his rights under such option, at any time within one year after death,
but not thereafter and in no event after the date the option would otherwise
have expired.
Any optionee whose employment has terminated by reason of Disability
may exercise his Employee Option, to the extent exercisable upon the effective
date of such termi nation, at any time within one year after such date, but not
thereafter and in no event after the date the option would otherwise have
expired.
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<PAGE>
The term of a Non-Employee Director Option shall not be affected by
the death or Disability of the holder. The termination of a Consultant Option as
a result of the death or Dis ability of the holder of the option (or a key
employee thereof) shall be governed by Paragraph 8. If the holder of a
Non-Employee Director Option or Consultant Option dies during the term of such
option, the option may be exercised, to the extent exercisable on the date of
his death, at any time during its term by his executor, administrator or other
person at the time entitled by law to his rights under such option.
10. COMPLIANCE WITH SECURITIES LAWS. The Committee may
require, in its discretion, as a condition to the exercise of any option that
either (a) a Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the shares of Common Stock to be issued
upon such exercise shall be effective and current at the time of exercise, or
(b) there is an exemption from registration under the Securities Act for the
issuance of shares of Common Stock upon such exercise. Nothing herein shall be
construed as requiring the Company to register under the Securities Act the
shares subject to any option.
The Committee may require the optionee to execute and deliver to the
Company his representations and warranties, in form and substance satisfactory
to the Committee, that (a) the shares of Common Stock to be issued upon the
exercise of the option are being acquired by the optionee for his own account,
for investment only and not with a view to the resale or distribution thereof,
and (b) any subsequent resale or distribution of shares of Common Stock by such
optionee will be made only pursuant to (i) a Registration Statement under the
Securities Act which is effective and current with respect to the shares of
Common Stock being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the optionee
shall, prior to any offer of sale or sale of such shares of Common Stock,
provide the Company with a favorable written opinion of counsel, in form and
substance satisfactory to the Company, as to the applicability of such exemption
to the proposed sale or distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange or under any applicable law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issue of shares of Common Stock thereunder, such option may not be exercised
in whole or in part unless such listing, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced by
an appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee.
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12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Not withstanding
any other provision of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization, merger in which
the Company is the surviving corporation, split-up, combination or exchange of
shares or the like, the aggregate number and kind of shares subject to the Plan,
the aggregate number and kind of shares subject to each outstanding option and
the exercise price thereof, and the number and kind of shares subject to future
Non-Employee Director Options and the 162(m) Maximum shall be appropriately
adjusted by the Board of Directors, whose determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the Company, or
(b) a merger in which the Company is not the surviving corporation or a
consolidation involving the Company, any outstanding options shall terminate,
unless other provision is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was
adopted by the Board of Directors on August 10, 1994 and was amended by the
Board of Directors on August 16, 1996. No option may be granted under the Plan
after August 9, 2004. The Board of Directors, without further approval of the
Company's shareholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3 promulgated under the Exchange Act or Section
162(m) of the Code, and to conform to any change in applicable law or to
regulations or rulings of administrative agencies; provided, however, that no
amendment shall be effective without the requisite prior or subsequent
shareholder approval which would (a) except as contemplated in Paragraph 12,
increase the maximum number of shares of Common Stock for which options may be
granted under the Plan or change the 162(m) Maximum, (b) change the eligibility
requirements to receive options hereunder or (c) make any other change for which
applicable law requires shareholder approval. Notwithstanding the foregoing, the
provisions regarding the selection of directors for participa tion in, and the
amount, the price or the timing of, Non-Employee Director Options shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act or the rules thereunder.
No termination, suspension or amendment of the Plan shall, without the consent
of the holder of an existing option affected thereby, adversely affect his
rights under such option. The power of the Committee to construe and administer
any options granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under
the Plan shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent provided
above, options may not be assigned, transferred,
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pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or
shares of Common Stock to be issued with respect thereto having an aggregate
fair market value equal to the amount which it determines is necessary to
satisfy its obligation to withhold Federal, state and local income taxes or
other amounts incurred by reason of the grant or exercise of an option, its
disposition, or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand. The Company shall not be required to
issue any shares of Common Stock pursuant to any such option until all required
payments have been made. Fair market value of the shares of Common Stock shall
be determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued upon
exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act, (b) implement the provisions of the Plan or any agreement between the
Company and the optionee with respect to such shares of Common Stock, or (c)
permit the Company to determine the occurrence of a "disqualifying disposition,"
as described in Section 421(b) of the Code, of the shares of Common Stock
transferred upon the exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares
of Common Stock pursuant to the exercise of options under the Plan shall be
added to the general funds of the Company and used for corporate purposes as the
Board of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CER TAIN
CONSTITUENT CORPORATIONS. Anything in this Plan to the contrary notwithstanding,
the Board of Directors may, without further approval by the shareholders,
substitute new options for prior options of a Constituent Corporation (as
defined in Paragraph 19) or assume the prior options of such Constituent
Corporation.
19. DEFINITIONS.
(a) Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.
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(b) Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
(c) Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, its Parent or any
Subsidiary in a transaction to which Section 424(a) of the Code applies (or
would apply if the option assumed or substituted were an ISO), or any Parent or
any Subsidiary of such corporation.
(d) Disability. The term "Disability" shall mean a permanent and
total disability within the meaning of Section 22(e)(3) of the Code.
(e) Employee Option. The term "Employee Option" shall mean an
option granted pursuant to the Plan to an individual who, at the time of grant,
is a key employee of the Company or a Subsidiary of the Company.
(f) Consultant Option. The term "Consultant Option" shall mean a
NQSO granted pursuant to the Plan to a person who, at the time of grant, is a
consultant to Company or a Subsidiary of the Company, and at such time is
neither a common law employee of the Company or any of its Subsidiaries nor a
director of the Company.
(g) Non-Employee Director Option. The term "Non-Employee Director
Option" shall mean a NQSO granted pursuant to the Plan to an individual who, at
the time of the grant, is a Non-Employee Director.
(h) Non-Employee Director. The term "Non-Employee Director" shall
mean an individual who is a director of the Company, but is not a common law
employee of the Company or of any of its Subsidiaries or its Parent.
20. GOVERNING LAW. The Plan, such options as may be granted
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of New Jersey, without regard to conflict
of law provisions.
21. PARTIAL INVALIDITY. The invalidity or illegality of any
provision herein shall not affect the validity of any other provision.
22. SHAREHOLDER APPROVAL. The amendment to the Plan shall be
subject to approval by the affirmative vote, in person or by proxy, of a
majority of all outstanding shares of the Company at the next duly held meeting
of the Company's shareholders at which a quorum is present. No options granted
pursuant to the amendment may be exercised prior to such approval, provided that
the date of grant of any options granted thereunder shall be determined as if
the amendment to the Plan had not been subject to such approval. Notwithstanding
the foregoing, if the amendment to the Plan is not approved by a vote of the
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shareholders of the Company on or before August 15, 1997, the amendment and any
options granted thereunder shall terminate, but the Plan as in effect prior to
the amendment and all options granted thereunder shall remain in full force and
effect.
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