BIOCRAFT LABORATORIES, INC.
----------------------------
Notice of Annual Meeting of Stockholders
August 14, 1995
----------------------------
To the Stockholders:
You are cordially invited to attend the Annual Meeting of Biocraft
Laboratories, Inc. (the "Company") to be held at the Marriott at Glenpointe, 100
Frank Burr Blvd., Teaneck, New Jersey on August 14, 1995 at 5:00 P.M. (local
time).
The Annual Meeting will be held for the following purposes:
1. To elect three directors to serve for a term of three years.
2. To consider and act upon a proposal to adopt the Biocraft Laboratories,
Inc. 1995 Restricted Stock Purchase Plan, as further described in the
accompanying Proxy Statement and Exhibit A thereto.
3. To consider and act upon a proposal to adopt the Biocraft Laboratories,
Inc. 1995 Employee Stock Option Plan, as further described in the
accompanying Proxy Statement and Exhibit B thereto.
4. To ratify the selection of Ernst & Young as independent auditors for
fiscal 1996.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on June 23, 1995 are
entitled to notice of the meeting and to vote at it or any adjournments thereof.
If it is convenient for you to do so, we hope you will attend the meeting.
If you cannot, and wish your stock to be voted, we urge you to fill out the
enclosed proxy card and return it to us in the envelope provided. No additional
postage is required.
Harold Snyder
Chairman, President and
Chief Executive Officer
Fair Lawn, New Jersey
July 6, 1995
Please date and sign the accompanying Proxy Card and
mail it promptly in the enclosed return envelope
<PAGE>
BIOCRAFT LABORATORIES, INC.
18-01 River Road
Fair Lawn, New Jersey 07410
-------------------------
PROXY STATEMENT
-------------------------
The enclosed proxy is solicited by the Board of Directors of Biocraft
Laboratories, Inc. It may be revoked at any time before it is exercised by
delivering a written notice to the Secretary of the Company stating that the
proxy is revoked, by executing a subsequent proxy and presenting it to the
Secretary of the Company or by attending the Annual Meeting and voting in
person. Only stockholders of record at the close of business on June 23, 1995
are entitled to notice of and to vote at the Annual Meeting. As of the close of
business on June 23, 1995, the Company had outstanding 14,166,127 shares of
Common Stock, each share entitled to one vote. It is anticipated that the
mailing to stockholders of this Proxy Statement and the enclosed proxy will
commence on or about July 7, 1995. The presence, in person or by proxy, of
stockholders holding a majority of the outstanding shares of Common Stock
entitled to vote will constitute a quorum at the Annual Meeting. Directors will
be elected at the Annual Meeting by a plurality of the votes cast (i.e., the
three nominees receiving the greatest number of votes will be elected as
directors). Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Abstentions are counted in tabulations of the votes cast
on proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved. Under
applicable Delaware law, a broker non-vote will have no effect on the outcome of
the matters to be acted upon at the Annual Meeting, and an abstention will have
the effect of a vote against any proposal requiring an affirmative vote of a
majority of the shares present and entitled to vote thereon.
Proxies will be solicited by mail, and the cost of such solicitation will
be borne by the Company.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company on June 23, 1995 by each person who
beneficially owns more than 5% of the Common Stock. Unless otherwise indicated,
each stockholder has sole voting and investment power with respect to the shares
owned beneficially by such stockholder.
Number of Percent of
Beneficial Ownership Shares (a) Class (b)
- -------------------- ---------- ----------
Harold Snyder
18-01 River Road, Fair Lawn, NJ 07410 3,780,184 26.7%
Beatrice Snyder
18-01 River Road, Fair Lawn, NJ 07410 3,780,186 26.7%
Beryl L. Snyder
18-01 River Road, Fair Lawn, NJ 07410 1,199,959(c) 8.4%
Brian S. Snyder
18-01 River Road, Fair Lawn, NJ 07410 1,180,450(c) 8.3%
Jay T. Snyder
18-01 River Road, Fair Lawn, NJ 07410 1,177,150(c) 8.3%
- ---------------
(a) Includes shares of Common Stock which principal stockholders have currently
exercisable rights to acquire through the exercise of options, in the
amount of 6,750 shares for Beryl L. Snyder and 5,450 shares each for Brian
S. Snyder and Jay T. Snyder.
(b) The total amount of shares subject to options described in note (a) were
deemed to be outstanding for purposes of calculating the percentage owned
by each individual.
(c) Includes 1,000,000 shares of Common Stock held by trusts created by Harold
Snyder and Beatrice Snyder and as to which Beryl L. Snyder, Brian S. Snyder
and Jay T. Snyder, as trustees thereof, have joint dispositive and voting
control.
2
<PAGE>
Security Holdings of Management
Shares of Common
Stock Benificially Percent
Name Owned on June 23, 1995 (a) of Class (b)
- ---- -------------------------- ------------
Directors
Harold Snyder ................... 3,780,184 26.7%
Beatrice Snyder ................. 3,780,186 26.7
Beryl L. Snyder ................. 1,199,959(c) 8.4
Brian S. Snyder ................. 1,180,450(c) 8.3
Jay T. Snyder ................... 1,177,150(c) 8.3
Gerald Klein .................... 1,000 *
James J. Rahal, Jr., M.D ........ 5,000 *
Madelon DeVoe Talley ............ 5,000 *
Marvin M. Thalenberg, M.D ....... 1,500 *
G. Harold Welch, Jr ............. 5,355 *
Executive Officers(d)
Melvin Kaufman .................. 5,450 *
Harmon Aronson .................. 9,900 *
All directors and officers as a group
(consisting of eighteen persons all
of whom own Common Stock) ....... 9,174,384 64.5%
- -------------
* Less than 1%.
(a) Includes shares of Common Stock which directors and officers have currently
exercisable rights to acquire through the exercise of options, in the
amount of 6,750 shares for Beryl L. Snyder, 5,450 shares each for Brian S.
Snyder and Jay T. Snyder, 1,000 shares for Mr. Klein, 5,000 shares each for
Dr. Rahal and Ms. Talley, 1,000 shares for Dr. Thalenberg, 5,000 shares for
Mr. Welch, 5,450 shares for Mr. Kaufman, 7,150 shares for Mr. Aronson and
68,700 shares for all directors and officers as a group.
(b) The total amount of shares subject to options described in note (a) were
deemed to be outstanding for purposes of calculating the percentage owned
by each individual and by all directors and officers as a group.
(c) Includes 1,000,000 shares of Common Stock held by trusts created by Harold
Snyder and Beatrice Snyder and as to which Beryl L. Snyder, Brian S. Snyder
and Jay T. Snyder, as trustees thereof, have joint dispositive voting
control.
(d) Executive officers, other than Harold Snyder, Beatrice Snyder, Beryl L.
Snyder, Braian S. Snyder and Jay T. Snyder, named in the Summary
Compensation Table below.
3
<PAGE>
ELECTION OF DIRECTORS
Under the Certificate of Incorporation of the Company, the Board of
Directors is divided into three classes, each consisting of a minimum of two
directors, with the term of office of one of the classes expiring each year.
Unless such authority is withheld by an indication thereon, it is intended that
the proxy will be voted for election to the Board of Directors of the nominees
named below, to serve until the annual meeting of stockholders specified with
respect to each nominee and until their successors are elected and qualified.
While the Board of Directors has no reason to believe that any of those named
will not be available as a candidate, should such a situation arise the proxy
may be voted for the election of other nominees as directors in the discretion
of the persons acting pursuant to the proxy.
Nominees For Election at the Annual Meeting
Term of Served as
Office Director
Nominee Age Expires Since
- -------- --- -------- ---------
Jay T. Snyder ............................. 36 1998 1993
Madelon DeVoe Talley (1)(2) ............... 63 1998 1989
G. Harold Welch, Jr. (3)(4) ............... 66 1998 1985
Incumbent Directors Whose Terms of Office Continue
Term of Served as
Office Director
Name Age Expiring Since
- ---- --- -------- ---------
Harold Snyder (1)(5) ....................... 73 1997 1964
Beatrice Snyder (1)(5) ..................... 71 1996 1964
Beryl L. Snyder ............................ 38 1997 1993
Brian S. Snyder ............................ 36 1996 1993
Gerard Klein ............................... 59 1996 1985
James J. Rahal, Jr., M.D. (2) .............. 61 1996 1990
Marvin M. Thalenberg, M.D. (1)(3)(5) ....... 68 1997 1985
- ---------------
(1) Member of the Restricted Stock Purchase Plan Committee.
(2) Member of the Compensation Committee.
(3) Member of the Stock Option Committee.
(4) Member of the Audit Committee.
(5) Member of the Directors' Stock Option Committee.
HAROLD SNYDER has been President of the Company since 1964 and in 1985 was
elected Chairman and Chief Executive Officer. Mr. Snyder holds an advanced
degree in natural sciences and, prior to founding the Company in 1964, held
various managerial and technical positions in the pharmaceutical industry.
BEATRICE SNYDER has been Secretary of the Company since 1964 and in 1985
was elected to the office of Senior Vice President. Until 1985, Mrs. Snyder also
served as Treasurer of the Company. Mrs. Snyder holds a bachelor's degree in
statistics.
4
<PAGE>
BERYL L. SNYDER was elected the Company's Assistant Secretary in August
1993 and Vice President and General Counsel in May 1990. She has been General
Counsel to the Company since 1984.
JAY T. SNYDER was elected the Company's Vice President -- Research and
Product Development in May 1990. He has been Director of Product Development
since 1988. From 1982 to 1988 he was plant manager of the Company's penicillin
dosage form facility and from 1977 to 1982 held various production positions
with the Company.
BRIAN S. SNYDER was elected the Company's Vice President and Controller in
May 1990. He has been the Company's Controller since 1983. From 1977 to 1983 he
held various sales and production positions with the Company.
GERARD KLEIN is President of B.V. Chemie Pharmacie Holland (C.P.H.),
pharmaceutical suppliers, and has been associated with such company and its
predecessor since 1955.
JAMES J. RAHAL, JR., M.D. is Director of the Infectious Disease Section of
The New York Hospital Medical Center of Queens in Queens, New York and a
Clinical Professor of Medicine at the Cornell University College of Medicine in
New York. From 1986 to 1988 he served as Chief of the Infectious Disease Section
of New York Infirmary Beekman Downtown Hospital.
MADELON DEVOE TALLEY, an investment consultant and writer, is currently a
Governor of the National Association of Security Dealers, Vice Chairman of the
Board of W.P. Carey & Company and a Trustee of Smith Barney Special Funds. She
is a former Trustee of the New York State Teachers Retirement System.
MARVIN M. THALENBERG, M.D., a specialist in internal medicine, has been
Commissioner of Health for Rockland County, New York since December 1990 and
teaches at Columbia University. From 1955 to 1987 he was engaged in the private
practice of medicine and taught at several universities.
G. HAROLD WELCH, JR., was President of the Yale-New Haven Medical Center,
Inc. from 1979 to June 1, 1990. Mr. Welch is currently Chairman of the South
Central Connecticut Regional Water Authority and Chairman of the Radkowsky
Thorium Power Corporation.
Harold Snyder and Beatrice Snyder are husband and wife. Beryl L. Snyder,
Brian S. Snyder and Jay T. Snyder are the children of Harold and Beatrice
Snyder.
The Audit Committee of the Board of Directors held one meeting in the
fiscal year ended March 31, 1995. The functions of the Committee include
recommending to the Board the engagement or discharge of independent auditors,
directing investigations into matters relating to audit functions, reviewing the
plan and results of audit with the auditors, reviewing the Company's internal
accounting controls and approving services to be performed by the auditors and
related fees.
5
<PAGE>
The Stock Option Committee of the Board of Directors which administers the
terminated 1985 Incentive Stock Option Plan and the proposed 1995 Employee Stock
Option Plan, the Restricted Stock Purchase Plan Committee of the Board of
Directors which administers the Company's terminated 1985 Restricted Stock
Purchase Plan and the proposed 1995 Restricted Stock Purchase Plan each held one
meeting in fiscal 1995. The Directors' Stock Option Committee which administers
the Directors' Stock Option Plan held no meetings in fiscal 1995.
The Board of Directors has no nominating committee. The Compensation
Committee, which was established in fiscal 1994 to consider and recommend to the
Board remuneration arrangements for senior management, held no meetings in
fiscal 1995. Such arrangements were acted upon by the full Board and the Stock
Option Committee.
During the last fiscal year, there were nine meetings of the Board of
Directors. Each of the incumbent Directors attended at least 75% of the meetings
of the Board of Directors and the committees of which he or she is a member
during fiscal 1995.
SECTION 16(A) COMPLIANCE. Section 16(a) of the Securities Exchange Act of
1934 requires the Company's directors and executive officers to file reports of
ownership of the Company's equity securities (and derivative securities) and
changes in such ownership with the Securities and Exchange Commission and the
New York Stock Exchange and to provide copies of those filings to the Company.
Based solely upon a review of such reports and certain written representations,
the Company believes that its directors and executive officers are in compliance
with their respective Section 16(a) filing requirements except that a report of
a sale of 500 shares of Common Stock by Dr. Thalenberg was not filed.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows aggregate cash and other compensation earned
(whether paid or accrued) during the fiscal years ended March 31, 1995, 1994 and
1993 by the Chief Executive Officer and the other six most highly compensated
executive officers of the Company (together, the "Named Officers") for all
services rendered in all capacities to the Company:
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------- ------------------------
Name and Other Restricted All
Principal Fiscal Annual Stock Options Other
Position Year Salary ($) Bonus ($) Compensation($) Awards($) (#) Compensation($)
-------- ---- ---------- --------- --------------- --------- ------- ---------------
(1) (2)
<S> <C> <C> <C> <C> <C> <C> <C>
Harold Snyder (3) 1995 538,461 -- -- -- -- 11,250
Chairman, 1994 511,538 -- -- -- -- 20,518
President 1993 482,692 100,000 -- -- -- 20,485
and CEO
Beatrice Snyder 1995 177,703 19,788 -- -- -- 11,250
Senior 1994 172,343 16,675 -- -- -- 14,858
Vice President 1993 154,658 87,303 -- -- -- 13,844
and Secretary
Melvin Kaufman 1995 174,876 19,759 -- -- 10,000 28,393
Vice President -- 1994 169,081 16,652 -- -- 2,350 31,255
Operations 1993 154,603 38,047 -- -- 2,000 29,083
Harmon Aronson 1995 168,341 19,258 10,000 27,004
Vice President -- 1994 144,269 14,773 -- -- 2,350 26,144
Quality 1993 130,933 35,907 -- -- 2,000 24,144
Management -- --
Brian Snyder 1995 136,764 16,381 -- -- 10,000 20,515
Vice President 1994 132,640 13,985 -- -- 2,350 19,896
& Controller 1993 118,241 33,830 -- -- 2,000 17,736
Jay Snyder 1995 136,764 16,381 -- -- 10,000 20,515
Vice President -- 1994 132,640 13,985 -- -- 2,350 19,896
New Products 1993 118,241 33,830 -- -- 2,000 17,736
Beryl Snyder 1995 136,764 16,381 -- -- 10,000 20,515
Vice President & 1994 132,640 13,985 -- -- 2,350 19,896
General Counsel 1993 118,241 33,830 -- -- 2,000 17,736
</TABLE>
- -----------------
(1) Does not include the value of certain personal benefits, the estimated
value of which, for each listed officer, did not exceed the lesser of
$50,000 and 10% of the total annual salary and bonus earned by that officer
in the relevant fiscal year.
(2) Amounts shown include such officer's allocable share of the Company's
fiscal 1995 contribution to its Profit Sharing Plan and Money Purchase
Pension Plan in the amounts of $11,250 for each of Mr. Harold Snyder and
Mrs. Beatrice Snyder, $22,500 for each of Mr. Kaufman and Mr. Aronson,
$20,515 for each of Mr. Brian Snyder, Mr. Jay Snyder and Ms. Beryl Snyder
and split dollar life insurance premiums paid in fiscal 1995 on behalf of
Mr. Kaufman ($5,893) and Mr. Aronson ($4,504).
(3) Harold Snyder's five-year employment agreement expired in March 1995. The
agreement provided for annual base salary at the rate of $500,000 per annum
plus vacation pay for the first year of the term, increasing annually
thereafter by the greater of 10% or the percentage increase in the consumer
price index during the preceding year. Mr. Snyder waived any increase in
base salary for the term of the agreement and during fiscal 1993
voluntarily agreed to a reduction of his annual rate of base salary to
$400,000 per annum for a portion of each of fiscal 1993 and 1994.
6
<PAGE>
Option Grants in Fiscal 1995
The following table summarizes the number of shares and the terms and
conditions of stock options Granted under the Company's 1985 Incentive Stock
Option Plan to the Named Officers in fiscal 1995:
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
% of Total Market Price Appreciation for
Number of Options Granted Exercise Price($/Sh) Option Term (2)
Options to Employees Expiration Price on Date --------------------------------
Name Granted (1) in 1995 Date ($/Sh) of Grant 0% ($) 5% ($) 10% ($)
---- ---------- ---------------- ---------- -------- ----------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harold Snyder --
Beatrice Snyder --
Melvin Kaufman 10,000 7.2% 9/22/99 10.00 15.50 55,000 97,824 149,629
Harmon Aronson 10,000 7.2% 9/22/99 10.00 15.50 55,000 97,824 149,629
Brian Snyder 10,000 7.2% 9/22/99 10.00 15.50 55,000 97,824 149,629
Jay Snyder 10,000 7.2% 9/22/99 10.00 15.50 55,000 97,824 149,629
Beryl Snyder 10,000 7.2% 9/22/99 10.00 15.50 55,000 97,824 149,629
</TABLE>
- ------------------
(1) The options become exercisable over an 18 month period in increments of 30%
after the initial six month period, an additional 30% after 12 months and
the final 40% after 18 months. The grant date of all the options was
September 22, 1994.
(2) The amounts shown under these columns are the result of calculations at the
0%, 5% and 10% rates required by the Securities and Exchange Commission and
are not intended to forecast future appreciation of the Company's stock
price.
Aggregated Option Exercises in Fiscal 1995 and Fiscal Year-End Option Values
The following table summarizes exercises of stock options in fiscal 1995
which were previously granted to the Named Officers, as well as certain
information concerning the unexercised options held by them at the end of fiscal
1995.
<TABLE>
<CAPTION>
Value of Unexercised In The
Number of Unexercised Money Options at 3/31/95 (1)
Options at 3/31/95 ----------------------------
-------------------------- Exercisable Unexercisable
Shares Value ----------- -------------
Name Acquired Realized($) Exercisable Unexercisable Shares Total ($) Shares Total ($)
---- -------- ----------- ----------- ------------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harold Snyder -- -- -- -- -- -- -- --
Beatrice Snyder -- -- -- -- -- -- -- --
Melvin Kaufman -- -- 5,450 7,000 5,450 55,850 7,000 56,000
Harmon Aronson -- -- 7,150 7,000 7,150 79,550 7,000 56,000
Brian Snyder -- -- 5,450 7,000 5,450 55,850 7,000 56,000
Jay Snyder -- -- 5,450 7,000 5,450 55,850 7,000 56,000
Beryl Snyder -- -- 6,750 7,000 6,750 72,750 7,000 56,000
</TABLE>
- -------------------
(1) Based on the New York Stock Exchange Composite closing price for the last
day of the fiscal year ($18.00).
Directors' Compensation
In fiscal 1995, directors who were not salaried officers of the Company
were paid $2,500 per calendar quarter for their services as directors and $350
for each meeting of the Board of Directors and of any committee which they
attended. They were also reimbursed for out-of-pocket expenses.
Under the 1989 Directors' Stock Option Plan (the "Directors' Plan"), each
director who is not also an officer or employee of the Company is entitled to
receive an option to purchase 5,000 shares of Common Stock at a price equal to
the fair market value of such shares on the date of grant. An aggregate of
150,000 shares are available for purchase pursuant to the exercise of options
granted under the Directors' Plan. Each option granted under the Directors' Plan
becomes exercisable in 1,000 share increments on each of the first five
anniversaries of the date such option is granted and expires on the tenth
anniversary of such grant. Subject to certain rights to exercise upon the death
or disability of the optionee, options granted under the Directors' Plan may be
exercised only if the optionee is an eligible director on the date of exercise.
7
<PAGE>
BOARD OF DIRECTORS REPORT CONCERNING EXECUTIVE COMPENSATION
In fiscal 1995, the Board of Directors considered and acted upon salary and
bonus arrangements for senior management, and the Stock Option Committee of the
Board acted upon stock option awards.
Compensation Policies
The Board's policies are to motivate and retain key employees with
competitive compensation packages and to encourage the enhancement of
stockholder value by providing appropriate incentives for corporate performance
and individual initiatives and performance.
To achieve these goals, the Board, among other things, considered the Chief
Executive Officer's recommendations with respect to other executive officers,
evaluated the Company's performance both in terms of current achievements and
significant initiatives with long-term implications and assessed the
contributions of individual executives.
Fiscal 1995 Compensation
In the Board's view, the senior executives of the Company, individually and
as a group, performed with great skill and dedication in leading the Company
through the many challenges presented in fiscal 1995. While those efforts will
be reflected in the Company's future performance, the Company's financial
results for the year restrained the Board from more fully compensating the
executives for their efforts in the year. Accordingly, base salary adjustments
and bonuses were comparatively modest.
The Stock Option Committee of the Board periodically grants stock options
as part of a total compensation package as a form of long-term incentive and to
reinforce the alignment of executives' interests with that of the Company's
stockholders. During the fiscal 1995, stock options were not granted to the
Chief Executive Officer, but were granted, as disclosed in the table captioned
"Option Grants in Fiscal 1995" above, to five of the other Named Officers.
Board of Directors
Gerald Klein
James J. Rahal, Jr.
Beatrice Snyder
Beryl L. Snyder
Brian S. Snyder
Harold Snyder
Jay T. Snyder
Madelon DeVoe Talley
Marvin M. Thalenberg
G. Harold Welch, Jr.
8
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative stockholder return
on the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Composite Index and the Dow Jones Pharmaceutical Index for
the five years ended March 31, 1995. The graph and table assume that $100 was
invested in each of the Company's Common Stock, the Standard & Poor's 500
Composite Index and the Dow Jones Pharmaceutical Index and that all dividends
were reinvested.
[THE FOLLOWING TABLE WAS REPRESENTED BY A CHART IN THE PRINTED MATERIAL]
Dow Jones
Parmaceutical
Date S&P 500 Index BCL
---- ------- ------------- ---
03/31/90 100 100 100
03/31/91 114 148 117
03/31/92 127 169 167
03/31/93 146 139 142
03/31/94 149 128 111
03/31/95 172 186 132
CERTAIN TRANSACTIONS
Harold Snyder, Beatrice Snyder, Beryl L. Snyder, Brian S. Snyder and Jay T.
Snyder and certain other officers and employees of the Company are the
stockholders of Groundwater Decontamination Systems, Inc. ("GDS"). On March 26,
1985, GDS granted the Company a non-exclusive license to continue its use of
certain of GDS's patented processes presently employed in the Company's
decontamination efforts at its Waldwick plant. The license, which is terminable
by the Company on 45 days' notice, provides for an annual royalty of $120,000
during the first year of the term, increasing annually thereafter by the
percentage increase in the consumer price index during the preceding year. The
amount of such royalty was determined by the principal stockholders, taking into
account the likely higher cost to the Company of employing a suitable
alternative system of decontamination. In fiscal 1995, $9,000 of royalties were
paid pursuant to the license. The balance of royalties for fiscal 1995 were
waived by GDS.
Harold Snyder, Beatrice Snyder, Beryl L. Snyder, Brian S. Snyder and Jay T.
Snyder are the principal stockholders of HS Realty Company, Inc. ("HS Realty").
In April 1988, HS Realty purchased from an unaffiliated company property
adjacent to the Company's Waldwick facility. The Company has agreed with HS
Realty to extend to such property the groundwater decontamination work currently
being done at the Waldwick plant. The agreement also provides that the Company
will be entitled to recover its expenses of performing such work from the
profits, if any, from the future sale or lease of the property.
Mr. Gerard Klein, a director of the Company, is President of B.V. Chemie
Pharmacie Holland (C.P.H.) ("Chemie"). In fiscal 1995, the Company purchased
from Chemie pharmaceutical intermediates for approximately $7.3 million.
Board of Directors Insider Participation
As noted above, five members of the Board of Directors, Harold, Beatrice,
Beryl, Brian and Jay Snyder, are executive officers of the Company and each
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation during fiscal 1995.
9
<PAGE>
APPROVAL OF 1995 RESTRICTED STOCK PURCHASE PLAN
Background and Purpose
On June 14, 1995, the Board of Directors approved the adoption of the 1995
Restricted Stock Purchase Plan (the "1995 Purchase Plan"), subject to
stockholder approval at the 1995 Annual Meeting. The 1995 Purchase Plan
authorizes the sale of up to 1,000,000 shares of Common Stock (subject to
adjustment as provided in the plan) to employees of the Company and would
replace the Company's 1985 Restricted Stock Purchase Plan (the "1985 Purchase
Plan") which expired in January 1995.
The purpose of the 1995 Purchase Plan, as in the case of the 1985 Purchase
Plan, is to promote the interests of the Company by (a) providing an incentive
to a large number of employees of the Company who, by their ability and
diligence, are able to make meaningful contributions to the Company's long-term
success and (b) furthering the identity of employees with those of the Company's
stockholders through stock ownership opportunities. The Board of Directors
believes that the 1985 Purchase Plan was successful in accomplishing its
purpose, and that it is advisable to continue to make available stock incentives
under the 1995 Purchase Plan.
No determinations have been made as to whom any awards shall be made in the
future, the purchase price for shares subject to any such awards or any other
items of any such awards.
Description of the 1995 Purchase Plan
The following summary of certain provisions of the 1995 Purchase Plan is
qualified in its entirety by reference to the 1995 Purchase Plan, a copy of
which is annexed to this Proxy Statement as Exhibit A.
Eligibility
Non-union employees of the Company are eligible to participate in the 1995
Purchase Plan. As of June 23, 1995, there were approximately 600 employees
eligible to participate in the 1995 Purchase Plan. Approximately 300 employees
purchased stock pursuant to awards granted under the 1985 Purchase Plan.
Administration
The 1995 Purchase Plan is administered by the Restricted Stock Purchase
Plan Committee of the Board of Directors (the "Purchase Plan Committee"). The
Purchase Plan Committee has authority, among other things, to select recipients
of awards of the right to purchase shares under the 1995 Purchase Plan, to
determine the purchase price for, and the number of, shares which may be
purchased pursuant to each such award and, more generally, to establish
regulations for the administration of, and to interpret, the 1995 Purchase Plan.
10
<PAGE>
Purchases of Stock
The price to be paid for shares by a recipient of an award pursuant to the
1995 Purchase Plan may not be less than 10% of the fair market value of such
shares on the date on which the award is made. On June 22, 1995, the closing
sale price of the Company's Common Stock on the New York Stock Exchange was
$20.125. Upon acceptance of an award, a recipient must either pay the full
purchase price of all such shares in cash or pay at least the par value of such
shares in cash and execute and deliver to the Company a promissory note for the
balance of the purchase price. The Purchase Plan Committee has the authority to
fix the terms of such promissory notes, including, the interest rate, if any,
and the terms of repayment.
For a period of time to be prescribed by the Purchase Plan Committee, the
purchaser of shares purchased pursuant to an award may not sell, pledge or
otherwise transfer any of such shares. If the purchaser leaves the employ of the
Company at any time prior to a date fixed by the Purchase Plan Committee, the
Company may, but is not obligated to, purchase any shares then held by such
purchaser that are subject to such restrictions on transferability. If the
Company elects to purchase any such shares, the purchase price will be the
lesser of the price paid by the purchaser for such shares or the fair market
value of such shares at the time such purchaser ceases to be an employee.
Notwithstanding the above restrictions on transferability, the purchaser
has all the other rights of a stockholder with respect to shares acquired under
the 1995 Purchase Plan, including the right to vote such shares and to receive
all dividends paid thereon.
Each purchaser must agree as a condition of accepting his or her award that
the Company may deduct from any payments of any kind otherwise due to the
purchaser the aggregate amount of any federal, state, or local withholding taxes
with respect to the shares subject to the award or make arrangements
satisfactory to the Company regarding payments to the Company of the aggregate
amount of any such taxes.
Amendment or Termination of the 1995 Purchase Plan
The Company's Board of Directors may amend, suspend or terminate the 1995
Purchase Plan in any respect at any time, except that the Board of Directors
many not increase the maximum number of shares of Common Stock subject to the
1995 Purchase Plan or decrease the minimum purchase price for shares awarded
under the 1995 Purchase Plan without the approval of the stockholders of the
Company. No modification or amendment of the 1995 Purchase Plan may, without the
written consent of a purchaser, affect the rights of such purchaser under an
award previously granted.
Federal Income Tax Consequences
The following discussion is intended only as a brief summary of the federal
income tax consequences of the purchase of shares pursuant to an award granted
under the 1995 Purchase Plan, any subsequent forfeiture of the shares, any
subsequent lapse or removal of the transfer restriction with respect to the
shares, and the subsequent sale (or other taxable disposition) of the shares.
The tax laws in question are highly technical and subject to change at any time,
which could be retroactive in nature.
11
<PAGE>
A purchaser of shares under the 1995 Purchase Plan may make an election
under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code") with respect to some or all of the shares purchased. The income tax
consequences will vary depending on whether such an election is made.
If no election is made, the purchaser will not realize any income as a
result of the purchase of shares subject to restrictions on transferability
described above. The purchaser will realize compensation income at the time the
transfer restrictions lapse or are otherwise removed in an amount equal to the
difference between the purchase price paid for such shares and the fair market
value of such shares at the time such restrictions lapse or are otherwise
removed. In addition, any dividends paid on any shares while such shares are
subject to transfer restrictions will be considered compensation income and not
dividend income.
If the purchaser makes an election under Section 83(b) of the Code, the
purchaser realizes compensation income at the time he or she purchases the
shares, in an amount equal to the difference between the fair market value of
such shares at the time of purchase (determined without regard to the transfer
restrictions) and the purchase price paid for such shares. No additional income
is realized upon the subsequent lapse or removal of the transfer restrictions
with respect to such shares and any dividends paid on the shares while such
shares are subject to the transfer restrictions will be taxed as dividend
(rather than compensation) income.
In general, the Company is entitled to a deduction, in the amount of the
compensation income realized by the purchaser at the time the purchaser realizes
such income, provided certain withholding tax requirements are met. As explained
above, each purchaser must make arrangements satisfactory to the Company with
respect to withholding taxes.
If and to the extent any shares are forfeited, the purchaser will be
allowed to deduct -- as an ordinary deduction if no Section 83(b) election was
made or as a capital loss if an election was made -- an amount equal to the
difference, if any, between the purchase price paid for the shares and the
amount received as a result of the forfeiture.
The purchaser will recognize a capital gain or loss upon the subsequent
sale or other taxable disposition of such shares (other than a sale to the
Company as a result of the forfeiture provisions), an amount equal to the
difference between the proceeds realized from the sale or other disposition and
the sum of (a) the purchase price paid for such shares plus (b) in the case of a
gain taxable to a purchaser who made a Section 83(b) election, the amount of
gross income taxable as compensation to such purchaser as a result of the
purchase of the shares.
The Company is not entitled to any deduction with respect to capital gains
realized by a purchaser.
12
<PAGE>
Vote Required and Board Recommendation
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote for the 1995
Purchase Plan is required for approval of the 1995 Purchase Plan.
The Board of Directors recommends a vote FOR the proposal to approve the
1995 Purchase Plan.
APPROVAL OF 1995 EMPLOYEE STOCK OPTION PLAN
Background and Purpose
On June 14, 1995 the Board of Directors adopted the 1995 Employee Stock
Option Plan (the "1995 Option Plan"), subject to stockholder approval at the
1995 Annual Meeting. The Company's 1985 Incentive Stock Option Plan terminated
on January 31, 1995 and no additional options may be granted thereunder.
Under the 1995 Option Plan, options may be granted to any person who is an
executive officer or other valuable staff, managerial, professional or technical
employee of the Company, including a director who is an employee of the Company
("Key Employee"). The Board of Directors has determined that the 1995 Option
Plan is in the Company's best interests as it more closely aligns the interests
of Key Employees with those of the Company's stockholders, provides Key
Employees added incentives to work toward the continued growth and success of
the Company and helps attract capable personnel and encourages them to remain
with the Company.
Description of the 1995 Option Plan
The following summary of certain provisions of the 1995 Option Plan is
qualified in its entirety by reference to the 1995 Option Plan, a copy of which
is annexed as Exhibit B.
The 1995 Option Plan is administered by the Stock Option Committee of the
Board of Directors (the "Option Committee"). The Option Committee will
determine, among other things, the recipients of grants, whether a grant shall
consist of incentive stock options ("ISOs") or non-qualified options ("NQOs"),
and the number of shares to be subject to such options. However, the aggregate
fair market value of stock (determined as of the time the option is granted)
with respect to which ISOs granted to any employee under all option plans of the
Company or its subsidiaries first become exercisable in any calendar year may
not exceed $100,000. Under existing guidelines, approximately 75 employees would
be presently considered Key Employees eligible for grants.
The 1995 Option Plan provides for the granting of options to purchase the
Company's Common Stock at prices to be determined by the Option Committee, but
in the case of ISOs at not less than the fair market value on the date of the
option grant. On June 22, 1995, the closing sale price of the Company's Common
Stock on the New York Stock Exchange was $20.125. The total number of shares
which may be sold pursuant to the options granted under the 1995 Option Plan is
1,000,000, subject to adjustment as provided in the plan. No option may be
granted for a term of more than ten years.
13
<PAGE>
The maximum number of shares of Common Stock with respect to which options
may be granted under the 1995 Option Plan in any calendar year to a Key Employee
may not exceed 25,000, except that in the year of the first grant of options to
a Key Employee, the maximum number of shares with respect to which options may
be granted may not exceed 100,000.
Upon the exercise of an option by a Key Employee, the holder must make
payment in cash or in shares of the Company's Common Stock, or in a combination
of both, of the full option price. Generally, options may be exercised only
while the recipient is an employee of the Company or its subsidiaries and within
90 days after termination of employment.
The 1995 Option Plan will terminate on June 14, 2005 unless earlier
terminated by the Board of Directors. The Board may also amend the Plan, except
that it may not amend the Plan, without stockholder approval, to increase the
number of shares subject to the Plan, decrease the minimum option price of any
Option, or extend the maximum option period. No termination of the Option Plan
will affect options outstanding at the time of termination, and options granted
prior to termination may extend beyond termination.
No options have been granted to Key Employees under the 1995 Option Plan,
and no determinations have been made regarding the Key Employees to whom grants
will be made in the future or the number of shares which will be subject to
future options.
See "Executive Compensation--Option Grants in Fiscal 1995" and "Aggregated
Option Exercises in Fiscal 1995 and Fiscal Year-End Option Values" for certain
information concerning options granted under the Company's 1985 Incentive Stock
Option Plan.
Federal Income Tax Consequences
The recipient of an ISO generally will not realize any income upon its
grant, or upon its exercise if no disposition of the shares received upon
exercise is made within two years from the date of grant or within one year
after the acquisition of the shares. The excess of the fair market value over
the exercise price of the shares received upon the exercise of an ISO, however,
is a tax preference item in the year of exercise which may subject the recipient
to an alternative minimum tax. If the foregoing holding periods are met, the
recipient will realize a long-term capital gain upon the difference between the
sale price and the exercise price, and the Company will receive no deduction
from taxable income. If these holding periods are not met, the recipient
generally will realize ordinary income to the extent of the difference between
the exercise price and the fair market value of the shares on the date the
option is exercised. However, if the disposition is by a sale or exchange at a
price less than the fair market value on the date of exercise, then, in general,
the amount of ordinary income is limited to the gain realized on such sale or
exchange. If the sale price exceeds the fair market value on the date of
exercise, such excess will be a capital gain, long-term or short-term depending
on the employee's holding period for such stock. The Company is entitled to a
deduction in an amount equal to the ordinary income realized by the optionee.
14
<PAGE>
The recipient of a nonqualified option will not realize income upon the
grant of an option, but will realize ordinary income in the amount of the
difference between the fair market value of the stock on the date the option is
exercised and the exercise price. The amount of ordinary income will be
deductible in computing the taxable income of the Company. The option holder
will have a basis for the stock acquired equal to the fair market value of the
stock at the date of exercise. Any gain or loss realized upon the subsequent
sale of stock acquired on the exercise of the option will be a short-term or
long-term capital gain or loss depending on the optionee's holding period.
Required Vote and Board Recommendation
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote for the 1995
Option Plan is required for approval of the 1995 Option Plan.
The Board of Directors recommends a vote FOR the proposal to approve the
1995 Option Plan.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has chosen the firm of Ernst & Young LLP as
independent auditors to examine the financial statements of the Company for the
fiscal year ending March 31, 1996. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting with the opportunity to make a
statement, if such representative so desires, and to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
1996 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement and form of proxy for that meeting no later
than March 9, 1996.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
meeting. If other matters do properly come before the meeting, the persons
acting pursuant to the proxy will vote on them in their discretion. A copy of
the 1995 Annual Report to Stockholders is being mailed with the Proxy Statement.
Upon written request of any Stockholder of record as of June 23, 1995, a
copy of the Company's Annual Report on Form 10-K for the year ended March 31,
1995 (excluding exhibits) as filed with the Securities and Exchange Commission
will be supplied without charge. Requests should be directed to Biocraft
Laboratories, Inc., 18-01 River Road, Fair Lawn, New Jersey 07410, Attention:
Ethyl Andersen.
HAROLD SNYDER
Chairman, President and
Chief Executive Officer
15
<PAGE>
ANNEX A
P R O X Y
BIOCRAFT LABORATORIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HAROLD SNYDER and BEATRICE SNYDER, and each of them, with full power of
substitution, are hereby authorized to represent and to vote the stock of the
undersigned in BIOCRAFT LABORATORIES, INC. (the "Company") at the Annual Meeting
of Stockholders to be held on August 14, 1995 and at any adjournment thereof as
set forth below:
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) / / nominees listed below) / /
JAY T. SNYDER, MADELON DeVOE TALLEY AND G. HAROLD WELCH, JR.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE COMPANY'S 1995 RESTRICTED STOCK PURCHASE PLAN
/ /FOR / /AGAINST / /ABSTAIN
3. PROPOSAL TO APPROVE THE COMPANY'S 1995 EMPLOYEE STOCK OPTION PLAN
/ /FOR / /AGAINST / /ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG as independent auditors
for fiscal 1996
/ /FOR / /AGAINST / /ABSTAIN
5. Upon or in connection with the transactions of such other business as may
properly come before the meeting or any adjournment thereof.
(Continued, and to be signed on other side)
<PAGE>
This proxy will be voted as specified and, unless otherwise specified, this
proxy will be voted FOR the election of directors and FOR proposals 2, 3 and 4.
DATED:........................., 1995
-------------------------------
Signature
-------------------------------
Signature if held jointly
Please sign exactly as name appears
at left. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Please mark, sign, date and return
the proxy card promptly using the
enclosed envelope.
Exhibit A
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BIOCRAFT LABORATORIES, INC.
1995 RESTRICTED STOCK PURCHASE PLAN
-------------------------------------------------------------------
<PAGE>
Table of Contents
-----------------
Page
----
1. PURPOSE OF THE PLAN............................................... 1
2. DEFINITIONS....................................................... 1
3. EFFECTIVE DATE OF THE PLAN........................................ 2
4. ADMINISTARTION OF THE PLAN........................................ 2
5. SHARES SUBJECT TO THE PLAN........................................ 2
6. GRANT OF AWARDS................................................... 3
7. AWARD AGREEMENTS.................................................. 3
8. RESTRICTIONS...................................................... 3
9. RIGHTS AS A STOCKHOLDER........................................... 4
10. RESTRICTION PERIOD................................................ 4
11. LAPSE AT DISCRETION OF THE COMMITTEE.............................. 4
12. WITHHOLDING TAXES................................................. 4
13. COMPLIANCE WITH SECURITIES LAWS REQUIREMENTS...................... 5
14. INTERPRETATION OF THE PLAN........................................ 5
15. LIMITS OF LIABILITY............................................... 5
16. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP..................... 6
17. AMENDMENT AND TERMINATION OF THE PLAN............................. 6
i
<PAGE>
BIOCRAFT LABORATORIES, INC.
1995 RESTRICTED STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Biocraft Laboratories, Inc. 1995 Restricted Stock
Purchase Plan (the "Plan") is to promote the interests of Biocraft Laboratories,
Inc., by (a) providing an incentive to employees of the Company which will
attract, retain and motivate personnel possessing outstanding ability who, by
their ability and diligence, are able to make meaningful contributions to the
Company's long-term success and (b) furthering the identity of Participants with
those of the Company's stockholders through stock ownership opportunities
2. DEFINITIONS
The following terms shall have the meanings set forth below for purposes of
the Plan:
(a) Award. An award of the right to purchase Restricted Stock granted
under the provisions of the Plan at a price determined by the
Committee, but in no case less than 10% of the fair market value of
such Stock at date of grant.
(b) Board. The Board of Directors of the Company.
(c) Committee. A committee which shall be either the Compensation
Committee of the Company or a committee of three (3) or more directors
to be appointed by the Board.
(d) Company. Biocraft Laboratories, Inc., a Delaware corporation, and its
subsidiaries, their successors, and any other corporation which adopts
the Plan with the approval of the Board.
(e) Employee. Any person who is actually performing services for the
Company in an empoyer-employee relationship, but excluding any person
who is a member of a collective bargaining unit.
(f) Participant. An Employee who is selected by the Committee to
participate in the Plan.
(g) Restricted Stock. Any shares of Stock purchased by a Participant
pursuant to the Plan subject to the restrictions set forth in Section
8 hereof.
<PAGE>
(h) Stock. Common Stock of the Company, $.01 par value.
(i) Purchase Price. The price to be paid by the Participant for the shares
of Stock awarded to him, such price to be no less than 10% of the fair
market value of such shares on the date of grant.
3. EFFECTIVE DATE OF THE PLAN
The effective date of the Plan is June 14, 1995.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Members of the Committee
shall be appointed from time to time by, and shall serve at the pleasure of, the
Board. Subject to the provisions of the Plan, the Committee shall have the sole
and complete authority to (a) select Participants; (b) determine the Purchase
Price of the Stock to be awarded and number of shares to be granted to each
Participant; (c) determine the time or times and the conditions subject to which
Awards may be made; (d) establish from time to time regulations for the
administration of the Plan; (e) interpret the Plan; and (f) make all
determinations necessary for the administration of the Plan. All expenses and
liabilities incurred by the Committee in the administration of the Plan shall be
borne by the Company. The Committee may employ attorneys, consultants,
accountants or other persons in connection with the administration of the Plan.
The Company, and its officers and directors, shall be entitled to rely upon the
advice, opinion or valuations of any such persons. No member of the Committee or
the Board shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee or the Board shall be fully protected by the Company in
respect of any such action, determination or interpretation.
5. SHARES SUBJECT TO THE PLAN
An aggregate of 1,000,000 shares of Stock shall be subject to the Plan
either from authorized but theretofore unissued shares or from shares reacquired
by the Company, including shares purchased in the open market, and such number
and kind of shares shall be appropriately adjusted by the Committee in the event
of any stock dividend or split, reverse stock split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares or
other similar corporate charge with respect to such Stock. If prior to the
2
<PAGE>
termination of the Plan shares of Restricted Stock shall have been repurchased
by the Company as a result of a forfeiture of such shares pursuant to the Plan,
such shares shall again become available for issuance pursuant to the Plan.
6. GRANT OF AWARDS
The Committee may, from time to time, in its sole discretion select
Participants, determine the number of shares of Restricted Stock to be granted
to each Participant, and establish the applicable terms and conditions of each
such Award. No Employee shall have any right to participate in the Plan. An
Employee selected by the Committee for participation during any one period will
not by virtue of such participation have the right to be selected as a
Participant for any other period.
7. AWARD AGREEMENTS
Each Award shall be evidenced by a written agreement, executed by the
Participant and the Company, which shall contain such terms and conditions as
the Committee, in its sole discretion, may determine. In addition, the
Participant shall either (i) pay in full the Purchase Price of the shares of
Restricted Stock subject to such Award in cash or (ii) pay at least the par
value of such shares in cash and execute and deliver to the Company a promissory
note to pay the balance of the Purchase Price over a period of time fixed by the
Committee. All other terms and conditions of any such promissory note shall be
determined by the Committee.
8. RESTRICTIONS
Shares of Stock issued or transferred to a Participant pursuant to the Plan
shall be subject to the following restrictions:
(a) None of such shares may be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of until the
restrictions on such shares shall have lapsed pursuant to Section 10
or 11 hereof.
(b) In the event that a Participant ceases to be an Employee, the Company
may, but shall not have any obligation to, purchase any shares of
Stock the restrictions on which shall not have lapsed pursuant to
Sections 10 and 11 hereof for an amount equal to the lesser of the
Purchase Price of such shares of Stock or their fair market value on
the date such Participant shall cease to be an Employee.
3
<PAGE>
9. RIGHTS AS A STOCKHOLDER
Upon the acceptance by a Participant of an Award, such Participant shall,
subject to the restrictions set forth in Section 8 hereof, have all the rights
of a stockholder with respect to the shares of Restricted Stock subject to such
Award, including, but not limited to, the right to vote such shares of
Restricted Stock and the right to receive all dividends paid thereon.
Certificates representing Restricted Stock shall bear a legend referring to the
restrictions set forth in Section 8 hereof.
10. RESTRICTION PERIOD
The Committee shall establish as to each Award the terms and conditions on
which the restrictions set forth in Section 8 shall lapse.
11. LAPSE AT DISCRETION OF THE COMMITTEE
Notwithstanding the forfeiture provisions of Section 8 above, the Committee
may at any time, in its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any or all such restrictions, or provide that
the restrictions on the pro-rata paid portion of such shares of Restricted Stock
shall terminate, and that such shares shall not be subject to forfeiture under
Section 8 above, upon the death, disability or retirement of a Participant.
12. WITHHOLDING TAXES
Each Participant shall agree at the time his Award is granted, and as a
condition thereof, that the Company shall deduct from any payments of any kind
otherwise due to such Participant the aggregate amount of any Federal, State or
local taxes of any kind required by law to be withheld with respect to the
shares of Stock subject to the Award or, if such payments are insufficient to
satisfy such taxes, or if no such payments are due or to become due to such
Participant, that such Participant will pay to the Company, or make arrangements
satisfactory to the Company regarding payments to the Company of, the aggregate
amount of any such taxes. Until such amount has been paid or arrangements
satisfactory to the Company have been made, no stock certificates free of a
legend reflecting the restrictions set forth in Section 8 hereof shall be issued
to such Participant.
4
<PAGE>
13. COMPLIANCE WITH SECURITIES LAWS REQUIREMENTS
Unless there is in effect at the time of exercise a registration statement
under the Securities Act of 1933 permitting the resale to the public of shares
acquired under the Plan (and, if required, thee is available for delivery a
prospectus meeting the requirements of Section 10(a) (3) of such Act), the
Participant shall, unless determined by the Committee that such is not required,
(i) represent and warrant in writing to the Company that the shares acquired are
being acquired for investment and not with a view to the distribution thereof,
(ii) acknowledge that the shares acquired may not be sold unless registered for
sale under said Act or pursuant to an exemption from such registration, and
(iii) agree that the certificates evidencing such shares shall bear a legend to
the effect of clauses (i) and (ii). If, subsequent to any such acquisition for
investment, there should become effective under the Securities Act of 1933 a
registration statement permitting the resale to the public of shares so acquired
and, if required, there is available for delivery by the Participant a
prospectus meeting the requirements of Section 10(a) (3) of said Act, then any
representations and warranties previously made that such shares were being
acquired for investment and not with a view to the distribution thereof shall
not preclude the Participant from selling such shares pursuant to the
registration statement and in the event of any such sale the holders of such
shares shall be released from such representations and warranties with respect
to shares sold by them pursuant to such registration statement.
14. INTERPRETATION OF THE PLAN
Any question of fact necessary for the application of the Plan, and any
question of interpretation or application of the Plan or any rule adopted
pursuant to Section 4 hereof, shall be determined by the Committee, and the
determination of such questions made by the Committee shall be final and
conclusive upon all parties.
15. LIMITS OF LIABILITY
Neither the Company nor any member of the Committee or the Board, or any
other person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan, shall have
any liability to any party for any action taken, or not taken, in good faith
under the Plan, or based on or arising out of a determination of any question
under the Plan, or an interpretation, administration or application of the Plan,
made in good faith.
5
<PAGE>
16. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP
The establishment of the Plan shall in no way, now or hereafter, reduce,
enlarge or modify the employment relationship between the Company and any
Participant. Nothing contained in the Plan or any Award pursuant thereto shall
be construed as conferring upon any Participant any right to continue in the
employ of the Company.
17. AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend, suspend, or terminate the Plan in any respect at any
time, except that the Board may not decrease the minimum purchase price for
shares of stock awarded under the Plan or increase the maximum number of shares
of Stock which may be awarded under the Plan (other than increases due to
adjustments in accordance with Section 5 hereof), without the approval of the
stockholders of the Company. No modification or amendment of the Plan shall
affect the rights of a Participant under an Award previously granted to him
unless such Participant consents in writing to such retroactive modification or
amendment of his rights.
6
Exhibit B
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BIOCRAFT LABORATORIES, INC.
1995 EMPLOYEE STOCK OPTION PLAN
------------------------------------------------------------------------------
<PAGE>
Table of Contents
Page
----
I. Purposes of the Plan.............................................. 1
II. Definitions....................................................... 1
III. Effective Date.................................................... 4
IV. Administration.................................................... 4
.
A. Duties of the Committee....................................... 4
B. Advisors ..................................................... 5
C. Indemnification............................................... 5
D. Meetings of the Committee..................................... 5
E. Determinations................................................ 5
V. Shares; Adjustment Upon Certain Events............................ 6
A. Shares to be Delivered; Fractional Shares..................... 6
B. Number of Shares.............................................. 6
C. Adjustments; Recapitalization, etc............................ 6
VI. Awards and Terms of Options....................................... 7
A. Grant......................................................... 7
B. Exercise Price................................................ 7
C. Number of Shares.............................................. 7
D. Exercisability................................................ 7
E. Acceleration of Exercisability................................ 8
F. Exercise of Options........................................... 9
G. Non-Competition and Other Provisions.......................... 9
H. Incentive Stock Option Limitations............................ 10
VII. Effect of Termination of Employment............................... 11
A. Death, Disability, Retirement, etc............................ 11
B. Cause......................................................... 11
C. Other Termination............................................. 11
D. Cancellation of Options....................................... 11
VIII. Nontransferability of Options..................................... 12
IX. Rights as a Stockholder........................................... 12
X. Termination, Amendment and Modification........................... 12
A. General Amendments and Termination................... ....... 12
i
<PAGE>
XI. Use of Proceeds................................................... 13
XII. General Provisions................................................ 13
A. Right to Terminate Employmen................................. 13
B. Purchase for Investment...................................... 13
C. Trusts, etc.................................................. 13
D. Notices...................................................... 14
E. Severability of Provisions................................... 14
F. Payment to Minors, Etc....................................... 14
G. Headings and Captions........................................ 14
H. Controlling Law.............................................. 14
I. Other Benefits............................................... 15
J. Costs........................................................ 15
K. Section 162(m) Deduction Limitation.......................... 15
L. Section 16(b) of the Act..................................... 15
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses...................................... 15
A. Stock Certificates........................................... 15
B. Legends...................................................... 15
C. Payment of Expenses.......................................... 15
XIV. Listing of Shares and Related Matters............................. 16
XV. Withholding Taxes................................................. 16
.
ii
<PAGE>
Biocraft Laboratories, Inc.
1995 Employee Stock Option Plan
I. Purposes of the Plan
The purposes of this 1995 Employee Stock Option Plan (the "Plan") are to
enable Biocraft Laboratories, Inc. (the "Company") and Designated Subsidiaries
(as defined herein) to attract, retain and motivate certain employees who are
important to the success and growth of the business of the Company and
Designated Subsidiaries and to create a long-term mutuality of interest between
such employees and the stockholders of the Company by granting them options to
purchase Common Stock (as defined herein).
II. Definitions
In addition to the terms defined elsewhere herein, for purposes of this
Plan, the following terms will have the following meanings when used herein with
initial capital letters:
A. "Act" means the Securities Exchange Act of 1934, as amended, and
all rules and regulations promulgated thereunder.
B. "Board" means the Board of Directors of the Company.
C. "Cause" means that the Committee shall have determined that any of
the following events has occurred: (1) an act of fraud, embezzlement,
misappropriation of business or theft committed by a Participant in the
course of his or her employment or any intentional misconduct or gross
negligence of a Participant which injures the business or reputation of the
Company or Designated Subsidiaries; (2) intentional damage committed by a
Participant, or damages resulting from the gross negligence of a
Participant, to the property of the Company or Designated Subsidiaries; (3)
a Participant's willful failure or refusal to perform the customary duties
and responsibilities of his or her position with the Company or Designated
Subsidiaries; (4) a Participant's material breach of any covenant,
condition or obligation required to be performed by him or her pursuant to
this Plan, the Option Agreement or any other agreement between him or her
and the Company or Designated Subsidiaries or a Participant's intentional
or grossly negligent violation of any material written policy of the
Company or Designated Subsidiaries; or (5) commission by a Participant of a
felony or a crime or act involving moral turpitude that brings the Company
or Designated Subsidiaries into public disrepute. Cause shall be deemed to
exist as of the date any of the above events occur even if the Committee's
determination is later and whether or not such determination is made before
or after Termination of Employment.
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D. "Code" means the Internal Revenue Code of 1986, as amended.
E. "Committee" means such committee, if any, appointed by the Board to
administer the Plan, consisting of two or more directors as may be
appointed from time to time by the Board each of whom, unless otherwise
determined by the Board, shall be disinterested persons as defined in Rule
16b-3 promulgated under Section 16(b) of the Act. If the Board does not
appoint a committee for this purpose, "Committee" means the Board.
F. "Common Stock" means the common stock of the Company, par value
$.01 per share, any Common Stock into which the Common Stock may be
converted and any Common Stock resulting from any reclassification of the
Common Stock.
G. "Company" means Biocraft Laboratories, Inc., a Delaware
corporation.
H. "Competitive Activity" means (a) being employed by, consulting to
or being a director of any business, or engaging directly or indirectly in
any business activity or enterprise, that is competitive with any activity
conducted by the Company or a Designated Subsidiary that the Key Employee
is or was employed by; (b) soliciting for employment or consulting,
employing or retaining, or assisting another Person to employ or retain,
directly or indirectly, any employees of the Company or Designated
Subsidiaries or any Person who was an employee of the Company or Designated
Subsidiaries in the prior twelve months, provided, however, that employing
or retaining, or assisting another Person to employ or retain, any Person
whose employment with the Company or a Designated Subsidiary has been
terminated without Cause or any Person that is non-exempt under the Federal
Fair Labor Standards Act, 29 USC ss. 213(a)(1), shall not be considered
Competitive Activity; (c) soliciting, contacting, or otherwise doing
business with any person or entity that at any time in the prior twelve
months has sold or contributed goods or services to the Company or
Designated Subsidiaries or has been a customer, client, agent, broker or
dealer of or for the Company.
I. "Designated Subsidiary" means any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code. An entity shall be
deemed a Designated Subsidiary only for such periods as the requisite
ownership relationship is maintained.
J. "Disability" means a permanent and total disability, rendering a
Participant unable to perform the duties performed by the Participant for
the Company or Designated Subsidiaries by reason of physical or mental
disability for a period of four consecutive months, or for a period of more
than an aggregate of six months in any twelve month period. A Disability
shall only be deemed to occur at the time of the determination by the
Committee of the Disability.
K. "Fair Market Value" shall mean, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, as of any date, the last sales prices
reported for the Common Stock on the applicable date, (i) as reported by
the principal national securities exchange in the United States on which it
is then traded, or (ii) if not traded on any such national securities
exchange, as quoted on an automated quotation system.
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sponsored by the National Association of Securities Dealers, or if the sale
of the Common Stock shall not have been reported or quoted on such date, on
the first day prior thereto on which the Common Stock was reported or
quoted. If the Common Stock is not readily tradeable on a national
securities exchange or any system sponsored by the National Association of
Securities Dealers, its Fair Market Value shall be set by the Committee
based upon its assessment of the cash price that would be paid between a
fully informed buyer and seller under no compulsion to buy or sell (without
giving effect to any discount for a minority interest or any restrictions
on transferability or any lack of liquidity of the stock).
L. "Incentive Stock Option" shall mean any Option awarded under this
Plan intended to be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code.
M. "Key Employee" means any person who is an officer or other valuable
employee of the Company or a Designated Subsidiary, as determined by the
Committee in its sole discretion. A Key Employee may, but need not, be an
officer of the Company or a Designated Subsidiary.
N. "Non-Qualified Stock Option" shall mean any Option awarded under
this Plan that is not an Incentive Stock Option.
O. "Option" means the right to purchase one Share at a prescribed
purchase price on the terms specified in the Plan.
P. "Participant" means a Key Employee who is granted Options under the
Plan which Options have not expired.
Q. "Person" means any individual or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such
Person as the context may require.
R. "Retirement" means a Termination of Employment at or after age 59
1/2 (or, with the consent of the Committee, under an early retirement
policy of the Company or a Designated Subsidiary, before age 59 1/2).
S. "Securities Act" means the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
T. "Share" means a share of Common Stock.
U. "Ten Percent Stockholder" shall mean a person owning Common Stock
of the Company possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company as defined in Section
422 of the Code.
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V. "Termination of Employment" with respect to an individual means
that individual is no longer actively employed by the Company or a
Designated Subsidiary on a full-time basis, irrespective of whether or not
such employee is receiving salary continuance pay, is continuing to
participate in other employee benefit programs or is otherwise receiving
severance type payments. In the event an entity shall cease to be a
Designated Subsidiary, there shall be deemed a Termination of Employment of
any individual who is not otherwise an employee of the Company or another
Designated Subsidiary at the time the entity ceases to be a Designated
Subsidiary. A Termination of Employment shall not include a leave of
absence approved for purposes of the Plan by the Committee. For purposes of
the Plan, a full-time employee is a person who is scheduled to work at
least thirty (30) hours per week.
III. Effective Date
The Plan shall become effective on June 14, 1995 (the "Effective Date"),
subject to its approval by the holders of a majority of the Common Stock (at the
time of approval) within one year after the Plan is adopted by the Board of
Directors of the Company. Grants of Options by the Committee under the Plan may
be made on or after the Effective Date of the Plan, including retroactively,
provided that, if the Plan is not approved by the holders of a majority of the
Common Stock (at the time of approval), all Options which have been granted by
the Committee shall be null and void. No Options may be exercised prior to the
approval of the Plan by the holders of a majority of the Common Stock (at the
time of approval).
VI. Administration
A. Duties of the Committee. The Plan shall be administered and interpreted
by the Committee. The Committee shall have full authority to interpret the Plan
and to decide any questions and settle all controversies and disputes that may
arise in connection with the Plan; to establish, amend and rescind rules for
carrying out the Plan; to administer the Plan, subject to its provisions; to
select Participants in, and grant Options under, the Plan; to determine the
terms, exercise price and form of exercise payment for each Option granted under
the Plan; to determine the consideration to be received by the Company in
exchange for the grant of the Options; to determine whether and to what extent
Incentive Stock Options and Non-Qualified Stock Options, or any combination
thereof, are to be granted hereunder to one or more Key Employees to prescribe
the form or forms of instruments evidencing Options and any other instruments
required under the Plan (which need not be uniform) and to change such forms
from time to time; and to make all other determinations and to take all such
steps in connection with the Plan and the Options as the Committee, in its sole
discretion, deems necessary or desirable. The Committee shall not be bound to
any standards of uniformity or similarity of action, interpretation or conduct
in the discharge of its duties hereunder, regardless of the apparent similarity
of the matters coming before it. Any determination, action or conclusion of the
Committee shall be final, conclusive and binding on all parties. Anything in the
Plan to the contrary notwithstanding, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall any
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discretion or authority granted under the Plan be so exercised, so as to
disqualify the Plan under Section 422 of the Code, or, without the consent of
the Participants affected, to disqualify any Incentive Stock Option under such
Section 422.
B. Advisors. The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan, and may rely
upon any advice or opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company.
C. Indemnification. To the maximum extent permitted by applicable law, no
officer of the Company or member or former member of the Committee or of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or By-Laws of
the Company, each officer and member or former member of the Committee or of the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel) or liability (including any sum
paid in settlement of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and to the fullest
extent permitted, arising out of any act or omission to act in connection with
the Plan, except to the extent arising out of such officer's, member's or former
member's own fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the officers, members or former members may have
as directors under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or Designated Subsidiary. Notwithstanding anything else
herein, this indemnification will not apply to the actions or determinations
made by an individual with regard to Options granted to him or her under this
Plan.
D. Meetings of the Committee. The Committee shall adopt such rules and
regulations as it shall deem appropriate concerning the holding of its meetings
and the transaction of its business. Any member of the Committee may be removed
from the Committee at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at any time be filled
by resolution adopted by the Board. All determinations by the Committee shall be
made by the affirmative vote of a majority of its members. Any such
determination may be made at a meeting duly called and held at which a majority
of the members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing and signed by
all the members of the Committee shall be as fully effective as if it had been
made by a majority vote of the members at a meeting duly called and held.
E. Determinations. Each determination, interpretation or other action made
or taken pursuant to the provisions of this Plan by the Committee shall be
final, conclusive and binding for all purposes and upon all persons, including,
without limitation, the Participants, the Company and Designated Subsidiaries,
directors, officers and other employees of the Company and Designated
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Subsidiaries, and the respective heirs, executors, administrators, personal
representatives and other successors in interest of each of the foregoing.
V. Shares; Adjustment Upon Certain Events
A. Shares to be Delivered; Fractional Shares. Shares to be issued under the
Plan shall be made available, at the sole discretion of the Board, either from
authorized but unissued Shares or from issued Shares reacquired by the Company
and held in treasury. No fractional Shares will be issued or transferred upon
the exercise of any Option. In lieu thereof, the Company shall pay a cash
adjustment equal to the same fraction of the Fair Market Value of one Share on
the date of exercise.
B. Number of Shares. Subject to adjustment as provided in this Article V,
the maximum aggregate number of Shares that may be issued under the Plan shall
be 1,000,000. If Options are for any reason canceled, or expire or terminate
unexercised, the Shares covered by such Options shall again be available for the
grant of Options, subject to the foregoing limit.
C. Adjustments; Recapitalization, etc. The existence of the Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or Designated
Subsidiaries, any sale or transfer of all or part of its assets or business or
any other corporate act or proceeding. The Committee may make or provide for
such adjustments in the maximum number of Shares specified in Article V(B), in
the number of Shares covered by outstanding Options granted hereunder, and/or in
the Purchase Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received upon the
exercise of Options, as the Committee in its sole discretion may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants or to otherwise recognize the effect that otherwise would result
from any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of a merger or
consolidation in which the Company is not the surviving entity or in the event
of any transaction that results in the acquisition of substantially all of the
Company's outstanding Common Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of all of the Company's assets (the foregoing being referred to as
"Acquisition Events"), then the Committee may in its sole discretion terminate
all outstanding Options effective as of the consummation of the Acquisition
Event by delivering notice of termination to each Participant at least 20 days
prior to the date of consummation of the Acquisition Event; provided that,
during the period from the date on which such notice of termination is delivered
to the consummation of the Acquisition Event, each Participant shall have the
right to exercise in full all the Options that are then outstanding
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(without regard to limitations on exercise otherwise contained in the Options)
but contingent on occurrence of the Acquisition Event, and, provided that, if
the Acquisition Event does not take place within a specified period after giving
such notice for any reason whatsoever, the notice and exercise shall be null and
void. Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor or upon conversion of
shares or other securities, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number and class of shares and/or other securities or property subject to
Options theretofore granted or the Purchase Price (as hereinafter defined).
VI. Awards and Terms of Options
A. Grant. The Committee may grant Non-Qualified Stock Options or Incentive
Stock Options, or any combination thereof to Key Employees, provided that the
maximum number of Shares with respect to which Options may be granted to any Key
Employee during any calendar year may not exceed 25,000, except that in the year
of the first grant of Options to a Key Employee, the maximum number of Shares
with respect to which Options may be granted may not exceed 100,000. To the
extent that the maximum number of authorized Shares with respect to which
Options may be granted are not granted in a particular calendar year to a
Participant (beginning with the year in which the Participant receives his or
her first grant of Options hereunder), such ungranted Options for any year shall
increase the maximum number of Shares with respect to which Options may be
granted to such Participant in subsequent calendar years during the term of the
Plan until used. To the extent that any Option does not qualify as an Incentive
Stock Option (whether because of its provisions or the time or manner of its
exercise or otherwise), such Option or the portion thereof which does not
qualify, shall constitute a separate Non-Qualified Stock Option. Each Option
shall be evidenced by an Option agreement (the "Option Agreement") in such form
as the Committee shall approve from time to time.
B. Exercise Price. The purchase price per Share (the "Purchase Price")
deliverable upon the exercise of a Non-Qualified Stock Option shall be
determined by the Committee and set forth in a Participant's Option Agreement,
provided that the Purchase Price shall not be less than the par value of a
Share. The Purchase Price deliverable upon the exercise of an Incentive Stock
Option shall be determined by the Committee and set forth in a Participant's
Option Agreement but shall be not less than 100% of the Fair Market Value of a
Share at the time of grant; provided, however, if an Incentive Stock Option is
granted to a Ten Percent Stockholder, the Purchase Price shall be no less than
110% of the Fair Market Value of a Share.
C. Number of Shares. The Option Agreement shall specify the number of
Options granted to the Participant, as determined by the Committee in its sole
discretion.
D. Exercisability. At the time of grant, the Committee shall specify when
and on what terms the Options granted shall be exercisable. In the case of
Options not immediately exercisable in full, the Committee may at any time
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accelerate the time at which all or any part of the Options may be exercised and
may waive any other conditions to exercise. No Option shall be exercisable after
the expiration of ten years from the date of grant; provided, however, the term
of an Incentive Stock Option granted to a Ten Percent Stockholder may not exceed
five years. Each Option shall be subject to earlier termination as provided in
Article VII below.
E. Acceleration of Exercisability.
All Options granted and not previously exercisable shall become fully
exercisable immediately upon the later of a Change of Control (as defined
herein) or approval of the Plan by stockholders in accordance with Article III.
For this purpose, a "Change of Control" shall be deemed to have occurred upon:
(a) an acquisition after the Effective Date by any individual, entity
or group (within the meaning of Section 13d-3 or 14d-1 of the Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Act) of more than 20% of the combined voting power of the then
outstanding voting securities of Company entitled to vote generally in the
election of directors, including, but not limited to, by merger,
consolidation or similar corporate transaction or by purchase; excluding,
however, the following: (x) any such acquisition by the Company or
Designated Subsidiaries or (y) any such acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or
Designated Subsidiaries; or
(b) the approval of the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company and
Designated Subsidiaries on a consolidated basis; excluding, however, such a
sale or other disposition to a corporation with respect to which, following
such sale or other disposition, (x) more than 80% of the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors will be then
beneficially owned, directly or indirectly, by the individuals and entities
who were the beneficial owners of the outstanding Shares immediately prior
to such sale or other disposition, (y) no Person (other than the Company,
Designated Subsidiaries, and any employee benefit plan (or related trust)
of the Company or Designated Subsidiaries or such corporation and any
Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 80% or more of the outstanding Shares)
will beneficially own, directly or indirectly, 70% or more of the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (z) individuals
who were members of the incumbent board will constitute at least a majority
of the members of the board of directors of such corporation; or
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(c) within any 24 month period beginning on or after the Effective
Date, the persons who were directors of the Company immediately before the
beginning of such period ("Incumbent Directors") shall cease (for any
reason other than death) to constitute at least a majority of the Board or
the board of directors of any successor to the Company, provided that, any
director who was not a director as of the date hereof shall be deemed to be
an Incumbent Director if such director was elected to the Board by, or on
the recommendation of or with approval of, at least two-thirds of the
directors who qualified as Incumbent Directors either actually or by prior
operation of this subsection, unless such election, recommendation or
approval was a result of an actual or threatened election contest of the
type contemplated by Regulation 14a-11 promulgated under the Exchange Act
or any successor provision.
F. Exercise of Options.
1. A Participant may elect to exercise one or more Options by giving
written notice to the Committee of such election and of the number of Options
such Participant has elected to exercise, accompanied by payment in full of the
aggregate Purchase Price for the number of Shares for which the Options are
being exercised.
2. Shares purchased pursuant to the exercise of Options shall be paid for
at the time of exercise as follows:
(a) in cash or by check, bank draft or money order payable to the
order of Company;
(b) if the Shares are traded on a national securities exchange,
through the delivery of irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the aggregate Purchase Price; or
(c) on such other terms and conditions as may be acceptable to the
Committee (which may include payment in full or in part by the transfer of
Shares which have been owned by the Participant for at least 6 months or
the surrender of Options owned by the Participant) and in accordance with
applicable law.
3. Upon receipt of payment, the Company shall deliver to the Participant as
soon as practicable a certificate or certificates for the Shares then purchased.
G. Non-Competition and Other Provisions. In consideration of the grant of
Options, by accepting the grant of Options the Key Employee may be required to
agree during employment and, in the event any such Options become exercisable,
for a period of up to one year following the date of the Key Employee's
Termination of Employment, not to engage in any Competitive Activity, except to
the extent consented to by the Company in writing. Each Key Employee accepting
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a grant of Options may be required to (a) acknowledge that the Company or a
Designated Subsidiary will suffer irreparable harm in the event such Key
Employee engages in any Competitive Activity during this period, and (b) agree
that in addition to its remedies at law, the Company and a Designated Subsidiary
shall be entitled to injunctive relief as a consequence of a violation or
threatened violation of this covenant. Notwithstanding the foregoing, nothing in
this Plan shall prohibit or penalize ownership by a Key Employee of the shares
of a business that is registered under Section 12 of the Act and constitutes,
together with all such shares owned by any immediate family member or affiliate
of, or person acting in concert with, such Key Employee, less than 2% of the
outstanding registered shares of such business. The Committee will have the
discretion to impose in a Key Employee's Option Agreement such other conditions,
limitations and restrictions as it determines are appropriate in its sole
discretion, including any waivers of rights which a Key Employee may have.
H. Incentive Stock Option Limitations. To the extent that the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year under the Plan and/or any other stock
option plan of the Company orany subsidiary or parent corporation (within the
meaning of Section 424 of the Code) exceeds $100,000, such Options shall be
treated as Options which are not Incentive Stock Options.
To the extent permitted under Section 422 of the Code, or the applicable
regulations thereunder or any applicable Internal Revenue Service pronouncement,
if (i) a Participant's employment with the Company or Designated Subsidiary is
terminated by reason of death, Disability, Retirement or termination without
Cause, and (ii) the portion of any Incentive Stock Option that would be
exercisable during the post-termination period specified under Article VII but
for the $100,000 limitation currently contained in Section 422(d) of the Code,
is greater than the portion of such Stock Option that is immediately exercisable
as an `incentive stock option' during such post-termination period under Section
422, such excess shall be treated as a Non-Qualified Stock Option. If the
exercise of an Incentive Stock Option is accelerated for any reason, any portion
of such Option that is not exercisable as an Incentive Stock Option by reason of
the $100,000 limitation contained in Section 422(d) of the Code shall be treated
as a Non-Qualified Stock Option.
Should any of the foregoing provisions not be necessary in order for the
Stock Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly, without
the necessity of obtaining the approval of the stockholders of the Company,
except as otherwise required by law.
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VII. Effect of Termination of Employment
A. Death, Disability, Retirement, etc. Except as otherwise provided in the
Participant's Option Agreement, upon Termination of Employment, all outstanding
Options then exercisable and not exercised by the Participant prior to such
Termination of Employment (and any Options not previously exercisable but made
exercisable by the Committee at or after the Termination of Employment) shall
remain exercisable by the Participant to the extent not exercised for the
following time periods, or, if earlier, the prior expiration of the Option in
accordance with the terms of the Plan and grant:
1. In the event of the Participant's death, Retirement or Disability,
such Options shall remain exercisable by the Participant (or by the
Participant's estate or by the person given authority to exercise such
Options by the Participant's will or by operation of law) for a period of
one year from the date of the Participant's death, Retirement or
Disability, provided that the Committee, in its sole discretion, may at any
time extend such time period.
2. In the event the Participant's employment is terminated by the
Company or a Designated Subsidiary without Cause, such Options shall remain
exercisable for 90 days from the date of the Participant's Termination of
Employment, provided that the Committee, in its sole discretion, may at any
time extend such time period.
B. Cause. Upon the Termination of Employment of a Participant for Cause, or
if the Company or a Designated Subsidiary obtains or discovers information after
Termination of Employment that such Participant had engaged in conduct that
would have justified a Termination of Employment for Cause during employment,
all outstanding Options of such Participant shall immediately terminate and
shall be null and void.
C. Other Termination. In the event of Termination of Employment for any
reason other than as provided in Article VII(A) or VII(B), all outstanding
Options not exercised by the Participant prior to such Termination of Employment
shall remain exercisable (to the extent exercisable by such Participant
immediately before such termination) for a period of 30 days after such
termination, provided that the Committee, in its sole discretion, may at any
time extend such time period.
D. Cancellation of Options. Except as otherwise provided in Article VI(E),
no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such Options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.
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VIII. Nontransferability of Options
No Option shall be transferable by the Participant otherwise than by will
or under applicable laws of descent and distribution, and during the lifetime of
the Participant may be exercised only by the Participant or his or her guardian
or legal representative. An Option shall also be transferable under a domestic
relations order that is a "qualified domestic relations order", as defined in
Section 414(p) of the Code, but may thereafter not be further transferred except
as provided in the prior sentence (with the alternate payee under such order
being substituted for "Participant"). In addition, except as provided above, no
Option shall be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and no Option shall be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
negotiate, pledge or hypothecate any Option, or in the event of any levy upon
any Option by reason of any execution, attachment or similar process contrary to
the provisions hereof, such Option shall immediately terminate and become null
and void.
IX. Rights as a Stockholder
A Participant (or a permitted transferee of an Option) shall have no rights
as a stockholder with respect to any Shares covered by such Participant's Option
until such Participant (or permitted transferee) shall have become the holder of
record of such Shares, and no adjustments shall be made for dividends in cash or
other property or distributions or other rights in respect to any such Shares,
except as otherwise specifically provided in this Plan.
X. Termination, Amendment and Modification
A. General Amendments and Termination. The Plan shall terminate at the
close of business on the tenth anniversary of the Effective Date (the
"Termination Date"), unless terminated sooner as hereinafter provided, and no
Option shall be granted under the Plan on or after that date. The termination of
the Plan shall not terminate any outstanding Options that by their terms
continue beyond the Termination Date. At any time prior to the Termination Date,
the Committee may amend or terminate the Plan or suspend the Plan in whole or in
part.
The Committee may at any time, and from time to time, amend, in whole or in
part, any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirements
referred to in Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to
Options granted prior to such amendment, suspension or termination, may not be
materially impaired without the consent of such Participant and, provided
further, without the approval of the stockholders of the Company entitled to
vote, no amendment may be made which would (i) materially increase the aggregate
number of shares of Common Stock that may be issued under this Plan (except by
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operation of Article V); (ii) decrease the minimum Purchase Price of any Option;
or (iii) extend the maximum option period.
The Committee may amend the terms of any Option granted, prospectively or
retroactively, but, subject to Article VI above or as otherwise provided herein,
no such amendment or other action by the Committee shall materially impair the
rights of any Participant without the Participant's consent. No modification of
an Option shall adversely affect the status of an Incentive Stock Option as an
incentive stock option under Section 422 of the Code. Notwithstanding the
foregoing, however, no such amendment may, without the approval of the
stockholders of the Company, effect any change that would require stockholder
approval under applicable law.
XI. Use of Proceeds
The proceeds of the sale of Shares subject to Options under the Plan are to
be added to the general funds of the Company and used for its general corporate
purposes as the Board shall determine.
XII. General Provisions
A. Right to Terminate Employment. Neither the adoption of the Plan nor the
grant of Options shall impose any obligation on the Company or Designated
Subsidiaries to continue the employment of any Participant, nor shall it impose
any obligation on the part of any Participant to remain in the employ of the
Company or Designated Subsidiaries.
B. Purchase for Investment. If the Board or the Committee determines that
the law so requires, the holder of an Option granted hereunder shall, upon any
exercise or conversion thereof, execute and deliver to the Company a written
statement, in form satisfactory to the Company, representing and warranting that
such Participant is purchasing or accepting the Shares then acquired for such
Participant's own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being offered and
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, and that in claiming such exemption the holder will, prior to
any offer for sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel acceptable to
the Company as to the availability of such exception.
C. Trusts, etc. Nothing contained in the Plan and no action taken pursuant
to the Plan (including, without limitation, the grant of any Option thereunder)
shall create or be construed to create a trust of any kind, or a fiduciary
relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. Any reserves that may be established
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by the Company in connection with the Plan shall continue to be part of the
general funds of the Company, and no individual or entity other than the Company
shall have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
D. Notices Any notice to the Company required by or in respect of this Plan
will be addressed to the Company at 18-01 River Road, Fair Lawn, New Jersey
07410, Attention: Chief Financial Officer, or such other place of business as
shall become the Company's principal executive offices from time to time. Each
Participant shall be responsible for furnishing the Committee with the current
and proper address for the mailing to such Participant of notices and the
delivery to such Participant of agreements, Shares and payments. Any such notice
to the Participant will, if the Company has received notice that the Participant
is then deceased, be given to the Participant's personal representative if such
representative has previously informed the Company of his status and address
(and has provided such reasonable substantiating information as the Company may
request) by written notice under this Section. Any notice required by or in
respect of this Plan will be deemed to have been duly given when delivered in
person or when dispatched by telegram or one business day after having been
dispatched by a nationally recognized overnight courier service or three
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid. The Company assumes no
responsibility or obligation to deliver any item mailed to such address that is
returned as undeliverable to the addressee and any further mailings will be
suspended until the Participant furnishes the proper address.
E. Severability of Provisions. If any provisions of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions of the Plan, and the Plan shall be construed and enforced
as if such provisions had not been included.
F. Payment to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Company and their employees, agents and
representatives with respect thereto.
G. Headings and Captions. The headings and captions herein are provided for
reference and convenience only. They shall not be considered part of the Plan
and shall not be employed in the construction of the Plan.
H. Controlling Law. The Plan shall be construed and enforced according to
the laws of the State of Delaware.
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I. Other Benefits. No payment under this Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company or a Designated Subsidiary nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability of
benefits is related to the level of compensation.
J. Costs. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Options
hereunder.
K. Section 162(m) Deduction Limitation. The Committee at any time may in
its sole discretion limit the number of Options that can be exercised in any
taxable year of the Company, to the extent necessary to prevent the application
of Section 162(m) of the Code (or any similar or successor provision), provided
that the Committee may not postpone the earliest date on which Options can be
exercised beyond the last day of the stated term of such Options.
L. Section 16(b) of the Act. All elections and transactions under the Plan
by persons subject to Section 16 of the Exchange Act involving shares of Common
Stock are intended to comply with all exemptive conditions under Rule 16b-3. The
Committee may establish and adopt written administrative guidelines, designed to
facilitate compliance with Section 16(b) of the Act, as it may deem necessary or
proper for the administration and operation of the Plan and the transaction of
business thereunder.
XIII. Issuance of Stock Certificates;
Legends; Payment of Expenses
A. Stock Certificates. Upon any exercise of an Option and payment of the
exercise price as provided in such Option, a certificate or certificates for the
Shares as to which such Option has been exercised shall be issued by the Company
in the name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.
B. Legends. Certificates for Shares issued upon exercise of an Option shall
bear such legend or legends as the Committee, in its sole discretion, determines
to be necessary or appropriate to prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act or to
implement the provisions of any agreements between Company and the Participant
with respect to such Shares.
C. Payment of Expenses. The Company shall pay all issue or transfer taxes
with respect to the issuance or transfer of Shares, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer and with the administration of the Plan.
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XIV. Listing of Shares and Related Matters
If at any time the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the grant of
Options or the award or sale of Shares under the Plan, no Option grant shall be
effective and no Shares will be delivered, as the case may be, unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.
XV. Withholding Taxes
The Company shall have the right to require prior to the issuance or
delivery of any shares of Common Stock payment by the Participant of any
Federal, state or local taxes required by law to be withheld.
The Committee may permit any such withholding obligation to be satisfied by
reducing the number of shares of Common Stock otherwise deliverable. A person
required to file reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number of shares of
Common Stock withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with such conditions as
are necessary to prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under then current
law, such conditions shall include the following: (x) the Withholding Election
shall be subject to the approval of the Committee and (y) the Withholding
Election is made (i) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date or is made in advance but takes effect during
such period, (ii) six (6) months before the stock award becomes taxable, or
(iii) during any other period in which a Withholding Election may be made under
the provisions of Rule 16b-3 promulgated pursuant to the Act. Any fraction of a
share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the Participant.
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