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MEASUREMENT SPECIALTIES, INC.
80 Little Falls Road
Fairfield, NJ 07004
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON October 20, 1995
To the Shareholders of
MEASUREMENT SPECIALTIES, INC:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders of
MEASUREMENT SPECIALTIES, INC., (the "Corporation") will be held at the
American Stock Exchange at 86 Trinity Place, New York, New York , on
October 20, 1995 at 10:00 a.m. Local Time for the following purposes:
1. To elect seven members to the Corporation's Board of Directors for a term
of one year and until the election and qualification of their successors;
2. To ratify the appointment of Grant Thornton LLP as the Corporation's
independent accountants;
3. To approve the Corporation's 1995 Stock Option Plan;
4. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on September 1, 1995 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at,
the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to
attend, please complete, date and sign the accompanying proxy and return it
promptly in the enclosed envelope to assure that your shares are represented
at the meeting. If you do attend, you may revoke any prior proxy and vote
your shares in person if you wish to do so. Any prior proxy will
automatically be revoked if you execute the accompanying proxy or if you
notify the Secretary of the Corporation, in writing, prior to the Annual
Meeting of the Shareholders.
By Order of the Board of Directors
Joseph R. Mallon Jr., Chairman
Dated: September 12, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF
YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
PROXY STATEMENT for
Annual Meeting of Shareholders
To be Held on October 20, 1995
This proxy statement and the accompanying form of proxy ("Proxy") have been
mailed on or about September 22, 1995 to the shareholders of record on
September 1, 1995 of MEASUREMENT SPECIALTIES, INC., a New Jersey corporation
(the "Corporation" or the "Company") in connection with the solicitation of
Proxies from the holders of shares of the Corporation's common stock, no par
value (the "Common Stock"), by the Board of Directors of the Corporation for
use at the Annual Meeting of Shareholders to be held at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York, on October 20,
1995, at 10:00 a.m., Local Time, and at any adjournment thereof.
Shares of Common Stock (hereinafter referred to as the "Shares") represented by
an effective Proxy in the accompanying form will be voted as directed thereon.
If no direction is given, then the Shares represented by the Proxy will not be
voted.
A Proxy may be revoked at any time before it is voted. A shareholder may
revoke his Proxy by voting in person at the Annual Meeting or submitting to the
Secretary of the Corporation at the meeting a subsequently dated proxy. In
addition, a shareholder may revoke his proxy by notifying the Secretary of the
Corporation either in writing prior to the Annual Meeting or in person at the
Annual Meeting. Revocation is effective only upon receipt of such notice by
the Secretary.
The solicitation of the enclosed Proxy is made on behalf of the Board of
Directors of the Corporation and the Corporation will bear the cost of the
solicitation. The Board of Directors may use the services of its executive
officers and certain directors to solicit Proxies from shareholders in person
and by mail, telegram and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send Proxies, proxy
statements and other material to the beneficial owners of Shares held of record
by such persons, and the Corporation may reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing.
The Corporation's Annual Report on Form 10-KSB for the fiscal year ended March
31, 1995 (without exhibits) accompanies this Proxy Statement. Copies of
exhibits may be obtained at a fee equal to the Corporation's cost in furnishing
such copies. Requests should be addressed to Measurement Specialties, Inc., at
its principal executive offices, 80 Little Falls Road, Fairfield, New Jersey
07004 Att: Shareholder Relations Dept.
VOTING SECURITIES AND RECORD DATE
The securities which are entitled to vote at the meeting are the Shares. Each
Share is entitled to one vote on each matter submitted to shareholders. The
Board of Directors has designated the close of business on September 1, 1995 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice and to vote at the meeting and any adjournment thereof. At
that date, 3,528,987 Shares of Common Stock were outstanding. Voting of the
Shares is on a noncumulative basis.
PRINCIPAL STOCKHOLDERS; SHARES HELD BY MANAGEMENT
The following table sets forth as of September 1, 1995, the number of Shares of
the Company's common stock owned and the percentage of outstanding shares held
by (i) owners of more than 5% of the outstanding voting stock of the
Corporation, (ii) each Director and Executive Officer of the Corporation, (iii)
each Nominee to the Board and (iv) all Officers and Directors of the Company as
a group. Each person named in the table has sole investment power and sole
voting power with respect to the Shares of voting securities set opposite his
name, except as otherwise indicated.
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AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
ACQUIRABLE
NAME AND ADDRESS OF CURRENTLY WITHIN PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNED 60 DAYS OF CLASS
Common stock, Donald Weiss 366,873 30,000 11.2%
no par value Measurement Specialties, Inc.
80 Little Falls Road
Fairfield, NJ 07004
Joseph R. Mallon, Jr. 43,500 5,000 1.4%
Measurement Specialties, Inc.
80 Little Falls Road
Fairfield, NJ 07004
Damon Germanton 405,393 30,000 12.2%(1)
Measurement Specialties, Inc.
80 Little Falls Road
Fairfield, NJ 07004
Richard S. Betts 66,648 7,000 2.1%
Rich Plan of Lake Plains, Inc.
Box 110
Perry, NY 14530
Dr. Steven P. Petrucelli 20,000 (2)
Rutgers University
Biomedical Engineering Bldg.
Piscataway, NJ 08854
The Hon. Dan J. Samuel 1,000 5,000 (2)
154 Hillspoint Road
Westport, CT 06880
Mark Cappiello 110,000 3.0%
Measurement Specialties, Inc.
80 Little Falls Road
Fairfield, NJ 07004
Mark Shornick 105,000 2.9%
Measurement Specialties, Inc.
80 Little Falls Road
Fairfield, NJ 07004
Current Officers and 883,414 312,000 31.1%
Directors as a group
(8 persons)
(1)Excludes ownership of 12,555 shares by Mr. Germanton's daughter, of whichMr.
Germanton disclaims beneficial ownership.
(2)Percentage of shares beneficially owned does not exceed one percent of the
class.
ITEM I. ELECTION OF DIRECTORS
The Company's Board of Directors has nominated the following slate containing
seven Board members. Directors are proposed to be elected at the Annual
Meeting of Shareholders to hold office for a term until the next annual meeting
of shareholders and until their respective successors have been duly elected
and have qualified. The affirmative vote of a majority of the outstanding
Shares entitled to vote at the Annual Meeting of Shareholders is required to
elect the directors. Incomplete Proxies received by the Company will be voted
in favor of the Nominees. In the event that any nominee is unable to serve,
the Proxy solicited hereby may be voted, in the discretion of the proxies, for
the election of another person in his stead. The Board of Directors knows of
no reason to anticipate that this will occur.
The nominees for the Board of Directors are as follows:
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NOMINEES AGE
Joseph R. Mallon, Jr. 50
Damon Germanton 52
Richard S. Betts 51
Steven P. Petrucelli 43
John Arnold 41
Theodore Coburn 41
Hon. Dan J. Samuel 70
Joseph R. Mallon, Jr. has served as the Company's President and Chief Executive
Officer since April 1, 1995 and as a Director since April 1, 1992. In October
1985, Mr. Mallon co-founded NovaSensor, where he served as Co-President and
Director until its acquisition by Lucas Industries, Inc., a subsidiary of Lucas
Ltd. of the United Kingdom, in April 1990. From that time until his departure
in January 1993, Mr. Mallon was the Executive Vice President and a Director of
Lucas NovaSensor. Thereafter, until his appointment as President, Chief
Executive Officer and Chairman of the Board, Mr. Mallon was enrolled in the
graduate PhD EE program at Stanford University. Mr. Mallon serves on the
Board's Audit Committee and on its Operating Committee.
Damon Germanton has served as a Director and an executive officer since he
founded the Company in 1981. Mr. Germanton serves on the Board's Operating
Committee.
Richard S. Betts was appointed to the Board of Directors on April 1, 1992. Mr.
Betts has been the President of Rich Plan of Lake Plains, Inc., a distributor
of privately labeled food products, since 1973. Mr. Betts chairs the Board's
Audit Committee and serves on its Compensation Committee.
Steven P. Petrucelli, who was elected a Director on June 15, 1992, has
consulted in medical technology for more than the past five years. Since 1979,
Dr. Petrucelli has served as an Assistant Professor at Rutgers University in
the Biomedical and Electrical Engineering Departments. Dr. Petrucelli joined
the Company's staff in January 1991. Previously, Dr. Petrucelli consulted for
the Company. Dr. Petrucelli chairs the Board's Operating Committee and serves
on its Compensation Committee.
The Hon. Dan J. Samuel, who was elected a Director on October 27, 1994, has
been a business consultant since his retirement in 1986. Previously, Mr.
Samuel served as President and Chief Executive Officer of Scallop Corporation,
a wholly owned subsidiary of the Royal Dutch/Shell Group. Mr. Samuel currently
serves on the Boards of Directors of Canadian Overseas Packaging Company and,
since 1985, Witco Corporation. Mr. Samuel chairs the Board's Compensation
Committee and serves on its Audit Committee.
Mark Cappiello has served as Vice President for Sales and Marketing since
January 1988. Mr. Cappiello was previously employed by Terraillon S.A., a
French manufacturer and distributor of scales and balance products.
Mark A. Shornick has served as Chief Financial Officer since July 1989, as
Assistant Secretary since April 26, 1993 and as Treasurer since June 19, 1995.
Before joining the Company, Mr. Shornick was employed as an audit manager at
Miller, Ellin & Company and Laventhol & Horwath, accounting firms in New York
City.
John Arnold was appointed to the Board of Directors on June 19, 1995. Mr.
Arnold has been in private law practice since 1989 and focuses primarily in
relationships between United States technology companies and Asian
manufacturers. Prior to 1989, Mr. Arnold was employed with the law firm of
Wilson, Sonsini, Goodrich & Rosati in Palo Alto, California and prior thereto
with Foley & Lardner in Milwaukee, Wisconsin. Upon management's request, Mr.
Arnold began providing legal services to the Company during the current fiscal
year.
Theodore Coburn, a nominee to the Board of Directors, presently provides
strategic and financial consulting services for eight emerging growth companies
and is a member of the board of directors for two corporations and three mutual
funds. Mr. Coburn was Managing Director of Prudential Securities from 1986 to
1991 and of Merrill Lynch Capital Markets from 1983 to 1986. Mr. Coburn holds
a masters degree at the Harvard University Graduate School of Education and a
masters degree at the Harvard University Divinity School.
The Board of Directors met four times during the last fiscal year. The Board
of Directors has Audit, Compensation and Operations Committees. The
Compensation and Operations Committees are comprised of three members each.
The Audit Committee consists of two members. The Board of Directors does not
have a Nominating Committee.
The Audit Committee includes: Richard Betts, Chairman, Joseph R. Mallon Jr.,
and Dan Samuel. The Committee met two times during the last fiscal year. The
Audit Committee requests and receives information and reports from management,
outside counsel and the Company's independent auditing firm. The Committee
utilizes this information for review and discussion of the auditing, internal
control, financial reporting and compliance activities of the Company and its
subsidiaries.
The Compensation Committee includes: Dan Samuel, Chairman, Steven Petrucelli,
and Richard Betts. The Committee met one time during the last fiscal year.
The purpose of the Compensation Committee is to establish and execute
compensation policy and programs for MSI executives. Joseph R. Mallon Jr.
previously served on the Committee, but resigned when he became the CEO on
April 1, 1995. Thereafter Steven Petrucelli joined the committee and Dan
Samuel became the Chairman.
The Operations Committee includes: Jens Hoeg, Chairman, Damon Germanton and
Steven Petrucelli. The Operations Committee met twice during the last fiscal
year. The purpose of the Operations Committee is to monitor the operations of
the Company and its subsidiaries and to make recommendations to the Board when
necessary. Jens Hoeg chaired the Operations Committee through March 25, 1995,
the date of his resignation from the Board of Directors. Thereafter, Steven
Petrucelli became Chairman of the Committee
No director attended less than 75% of the meetings.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished
to the Company, eight reporting persons failed to file reports required by
Section 16(a) of the Exchange Act on timely basis, as disclosed in these Forms,
during the year ended March 31, 1995. There were no known failures to file
required Forms. Messrs. Mallon, Betts, Petrucelli, Samuel, Cappiello and
Shornick and Jens F. Hoeg (then a Director) each filed one late report for a
stock option awarded on October 27, 1994. Mr. Mallon filed a late report for a
stock option awarded on April 27, 1995. Mr. Germanton filed one late report
for a stock option awarded on December 9, 1994.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Directors and Executive Officers as of the
date of the Proxy Statement:
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DIRECTOR
NAME AGE POSITIONS AND OFFICES SINCE
Joseph R. Mallon, Jr. 50 Director 1992
President, Chief Executive
Officer and Chairman of the
Board of Directors effective
April 1, 1995
Damon Germanton 52 Executive Vice President, 1981
Chief Operating Officer,
Secretary and Director
Richard S. Betts 51 Director 1992
Steven P. Petrucelli 43 Director 1992
John Arnold 41 Director 1995
The Honorable Dan J. Samuel 70 Director 1994
Mark A. Shornick 41 Chief Financial Officer, N/A
Assistant Secretary and
Treasurer
Mark Cappiello 41 Vice President of Sales N/A
and Marketing
EXECUTIVE COMPENSATION
The Company's Summary Compensation Table, Option/SAR Grants Table and
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table for
the year ended March 31, 1995 appear on the following pages. For the year
ended March 31, 1995, there were no long-term incentive plan ("LTIP") awards,
nor were any stock options or stock appreciation rights repriced.
Through March 31, 1995, non-employee Directors were paid $1,000 for each Board
meeting attended, up to a maximum of $4,000 per fiscal year. Thereafter, all
non-officer Directors are paid $1,000 for attending each regularly scheduled
Board meeting plus $250 for attending ($500 for chairing) each quarterly
Committee meeting.
Additionally, on October 27, 1994 each non-employee Director was granted an
option to purchase 5,000 common shares at $3.50, vesting on October 27, 1995
(subject to completion of the Director's then current term) and expiring on
October 27, 2000. Mr. Petrucelli was granted an option to purchase an then
aggregate of 20,000 common shares at $3.50, exercisable for five years, in
cumulative annual installments of 20 percent beginning October 27, 1995.
The company's employment agreements with its former Chief Executive Officer and
its current Chief Operating Officer provide for a minimum annual salary for
each officer, through January 31, 1996, of $175,000, subject to bonuses and
merit increases which may be granted by the Board's Compensation Committee.
Pursuant to these agreements, the Company would become obligated to pay
severance benefits computed based on the average annual compensation for the
latest three years of employment if the Board were to decline to renew these
agreements by January 31, 1995.
The Company's employment agreement with its former Chief Executive Officer was
terminated as of March 31, 1995. As a result of this termination, the Company
is obligated to pay a $194,833 severance benefit on January 31, 1996.
Additionally, the Company is required to employ the former Chief Executive
Officer as a full-time marketing and management consultant to the Company at a
monthly compensation of $15,667 through January 31, 1996.
The Chief Operating Officer agreed to extend, until completion of a review by
the Compensation Committee, the date by which the Board must renew his
employment agreement or obligate the Company for a severance benefit
thereunder.
On April 27, 1995, the Board approved a compensation arrangement with the
Company's new Chief Executive Officer. The arrangement, effective April 1,
1995 provides for a minimum annual salary of $100,000, subject to an annual
performance bonus of up to $120,000 which the Board may grant . Additionally,
the Board granted the officer an option to purchase an aggregate of 144,000
common shares as at $4.875, excercisable under certain conditions in cumulative
annual installments and expiring on various dates through April 27, 2005.
The following table sets forth certain information concerning the
compensation of the named executive officers for each of the fiscal years ended
March 31, 1995, 1994 and 1993 respectively. Information is not given in the
table for any portion of the year during which a person was not an officer or
director of the Corporation.
SUMMARY COMPENSATION TABLE
For the Year Ended March 31, 1995
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Annual Compensation (1) Awards Payouts Long Term Compensation
Other Securities
Name and Year Annual Restricted Underlying All
Principal Ended Bonus Compensation Stock Awards Options/ LTIP Other
Position March 31 Salary($) ($)(2) ($)(2)(3) ($) SARs (#) Payouts(#) Compensation ($)(4)
Donald Weiss
President and 1995 188,000 --- 11,498 0 0 0 196,933
Chief Executive 1994 183,000 0 8,499 0 20,000 0 2,000
Officer (5) 1993 175,000 34,000 6,282 0 10,000 0 0
Damon Germanton
Executive Vice
President, 1995 188,000 --- 13,421 0 10,000 0 2,000
Chief Operating 1994 183,000 0 10,048 0 20,000 0 2,000
Officer and 1993 175,000 34,000 6,869 0 10,000 0 0
Secretary
Mark Cappiello
VicePresident of 1995 110,000 --- 8,953 0 50,000 0 2,000
Sales and 1994 105,000 20,000 5,989 0 0 0 2,000
Marketing 1993 100,000 20,000 9,205 0 0 0 0
Mark A. Shornick
Chief Financial 1995 105,000 --- 0 0 25,000 0 2,000
Officer, Assistant 1994 102,000 5,000 0 0 0 0 2,000
Secretary & Treasurer 1993 97,000 14,850 0 0 25,000 0 0
(1)Amounts do not include payments of overseas living expenses relating to Mr.
Germanton's Hong Kong assignment.
(2)Bonuses earned for 1995 are not calculable through the latest practicable
date.
(3)Perquisites, which did not exceed the lesser of $50,000 or 10 percent of
each officer's salary and bonus, principally consist of payments reimbursing
Messrs. Weiss and Germanton for their personal use of their automobiles and the
cost of a company automobile (excluding insurance) provided for Mr. Cappiello's
personal use. Additionally, for 1994 the Company paid long-term disability
income insurance premiums for the benefit of Messrs. Weiss ($3,526 for 1995 and
$882 for 1994) and Germanton ($3,673 for 1995 and $1,836 for 1994).
(4)All other compensation consists of the Company's annual contributions to a
defined contribution plan established under Section 401(k) of the Internal
Revenue Code. Additionally, all other compensation for 1995 includes $194,833
accrued for the termination of Mr. Weiss' employment contract.
(5)Mr. Weiss' services as the Company's President, Chief Executive Officer and
Chairman of the Board of Directors ended on March 31, 1995.
Option/SAR Grants in Last Fiscal Year
Individual Grants
For the Year Ended March 31, 1995
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% of Total Options/
# of Securities SARs Granted To Exercisable Expiration
Underlying Options/ Employees in or Base Price Date
NAME SARs Granted(#) Fiscal Year ($/SH)
Damon Germanton 10,000(1) 6.67% $3.30 12/09/2000
Mark A. Shornick 5,000(2) 3.33% $3.50 10/27/2000
5,000(3) 3.33% $3.50 10/27/2001
5,000(4) 3.33% $3.50 10/27/2002
5,000(5) 3.33% $3.50 10/27/2003
5,000(6) 3.33% $3.50 10/27/2004
Mark Cappiello 10,000(2) 6.67% $3.50 10/27/2000
10,000(3) 6.67% $3.50 10/27/2001
10,000(4) 6.67% $3.50 10/27/2002
10,000(5) 6.67% $3.50 10/27/2003
10,000(6) 6.67% $3.50 10/27/2004
(1)Exercisable beginning December 9, 1995.
(2)Exercisable beginning October 27, 1995.
(3)Exercisable beginning October 27, 1996.
(4)Exercisable beginning October 27, 1997.
(5)Exercisable beginning October 27, 1998.
(6)Exercisable beginning October 27, 1999.
Aggregated Option/SAR Exerceises in Last Fiscal Year
and FY-End Option/SAR Values
For the Year Ended March 31, 1995
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Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options/
Acquired on Value Options/SARs at Y-End(#) SARs at FY-End ($)(1)
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
Donald Weiss 0 0 30,000 29,750
0 0
Damon Germanton 0 0 30,000 29,750
10,000 13,250
Mark Cappiello 0 0 100,000 193,750
50,000 56,250
Mark A. Shornick 0 0 100,000 193,750
25,000 28,125
(1)Intrinsic value, based on the excess of the closing price of the Company's common stock at March 31, 1995
($4.63) over the exercise price of the options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Most of the Company's products are obtained from River Display, Ltd., a Hong
Kong company of which M.B. Lee is a principal shareholder. M.B. Lee served on
the Board from April 1, 1992 through October 27, 1994. The Company's purchases
from River Display, Ltd. approximated $ 4,029,000 from April 1, 1994 through
October 27, 1994 and $5,439,000 for the year ended March 31, 1994.
ITEM II
PROPOSAL FOR APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Grant Thornton LLP as
independent auditors of the Company for fiscal year 1996 subject to
ratification by the stockholders. Grant Thornton LLP has served as the
Company's independent auditors since 1992.
Audit services expected to be performed by Grant Thornton LLP during fiscal
year 1996 will consist of the audit of financial statements of the Company and
its subsidiaries. A representative of Grant Thornton LLP will be present at
the Annual Meeting and will be given an opportunity to make a statement if he
so desires and to respond to appropriate questions.
During the prior three years ended March 31, 1995, the Company has had no
disagreements with accountants on matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to their accountant's satisfaction, would have caused them to
make reference to such matters in their reports.
The Board of Directors recommends that the shareholders vote for approval of
the proposal to ratify the appointment of Grant Thornton LLP as independent
auditors for fiscal year 1996.
ITEM III
PROPOSAL TO APPROVE THE COMPANY'S
1995 EMPLOYEE STOCK OPTION PLAN
On September 8, 1995, the Board of Directors of the Company adopted a Stock
Option Plan. The plan is intended to comply with the requirements of Section
422 of the Internal Revenue Code of 1986, as amended. Approval of the Plan is
subject to the approval by the Shareholders at the Annual Meeting. The Plan
provides for the issuance of up to 326,000 employee stock options over a ten
year period commencing September 8, 1995.
Employees eligible for participation in the Plan consist of the Company's
current management, as well as any additional executive officers who may be
hired by the Company in the future. Once the Plan has been approved by the
Shareholders, the Board of Directors has the ability to allocate the Options
among the various eligible employees at the Board's discretion.
The Board of Directors believes that its ability to grant Options under the
Plan will advance the interests of the Company by strengthening its ability to
attract and retain in its employ people of desired training, experience and
ability, and to furnish additional incentives to its eligible employees upon
whose judgment, initiative and efforts the Company is largely dependent for the
successful conduct of its operations.
The Board of Directors recommends that the shareholders vote for approval of
the Employee Stock Option Plan.
GENERAL
The 1995 Stock Option Plan (the "1995 Plan") was adopted by the Board of
Directors on September 8, 1995 to replace the Company's existing 1985 Stock
Option Plan which by its terms expires on September 30, 1995. The Board
reserved a total of 326,000 shares of Common Stock for issuance under the 1995
Plan and terminated the 1985 Plan under which 900,000 shares had been reserved,
but options for only 674,000 shares had been granted. A copy of the Plan is
annexed hereto as Exhibit A.
Options granted under the 1995 Plan may be either "incentive stock options" as
defined in Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code") or nonstatutory options. See "Tax Information" below for information
concerning the tax treatment of both incentive stock options and nonstatutory
options.
The shareholders are requested in this Proposal to approve the terms of the
1995 Plan. Incentive stock options may not be granted under the 1995 Plan
unless it is approved by the Company's shareholders within twelve months of its
adoption. The affirmative vote of the holders of a majority of the shares
present and entitled to vote at the Annual Meeting will be required to approve
the 1995 Plan.
The essential features of the 1995 Plan are outlined below:
ADMINISTRATION
The 1995 Plan is administered by the Board of Directors of the Company. The
Board has the power to construe and interpret the 1995 Plan and, subject to the
provisions of the 1995 Plan, to determine the persons to whom and the dates on
which options will be granted, the number of shares to be subject to each
option, the time or times during the term of each option within which all or a
portion of such option may be exercised, the exercise price, the type of
consideration and other terms of the option. The Board of Directors is
authorized to delegate administration of the 1995 Plan to a committee composed
of not fewer than two members of the Board. The Board has delegated
administration of the 1995 Plan to the Compensation Committee of the Board. As
used herein with respect to the 1995 Plan, the term "Board" refers to the
delegated Committee of the Board to the extent it is administrating the 1995
Plan.
The proposed regulations under Section 162(m) require that the directors who
serve as members of any Committee administering the 1995 Plan must be "outside
directors". This limitation would exclude from the delegated Committee (i)
current employees of the Company, (ii) former employees of the Company
receiving compensation for past services (other than benefits under a
tax-qualified pension plan), (iii) current and former officers of the Company,
(iv) directors currently receiving direct and indirect remuneration from the
Company in any capacity (other than as a director), unless any such person is
otherwise considered an "outside director" for purposes of Section 162(m). The
Company currently intends to monitor the proposed regulations and will
determine at the appropriate time whether to make any change to the composition
of its delegated Committee if any would be required by the final regulations.
ELIGIBILITY
Incentive stock options may be granted under the 1995 Plan only to employees
(including officers of the Company and its affiliates). Directors and
consultants are eligible to receive nonstatutory stock options under the 1995
Plan.
No option may be granted under the 1995 Plan to any person who at the time of
the grant, owns (or is deemed to own) stock possessing more than 10% of the
total combined voting power of the Company or any affiliate of the Company,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant, and the term of the
option does not exceed five years from the date of grant. For incentive stock
options granted under the 1995 Plan, the aggregate fair market value,
determined at the time of grant, of the shares of Common Stock with respect to
which such options are exercisable for the first time by an optionee during any
calendar year (under all such plans of the Company and its Affiliates) may not
exceed $100,000.
The 1995 Plan also contains a per-person, per-calendar year limitation equal to
200,000 shares of Common Stock. The purpose of this limitation is to conform
with the requirements of Section 162(m) relating to performance based
compensation and to permit the Company to be able to deduct for tax purposes
the compensation attributable to the exercise of options granted under the 1995
Plan.
STOCK SUBJECT TO THE 1995 PLAN
If options granted under the 1995 Plan expire or otherwise terminate without
being exercised, the Common Stock not purchased pursuant to such options again
becomes available for issuance under the 1995 Plan.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under the
1995 Plan. Individual option grants may be more restrictive as to any or all of
the permissible terms described below:
EXERCISE PRICE; PAYMENT. The exercise price of incentive stock options under
the 1995 Plan may not be less than the fair market value of the Common Stock
subject to the option on the date of the option grant, and in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value. The
exercise price of nonstatutory options under the 1995 Plan may not be less than
85% of the fair market value of the Common Stock subject to the option on the
date of the option grant.
The exercise price of options granted under the 1995 Plan must be paid in cash
at the time the option is exercised, by delivery of other Common Stock of the
Company, or by a combination of the two methods of payment.
OPTION EXERCISE. Options granted under the 1995 Plan may become exercisable in
cumulative increments ("vest") as determined by the Board. Shares covered by
currently outstanding options under the Company's 1985 Stock Option Plan vary
in their rate of vesting, but the most current grants typically vest at the
rate of 20% per year during the optionee's employment. Shares covered by
options granted under the 1995 Plan may be subject to different vesting terms.
The Board has the power to accelerate the time during which an option may be
exercised. To the extent provided by the terms of an option, an optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by a cash payment upon exercise, by authorizing the
Company to withhold a portion of the stock otherwise issuable to the optionee,
by delivering already-owned stock of the Company or by a combination of these
means.
TERM. The maximum term of options under the 1995 Plan is ten years, except that
in certain cases (see "Eligibility") the maximum term is five years. Options
under the 1995 Plan terminate three months after the optionee ceases to be
employed by or serve as a director or consultant to the Company or any
affiliate of the Company, unless (a) the termination of such relationship is
due to such person's permanent and total disability (as defined in the Code),
in which case the option may, but need not, provide that it may be exercised at
any time within one year of such termination; (b) the optionee dies while
employed by or serving as a director or consultant to the Company or any
affiliate of the Company, in which case the option may, but need not, provide
that it may be exercised (to the extent the option was exercisable at the time
of the optionee's death) within one year of the optionee's death by the person
or persons to whom the rights to such option pass by will or by the laws of
descent and distribution; or (c) the option by its terms specifically provides
otherwise.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the 1995 Plan or subject to any
option granted under the 1995 Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure of otherwise), the 1995 Plan and
options outstanding thereunder will be appropriately adjusted as to the class
and the maximum number of shares subject to such plan, the maximum number of
shares which may be granted to any person during a calendar year, and the
class, number of shares and price per share of stock subject to such
outstanding options.
EFFECT OF CERTAIN CORPORATE EVENTS
The 1995 Plan provides that, in the event of a merger, or other corporate
reorganization, or acquisition, that options granted under the 1995 Plan will
terminate if not exercised prior to such event. In such event, the Board may,
in the exercise of its sole discretion, declare that any Option shall be
exercisable as to all of the stock subject to the Option, including shares as
to which the Option would not otherwise be exercisable. In the event of any
dissolution or liquidation of the Company, any options outstanding under the
1995 Plan shall terminate if not exercised prior to such event. The
acceleration of an option in the event of an acquisition or similar corporate
event may be viewed as an antitakeover provision, which may have the effect of
discouraging a proposal to acquire or otherwise obtain control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the 1995 Plan without stockholder approval
or ratification at any time or from time to time. Unless sooner terminated, the
1995 Plan will terminate on September 8, 2005.
The Board may also amend the 1995 Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within twelve months before or after its adoption by the Board if
the amendment would: (a) increase the number of shares reserved for options
under the plan; (b) materially modify the requirements as to eligibility for
participation under the plan; or (c) materially increase the benefits accruing
to participants under the plan. The Board may submit any other amendment to the
1995 Plan for stockholder approval.
RESTRICTIONS ON TRANSFER
Under the 1995 Plan, an option may not be transferred by the optionee otherwise
than by will or by the laws of descent and distribution. During the lifetime of
an optionee, an option may be exercised only by the optionee.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive stock options under the 1995 Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or the
Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition
will be a capital gain or loss which will be long-term or short-term depending
on whether the stock was held for more than one year. Long term capital gains
currently are generally subject to lower tax rates than ordinary income. The
maximum capital gains rate for federal income tax purposes is currently 28%,
while the maximum ordinary income rate is effectively 39.6% at the present
time. Slightly different rules may apply to optionees who are subject to
Section 16(b) of Securities Exchange Act of l934, as amended (the "Exchange
Act").
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will be entitled (subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code and
the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition
occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the 1995
Plan generally have the following federal income tax consequences.
There are no tax consequences to the optionee or the Company by reason of the
grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules apply to the optionees who are subject to Section
16(b) of the Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m), which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a table year to the extent that
compensation exceeds $1,000,000 for a covered employee. It is possible that
compensation attributable to stock options, when combined with all other types
of compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year. The Company does not
currently anticipate that Section 162(m) will be applicable to its operations.
However, in the event that the Company determines that 162(m) may become
applicable with respect to compensation to be paid to an officer of the
Company, the Company may choose to administer the Plan and make grants under
the Plan in a manner which would exempt compensation related to an option
granted under the Plan exempt from the Section 162(m) limitation.
ITEM IV.
OTHER BUSINESS
As of the date of this proxy statement, the only business which the Board of
Directors intends to present, and knows that others will present, at the
meeting is that hereinabove set forth. If any other matter or matters are
properly brought before the meeting, or any adjournments thereof, it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's next Annual
Meeting of Shareholders must be received by the Company on or prior to May 7,
1996 to be eligible for inclusion in the Company's proxy statement and form of
proxy to be used in connection with the next Annual Meeting of Shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH R. MALLON JR., Chairman
Dated:September 12, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN
YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS
MAILED IN THE UNITED STATES OF AMERICA.
</TABLE>
EXHIBIT 10
MEASUREMENT SPECIALTIES, INC.
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or Nonstatutory
Stock Options, at the discretion of the Board and as reflected in the terms of
the written option agreement.
2.DEFINITIONS. As used herein, the following definitions shall apply:
(a)"Board" shall mean the Board of Directors of the Company.
(b)"Code" shall mean the Internal Revenue Code of 1986, as amended.
(c)"Common Stock" shall mean the Common Stock of the Company.
(d)"Company" shall mean Measurement Specialties, Inc., a New Jersey
corporation.
(e)"Consultant" shall mean any person who is engaged by the Company to render
consulting services and is compensated for such consulting services.
(f)"Director" shall mean any director of the Company whether compensated for
such services or not.
(g)"Employee" shall mean any person, including officers and directors, employed
by the Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(h)"Incentive Stock Option" shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(i)"Nonstatutory Stock Option" shall mean an Option not intended to qualify as
an Incentive Stock Option.
(j)"Option" shall mean a stock option granted pursuant to the Plan.
(k)"Optioned Stock" shall mean the Common Stock subject to an Option.
(l)"Optionee" shall mean an Employee, Director or Consultant who receives an
Option.
(m)"Plan" shall mean this 1995 Stock Option Plan.
(n)"Share" shall mean a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.
3.STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under this Plan is Three Hundred Twenty-Six Thousand (326,000) shares of Common
Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
shares issued under the Plan or the Option Plan and later repurchased by the
Company shall not become available for future grant or sale under the Plan.
4.ADMINISTRATION OF THE PLAN.
(a)PROCEDURE. The Plan shall be administered by the Board of Directors of the
Company. The Board of Directors shall appoint a Committee consisting of not
less than two members of the Board of Directors who are "outside directors"
within the meaning of Section 162(m) of the Code to administer the Plan on
behalf of the Board of Directors, subject to such terms and conditions as the
Board of Directors may prescribe. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors. Members of the
Board who are either eligible for Options or have been granted Options may vote
on any matters affecting the administration of the Plan or the grant of any
Options pursuant to the Plan, except that no such member shall act upon the
granting of an Option to himself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting of Options to him.
The Board of Directors may, from time to time, increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.
(b)POWERS OF THE BOARD. Subject to the provisions of the Plan, the Board shall
have the authority, in its discretion: (i) to grant Incentive Stock Options or
Nonstatutory Stock Options; (ii) to determine, upon review of relevant
information, the fair market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price shall
be determined in accordance with Section 8(a) of the Plan; (iv) to determine
the Employees, Consultants and Directors to whom, and the time or times at
which, Options shall be granted and the number of shares to be represented by
each Option; (v) to interpret the Plan; (vi) to prescribe, amend and rescind
rules and regulations relating to the Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend each Option; (viii) to
accelerate or defer (with the consent of the Optionee) the exercise date of any
Option, consistent with the provisions of Section 5 of the Plan; (ix) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously granted by the Board;
and (x) to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c)EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.
5.ELIGIBILITY.
(a)OPTIONEE ELIGIBILITY. Nonstatutory Stock Options may be granted to
Employees, Consultants and Directors. Incentive Stock Options may be granted
only to Employees. An Employee, Consultant or Director who has been granted an
Option may, if he is otherwise eligible, be granted an additional Option or
Options.
(b)INCENTIVE STOCK OPTION RESTRICTION. No Incentive Stock Option may be granted
to an Employee which, when aggregated with all other incentive stock options
granted to such Employee by the Company, would result in Shares having an
aggregate fair market value (determined for each Share as of the date of grant
of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.
This section 5(b) of the Plan shall apply only to an Incentive Stock Option
evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(c)SPECIAL RESTRICTION. No Employee may be granted, in any fiscal year of the
Company, Options to purchase in excess of 200,000 shares under the Plan.
(d)RESERVATION OF TERMINATION RIGHTS. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his right
or the Company's right to terminate his employment or consulting relationship
at any time, with or without cause.
6.TERM OF PLAN. The Plan shall become effective upon adoption by the Board of
Directors. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.
7.TERM OF OPTION. The term of each Option shall be ten (10) years from the
date of grant thereof (five (5) years if Optionee owns, immediately before the
Option is granted, stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent
or Subsidiary) or such shorter term as may be provided in the Stock Option
Agreement.
8.EXERCISE PRICE AND CONSIDERATION.
(a)EXERCISE PRICE. The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall not be less than the following:
(i) 100% of the fair market value per Share on the date of grant; or
(ii) if the Optionee shall be a person who shall own stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
then such exercise price shall not be less than 110% of the fair market value
per Share on the date of grant.
(b)ELIGIBLE CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option may consist entirely of cash, check, delivery
of Common Stock of the Company that has been held by the Optionee for a minimum
of six months having a fair market value equal to the exercise price payable
with respect to such exercise or any combination of such methods of payment, or
such other consideration and method of payment for the issuance of Shares as
shall be determined by the Board to the extent permitted under the general
corporation law of New Jersey.
9.EXERCISE OF OPTION.
(a)PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.
Full payment may, as authorized by the Board, consist of any consideration and
method of payment allowable under Section 8(b) of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b)TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the event of
termination of an Optionee's status as an Employee or Consultant, as the case
may be, such Optionee may, but only within ninety (90) days after the date of
such termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), exercise his Option to
the extent that he was entitled to exercise it at the date of such termination.
In the case of a Nonstatutory Stock Option, the Board may at any time, in its
determination, change such ninety (90) day post termination exercise period to
a period greater than ninety (90) days. In no event, however, shall an Option
be exercisable after the date of expiration of the term of such Option as set
forth in the Option Agreement. To the extent that an Optionee was not entitled
to exercise the Option at the date of termination, or if an Optionee fails to
exercise an Option within the time specified herein, the Option shall
terminate. Notwithstanding the above, in the event of termination of an
Optionee's status as an Employee or Consultant for cause, the Board may, in the
excersise of its sole disretion in such instances, terminate the Optionee's
Options.
(c)DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 9(b)
above, in the event of termination of an Optionee's status as an Employee or
Consultant as a result of his disability, the Optionee may, but only within one
year from the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise an Option to the extent the Optionee was entitled to exercise it at
the date of such termination. To the extent that an Optionee was not entitled
to exercise the Option at the date of termination, or if the Optionee does not
exercise the Option within the time specified herein, the Option shall
terminate.
(d)DEATH OF OPTIONEE. In the event of the death of an Optionee, the Option may
be exercised, at any time within one year following the date of death (but in
no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that had accrued at the date of death of
the Optionee. In the event that an Optionee should die within ninety (90) days
after termination as an Employee, Consultant or Director of the Company, the
Option may be exercised, at any time within one year following the date of
death (but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
such termination.
(e)NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10.ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a)STOCK SPLITS, COMBINATIONS AND RECAPITALIZATIONS. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
(b)DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances,
declare that any Option shall terminate as of a date fixed by the Board and
give each Optionee the right to exercise his Option as to all or any part of
the Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable.
(c)MERGER, CONSOLIDATION OR SALE OF ASSETS. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Company shall provide each
Optionee with written notice of such transaction at least thirty (30) days
prior to the projected date of such transaction. The Optionee may exercise the
Option, to the extent then exercisable, on or prior to the date of such
transaction and may condition his exercise upon the occurrence of the
transaction. Whether or not so exercised, the Option shall terminate
immediately prior to the consummation of such proposed sale or merger. In the
event of a proposed sale or merger, the Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall be exercisable as
to all the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable. If the Board, in its sole discretion, makes an Option
fully exercisable, the Board shall include in its notice for such transaction a
notification that the Option shall be fully exercisable prior to consummation
of the transaction to which such notice relates.
11.TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
12.SHAREHOLDER APPROVAL; AMENDMENT AND TERMINATION OF THE PLAN.
(a)SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months after the date the
Plan is adopted.
(b)AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan from
time to time in such respects as the Board may deem advisable; provided that,
the following revisions or amendments shall require approval of the
shareholders of the Company:
(i)any increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 10 of the Plan; or
(ii)any change in the designation of the class of persons eligible to be
granted Options.
(c)EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination of
the Plan shall not affect Options already granted and such Options shall remain
in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.
13.CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
14.RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15.OPTION AGREEMENT. Options shall be evidenced by written option agreements
in such form as the Board shall approve.
16.INFORMATION TO OPTIONEES. The Company shall provide to each Optionee upon
request, during the period for which such Optionee has one or more Options
outstanding, copies of the Company's annual financial statements. In addition
to annual financial statements, the Company shall make available to each
Optionee upon request, during the period for which such Optionee has one or
more Options outstanding, all annual reports and other information which are
provided to all shareholders of the Company.
