PROXY
MICRONETICS WIRELESS, INC.
26 Hampshire Drive
Hudson, NH 03051
This Proxy is solicited on behalf of the Board of Directors.
The undersigned, revoking all proxies, hereby appoints
Richard S. Kalin and David Siegel and each of them, proxies with
power of substitution to each, for and in the name of the
undersigned to vote all shares of Common Stock of Micronetics
Wireless, Inc. (the "Company") which the undersigned would be
entitled to vote if present at the Annual Meeting of Shareholders
of the Company to be held on September 19, 1996, at 10:30 A.M. at
the offices of Kalin & Banner and any adjournments thereof, upon
the matters set forth in the Notice of Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual
Meeting, Proxy Statement and the Company's 1995 Annual Report.
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD Authority
below (except as marked vote for all nominees
to the contrary below) listed below
(INSTRUCTION: To withhold authority to vote for an individual
nominee, strike a line through such nominee's name in the list
below.)
ROY L. BOE, RICHARD S. KALIN, BARBARA MEIRISCH, AND DAVID SIEGEL
2. APPROVAL OF COMPANY'S 1996 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
3. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING
FOR AGAINST ABSTAIN
PLEASE SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
and when properly executed will be voted as directed herein. If no
direction is given, this Proxy will be voted FOR Proposals 1, 2 and
3.
Date: , 1996
(Signature)
(Signature, if held jointly)
Where stock is registered in the names
of two or more persons ALL should sign.
Signature(s) should correspond exactly
with the name(s) as shown above. Please
sign, date and return promptly in the
enclosed envelope. No postage need be
affixed if mailed in the United States.
Requests for copies of proxy materials, the Company's Annual
Report for its fiscal year ended March 31, 1996 or the Company's
Annual Report for its fiscal year ended March 31, 1996 on Form-10-
KSB should be addressed to Shareholder Relations, Micronetics
Wireless, Inc., 26 Hampshire Drive, Hudson, New Hampshire 03051.
This material will be furnished without charge to any shareholder
requesting it.
<PAGE>
MICRONETICS WIRELESS, INC.
26 Hampshire Drive
Hudson, NH 03051
Proxy Statement
The enclosed proxy is solicited by the management of
Micronetics Wireless, Inc. (the "Company") in connection with the
1996 Annual Meeting of Shareholders (the "Meeting") to be held on
September 19, 1996 at 10:30 A.M. at the offices of Kalin & Banner,
757 Third Avenue - 7th Floor, New York, NY 10017 and any
adjournment thereof. The Board of Directors has set August 9, 1996
as the record date for the determination of shareholders entitled
to vote at the Meeting. A shareholder executing and returning a
proxy has the power to revoke it at any time before it is exercised
by filing a later proxy with, or other communication to, the
Secretary of the Company or by attending the Meeting and voting in
person.
The proxy will be voted in accordance with your directions as
to:
(1) The election of the four persons listed herein as
directors of the Company;
(2) Approval of the Company's 1996 Stock Option Plan; and
(3) Such other matters as may properly come before the
Meeting.
In the absence of direction, the proxy will be voted in favor
of management's proposals.
The entire cost of soliciting proxies will be borne by the
Company. The costs of solicitation, which represent an amount
believed to be normally expended for a solicitation relating to an
uncontested election of directors, will include the costs of
supplying necessary additional copies of the solicitation materials
and the Company's Annual Report to Shareholders for its fiscal year
ended March 31, 1996 (the "Annual Report") to beneficial owners of
shares held of record by brokers, dealers, banks, trustees, and
their nominees, including the reasonable expenses of such
recordholders for completing the mailing of such materials and
Annual Reports to such beneficial owners.
Only shareholders of record of the Company's 3,117,438 shares
of Common Stock (the "Common Stock") outstanding at the close of
business on August 9, 1996 will be entitled to vote. Each share of
Common Stock is entitled to one vote. Holders of a majority of the
outstanding shares of Common Stock must be represented in person or
by proxy in order to achieve a quorum. The proxy statement, the
attached notice of meeting, the enclosed form of proxy and the
Annual Report are being mailed to shareholders on or about August
14, 1996.
1. ELECTION OF DIRECTORS
Four directors are to be elected by a majority of the votes
cast at the Meeting, each to hold office until the next Annual
Meeting of Shareholders and until his or her respective successor
is elected and qualifies. The persons named in the accompanying
proxy have advised management that it is their intention to vote
for the election of the following nominees as directors unless
authority is withheld:
Roy L. Boe
Richard S. Kalin
Barbara Meirisch
David Siegel
Management has no reason to believe that any nominee will be
unable to serve. In the event that any nominee becomes
unavailable, the proxies may be voted for the election of such
person or persons who may be designated by the Board of Directors.
The following table sets forth certain information as to the
persons nominated for election as directors of the Company at the
Meeting:
Position with Director
Name Age the Company Since
Richard S. Kalin 41 Chief Executive Officer, April 1987
Chairman, President,
and Director
Roy L. Boe 65 Director January 1994
Barbara Meirisch 55 Not applicable Not Applic-
able
David Siegel 68 Director April 1987
Richard S. Kalin was appointed Chief Executive Officer in
January 1992 and Chairman of the Board in June 1989. Prior thereto
he had been Secretary and a director of the Company since April
1987. Mr. Kalin is also Secretary and a director of Pentech
International, Inc., a manufacturer and distributor of stationery
products and Wanderlust Interactive, Inc., an interactive,
multimedia publisher. He has also been engaged in the private
practice of law since 1978, and currently is a partner of Kalin &
Banner, counsel to the Company.
Mr. Roy L. Boe has been a director of the Company since
January 1994. Mr. Boe is President of the Worcester IceCats, a
professional ice hockey team located in Worcester, Massachusetts
since April 1994. He is also a director of Pentech International,
Inc., a company engaged in the distribution of writing instruments.
Ms. Barbara Meirisch is being nominated to be a director at
this meeting. She was employed at AT&T from 1991 to January 1996
as a Director of Public Relations for the Network Wireless Systems
Business Unit, where she had responsibility for developing wireless
communication strategies for domestic and international operations
and media relations. Presently, she is engaged in consulting
communication companies.
Mr. David Siegel has been a director of the Company since
April 1987. Mr. Siegel is also Chairman of the Board of Directors
of Surge Components, Inc., a distributor of passive electronic
components, a director of Kent Electronics, Inc., a manufacturer of
electronic cable assemblies and a distributor of electronic
components and a director of Nu Horizons Electronics Corp., a
distributor of electronic components.
During the fiscal year ended March 31, 1996 ("Fiscal 1996"),
the Board of Directors held two meetings during Fiscal 1996 and
acted four times by unanimous consent.
OTHER EXECUTIVE OFFICERS
Mr. Robert Delitta, 35, was appointed Vice President -
Manufacturing in August 1989. He was appointed Vice President of
Operations during Fiscal 1996. He has been employed by the Company
in various capacities since July 1987.
Mr. David Robbins, 32, was appointed Vice President in July
1993. He was appointed Chief Technical Officer during Fiscal 1997.
He has been employed by the Company as an engineer since May 1986,
except for the period October 1990 to February 1992 when he was
employed as an engineer for Alpha Industries, Inc.
Ms. Donna Hillsgrove, 47, was appointed Secretary and
Treasurer of the Company in January 1994. Prior to that time she
was Controller of the Company. She has been employed by the
Company since April 1992. From 1980 to May 1991 she was employed
as a supervisor in the accounts receivable department of Kollsman
Company, a division of Sequa Corporation.
COMPLIANCE WITH SECTION 16(b) OF THE SECURITIES EXCHANGE ACT OF
1934
During Fiscal 1996, the Company believes all of its officers
and directors timely filed all required reports required under
Section 16 of the Securities Exchange Act of 1934.
EXECUTIVE COMPENSATION
The following table sets forth information relating to the
cash compensation received by the Company's President. None of the
Company's officers had cash compensation in Fiscal 1996 of more
than $100,000 per year. No executive officer received benefits in
excess of ten percent of their cash compensation.
SUMMARY COMPENSATION TABLE
Long
Other Term
Annual Annual Compen-
Name and Com- Compen- sation/ Other
Principal Fiscal pensation sation Option Compen-
Position Year Salary ($) Bonus ($) Grants sation
Richard 1996 72,289(1) - 85,000(2) 6,015(3)
S. Kalin, 1995 59,324(1) - 25,000(2) 6,000(3)
Chairman 1994 68,819 - 40,000 2,000(3)
and
President
(1) Includes $29,324 in legal fees and disbursements to Kalin & Banner,
of which Mr. Kalin is a partner for Fiscal 1995 and $42,289 of such
fees in Fiscal 1996. Does not include $24,000 in fees paid to
Makenzie Communications, an advertising agency owned by Mr. Kalin's
wife, during each of Fiscal 1995 and Fiscal 1996, as to which Mr.
Kalin disclaims beneficial ownership.
(2) Includes 35,000 long term compensation/option grants granted to Mr.
Kalin's wife in Fiscal 1996 and 25,000 of such option grants in
Fiscal 1995 as to which Mr. Kalin disclaims beneficial ownership.
(3) Includes expenses relating to furnishing Mr. Kalin an automobile.
STOCK OPTION PLANS
In August 1987, the Company adopted and the shareholders
approved an Incentive Stock Option Plan (the "ISO Plan") pursuant
to which options to purchase up to an aggregate of 100,000 shares
of Common Stock may be granted to all employees, officers and
directors of the Company (there are currently 40 employees,
officers and directors of the Company). In June 1989, the ISO Plan
was amended to increase the number of shares of Common Stock which
may be granted under the ISO Plan to 200,000. Such options are
intended to qualify as "incentive stock options" within the meaning
of Section 422A of the Internal Revenue Code. In August 1987, the
Company also adopted and the shareholders approved an Executive
Stock Option Plan (the "ESO Plan") pursuant to which options to
purchase up to an aggregate of 100,000 shares of Common Stock may
be granted. On April 14, 1994, the Company adopted a 1994 Stock
Option Plan (the "1994 Plan") and readopted it on July 18, 1995
pursuant to which options to purchase up to 300,000 shares of
Common Stock may be granted to employees, consultants, advisors
and/or directors. Option granted pursuant to the 1994 Plan may be
incentive options or non-qualified options as such terms are
defined in the Internal Revenue Code of 1986, as amended (The ISO
Plan, the ESO Plan, and the 1994 Plan are referred to collectively
as the "Plans"). There is also a discussion under Item 2 below of
the Company's 1996 Stock Option Plan.
The Plans are administered by the Board of Directors which has
the authority to determine the persons to whom the options may be
granted, the number of shares of Common Stock to be covered by each
option, the time or times at which the options may be granted or
exercised and for the most part, the terms and provisions of the
options. Options granted under the ESO Plan, in addition to
employees, may be granted to directors or consultants to the
Company. The exercise price of options granted under the ISO Plan
and the 1994 Plan may not be less than the fair market value of the
shares of Common Stock on the date of grant (110% of such price if
granted to a person owning in excess of ten percent of the
Company's securities). Options granted under the ISO Plan may not
be granted more than ten years from the date of adoption of the ISO
Plan, nor may options be exercised more than ten years from the
date of grant (five years if granted to a person owning in excess
of ten percent of the Company's securities). Options granted under
the 1994 Plan may not be granted more than ten years from the date
of adoption of the 1994 Plan, nor may options be exercised more
than ten years from the date of grant.
The following is information with respect to the persons or
classes of people who have been granted options under the Plans
(except as otherwise set forth) during Fiscal 1996:
OPTION GRANTS IN FISCAL 1996
Percent
of Total
Options
Options Granted in Exercise Expiration
Name Granted Fiscal Year Price ($) Date
Richard S. Kalin 50,000 18.69% 2.25 10/27/00
Noelle Makenzie(1) 25,000 13.08% 1.925(2) 6/2/00
10,000 2.41 1/18/01
Robert Delitta(1) 25,000 16.82% 1.75 6/2/00
20,000 2.125 1/18/01
David Robbins(1) 25,000 16.82% 1.75 6/2/00
20,000 2.125 1/18/01
OPTION GRANTS IN FISCAL 1996
(continued)
Percent
of Total
Options
Options Granted in Exercise Expiration
Name Granted Fiscal Year Price ($) Date
David Siegel 10,000 3.74% 2.25 10/27/00
Donna Hillsgrove(1) 5,000 1.87% 2.125 1/18/01
(1) Pursuant to 1994 Stock Option Plan
(2) Wife of Mr. Kalin, President of the Company
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END (FYE) OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options Options
Acquired At FYE (#) At FYE ($)
On Value Exercisable/ Exercisable/
Name Exercise Realized ($) Unexercisable Unexercisable(1)
Richard
S. Kalin 75,780 146,824 160,030/38,750 212,249/42,281
Robert
Delitta 10,000 31,250 14,500/68,500 28,000/62,700
David
Robbins 10,000 14,375 19,500/73,500 36,450/71,150
Donna
Hillsgrove 11,850 32,225 0/16,800 0/22,537
(1) Represents fair market value of Common Stock at March 29, 1996 of
$2.75 as reported by NASDAQ, less the exercise price.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of July 18, 1996 the number of
shares of Common Stock held of record or beneficially (i) by each
person who held of record, or was known by the Company to own
beneficially, more than five percent of the outstanding shares of the
Common Stock, (ii) by each director and (iii) by all officers and
directors as a group:
Number of Percent of
Names and Address Shares Owned Outstanding Shares
Richard S. Kalin 911,610(1) 29.2%
One Oak Forest Lane
Mendham, NJ 07945
David Siegel 256,020(2) 8.2%
2488 Horace Court
Bellmore, New York 11710
Roy L. Boe 49,970(3) 1.6%
c/o Micronetics Wireless, Inc.
26 Hampshire Drive
Hudson, NH 03051
Kenneth Pasternak 202,500 6.5%
99 Rose Avenue
Woodcliff Lake, NJ 07675
Barbara Meirisch 9,500 (6)
17 Woods End Road
West Orange, NJ 07052
All Officers and 1,261,300 40.5%
Directors as a group (1)(2)(3)(4)(5)
(seven persons)
(1) Includes 98,500 shares of Common Stock held in his retirement
accounts and options to purchase an aggregate of 138,720 shares of
Common Stock at exercise prices ranging from $.625 to $2.25 per
share. Also includes 414,850 shares of Common Stock and options to
purchase an aggregate of 60,000 shares of Common Stock owned by his
wife.
(2) Includes 53,050 shares of Common Stock owned of record by RJW
Trading Corp., a personal holding company 100% owned by Mr. Siegel
and members of his family, 24,970 shares of Common Stock held in
his retirement account, options to purchase an aggregate of 125,000
shares of Common Stock exercisable at prices ranging from $.625 to
$2.25 per share.
(3) Includes options to purchase an aggregate of 35,000 shares of
Common Stock at an exercise price range between $2.875 and $1.25
per share. Also includes 14,970 shares of Common Stock owned by
his wife, Betty Boe.
(4) Includes an option to purchase an aggregate of 7,500 shares of
Common Stock exercisable at $2.19.
(5) Includes options to purchase and an additional 200 shares owned by
officers of the Company who are not also directors.
(6) Less than 1%.
CERTAIN TRANSACTIONS
The Company issued $225,000 of 8% Convertible Subordinated
Debentures during Fiscal 1995. The debentures were due April 30, 1996.
The debentures were convertible into the Company's common stock at $1.67
per share. Two $25,000 convertible debentures were issued to affiliates
of the Company, one to Mr. Siegel's retirement account and the other to
Mr. Boe's wife. During Fiscal 1996, holders of $200,000 of the
debentures converted them into 119,760 shares of Common Stock. Included
in the number of shares of Common Stock are 14,970 shares issued to Mr.
Boe's wife and 14,970 shares issued to Mr. Siegel's retirement account.
2. APPROVAL OF THE COMPANY'S 1996 OPTION PLAN
THE BOARD OF DIRECTORS IS RECOMMENDING APPROVAL OF THE COMPANY'S
1996 STOCK OPTION PLAN (THE "1996 PLAN"). THE BOARD OF DIRECTORS
ADOPTED THE 1996 PLAN ON JANUARY 18, 1996.
The 1996 Plan provides for the issuance of incentive and non-
statutory stock options to employees, consultants, advisors and/or
directors. The Company will reserve 300,000 shares of its Common Stock
for issuance of shares of Common Stock pursuant to the 1996 Plan. The
1996 Plan will be in effect for ten years from its effective date.
Options shall be exercisable at the fair market value at the date of the
grant except options issued to persons who own in excess of ten percent
of the Common Stock may be no less than 110% of the fair market value.
Generally, for Federal income tax purposes neither the grant nor
exercise of an incentive option will result in any tax effect on either
the Company or the recipient. Upon the sale of Common Stock issued upon
exercise of such an option, the recipient is obligated to pay federal
tax on any amount received from the sales price over the exercise price
of the option, as a capital gain. Generally, this is not a taxable
event for the Company. With respect to non-incentive options, the
difference between the exercise price of the option and the market
price of a share of Common Stock on the day of exercise will be treated
as ordinary income for the recipient and compensation expense for the
Company.
A copy of the 1996 Plan is attached hereto as Exhibit "A".
3. OTHER MATTERS
The Board of Directors has no knowledge of any other matters which
may come before the Meeting and does not intend to present any other
matters. However, if any other matters shall properly come before the
Meeting or any adjournment thereof, the persons named as proxies will
have discretionary authority to vote the shares of Common Stock
represented by the accompanying proxy in accordance with their best
judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Paul C. Roberts, an independent
certified public accountant, auditor of its Fiscal 1996 financial
statements, as the auditor of the financial statements of the Company
for its current fiscal year ending March 31, 1997. Mr. Roberts has been
invited to the Meeting, but it is uncertain whether he will attend. If
he does, he will be given the opportunity to make a statement and to
answer questions any shareholders may have.
Any shareholder of the Company who wishes to present a proposal to
be considered at the next annual meeting of shareholders of the Company
and who wishes to have such proposal presented in the Company's Proxy
Statement for such meeting must deliver such proposal in writing to the
Company at 26 Hampshire Drive, Hudson, NH 03051 on or before May 8,
1997.
By Order of the Board of Directors
Donna M. Hillsgrove,
Secretary
Dated: August 14, 1996
micro\pxy-not.96
<PAGE>
EXHIBIT A
MICRONETICS WIRELESS, INC.
1996 STOCK OPTION PLAN
1. General Plan Information;. The purpose of this Stock Option
Plan (the "Plan") is to advance the interests of Micronetics Wireless,
Inc. (the "Company") by enhancing the ability of the Company to attract
and retain selected employees, officers, consultants, advisors to the
Board of Directors and qualified directors (collectively the
"Participants") by creating for such Participants incentives and rewards
for their contributions to the success of the Company, and by
encouraging such Participants to become owners of shares of the
Company's common stock, par value $0.01 per share, as the title or par
value may be amended (the "Shares").
Options granted pursuant to the Plan may be incentive stock options
("Incentive Options") as defined in the Internal Revenue Code of 1986,
as amended (the "Code") or non-qualified options, or both. The proceeds
received from the sale of Shares pursuant to the Plan shall be used for
general corporate purposes.
2. Effective Date of Plan. The Plan will become effective upon
approval by the Board of Directors (the "Board"), and shall be subject
to the approval by the holders of at least a majority of all Shares
present in person and by proxy and entitled to vote thereon at a meeting
of stockholders of the Company prior thereto or within 12 months
thereafter.
3. Administration of the Plan. The Plan will be administered by
the Board of the Company. The Board will have authority, not
inconsistent with the express provisions of the Plan, to take all action
necessary or appropriate thereunder, to interpret its provisions, and to
decide all questions and resolve all disputes which may arise in
connection therewith. Such determinations of the Board shall be
conclusive and shall bind all parties.
The Board may, in its discretion, delegate its powers with respect
to the Plan to an employee benefit plan committee or any other committee
(the "Committee"), in which event all references to the Board hereunder,
including without limitation the references in Section 10, shall be
deemed to refer to the Committee. The Committee shall consist of not
fewer than three members. Each of the members must be a "disinterested
person" as that term is defined in Rule 16b-3 adopted pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"). A majority of the
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by the majority of its
members present at a meeting. Any determination of the Committee under
the Plan may be made without notice or meeting of the Committee by a
writing signed by all of the Committee members.
The Board and the Committee, if any, shall have the authority to
determine eligibility, the number of options granted and the exercise
price of options.
4. Eligibility. The Participants in the Plan shall be all
employees, officers, consultants, advisors to the Board of Directors and
qualified directors of the Company or any of its present or future
subsidiaries (as defined in Section 9) whether or not they are also
officers of the Company. Members of the Committee are eligible only if
they do not exercise any discretion in; (i) selecting Participants who
receive grants of options; (ii) determining the number of Shares to be
granted to any Participant; or (iii) determining the exercise price of
any options, or as counsel to the Company may otherwise advise the
Committee that the taking of any such action does not impair the status
of such eligible Committee members as "disinterested persons" within the
meaning of Exchange Act Rule 16b-3.
5. Grant of Options.
(a) The Board shall grant options to Participants that it, in
its sole discretion, selects. Options shall be granted on such terms as
the Board shall determine except that Incentive Options shall be granted
on terms that comply with the Code and regulations thereunder.
(b) All directors and advisors to the Board of Directors of
the Company who are not employees of the Company or its subsidiaries
shall automatically receive grants of 10,000 fully-vested non-qualified
options (i) at the time this Plan is adopted by the Board or (ii) upon
election or appointment to the Board, if not a member of the Board at
the time this Plan is adopted by the Board and the Company has a class
of equity securities registered under the Securities Act of 1933 (the
"Act"). The exercise price shall be 100% of fair market value on the
date of grant as defined by Section 9.
(c) No options shall be granted after January 18, 2006 but
options previously granted may extend beyond that date.
6. Option Agreements.
(a) Each option under the Plan shall be evidenced by an
option agreement, which shall be signed by an officer of the Company and
by the optionee and which shall contain such provisions as may be
approved by the Board.
(b) The option agreements shall constitute binding contracts
between the Company and the optionee. Every optionee, upon acceptance
of such option agreement, shall be bound by the terms and restrictions
of this Plan and of the option agreement.
(c) The terms of the option agreement shall be in accordance
with this Plan, but may include additional provisions and restrictions,
provided that the same are not inconsistent with the Plan.
7. Terms and Conditions of Options.
(a) Exercise Price. Except as provided in Section 5(b) of
this Plan, the purchase price per share for Shares issuable upon
exercise of options shall be a minimum of 100% of fair market value on
the date of grant and shall be determined by the Board. For this
purpose, "fair market value" will be determined as set forth in Section
9. Notwithstanding the foregoing, if any person to whom an option is to
be granted owns in excess of ten percent of the outstanding capital
stock of the Company, then no option may be granted to such person for
less than 110% of the fair market value on the date of grant as
determined by the Board.
(b) Annual Limit on Grant and Exercise. Incentive Options
shall not be granted to any individual pursuant to this Plan, the effect
of which would be to permit such person to first exercise options, in
any calendar year, for the purchase of Shares having a fair market value
in excess of $100,000 (determined at the time of the grant of the
options). An optionee hereunder may exercise options for the purchase
of Shares valued in excess of $100,000 (determined at the time of the
grant of the options) in a calendar year, but only if the right to
exercise such options shall have first become available in prior
calendar years.
(c) Payment for Delivery of Shares. Shares which are subject
to options shall be issued only upon receipt by the Company of full
payment of the purchase price for the Shares as to which the option is
exercised. The purchase price shall be payable by the Participant to
the Company either (i) in cash, certified check, bank draft or money
order payable to the order of the Company; or (ii) through the delivery
of Shares owned by the Participant for a period of not less than six
months and for which the Participant has good title (free and clear of
any liens and encumbrances) having a fair market value equal to the
purchase price; or (iii) by a combination of cash and Shares as
provided in (i) and (ii) above.
The Company shall not be obligated to deliver any Shares unless and
until, in the opinion of the Company's counsel, all applicable federal
and state laws and regulations have been complied with, nor, if the
outstanding common stock is at the time not listed on any securities
exchange, unless and until the Shares to be delivered have been listed
(or authorized to be added to the list upon official notice of issuance)
upon such exchange, nor unless or until all other legal matters in
connection with the issuance and delivery of Shares have been approved
by the Company's counsel. Without limiting the generality of the
foregoing, the Company may require from the person exercising an option
such investment representation or such agreement, if any, as counsel for
the Company may consider necessary in order to comply with the
Securities Act of 1933, as amended and applicable state securities laws.
A Participant shall have the rights of a shareholder only as to
Shares actually acquired by him under the Plan.
(d) Vesting. Except for options granted pursuant to Section
5(b) of this Plan, the Board may impose such vesting restrictions as it
sees fit at the time of grant.
(e) Non-Transferability of Options. Options may not be sold,
assigned or otherwise transferred or disposed of in any manner
whatsoever except as provided in Section 7(g).
(f) Forfeiture of Options upon Termination of Relationship.
All options which have not vested shall terminate and be forfeited
automatically upon the termination for any reasons whatsoever of a
Participant's status as an employee, consultant or advisor to the Board.
Unexercised options shall terminate and be forfeited upon (i) the
Participants voluntary termination of his employment or (ii) the
expiration of three months after the Participant's employment is
terminated by the Company. Except as provided in Section 7(g) below,
unexercised options granted to directors shall not terminate or be
forfeited in the event such person is no longer a director of the
Company.
(g) Death. If a Participant dies at a time when he is
entitled to exercise an option, then at any time or times within one
year after his death (or such further period as the Board may allow)
such options may be exercised, as to all or any of the Shares which the
Participant was entitled to purchase immediately prior to his death, by
his personal representative or the person or persons to whom the options
are transferred by the will or the applicable laws of descent and
distribution, and except as so exercised such options will expire at the
end of such period.
(h) Loans to Exercise Options. If requested by any
Participant to whom a grant of non-qualified options has been made, the
Company or any subsidiary may loan such person the amount of money
necessary to pay the federal income taxes incurred as a result of the
exercise of any options (or guarantee a bank loan for such purpose),
assuming that the Participant is in the maximum federal income tax
bracket six months from the time of exercise and assuming that the
Participant has no deductions which would reduce the amount of such tax
owed. The loan shall be made on or after April 15th of the year
following the year in which the amount of tax is determined as may be
requested by the Participant and shall be made on such terms as the
Company or lending bank determines.
(i) Withholding Taxes. To the extent that the Company is
required to withhold taxes for federal income tax purposes in connection
with the exercise of any options, the Company shall have the right to
assist the Participant to satisfy such withholding requirement by (i)
the Participant paying the amount of the required withholding tax to the
Company, (ii) the Participant delivering to the Company Shares of its
common stock previously owned by the Participant or (iii) the
Participant having the Company retain a portion of the Shares covered by
the option exercise. The number of Shares to be delivered to or
withheld by the Company times the fair market value as defined by
Section 8 of this Plan shall equal the cash required to be withheld. To
the extent that the Company elects to allow the Participant either to
deliver or have withheld Shares of the Company's common stock, the Board
or the Committee may require him to make such election only during
certain periods of time as may be necessary to comply with appropriate
exemptive procedures regarding the "short-swing" profit provisions of
Section 16(b) of the Exchange Act or to meet certain Code requirements.
8. Shares Subject to Plan.
(a) Number of Shares and Stock to be Delivered. Shares
delivered pursuant to this Plan shall, in the discretion of the Board,
be authorized but unissued Shares of common stock or previously issued
Shares acquired by the Company. Subject to adjustments as described
below, the aggregate number of Shares which may be delivered under this
Plan shall not exceed 350,000 Shares of common stock of the Company.
(b) Changes in Stock. In the event of a stock dividend,
stock split or combination of Shares, recapitalization, merger in which
the Company is the surviving corporation or other change in the
Company's capital stock, the number and kind of Shares of stock or
securities of the Company to be subject to the Plan and to options then
outstanding or to be granted thereunder, the maximum number of Shares or
securities which may be delivered under the Plan, the option price and
other relevant provisions, shall be appropriately adjusted by the Board
whose determination shall be binding on all persons. In the event of a
consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the
Company's outstanding stock by a single person or entity, or in the
event of the sale or transfer of substantially all the Company's assets,
all outstanding options shall thereupon terminate.
The Board may also adjust the number of Shares subject to
outstanding options, the exercise price of outstanding options and the
terms of outstanding options to take into consideration material changes
in accounting practices or principles, consolidations or mergers (except
those in which the Company is not the surviving Corporation as described
in the immediately preceding paragraph), acquisitions or dispositions of
stock or property or any other event if it is determined by the Board
that such adjustment is appropriate to avoid distortion in the operation
of the Plan.
9. Definitions.
(a) For purposes of the Plan, a subsidiary is any corporation
(i) in which the Company owns, directly or indirectly, stock possessing
50 percent or more of the total combined voting power of all classes of
stock or (ii) over which the Company has effective operating control.
(b) The fair market value of the Shares of common stock shall
be deemed to be:
(i) the closing price of the Company's common stock
appearing on a national securities exchange if the Company's common
stock is listed on such an exchange, or if not listed, the average
closing bid price appearing on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ");
(ii) if the Shares of common stock are not listed on
NASDAQ, then the average bid price for the Company's stock as listed in
the National Quotation Bureau's pink sheets;
(iii) if there are no listed bid prices published in the
pink sheets, then the market value shall be based upon the average
closing bid price as determined following a polling of all dealers
making a market in the Company's Shares.
10. Indemnification of Board. In addition to and without
affecting such other rights of indemnification as they may have as
members of the Board or otherwise, each member of the Board shall be
indemnified by the Company to the extent legally possible against
reasonable expenses, including attorney's fees, actually and reasonably
incurred in connection with any appeal therein, to which he may be a
party by reason of any action taken or failure to act under or in
connection with the Plan, or any option granted thereunder, and against
all judgments, fines and amounts paid by him in settlement thereof;
provided that such payment of amounts so indemnified is first approved
by a majority of the members of the Board who are not parties to such
action, suit or proceeding, or by independent legal counsel selected by
the Company, in either case on the basis of a determination that such
member acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company; and except that
no indemnification shall be made in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such Board
member is liable for a breach of the duty of loyalty, bad faith or
intentional misconduct in his duties; and provided further, that the
Board member shall, in writing, offer the Company the opportunity, at
its own expense, to handle and defend same.
11. Amendments. The Board may at any time discontinue granting
options under the Plan. The Board may at any time or times amend the
Plan or amend any outstanding option or options for the purpose of
satisfying the requirements of any changes in applicable laws or
regulations or for any other purpose which may at the time be permitted
by law, provided that (except to the extent explicitly required or
permitted herein above) no such amendment will, without the approval of
the stockholders of the Company, (a) increase the maximum number of
Shares available under the Plan, (b) reduce the option price of
outstanding options or reduce the price at which options may be granted,
(c) extend the time within which options may be granted, (d) amend the
provisions of this Section 11 of the Plan, (e) adversely affect the
rights of any Participant (without his consent) under any options
theretofore granted or (f) be effective if stockholder approval is
required by applicable statute, rule or regulation.
Date Originally Approved by Board of Directors: January 18, 1996
Date Approved by Shareholders: , 1996
