THERMO-MIZER ENVIRONMENTAL CORP.
528 Oritan Avenue
Ridgefield, New Jersey 07657
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON DECEMBER 12, 1996 AT 10:00 A.M.
To the Shareholders of
Thermo-Mizer Environmental Corp.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Thermo-Mizer Environmental Corp., a Delaware corporation (the
"Company"), will be held at the offices of the Company, 528 Oritan Avenue,
Ridgefield, New Jersey, on December 12, 1996, at the hour of 10:00 a.m. local
time for the following purposes:
(1) To amend the Company's By-Laws to provide for the election of
directors to
staggered terms;
(2) To elect five (5) directors of the Company to hold office for
initial terms of
one, two, or three years, or in the event the proposed
amendment to the
Company's By-Laws authorizing a staggered Board of Directors
is not
approved, then for a term of one year;
(3) To consider and approve the adoption of a Stock Incentive
Plan for the Company;
and
(4) To transact such other business as may properly come before
the Meeting.
Only shareholders of record at the close of business on November 12,
1996 are entitled to notice of and to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
Steven W. Schuster, Secretary
November 13, 1996
IF YOU WISH TO VOTE IN FAVOR OF EACH OF THE PROPOSALS AND FOR
THE NOMINEES PRESENTED, CHECK THE APPROPRIATE BOX, SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IN ANY
EVENT YOUR PROMPT RETURN OF A SIGNED AND DATED PROXY WILL BE
APPRECIATED.
<PAGE>
THERMO-MIZER ENVIRONMENTAL CORP. 528 Oritan Avenue
Ridgefield, New Jersey 07657
December 12, 1996
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are furnished by the
Board of
Directors of the Company in connection with the solicitation of proxies for use
at the 1996 Annual Meeting of Shareholders (the "Meeting") referred to in the
foregoing notice. It is contemplated that this Proxy Statement, together with
the accompanying form of proxy and the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1996 will be mailed to shareholders on or
about November 14, 1996.
The record date for the determination of shareholders entitled to
notice of and to vote at the Meeting is November 12, 1996. On that date, there
were issued and outstanding, 2,181,500 shares of Common Stock, par value $.001
per share. The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock outstanding and entitled to vote at the Meeting is
necessary to constitute a quorum. In deciding all questions, a shareholder shall
be entitled to one vote, in person or by proxy, for each share held in his or
her name on the record date.
All proxies received pursuant to this solicitation will be voted
(unless revoked) at the Meeting on December 12, 1996, or any adjournments
thereof, in the manner directed by a shareholder and, if no direction is made,
in favor of the proposals. Any shareholder giving a proxy has the power to
revoke it any time prior to voting, but a revocation will not be effective until
the Company has received a revoking instrument or a proper proxy of later date.
Mere attendance at the meeting, without such revoking instrument, will not
revoke the proxy.
The favorable vote of holders of a majority of the shareholders present
at the Meeting is required to approve all proposals.
As of the date of this Proxy Statement, the Board of Directors knows of
no matters other than the foregoing that will be presented at the Meeting. If
any other business should properly come before the Meeting, the accompanying
form of proxy will be voted in accordance with the judgment of the persons named
therein, and discretionary authority to do so is included in the proxies. All
expenses in connection with the solicitation of this proxy will be paid by the
Company. In addition to solicitation by mail, officers, directors and regular
employees of the Company who will receive no extra compensation for their
services, may solicit proxies by telephone, telegraph or personal calls.
Management does not intend to use specially engaged employees or paid solicitors
for such solicitation. Management intends to solicit proxies which are held of
record by brokers, dealers, banks, or voting trustees, or their nominees, and
may pay the reasonable expenses of such record holders for completing the
mailing of solicitation materials to persons for whom they hold the shares. All
solicitation expenses will be borne by the Company.
2
<PAGE>
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tabulation shows the security ownership as of November
12, 1996 of (i) each person known to the Company to be the beneficial owner of
more than 5% of the Company's outstanding Common Stock, (ii) each Director of
the Company, and (iii) all Directors and Officers as a group.
Amount
and Nature Approximate
Name of of Beneficial Percent
Beneficial Owner Ownership of Class
Jon J. Darcy
528 Oritan Avenue
Ridgefield, New Jersey 07657 (1) 884,750 37.47%
Solay Inc. (2)
888 Prospect Street Suite 225
LaJolla, California 92037 240,000 10.16%
Jon J. Darcy Trust for
Janine Marie Darcy
U/A/D 6/18/81
c/o Jonathan M. Darcy
2702 Jacqueline Dr., Apt. H23
Wilmington, DE 19810 147,181 6.2%
Jon J. Darcy Trust for
Jonathan Michael Darcy
U/A/D 6/18/81
c/o Joseph Sikora
Highland Florist
Ruckman Road
Hillsdale, NJ 07642 147,181 6.2%
Jon J. Darcy Trust for
Stephen Joseph Darcy
U/A/D 6/18/81
c/o Raymond Breitenbach
65 Glen Road
Woodcliff Lake, NJ 07675 147,181 6.2%
3
<PAGE>
Edward A. Heil (3)
528 Oritan Avenue
Ridgefield, New Jersey 07657 33,000 1.40%
Edward A. Sundberg (4)
528 Oritan Avenue
Ridgefield, New Jersey 07657 34,500 1.46%
K. Ivan F. Gothner (5)
528 Oritan Avenue
Ridgefield, New Jersey 07657 8,000 .34%
Carl Bruno (6)
528 Oritan Avenue
Ridgefield, New Jersey 07657 8,750 .37%
Prem S. Chopra
528 Oritan Avenue
Ridgefield, New Jersey 07657 -0- 0%
Steven W. Schuster (7)
260 Madison Avenue
New York, New York 10016 8,000 .34%
Directors and Officers
as a Group (7 persons) 947,300 41.38%
- --------------------------------------------------------
(1) Does not include an aggregate of 441,543 shares held in three
trusts for the benefit
of Mr. Darcy's children. Each trust has a different trustee, who has the power
to transfer and vote the shares. Includes 240,000 shares of Common Stock owned
by Solay, Inc. which may be voted by Mr. Darcy pursuant to a proxy granted by
Solay, Inc. Includes 95,000 shares of Common Stock included in option to
purchase 95,000 Units each consisting of one share of Common Stock and two Class
B Warrants. Does not include the shares of Common Stock underlying the Class B
Warrants, which have an exercise price of $3.00 per share.
(2) Solay, Inc. has the power to sell, transfer, or otherwise
dispose of the shares listed,
however, it has granted the Company's president, Jon J. Darcy, the power to
vote such shares.
(3) Includes 33,000 shares of Common Stock included in option to
purchase 33,000 Units each consisting of one share of Common Stock and two Class
B Warrants. Does not include the shares of Common Stock underlying the Class B
Warrants, which have an exercise price of $3.00 per share.
4
<PAGE>
(4) Includes 33,000 shares of Common Stock
included in option to
purchase 33,000 Units each consisting of one share of Common Stock and two Class
B Warrants. Does not include the shares of Common Stock underlying the Class B
Warrants, which have an exercise price of $3.00 per share.
(5) Includes 8,000 shares of Common Stock included in option to
purchase 8,000 Units each consisting of one share of Common Stock and two Class
B Warrants. Does not include the shares of Common Stock underlying the Class B
Warrants, which have an exercise price of $3.00 per share.
(6) Includes 5,000 shares of Common Stock included in option to
purchase 5,000 Units each consisting of one share of Common Stock and two Class
B Warrants. Does not include the shares of Common Stock underlying the Class B
Warrants, which have an exercise price of $3.00 per share.
(7) Includes 6,000 shares of Common Stock included in option to
purchase 6,000
Units each consisting of one share of Common Stock and two Class B Warrants.
Does not include the shares of Common Stock underlying the Class B Warrants,
which have an exercise price of $3.00 per share, or 1,000 shares of Common Stock
issuable upon the conversion of the Redeemable Class A Warrants with an exercise
price of $6.00 per share issued pursuant to a Prospectus dated February 27,
1996.
PROPOSAL ONE:
AMENDMENT OF BY-LAWS TO AUTHORIZE STAGGERED
TERMS FOR ELECTION OF DIRECTORS
Management recommends that you vote in favor of the
proposed
amendment to the by-laws of the Company
authorizing
staggered terms for election of directors
The Board of Directors of the Company has proposed an amendment to the
Company's By-Laws under which the Board of Directors will be divided into three
classes, as provided under Section 141 of the Delaware Corporation Code.
Initially Class I directors (Carl R. Bruno) would be elected for a one-year
term, Class II directors (Edward A. Heil, K. Ivan F.
Gothner) would be
elected for a two-year term, and Class III directors (Jon J. Darcy, Edward A.
Sundberg) would be elected for a three-year term. Thereafter, successors to
director whose terms expire will be elected for three-year terms. It is proposed
that Sections 2 and 3 of Article II of the By-Laws of the Company be combined
and amended to read as follows:
2. NUMBER, TERM, and QUALIFICATIONS. The number of directors
which
shall constitute the whole board shall not be less than three nor more
than six. Within the
limits specified, the number of directors shall be determined by
resolution of the board or
5
<PAGE>
by the shareholders at the annual meeting of shareholders or at a
special meeting called for
that purpose. The terms of office of directors shall be classified by
dividing them into
three classes, with each being as nearly equal in number as possible.
The terms of office of
the directors initially classified as Class I shall expire at the
annual meeting of shareholders
one year after the date such directors are elected and qualified; the
terms of those
classified as Class II shall expire at the annual meeting of
shareholders two years after the
date such directors are elected and qualified; and the terms of those
classified as Class III
shall expire at the annual meeting of shareholders three years after
the date such directors
are elected and qualified. At each annual meeting of shareholders
after such initial
classification, directors of the class which is expiring shall be
elected to hold office until
the third succeeding annual meeting of shareholders.
The Company believes that the proposed amendment to establish staggered
terms for the election of directors will provide additional continuity to its
management by
having persons serve
on its Board of Directors for a longer period of time, without standing for
reelection. However, there have been no problems with continuity of the Board of
Directors in the past. The Board of Directors may expand the number of positions
on the Board as it identifies qualified persons who are willing to serve a
directors of the Company. The Company believes that three year terms for its
directors will be more attractive to a potential director candidate and thus
will make available to the Company more candidates.
While the Company believes the proposed amendment to its By-Laws is
warranted because of the factors discussed above, the amendment will also make
it more difficult to change control of the Company. If there were an attempt by
the shareholders to change control of the Company by removing and replacing all
or a majority of the Board of Directors, such an attempt will be more difficult
if there are staggered terms for the election of directors. Since not all
directors will stand for election at a single shareholders meeting, as is the
case now, the shareholders desiring to change control would have to vote at
multiple meetings in order to do so. It would require at least two annual
meetings to remove and replace a majority of the directors of the Company and
would require three annual meetings to remove and replace the entire Board of
Directors.
The affirmative vote of holders of a majority of the Company's
outstanding Voting Stock is required for approval of the proposed amendment to
the Companys By-Laws authorizing
staggered terms for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF THE
PROPOSED AMENDMENT TO THE COMPANYS BY-LAWS
AUTHORIZING
STAGGERED TERMS FOR THE ELECTION OF DIRECTOR
6
<PAGE>
PROPOSAL TWO: ELECTION OF DIRECTORS
Management recommends that you vote in favor of the
nominees
named to the Board of Directors
Five (5) directors are to be elected at the meeting, each to hold
office for a period of one, two or three years as set forth below, or in the
event the proposed amendment to the Companys By-Laws authorizing a staggered
Board of Directors is not approved, then for a period of one year, and in any
event until a successor is elected and qualified. It is intended that votes will
be cast pursuant to such proxy for the election of the three persons whose names
are first set forth below unless authority to vote for one or more of the
nominees is withheld by the enclosed proxy, in which case it is intended that
votes will be cast for those nominees, if any, with respect to whom authority
has not been withheld. If all of the nominees should become
unable or unwilling
to serve as a director, it is intended that the proxy be voted, unless authority
is withheld, for the election of such person, if any, as shall be designated by
the Board of Directors. Directors will be elected by a majority of the votes
cast at the Meeting.
The following information is submitted concerning the five nominees for
election as directors of the Company:
7
<PAGE>
Nominees for Election
The following table sets forth information concerning the nominees for
director of the Company.
Class Term First
of of Became Principal
Name Director Age Office Director Occupation
Carl R. Bruno I 64 1 year 1996 Accountant
Edward A. Heil II 45 2 years 1995 Consultant
K. Ivan F. Gothner II 38 2 years 1995 Director of
securities firm
Jon J.Darcy III 48 3 years 1978 President;
CEO
Edward A. Sundberg III 49 3 years 1995 President of
consulting
firm
Outside directors shall receive $4,000 per year and $350 per meeting as
compensation for serving on the Board of Directors. All Directors are reimbursed
by the Company for any expenses incurred in attending Director's meetings.
Jon J. Darcy co-founded the Company in 1978 and has been an executive with it
since inception and President since 1987. He has a Bachelor of Science degree
from the State University of New
York Maritime College.
Edward A. Sundberg has been President of ConsultAmerica, Inc., a business
consulting firm,
since 1992. From 1989 to 1992, he was Executive Vice President of ISS
International Service
Systems, Inc. Mr. Sundberg holds a Bachelor of Science degree from the United
States Naval
Academy and a Master of Business Administration from Boston University.
Edward A. Heil is a certified public accountant and a principal since January
1992 in Independent Network Group, Inc., a financial consulting firm. From 1984
through December 1991, he was a partner in the accounting firm, Deloitte &
Touche. From 1973 to 1984 he was employed in various professional capacities by
Deloitte & Touche. Mr. Heil holds Bachelor of Arts and Master of Business
Administration degrees from New York University.
K. Ivan F. Gothner became employed as a managing director of First United
Equities, Inc., a
broker- dealer which is a member of the National Association of Securities
Dealers, Inc., in
August 1995. He was President of Breasy Medical Equipment (US), Inc. from
October 1994 to
August 1995. From January 1993 through September 1994, he was General Partner of
8
<PAGE>
Adirondack Partners, LP. From 1990 to 1992, he was a Senior Vice President at
Barclays Bank
of New York. Prior thereto, he was a Senior Vice President at Kleinwort Benson
Limited, an
investment banking firm. Mr. Gothner holds Bachelor of Arts and Master of Arts
degrees from
Columbia University.
Carl R. Bruno is a certified public accountant who has been the Chief Financial
Officer of DiFazio Electric, Inc. since November 1987 and is also a director of
State Bancorp., Inc. He holds a Bachelor of Arts degree in accounting form the
State University of N.Y.
at Plattsburgh.
Executive Compensation
The following tabulation shows the total compensation paid by the Company to its
executive officers for the fiscal years ended June 30, 1994, 1995 and 1996.
Long Term Compensation
Annual Compensation(1) Awards Payouts
Other Restricted All
Name and Annual Stock OptionsLTIP Other
Principal PositionYearSalaryBonusCompensationAwards($)/SARsPayoutsCompensation
Jon Darcy(1) 1996 $123,000 0 0 0 0 0 0
President; CEO
1995 $123,000 0 0 0 0 0 0
1994 $123,000 0 0 0 0 0 0
- -------------
(1) In November 1994, the Company entered into a three-year employment agreement
with Jon J. Darcy under which he will receive an annual salary of $123,000 per
annum for the first year with an increase of $3,690 in the second year and an
additional increase of $3,800 in the third year. The employment agreement also
provides for the use of a car and that the
Board of
Directors may award Mr. Darcy bonuses and other incentive compensation as it
deems appropriate, based upon the Company's operating performance or other
reasonable criteria and includes a restrictive covenant limiting Mr. Darcy's
ability to obtain employment with a competitor or potential competitor.
The affirmative vote of holders of a majority of the Company's
outstanding Voting Stock is required for the election of each nominee for
director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF THE
ELECTION OF THE FIVE DIRECTORS HEREIN NAMED
PROPOSAL THREE: APPROVAL OF PROPOSED STOCK
INCENTIVE PLAN
9
<PAGE>
Management recommends that you vote in favor of the
adoption of the
proposed Incentive Stock Plan
The Board of Directors has unanimously approved and unanimously
recommends that the shareholders adopt the Company's 1996 Stock Incentive Plan
(the "Plan"). Approval of this proposal will require the
affirmative vote of a majority of the shares present in person or represented
by proxy at the Meeting. The Plan would provide a means whereby employees,
officers, directors, consultants and independent contractors ("Qualified
Grantees") may acquire the Common Stock of the Company pursuant to grants of
Incentive Stock Options, (ISO) whereby Qualified Grantees may purchase shares of
Common Stock pursuant to "nonqualified stock options" and whereby Qualified
Grantees may acquire the right to participate in the appreciation of the Common
Stock pursuant to "Stock Appreciation Rights". A summary of the significant
provisions of the Plan, as amended, is set forth below. A copy of the full Plan
is annexed as Exhibit A to this Proxy Statement. The following description of
the Plan is qualified in its entirety by reference to the Plan itself.
The Plan shall be administered by a committee (the
"Committee") all of whose members are "disinterested persons" as that term
10
<PAGE>
is defined in Rule 16b-3(d)(3) of the General Rules and Regulations under the
Securities Exchange Act of 1934, consisting of two or more directors appointed
by, and who serve at the pleasure of, the Board of Directors. Subject to the
express terms of the Plan, the Committee has the sole discretion to determine to
whom among those eligible, and the time or times at which, options and/or Stock
Appreciation Rights may be exercised. In making such determinations, the
Committee may take into account the nature and period of service of eligible
employees, their level of compensation, their past, present and potential
contributions to the Company and such other factors as the Committee in its
discretion deems relevant.
The Committee may amend, suspend, or terminate the Plan at any
time, except that no amendment may be adopted without the approval of
shareholders which would (i) increase the benefits accruing to participants
under the Plan; (ii) materially increase the number of securities which may be
issued under the Plan; or (iii) change the eligibility requirements for
participation in the Plan.
Unless the Plan is terminated earlier by the Board of
Directors, the Plan will
terminate on December 12, 2006.
Subject to adjustments resulting from changes in
capitalization and assuming approval of this Proposal by shareholders, no more
than 500,000 shares of Common Stock may be issued pursuant to the exercise of
options or Stock Appreciation Rights granted under the Plan. Grants of Stock
Appreciation Rights will be deducted from the 500,000 shares authorized for
issuance pursuant to the Plan.
11
<PAGE>
Under certain circumstances involving a change in the number
of shares of Common Stock without the receipt by the Company of any
consideration therefor, such as a stock split, stock consolidation or payment of
a stock dividend, the class and aggregate number of shares of Common Stock in
respect of which options may be granted under the Plan, the class and number of
shares subject to each outstanding option and the option price per share will be
proportionately adjusted. In addition, if the Company is involved in a merger,
consolidation, dissolution or liquidation, the options or Stock Appreciation
Rights granted under the Plan will be adjusted or, under certain conditions,
will terminate, subject to the right of
the option holder or
Stock Appreciation Rights holder to exercise his option or stock appreciation
right or a comparable option substituted at the discretion of the Company prior
to such event. An option or Stock Appreciation Rights may not be transferred
other than by will or by laws of descent and distribution, and during the
lifetime of the option holder may be exercised only by such holder. If any
option expires or terminates for any reason, without having been exercised in
full, the unpurchased shares subject to such option will be available again for
purposes of the Plan.
Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those individuals who are eligible to
receive options pursuant to the Plan, the terms and conditions of which shall be
set forth in an option agreement between the Company and the optionee.
The exercise price of each option or stock appreciation right
is determined by the Board of Directors or the Committee, but may not be less
than 110% of the fair market value of the shares of Common Stock covered by the
option or stock appreciation right for employees of the Company and 100% for
nonemployee directors of the Company on the date the option or stock
appreciation right is granted.
An ISO holder who meets the eligibility requirements of
Section 422 of the Code will not realize income for Federal income tax purposes,
and the Company will not be entitled to a deduction, on either the grant or the
exercise of ISO. If the ISO holder does not dispose of the shares acquired
within two years after the date the ISO was granted to him or within one year
after the transfer of the shares to him, (i) any proceeds realized on a sale of
such shares in excess of the option price will be treated as long-term capital
gain and (ii) the Company will not be entitled to any deduction for Federal
income tax purposes with respect to such shares.
If an ISO holder disposes of shares during the two-year or
one-year periods referred to above (a "Disqualifying Disposition"), the ISO
holder will not be entitled to the favorable tax treatment afforded to incentive
stock options under the Code.
Instead, the ISO
holder will realize ordinary income for Federal income tax purposes in the year
the Disqualifying Disposition is made, in an amount equal to the excess, if any,
of the fair market value of the shares of Common Stock on the date of exercise
over the exercise price.
An ISO generally will recognize long-term capital gains or
loss, as the case may be, if the Disqualifying Disposition is made more than one
year after the shares are transferred to
12
<PAGE>
the ISO holder. The amount of any such gain or loss will be equal to the
difference between the amount realized on the Disqualifying Disposition and the
sum of (x) the exercise price and (y) the ordinary income realized by the ISO
holder as a result of the Disqualifying Disposition.
The Company will be allowed in the taxable year of a
Disqualifying Disposition a deduction in the same amount as the ordinary income
recognized by the ISO holder provided all
necessary withholding requirements are met.
Notwithstanding the foregoing, if the Disqualifying
Disposition is made in a transaction with respect to which a loss (if sustained)
would be recognized to the ISO holder, then the amount of ordinary income
required to be recognized upon the Disqualifying Disposition will not exceed the
amount by which the amount realized from the disposition exceeds the exercise
price. Generally, a loss may be recognized if the transaction is not a "wash"
sale, a gift or a sale between certain persons or entities classified under the
Code as "related persons."
For purposes of computing the alternative minimum tax with
respect to shares acquired pursuant to the exercise of ISOs, the different
between the fair market value of the shares on the date of exercise over the
exercise price will be an item of tax preference in the year of exercise if the
shares are not subject to a Risk of Forfeiture; if the shares are subject to a
Risk of Forfeiture, the amount of the tax preference taken into account in the
year the Risk of Forfeiture ceases will be the excess of the fair market value
of the shares at the date they cease to be subject to a Risk of Forfeiture over
the exercise price. The basis of the shares for alternative minimum tax
purposes, generally, will be an amount equal to the price, increased by the
amount of the preference taken into account in computing the alternative minimum
taxable income. The rate of tax applied in general to alternative minimum
taxable income is 24%.
The affirmative vote of holders of a majority of the
Company's outstanding Voting
Stock is required for approval of the Plan.
THE BOARD OF DIRECTORS RECOMMEND A VOTE IN FAVOR OF
THE ADOPTION
OF THE PROPOSED STOCK INCENTIVE PLAN
13
<PAGE>
MISCELLANEOUS
Committees
The Board of Directors has established a compensation committee
comprised of outside directors to review compensation matters as well as any new
employment contracts.
Audit Matters
It is expected that a representative of Eichler Bergsman & Co., LLP
will be present at the Annual Meeting of Shareholders and will be available to
respond to appropriate questions.
The Company's 1996 Annual Report on Form 10-KSB is being mailed to
shareholders
with this Proxy Statement.
Proposals of Security Holders
Proposals of security holders intended to be presented at the 1997
Annual Meeting must be received by the Company for inclusion in the Company's
Proxy Statement and form of proxy relating to that meeting no later than
September 30, 1997.
Other Business
The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
By Order of the Board of Directors
Jon J. Darcy, President
November 14, 1996
STEVEN\THERMOMI\PROXY.STM
EXHIBIT 10(v)
THERMO-MIZER ENVIRONMENTAL CORP.
1996 STOCK INCENTIVE PLAN
14
<PAGE>
1. Purpose.
The purpose of this Plan is to enable Thermo-Mizer Environmental Corp.
and its affiliates to recruit and retain capable employees for the successful
conduct of its business and to provide an additional incentive to directors,
officers and other eligible key employees
consultants and
advisors upon whom rest major responsibilities for the successful operation and
management of the Company and its affiliates.
2. Definitions.
For purposes of the Plan:
2.1 Adjusted Fair Market Value means, in the event
of a Change in
Control, the greater of (i) the highest price per Share of Common Stock paid to
holders of the Shares of Common Stock in any transaction (or series of
transactions) constituting or resulting in a Change in Control or (ii) the
highest Fair Market Value of a Share during the ninety (90) day period ending on
the date of a Change in Control.
2.2 Affiliate Corporation or Affiliate shall mean any corporation, directly or
indirectly, through one of more intermediaries, controlling, controlled by or
under common control with the Company.
2.3 Agreement means the written agreement between the Company
and an Optionee evidencing the grant of an Award.
2.4 Award means an Incentive Stock Option, Nonqualified Stock Option or Stock
Appreciation Right granted or to be granted pursuant to the Plan.
2.5 Board means the Board of Directors of the Company.
2.6 Cause means:
(a) Solely with respect to Nonemployee Directors, the
commission of an act of fraud or an act of embezzlement, misappropriation or
conversion of
assets or opportunities of the Company or any Affiliate, and
(b) For all other purposes, unless otherwise defined in the
Agreement evidencing a particular Award, an Optionee (other than a Nonemployee
Director) (i)
15
<PAGE>
intentional failure to perform reasonably assigned duties, (ii) dishonesty or
willful misconduct in the performance of duties, (iii) involvement in a
transaction in connection with the performance of duties to the Company which
transaction is adverse to the interests of the Company and which is engaged in
for personal profit, or (iv) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or
similar offenses).
2.7 Change in Capitalization means any increase or reduction in the
Number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
2.8 A Change in Control shall mean the occurrence during the term of the
Plan of either of any person (as such term is used in Section 13(c) and
14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company, is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of Securities of the Company representing 50% or
more of the total
voting power represented by the Company's then outstanding voting securities.
2.9 Code means the Internal Revenue Code of 1986, as amended.
2.10 Committee means a committee, as described
in Section 3.1,
appointed by the Board to administer the Plan and to perform the functions set
forth herein.
2.11 Company means Thermo-Mizer Environmental Corp. (including
any and all subsidiaries currently existing or hereafter acquired or
established).
2.12 Director Option means an Option for Shares, Stock Appreciation Rights or
Units granted pursuant to Section 6.
2.13 Disability means a physical or mental infirmity which impairs an Optionee's
ability to perform substantially his or her duties for a period of one hundred
eighty (180) consecutive days.
2.14 Disinterested Director means a director of the Company who is disinterested
within the meaning of Rule 16b-3 under the Exchange Act.
16
<PAGE>
2.15 Eligible Individual means any director (other than a
Nonemployee Director), officer or employee of, or consultant or advisor to, the
Company or an Affiliate who is receiving cash compensation and who is designated
by the Committee as eligible to receive Awards subject to the conditions set
forth herein.
2.16 Employee Option means an option granted pursuant to
Section 5.
2.17 Exchange Act means the Securities Exchange Act of 1934, as
amended.
2.18 Fair Market Value on any date means the average of the high
and low sales prices of the Shares on such date on the principal securities
exchange on which such Shares are listed, or if such Shares are not so listed or
admitted to trading, the arithmetic mean of the per Share closing bid price and
closing asked price per Share on such date as quoted on the quotation system of
the Nasdaq Stock Market, Inc. or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked quotations
with respect to Shares on such date, the Fair Market Value as established by the
Board in good faith and, in the case of an Incentive Stock Option, in accordance
with Section 422 of the Code.
2.19 Incentive Stock Option means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.20 Nonemployee Director means a director of the Company who is
not an employee
of the Company or an Affiliate.
2.21 Nonqualified Stock Option means an Option which is not an
Incentive Stock
Option.
2.22 Option means a Nonqualified Stock Option, an Incentive Stock
Option, a Director Option, an Employee Option or any or all of them.
2.23 Optionee means a person to whom an Option is being granted
under the Plan.
2.24 Outside Director means a director of the Company who is an
outside director within the meaning of Section 162(m) of the Code and the
regulations promulgated
thereunder.
2.25 Parent means any corporation which is a parent corporation
within the meaning of Section 424(e) of the Code) with respect to the Company.
2.26 Plan means the Thermo-Mizer Environmental Corp. 1996 Stock
Option Plan.
17
<PAGE>
2.27 Pooling Transaction means an acquisition of the Company in
a transaction which
is intended to be treated as a pooling of interests under generally accepted
accounting principles
as defined in Opinion No. 16 of the Accounting Principles Board.
2.28 Shares means the common stock, par value
$.001 per share, of
the Company and any securities or other consideration issuable in respect of
Shares in connection
with a Change in Capitalization or Change in Control.
2.29 Stock Appreciation Right or SARs means a
right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 8 hereof.
2.30 Subsidiary means any corporation which is a
subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.31 Successor Corporation means a corporation,
or a parent or
subsidiary thereof within the meaning of 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
2.32 Ten Percent Stockholder means an Eligible
Individual, who, at
the time an Incentive Stock Option is to be granted to him or her owns (within
the meaning of Section 422(b) (6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary thereof.
2.33 Unit means a security consisting of one share of Common
Stock and two Class B
Warrants.
2.34 Class B Warrant shall be exercisable at an exercise price
equal to the greater of $3.00 per share or 120% of the offering price in a
secondary public offering by the Company.
3. Administration.
3.1 The Plan shall be administered by the Committee
which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The
Committee shall keep minutes of its meetings. A quorom shall consist of not
fewer than two (2) members of the Committee and a majority of a quorom may
authorize any action.
Any decision
or determination reduced to writing and signed by a majority of all of the
members shall be as fully effective as if made by a majority,vote at a meeting
duly called and held. The Committee shall consist of at least two (2) directors
of the Company each of whom shall be a Disinterested Director and an Outside
Director. No member of the Committee shall be liable for any action,
18
<PAGE>
failure to act, determination or interpretation made in good faith with respect
to this Plan or any
transaction hereunder, except for liability arising from his or her own willful
misfeasance, gross negligence or reckless disregard of his or her duties. The
Company hereby agrees to indemnify each member of the Committee for all costs
and expenses and, to the extent permitted by applicable law, any liability
incurred in connection with defending against, responding to, negotiating for
the settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any actions in administering this
Plan or in authorizing or denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions
set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Employee
Options shall be granted under the Plan and the number of Employee Options to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Employee Option, including the purchase price per Share subject to
each Employee Option, and make any amendment or modification to any Option
Agreement consistent with the terms of this Plan;
(b) construe and interpret the Plan and the
Options granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law, including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and otherwise to
make the Plan fully effective. All decisions and determinations by the Committee
or the exercise of this power shall be final, binding and conclusive upon the
Company, its Affiliate Corporations, the Options, and all other persons having
any interest therein;
(c) determine the duration and purposes for
leaves of absence
which may be granted to an Optionee on an individual basis without constituting
a termination of
employment or service for purposes of this Plan;
(d) exercise its discretion with respect to
the powers and rights
granted to it as set forth in the Plan; and
(e) exercise such powers and perform such
acts as it deems
necessary or advisable to promote the best interests of the Company with
respect to the Plan.
4. Stock Subject to the Plan.
19
<PAGE>
4.1 The maximum number of Shares that may be made the subject
of Options granted under the Plan is 500,000. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 11. The Company shall reserve for purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option, the number of Shares
available under Section 4.1 for the granting of further Options shall be reduced
by the number of shares subject to such Option granted. Whenever any outstanding
Option or portion thereof expires, is canceled or is otherwise terminated for
any reason without having been exercised or payment
having been
made in respect of the entire Option, the Shares allocable to the expired,
canceled or otherwise terminated portion of the Option may again be the subject
of Options granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement.
5.2 Purchase Price. The purchase price or the manner in which
the purchase price is to be determined for Shares under each Employee Option
shall be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an
Incentive Stock
Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Employee Options granted hereunder shall
be for such term as the Committee shall determine, provided that an Incentive
Stock Option granted hereunder shall not be exercisable after the expiration of
ten (10) years from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder), and a Nonqualified
Stock Option shall not be exercisable after the expiration of ten (10) years
from the date it is granted. The Committee may, subsequent to the granting of
any Employee Option, extend the term thereof but in no event shall the term as
so extended exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.5 hereof,
each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be
designated by the Committee and set forth in the Agreement. To the extent not
exercised,
20
<PAGE>
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Employee Option
expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.
5.5 Modification. No modification of an Employee Option shall
adversely alter or impair any rights or obligations under the Employee Option
without the Optionee's consent.
6. Option Grants for Nonemployee Directors.
6.1 Purchase Price. The purchase price for Shares, SARs or
Units under each Director Option shall be not less than to 100% of the Fair
Market Value of such Shares or Units on the date immediately preceding the date
of the grant.
6.2 Vesting. Subject to Sections 6.3 and 7.5 each Director
Option shall become exercisable within four (4) equal annual installments
beginning on the date of grant; provided, however, that the Optionee continues
to serve as a Director as of such dates. If an Optionee ceases to serve as a
Director for any reason, the Optionee shall have no rights with respect to that
portion of a Director Option which has not then vested pursuant to the preceding
sentence and the Optionee shall automatically forfeit that portion of the
Director Option which remains unvested.
6.3 Limitations on Amendment. The provisions in this Section 6
and Section 7.1 shall not be amended more than once every six (6) months, other
than to comport with changes in the Code or the rules and regulations
thereunder.
7. Terms and Conditions Applicable to All Options.
7.1 Duration. Each Option shall terminate on
the date which is the tenth
anniversary of the grant date, unless terminated earlier as follows:
(a) If an Optionee's employment or service
terminates for any reason
other than Disability, death or Cause, the Optionee may for a period of three
(3) months after such termination exercise his or her Option to the extent, and
only to the extent, such Option or portion thereof was vested and exercisable as
of the date of the Optionee's employment or service terminated, after which time
the Option shall automatically terminate in full.
(b) If an Optionee's employment or service
terminates by reason of the
Optionee's Disability, the Optionee may, for a period of one (1) year after such
termination, exercise his or her Option to the extent, and only to the extent,
such Option or portion thereof
<PAGE>
was vested and exercisable as of the date the Optionees employment or service
terminated, after which time the Option shall automatically terminate in full.
(c) If an Optionee's employment or service
terminates for Cause, the
Option granted to the Optionee hereunder shall immediately terminate in full and
no rights thereunder may be exercised.
(d) If an Optionee dies while employed or in
the service of the
Company or an Affiliate or within the three (3) month or twelve (12) month
period described in clause (a) or (b), respectively, of this Section 7.1 the
Option granted to the Optionee may be exercised at any time within twelve (12)
months after the Optionee's death by the person or persons to whom such rights
under the Option shall pass by will, or by the laws of descent and distribution,
after which time the Option shall terminate in full; provided, however, that an
Option may be exercised to the extent, and only to the extent, such Option or
portion thereof was exercisable on the date of death or earlier termination of
the Optionee's services as a Director.
Notwithstanding clauses (a) through (d) above, the Agreement evidencing the
grant of an Employee Option may, in the Committee's sole and absolute
discretion, set forth additional or different terms and conditions applicable to
Employee Options upon a termination or change in status of the employment or
service of an Eligible Individual. Such terms and conditions may be determined
at the time the Employee Option is granted or thereafter.
7.2 Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted except by will or the laws of
descent and distribution, and an Option may be exercised during the lifetime of
such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee.
7.3 Method of Exercise. The exercise of an
option shall be made only by a
written notice delivered in person or by mail to the Secretary or Chief
Financial Officer of the
Company at the Company's principal executive office, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with
the
Agreement pursuant to which the Option was granted. The purchase price for any
Shares purchased pursuant to the exercise of an Option shall be paid in full in
cash
upon such exercise.
Notwithstanding the foregoing, the Committee shall have discretion to determine
at the time of grant of each Employee Option or at any later date (up to and
including the date of exercise) that the form of payment acceptable in respect
of the exercise of such Employee Option may consist of either of the following
(or any combination thereof): (I) cash or (ii) the transfer of Shares to the
Company upon such terms and conditions as determined by the Committee. The
Optionee shall
<PAGE>
deliver the Agreement evidencing the Option to the Secretary or Chief Financial
Officer of the Company who shall endorse thereon a notation of such exercise and
return such Agreement to the Optionee. No fractional Shares (or cash in lieu
thereof) shall be issued upon exercise of an Option and the number of Shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole Shares.
7.4 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the Shares to the Optionee and (iii) the
Optione's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
7.5 Effect of Change in Control. In the event of a Change in
Control, all Options outstanding on the date of such Change in Control shall
become immediately and fully vested and exercisable. In addition, to the extent
set forth in an Agreement evidencing the grant of an Employee Option, an
Optionee will be permitted to surrender for cancellation within sixty (60) days
after such Change in Control, any Employee Option or portion of an Employee
Option to the extent not yet exercised and the Optionee will be entitled to
receive a cash payment in an amount equal to the excess, if any of (x) (A) in
the case of a Nonqualified Stock Option, the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Employee Option or portion thereof
surrendered or (B) in the case of an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Employee Option or portion thereof surrendered, over (y) the aggregate purchase
price for such Shares under the Employee Option or portion thereof surrendered;
provided, however, that in the case of an Employee Option granted within six (6)
months prior to the Change in Control to any Optionee who may be subject to
liability under Section 16(b) of the Exchange Act, such Optionee shall be
entitled to surrender for cancellation his or her Option during the sixty (60)
day period commencing upon the expiration of six (6) months from the date of
grant of any such Employee Option. In the event an Optionees employment or
service with the Company is terminated by the Company following a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
termination of the Optione's employment or service shall remain exercisable for
a period ending not before the earlier of the first anniversary of the
termination of the Optione's employment or service or the expiration of the
stated term of the Option.
8. Stock Appreciation Rights. The Committee may, in its
discretion, either alone or
in connection with the grant of an Employee Option, grant Stock Appreciation
Rights in
<PAGE>
accordance with the Plan, the terms and conditions of which shall be set forth i
n an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser number
of Shares as the Committee may determine) and shall, except as provided in this
Section 8, be subject to the same terms.
8.1 Time of Grant. A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option, or (ii) if related to an Option,
either at the time of grant, or at any time thereafter during the term of the
Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 8.8, a Stock
Appreciation Right granted
in connection with an Option shall be exercisable at such time or times and only
to the extent that the related Options are exercisable, and will not be
transferable except to the
extent the related
Option may be transferable. A Stock Appreciation Right granted in connection
with an Incentive Stock Option shall be exercisable only if the Fair Market
Value of a Share on the date of exercise exceeds the purchase price specified in
the related Incentive Stock Option
Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right
related to an Option, the holder shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit, in any manner, the
amount payable with respect to any Stock Appreciation Right by including such a
limit in the
Agreement evidencing the
Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock
Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right or
the surrender of such Option pursuant to Section
7.3, the Stock
Appreciation Right shall be canceled to the extent of the number of Shares as to
which the Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option.
The Committee may
grant to Eligible Individuals Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.8), vesting and duration
as the Committee shall determine, but, in
no event, shall they
3
<PAGE>
have a term of greater than ten (10) years. Upon exercise of a Stock
Appreciation Right
unrelated to an Option, the holder shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit, in any
manner, the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the same Stock Appreciation
Right at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be
exercised by a holder only by a written notice delivered in person or by mail to
the Secretary or Chief Financial Officer of the Company at the Company's
principal executive office, specifying the number of Shares with respect to
which the Stock Appreciation Right is being exercised. If requested by the
Committee, the holder shall deliver the Agreement evidencing the Stock
Appreciation Right being exercised and the Agreement evidencing any related
Option to the Secretary or Chief Financial Officer of the Company who shall
endorse thereon a notation of such exercise and return such Agreement to the
holder.
8.5 Form of Payment. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee, solely in
whole Shares in a number determined at their Fair Market Value in the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares.
If the Committee
decides to make full payment in Shares and the amount payable results in a
fractional Share, payment for the fractional Share will be made in cash.
Notwithstanding the foregoing, no payment in the form of cash may be made upon
the exercise of a Stock
Appreciation Right
pursuant to Sections 8.2(b) or 8.3 to an officer of the Company who is subject
to liability under
Section 16(b) of the Exchange Act, unless the exercise of such Stock
Appreciation Right is made
either (i) during the period beginning on the third business day and ending on
the twelfth business day following the date of release for publication of the
Company's quarterly or annual statements of earnings (the "Window Period") or
(ii) pursuant to an irrevocable election to receive cash made at least six (6)
months prior to the exercise of such Stock Appreciation Right.
8.6 Restrictions. No Stock Appreciation Right may be
exercised before a
date six (6) months after the date on which it is granted.
8.7 Modification. No modification of an Award shall
adversely alter or impair
any rights or obligations under the Agreement without the holder's consent.
<PAGE>
8.8 Effect of Change in Control. In the event of a Change in
Control but subject to Section 8.6, all Stock Appreciation Rights shall become
immediately and fully exercisable. In addition, to the extent set forth in an
Agreement evidencing the grant of a Stock Appreciation Right, a holder will be
entitled to receive a payment in cash or stock, in either case, with a value
equal to the excess, if any, of (A) the greater of (x) the Fair Market Value, on
the date preceding the date of exercise, of the underlying Shares subject to the
Stock Appreciation Right or portion thereof exercised and (y) the Adjusted Fair
Market Value, on the date preceding the date of exercise, of the Shared over (B)
the aggregate Fair Market Value, on the date the Stock Appreciation Right was
granted, of the Shares subject to the Stock Appreciation Right or portion
thereof exercised; provided, however, that in the case of a Stock Appreciation
Right granted within six (6) months of the Change in Control to any holder who
may be subject to liability under Section 15(b) of the Exchange Act, such holder
shall be entitled to exercise his or her Stock Appreciation Right during the
sixty (60) day period commencing upon the expiration of six months from the date
of grant of any such Stock Appreciation Right. In the event of a holder's
employment or service with the Company is terminated by the Company following a
Change in Control, each Stock Appreciation Right held by the holder that was
exercisable as of the date of termination of the holder's employment or service
shall remain exercisable for a period ending but not before the earlier of the
first anniversary of the termination of the holder's employment or service or
the expiration of the stated term of the Stock Appreciation Right.
9. Adjustment Upon Changes n Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number of Shares with respect to which Options may be granted under the
Plan, (ii) maximum number of Shares with respect to which Options may be granted
to any Eligible Individual during the term of the Plan, (iii) the number of
Shares which are subject to outstanding Options granted under the Plan, and the
purchase price therefor, if applicable, and (iv) the number of Shares in respect
of which Director Options are to be granted under Section 6.
(b) Any such adjustment in the Shares subject to Incentive
Stock Options (including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by Section 424(h)(3)
of the Code and only to the extent otherwise permitted by Sections 422 and 424
of the Code.
(c) If, by reason of a Change of Capitalization, an Optionee
shall be entitled to exercise an Option with respect to new, additional or
different shares of stock, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Option, prior to
such Change in Capitalization.
5
<PAGE>
10. Effect of Certain Transactions. Subject to
Sections 7.5 and 8.8 or as
otherwise provided in an Agreement, in the event of (i) the liquidation or
dissolution of the
Company or (ii) a merger or consolidation of the Company, the Plan and the
Options issued
hereunder shall continue in effect in accordance with their respective terms.
11. Interpretation.
(a) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
(b) The Director Options described in Section 6 are intended
to qualify as formula awards under Rule 16b-3 promulgated under the Exchange Act
(thereby preserving the disinterested status of Nonemployee Directors receiving
such Awards) and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with the foregoing intent shall be inoperative and shall interpret
and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with the foregoing intent
shall be inoperative and shall not affect the validity of the Plan.
(c) Unless otherwise expressly stated in the relevant
Agreement, each Option granted under the Plan is intended to be
performance-based compensation within the meaning of Section 162(m)(4)(C) of the
Code. The Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options if the ability to exercise
such discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options to fail to qualify as
performance-based compensation.
12. Pooling Transactions.
Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which is also
intended to constitute a Pooling Transaction, the Committee shall take such
actions, if any, which are specifically recommended by an independent public
accounting firm engaged by the Company to the extent reasonably necessary in
order to assure that the Pooling Transaction will qualify as such, including but
not limited to (i) deferring the vesting, exercise, payment or settlement in
respect of any Option, (ii) providing that the payment or settlement in respect
of any Option be made in the form of cash, Shares or securities of a successor
or acquiree of the Company, or a combination of the foregoing, and (iii)
providing for the extension of term of any Option to the extent necessary to
accommodate the foregoing,
6
<PAGE>
but not beyond the maximum term permitted for any Option.
13. Termination and Amendment of the Plan.
The Plan shall terminate on the preceding the tenth
anniversary of the date of its adoption by the stockholders of the Company, and
no Option may be granted thereafter. Subject to Section 6.5, the Board may
sooner terminate the Plan, and the Board may at any time and from time to time
amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Award already granted under the Plan, except
with the consent of the Optionee or holder of an SAR nor shall any amendment,
modification or termination deprive any Optionee or holder of an SAR of any
Shares which he or she may have acquired through or as a result of the Plan; and
(b) To the extent necessary under Section 16(b) of the
Exchange Act and the rules and regulations promulgated thereunder or other
applicable law, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law and regulations.
14. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.
15. Limitation of Liability.
As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an
Option other than at the
sole discretion of the Committee;
(b) give any person any rights whatsoever with
respect to Shares
except as specifically provided in the Plan;
7
<PAGE>
(c) limit in any way the right of the Company
to terminate the
employment of any person at any time; or
(d) be evidence of any agreement or
understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
16. Regulations and Other Approvals; Governing Law.
16.1 Except as to matters of Federal law, this Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of New Jersey.
16.2 The obligation of the Company to sell or deliver Shares
with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable Federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
16.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
16.4 Each Option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval or any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.
16.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require an individual receiving Shares
pursuant to an Award granted under the Plan, as a condition precedent to receipt
of such Shares, to represent
8
<PAGE>
and warrant to the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution thereof and will not
be sold or transferred other than pursuant to an exemption applicable under the
Securities Act as amended, or the rules and regulations promulgated thereunder.
The certificates evidencing any of such Shares shall be appropriately amended to
reflect their status as restricted securities as aforesaid.
17. Miscellaneous.
17.1 Multiple Agreements. The terms of each Award granted to
an Eligible Individual may differ from other Awards granted under the Plan at
the same time, or at some other time. The Committee may also grant more than one
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Awards previously granted to
that Eligible Individual.
17.2 Withholding of Taxes.
(a) At such times as an Optionee or holder of an
SAR recognizes taxable
income in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or holder shall pay other amounts as may be required by
law to be withheld by the Company in issuance or release from escrow of such
Shares or the payment of such cash. The Company shall have the right to deduct
from any payment of cash to an Optionee or holder an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or holder may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee to have withheld a
portion of the Shares then issuable to him or her having an aggregate Fair
Market Value, on the date preceding the date of such issuance, equal to the
Withholding Taxes, provided that in respect of an Optionee or holder who may be
subject to liability under Section 16(b) of the Exchange Act either; (i)(A) the
Tax Election is made at least six (6) months prior to the date of the Taxable
Event and (B) the Tax Election is irrevocable with respect to all Taxable Events
of a similar nature occurring prior to the expiration of six (6) months
following a revocation of the Tax Election; or (ii)(A) the Tax Election is made
at least six (6) months after the date the Award was granted, (B) the Award is
exercised during the Window Period and (C) the Tax Election is made during the
Window Period in which the related Award is exercised or prior to such Window
Period and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify this Section 17.2 (other than as regards Director Options)
or impose such other restrictions or limitations on Tax Elections to be made at
such times and subject to such other conditions as the Committee determines will
constitute exempt transactions under Section 16(b) of the Exchange Act.
9
<PAGE>
(b) If an Optionee makes a disposition, within
the meaning of Section
424 (c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
17.3 Effective Date. The effective date of the
Plan shall be as determined
by the Board, subject only to the approval by the affirmative vote of the
stockholders.
<PAGE>
