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 Montvale Inn, 100 Chestnut Ridge Road, Montvale, New
Jersey 07645, 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
Jon J. Darcy, President
November 15, 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.
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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.
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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%
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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.
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(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 $4.01 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
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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
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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:
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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
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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
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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
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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.
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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
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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
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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 15, 1996
<PAGE>
EXHIBIT A
THERMO-MIZER ENVIRONMENTAL CORP.
1996 STOCK INCENTIVE PLAN
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)
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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.
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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.
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<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' 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,
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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;
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(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.
16.4 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
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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.
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(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.
