SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
TECH LABORATORIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
TECH LABORATORIES, INC.
955 BELMONT AVENUE
NORTH HALEDON, NEW JERSEY 07508
Notice of Annual Meeting of Shareholders
To Be Held on August 10, 2000
To the Shareholders:
The Annual Meeting of Shareholders of Tech Laboratories, Inc. (the
"Company") will be held at the Holiday Inn & Conference Center, 50 Kenney Place,
Saddle Brook, New Jersey 07663 on August 10, 2000, at 4:30 p.m. to consider and
act upon the following matters:
1. To elect four (4) directors to serve until the next Annual Meeting and
until their successors are chosen and qualified.
2. To approve an amendment to the certificate of incorporation of the
Company to increase from 5,000,000 to 10,000,000 the authorized number
of shares of the common stock of the Company.
3. To ratify and approve the selection by the Board of Directors of
Charles J. Birnberg as the Company's independent public accountant for
the fiscal year ended December 31, 2000.
4. To adopt an incentive stock option plan for employees of the Company.
5. To adopt a stock option plan for non-employee directors of the
Company.
6. To consider and act upon such other matters as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on June 22, 2000, will be
entitled to notice of and to vote at the meeting. The stock transfer books of
the Company will remain open.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Carmine O. Pellosie, Jr., Secretary
June 30, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES.
TECH LABORATORIES, INC.
955 BELMONT AVENUE
NORTH HALEDON, NEW JERSEY 07508
Proxy Statement for
Annual Meeting of Shareholders
August 10, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Tech Laboratories, Inc. (the "Company") for
use at the Annual Meeting of Shareholders to be held on August 10, 2000, and at
any adjournment of that meeting. In considering whether or not to have an
adjournment, management will consider what is in the best interest of the
shareholders. All proxies will be voted as marked. Proxies marked as abstaining
(including proxies containing broker non-votes) on any matters to be acted upon
by shareholders will be treated as present at the meeting for purposes of
determining a quorum but will not be counted as votes cast on such matters. Any
proxy may be revoked by a shareholder at any time before it is exercised by
written or oral request to Carmine Pellosie, Secretary of the Company. The date
of mailing of this Proxy Statement is expected to be on or about June 30, 2000.
The Board of Directors has fixed June 22, 2000, as the record date for the
determination of shareholders entitled to vote at the Annual Meeting. At the
close of business on June 6, 2000, there were outstanding and entitled to vote
3,944,039 outstanding shares of common stock, par value $.01 (the "Common
Stock"), of the Company. Each share is entitled to one vote.
The Company's 1999 Annual Report on Form 10-KSB/A filed with the Securities
and Exchange Commission, which includes financial statements for the fiscal year
ended December 31, 1999, is being mailed to shareholders with this proxy
statement, but is not incorporated into this proxy statement and is not to be
considered a part of the proxy statement or soliciting materials.
The following table sets forth information concerning ownership of the
Company's Common Stock as of June 6, 2000, by each person known by the Company
to be the beneficial owner of more than five (5%) percent of the Common Stock.
Percent of
Common Stock Common Stock
Name and Address Beneficially Owned Outstanding
- ---------------- ------------------ -----------
Bernard M. Ciongoli.......................... 820,000 20.79%
Tech Laboratories, Inc.
955 Belmont Avenue
North Haledon, New Jersey 07508
Earl Bjorndal................................ 248,344 6.29%
c/o Tech Laboratories, Inc.
955 Belmont Avenue
North Haledon, New Jersey 07508
The persons listed in the above table have sole voting and investment power
with respect to their respective shares.
All of the persons listed above, for as long as they continue to hold five
percent or more of the Company's outstanding Common Stock, will be deemed
"affiliated persons" of the Company, as such term is defined in the Securities
Act of 1933, as amended (the "Act").
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that there shall be up to five (5) members of
the board of directors. Currently, the Board consists of four (4) directors. The
board has nominated a total of four (4) individuals to serve as directors until
the next Annual Meeting and until their successors are chosen and qualified.
Vacancies on the Board may be filled by a majority of the remaining members.
Included in the Board's slate of nominees are three (3) individuals
currently serving on the Board. Salvatore Grisafi has been nominated to fill a
vacancy on the Board. The affirmative vote of the holders of a majority of the
Common Stock present or represented at the meeting is required for the election
of directors. The persons named in the proxy will vote, as permitted by the
By-Laws of the Company, to elect as directors the four (4) nominees named below,
unless authority to vote for the election of directors is withheld by marking
the proxy to that effect or the proxy is marked with the names of directors as
to whom authority to vote is withheld. The proxy may not be voted for more than
four (4) directors. The three (3) nominees currently members of the Board are
Bernard M. Ciongoli, Earl M. Bjorndal and Carmine O. Pellosie, Jr.
Directors are elected for a one (1) year term or until their resignation,
disqualification or removal from office. If a nominee becomes unavailable, the
person acting under the proxy may vote the proxy for the election of a
substitute. It is not presently contemplated that any of the nominees will be
unavailable.
The following sets forth the name of each nominee and the positions and
offices held by him or her, his or her age, the date on which he or she became a
director of the Company, as applicable, his or her principal occupation and
business experience for the last five years and the names of other publicly-held
companies in which he or she serves as a director:
-2-
Officer and Director Biographies
Bernard M. Ciongoli, 53, became our President and a Director in late 1992,
and became Treasurer in 1998. From 1990 through 1991 he served as President of
HyTech Labs, a company engaged in sales and servicing of electronic test
equipment. During the years of 1987 to 1990, he acted as the principal owner and
President of Bernco Developers, a real estate developer. Mr. Ciongoli holds a
degree in electronic engineering from Paterson Institute of Technology.
Earl M. Bjorndal, 48, has been with us in various capacities since 1981. He
has been a Director since 1985, and became a Vice President in 1992. He is a
graduate of the New Jersey Institute of Technology with both bachelor's and
master's degrees in industrial engineering.
Carmine O. Pellosie, Jr., 57, has been a Director since 1997. Since January
1, 1999, he has been the Controller of the Passaic County Department of Health
and Human Services. Prior to January 1999, he was, for more than five years,
president of International Logistics, Inc.
Salvatore Grisafi, 70, is president of MPX Network Solutions, a privately
held telecommunications/networking business development and marketing consulting
company. Mr. Grisafi has served as a consultant to the Company since 1998, and
assisted the Company in the acquisition of the DynaTraX(TM) technology from
NORDX/CDT and in identifying other opportunities and business strategies. Mr.
Grisafi is a graduate of the New York Institute of Technology.
Security Ownership of Principal Stockholders and Management
The following table sets forth certain information as to those persons who,
to the knowledge of the Company, owned 5% or more of the outstanding Common
Stock of the Company as of June 6, 2000, and as to the officers and directors of
the Company as a group:
Percentage of
Number of Shares Outstanding
Name Owned Shares Owned
- ---- ---------------- -------------
Bernard M. Ciongoli 820,000 20.79%
Earl Bjorndal 248,344 6.29%
Carmine O. Pellosie, Jr 40,000 1.02%
Richard Rice 197,400 5.00%
Officers, Directors, and 5% 1,305,744 33.10%
Stockholders as a group (4 persons)
Compliance with Section 16(a) of the 1934 Act
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's officers and directors, and persons who own more than ten
percent of the Company's Common Stock, to file initial reports of beneficial
ownership and changes in beneficial ownership with the Commission and to furnish
the Company with copies of all reports filed.
All filing requirements applicable to its officers, directors, and greater
than ten percent shareholders were complied with except as follows: the Form 3
due ten days following the effectiveness of Tech Labs' registration statement,
filed on Form SB-2 and declared effective February 3, 2000, was not timely filed
for Richard Rice, currently a director of the Company but not a nominee, or
Louis Tomasella, a former director of the Company who resigned on February 29,
2000; and the Schedule 13G and 13D, also required to be filed within ten days of
the aforementioned registration statement, for Earl Bjorndal and Bernard
Ciongoli, respectively, were not timely filed. The late forms were all filed
within several days of their required due date. In addition, Richard Rice's Form
4 and Schedule 13D were not timely filed.
-3-
Management
Directors and Executive Officers
The following table sets forth certain information concerning the directors
and executive officers of the Company:
Name Address Position
- ---- ------- --------
Bernard M. Ciongoli c/o Tech Laboratories, Inc. President, Treasurer, Chief
955 Belmont Avenue Financial Officer, and
North Haledon, New Jersey Chairman of the Board of
07508 Directors
Earl M. Bjorndal c/o Tech Laboratories, Inc. Vice President and Director
955 Belmont Avenue
North Haledon, New Jersey
07508
Carmine O. Pellosie, Jr. c/o Tech Laboratories, Inc. Secretary and Director
955 Belmont Avenue
North Haledon, New Jersey
07508
Committees of the Board
The Company has a standing audit committee composed of Bernard Ciongoli and
Carmine Pellosie. The Company does not have standing nominating or compensation
committees, or committees performing similar functions.
Meeting of the Board
The Company held one (1) meeting of the Board in 1999. All of the Company's
directors participated in the meeting.
Executive Compensation
The following table summarizes the compensation paid to or earned by our
president. No other officer has received compensation in excess of $100,000 in
any recent fiscal year.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
---------------------------- ------------
Shares of
Common Stock
Issuable Upon
Name and 1999 Exercise of
Principal Position Year Salary Bonus($) Options
- ------------ ---- -------- -------- -------------
Bernard M. Ciongoli 1999 $125,000 0 0
President, Treasurer 1998 $125,000 0 300,000
1997 $125,000 0 0
No options were granted in 1999 to any employee of the Company.
-4-
The Company has a five (5) year employment contract with Mr. Ciongoli that
commenced October 1, 1998, and was amended June 18, 1999. Mr. Ciongoli is
currently compensated at the base salary rate of $125,000 per annum. Mr.
Ciongoli is also entitled to receive two (2%) percent of our sales in excess of
$1,000,000 during any year he is employed by us. In addition, Mr. Ciongoli was
also granted an option exercisable for five (5) years from date of grant to
purchase 300,000 shares of stock at $.50 per share, such option to vest in
increments of 100,000 shares per annum on each anniversary date of the agreement
commencing October 1, 1998. The agreement is automatically renewed for one (1)
year unless either party terminates the agreement in writing at least 180 days
prior to the expiration of the term or of any renewal period.
The Company does not have employment agreements with any other officer or
other employee.
Board Compensation
The members of the Board are not presently compensated.
Certain Relationships and Related Transactions
Salvatore Grisafi is the president of MPX Network Solutions, Inc. ("MPX").
The Company entered into a consulting agreement with MPX which expires on March
14, 2001. Pursuant to the agreement, MPX provides consulting services in the
areas of marketing, customer relations and strategic and product development
planning, and is paid an annual fee of $52,000 and commission on sales of
telecommunications products during the term of the agreement ranging from 3% of
the first $1,000,000 of the net sale prices to 1/2% of the net sale prices over
$4,000,000. In addition, the Company, pursuant to the agreement, delivered
50,000 shares of the Company's Common Stock to MPX.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO CHARTER
Pursuant to the Company's certificate of incorporation, the Company is
presently authorized to issue 5,000,000 shares, $.01 par value, of common stock
(the "Common Stock") of which 3,949,039, as of June 6, 2000, were issued and
outstanding. There are approximately 200 holders of the Common Stock.
One of the purposes of this Annual Meeting of Shareholders is to consider
and vote upon approval of an amendment to the Company's certificate of
incorporation that would (i) increase the number of shares of Common Stock the
Company is authorized to issue from 5,000,000 to 10,000,000 shares. A copy of
the form of proposed amendment reflecting the increase in the authorized shares
of Common Stock is included as Exhibit 1 hereto. Holders of the Common Stock do
not have any preemptive or similar rights to purchase any securities of the
Company and accordingly do not have any rights to purchase any additional
authorized shares of Common Stock. The Board of Directors would not seek from
shareholders any authorization or approval for the issuance of the additional
authorized shares of Common Stock unless required to do so by law in the
particular instance. If and when issued, the newly authorized shares of Common
Stock would have the same rights as the presently issued and outstanding shares
of Common Stock.
Description of the Common Stock
Each share of Common Stock is entitled to one vote on all matters submitted
to a vote of shareholders. The Common Stock does not have cumulative voting
rights, which means that the holders of a majority of the outstanding shares may
elect all of the directors of the Company. Stockholders holding a majority of
the voting power of the capital stock issued and outstanding and entitled to
vote, represented in person or by proxy, are necessary to constitute a quorum at
any meeting of stockholders, and the vote by the holders of a majority of such
outstanding shares is required to effect certain fundamental corporate changes
such as liquidation, merger or amendment of our certificate of incorportation.
-5-
Holders of Common Stock are entitled to receive dividends pro rata based on
the number of shares held, when, as and if declared by the Board of Directors,
from funds legally available therefor. In the event of the liquidation,
dissolution or winding up of the affairs of the Company, all assets and funds of
the Company remaining after the payment of all debts and other liabilities shall
be distributed, pro rata, among the holders of the Common Stock.
The reason for the proposal is to provide the Company with a sufficient
number of authorized shares (i) to issue shares upon the exercise of presently
outstanding stock options, (ii) to enable the Company to grant options for up to
an aggregate of 250,000 shares of Common Stock to be issued under the proposed
stock option plans described in Proposal Nos. 4 and 5, and (iii) to enable the
Company to sell additional shares in the future should the Board of Directors
determine such sale to be in the best interest of the Company. The stock option
plans are described in Proposal Nos. 4 and 5.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the approval of the proposed amendment to the
certificate of incorporation.
The Board of Directors of the Company recommends a vote FOR Proposal No. 2.
PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 2000
The Board of Directors, including a majority of directors who are not
interested persons of the Company, subject to shareholder approval, has selected
Charles J. Birnberg as independent public accountant to be employed by the
Company for the fiscal year ending December 31, 2000, to sign or certify such
financial statements, or any portions thereof, as may be filed by the Company
with the Commission or any other authorities at any time. The employment of such
independent public accountant for such purpose is subject to approval by the
shareholders at this meeting. No member of Charles J. Birnberg nor any associate
of Mr. Birnberg's has a direct or indirect material financial interest in the
Company or any of its affiliates.
The affirmative vote of a majority of the Common Stock present or
represented at the meeting is required to ratify and approve the selection of
Charles J. Birnberg as independent public accountant for the Company for fiscal
2000.
Charles J. Birnberg will be present at the Annual Meeting of Shareholders
for the purpose of answering shareholder questions and making any other
appropriate statement.
The Board of Directors of the Company recommends a vote FOR Proposal No. 3.
PROPOSAL NO. 4
APPROVAL OF AN INCENTIVE STOCK OPTION PLAN
The Company's Board of Directors, including a majority of the
non-interested directors, has adopted, subject to shareholder approval, an
employee stock option plan (the "2000 Employee Plan") in order to link the
personal interests of key employees to the long-term financial success of the
Company and the growth of shareholder value. The 2000 Employee Plan authorizes
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code for the purchase of an aggregate of 150,000 shares
(subject to adjustment for stock splits and similar capital changes) of Common
Stock to employees of the Company. By adopting the 2000 Employee Plan, the Board
believes that the Company will be better able to attract, motivate and retain as
employees people upon whose judgment and special skills the success of the
Company in large measure depends. As of June 6, 2000, no options to purchase
shares of Common Stock have been granted under the 2000 Employee Plan.
Accordingly, as of such date, 150,000 shares of Common Stock were available for
future awards under the 2000 Employee Plan.
-6-
The 2000 Employee Plan will be administered by the 2000 Employee Plan
Committee of the Board of Directors, which will be comprised of one or more of
the independent members of the Board of Directors (the "Committee"). The
Committee can make such rules and regulations and establish such procedures for
the administration of the 2000 Employee Plan as it deems appropriate.
The exercise price of an incentive stock option must be at the fair market
value of the Company's Common Stock on the date of grant (110% of the fair
market value for shareholders who, at the time the option is granted, own more
than 10% of the total combined classes of stock of the Company or any
subsidiary). No employees may exercise more than $100,000 in options held by
them in any year.
No option may have a term of more than ten years (five years for 10% or
greater shareholders). Options generally may be exercised only if the option
holder remains continuously associated with the Company or a subsidiary from the
date of grant to the date of exercise. However, options may be exercised upon
termination of employment or upon death or disability of any employee within
certain specified periods.
The following is a general summary of the federal income tax consequences
under current tax law of incentive stock options ("ISOs"). It does not purport
to cover all of the special rules, including special rules relating to persons
subject to the reporting requirements of Section 16 under the 1934 Act who do
not hold the shares acquired upon the exercise of an option for at least six
months after the date of grant of the option and special rules relating to the
exercise of an option with previously-acquired shares, or the state or local
income or other tax consequences inherent in the ownership and exercise of stock
options and the ownership and disposition of the underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of an ISO.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him or her, the optionee will recognize
long-term capital gain or loss and the Company will not be entitled to a
deduction. However, if the optionee disposes of such shares within the required
holding period, all or a portion of the gain will be treated as ordinary income
and the Company will generally be entitled to deduct such amount.
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax.
The description of the 2000 Employee Plan set forth herein is qualified in
its entirety by reference to the text of the 2000 Plan, a copy of which is
attached as Exhibit 2 to this Proxy Statement.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the approval of the 2000 Employee Plan. The
Board of Directors of the Company recommends a vote FOR Proposal No. 4.
PROPOSAL NO. 5
APPROVAL OF NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's Board of Directors has adopted subject to shareholder
approval, a stock option plan for non-employee directors (the "Director Plan")
in order to link the personal interests of such non-employee directors to the
long-term financial success of the Company and the growth of shareholder value.
By adopting the Director Plan, the Board believes that the Company will be
better able to attract, motivate and retain as directors people upon whose
judgment and special skills the success of the Company in large measure depends.
-7-
The total number of shares for which options may be granted from time to
time under the Director Plan is 100,000 shares.
The Director Plan will be administered by a committee of directors who are
not eligible to participate in the Directors Plan (the "Committee"). Options
become exercisable with respect to such shares granted on the date on which the
option was granted, so long as the optionee remains an eligible director. No
option may be exercised more than five years after the date on which it is
granted. The number of shares available for options, the number of shares
subject to outstanding options and their exercise prices will be adjusted for
changes in outstanding shares such as stock splits and combinations of shares.
Shares purchased upon exercise of options, in whole or in part, must be paid for
in cash or by means of unrestricted shares of Common Stock or any combination
thereof.
The following is a general summary of the federal income tax consequences
under current tax law of non-qualified stock options ("NQSOs"). It does not
purport to cover all of the special rules, including special rules relating to
persons subject to the reporting requirements of Section 16 under the 1934 Act
who do not hold the shares acquired upon the exercise of an option for at least
six months after the date of grant of the option and special rules relating to
the exercise of an option with previously-acquired shares, or the state or local
income or other tax consequences inherent in the ownership and exercise of stock
options and the ownership and disposition of the underlying shares.
Upon the exercise of a NQSO, the optionee will recognize ordinary income in
an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof, and the
Company will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the period for which the shares were held. Long-term capital gain is
generally subject to more favorable tax treatment than ordinary income or
short-term capital gains.
If the option does not have a readily ascertainable fair market value, an
optionee will not recognize taxable income for federal income tax purposes upon
the grant of an NQSO.
Options granted under the Director Plan will not be transferable other than
by the laws of descent and during the optionee's life may be exercised only by
the optionee.
The Director Plan may be terminated at any time by the Board of Directors
or the Committee, and will terminate ten years after the effective date of the
Director Plan. The Board of Directors may not materially increase the number of
shares authorized under the plan or materially increase the benefits accruing to
participants under the plan without the approval of the shareholders of the
Company.
The exercise or conversion price of the options issued pursuant to the
Director Plan shall be not less than current fair market value at the date of
issuance.
The description of the Director Plan set forth herein is qualified in its
entirety by reference to the text of the Director Plan, a copy of which is
attached as Exhibit 3 to this Proxy Statement.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for the approval of the Director Plan. The Board of
Directors of the Company recommends a vote FOR Proposal No. 5.
PROPOSAL NO. 6
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named
-8-
in the accompanying proxy to vote, or otherwise to act, in accordance with their
judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone and
personal interview.
Deadline for Submission of Shareholder Proposals
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company at its principal
executive offices not later than March 9, 2001, for inclusion in the proxy
statement for that meeting. Mere submission of a proposal does not guarantee its
inclusion in the Proxy Statement or its presentation at the meeting since
certain federal rules must also be met.
The Board of Directors invites shareholders to attend the Annual Meeting.
Whether or not you plan to attend, you are urged to complete, date, sign and
return the enclosed proxy in the accompanying envelope. Prompt response will
greatly facilitate arrangements for the meeting, and your cooperation will be
appreciated. Shareholders who attend the meeting may vote their stock personally
even though they have sent in their proxies.
By Order of the Board of Directors
CARMINE O. PELLOSIE, JR., Secretary
June 30, 2000
-9-
PROXY FOR HOLDERS OF COMMON STOCK
Tech Laboratories, Inc.
The undersigned holder of shares of common stock, $.01 par value ("Common
Stock"), of Tech Laboratories, Inc. (the "Company") hereby constitutes and
appoints Bernard M. Ciongoli, proxy and attorney of the undersigned, with full
power of substitution to each, for and in the name of the undersigned, to vote
and act upon all matters (unless and except as expressly limited below) at the
Annual Meeting of Shareholders of the Company to be held on August 10, 2000, at
the Holiday Inn & Conference Center, 50 Kenney Place, Saddle Brook, New Jersey
07663 at 4:30 p.m., and at any and all adjournments thereof, in respect of all
Common Stock of the Company held by the undersigned or in respect of which the
undersigned would be entitled to vote or act, with all the powers the
undersigned would possess if personally present. All proxies heretofore given by
the undersigned in respect of said meeting are hereby revoked.
PROPOSAL 1. To Elect Directors
FOR electing all nominees listed (as recommended in the proxy
statement) except as marked below______________.
Bernard M. Ciongoli, Earl Bjorndal, Carmine O. Pellosie, Jr. and
Salvatore Grisafi.
WITHHOLD AUTHORITY to vote for all nominees listed
________________
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that person's name in the space provided.)
PROPOSAL 2. To approve an amendment to the certificate of incorporation of
the Company to increase from 5,000,000 to 10,000,000 the
authorized number of shares of the Common Stock of the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 3. To ratify and approve the appointment of Charles J. Birnberg as
the Company's independent public accountants for the fiscal year
ended December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 4. To adopt a qualified stock option plan for employees of the
Company.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 5. To adopt a stock option plan for non-employee directors of the
Company.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 6. Such other matters as may properly come before the meeting.
[_] FOR [_] AGAINST [_] ABSTAIN
(continued and to be signed on reverse side)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Specify desired action by checkmarks in the appropriate spaces. The Proxy will
be voted as specified. If no specification is made, the Proxy will be voted for
the nominees named in the Proxy Statement to represent the holders of Common
Stock and in favor of Proposals 2, 3, 4, and 5. The persons named as proxies
have discretionary authority, which they intend to exercise in favor of the
proposals referred to and according to their best judgment as to other matters
which properly come before the meeting.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
No. of Shares:__________ Dated: ____________________
- ---------------------------- -----------------------------
(Print Name) (Signature of Shareholder)
- ---------------------------- -----------------------------
(Print Name) (Signature of Shareholder)
The signature(s) on this Proxy should correspond exactly with the shareholder's
name as stencilled hereon. In the case of joint tenancies, co-executors or
co-trustees, both should sign. Person(s) signing as Attorney, Executor,
Administrator, Trustee or Guardian should provide full title.
Exhibit 1
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
TECH LABORATORIES, INC.
Under Section 14A:9-4 of Title 14A
It is hereby certified that:
FIRST: The name of the Corporation is TECH LABORATORIES, INC.
SECOND: Article FIFTH of the Certificate of Incorporation of the
Corporation is hereby deleted in its entirety substituting the following new
paragraph FIFTH in its place:
The total authorized capital stock of this corporation is 10,000,000
shares, par value of $.01 per share, all of which shall be common stock.
No shareholder shall, because of his ownership of stock, have a preemptive
right to purchase, subscribe for, or take any part of any securities
convertible into or carrying options or warrants to purchase stock, issued,
optioned, or sold by the corporation.
Any part of the capital stock and any part of the notes, debentures, bonds,
or other securities convertible into or carrying options or warrants to
purchase stock authorized by any amended certificate duly filed, may at any
time be issued, optioned for sale, sold, or disposed of by the corporation
pursuant to the Resolution of its Board of Directors to such persons and
upon such terms as may, to such Board, seem proper, without first offering
such stock or securities or any part thereof to existing shareholders.
THIRD: The amendment to the Certificate of Incorporation was approved by a
majority of the outstanding shares of the Corporation entitled to vote on said
amendment on the ____ day of______, 2000.
FOURTH: The vote approving of the said amendment was ________ shares for
said amendment to ___ shares against said amendment.
IN WITNESS WHEREOF, this Certificate of Amendment to the Certificate of
Incorporation has been subscribed to this ____th day of__________, 2000 by the
undersigned who affirm that the statements made herein are true under the
penalties of perjury.
BERNARD M. CIONGOLI, PRESIDENT
CARMINE O. PELLOSIE, JR., SECRETARY
EXHIBIT 2
TECH LABORATORIES, INC.
2000 INCENTIVE STOCK OPTION PLAN
1. PURPOSE.
The purpose of the 2000 Incentive Stock Option Plan (the "Plan") is to
provide an incentive to selected directors, officers and employees of Tech
Laboratories, Inc., and any subsidiaries of Tech Laboratories, Inc.
(collectively, the "Company"), to acquire a proprietary interest in the Company,
to continue as directors, officers and employees and to increase their efforts
on behalf of the Company.
2. THE PLAN.
The Plan provides for the grant of Options to acquire shares of the
Company's common stock, par value $.01 (the "Stock"). Options granted under the
Plan are intended to qualify as incentive stock options (the "Incentive Stock
Options" or "Options") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
3. ADMINISTRATION.
(a) The Plan shall be administered by a committee (the "Committee")
composed of one or more of the independent members of the Board of Directors of
the Company (the "Board") to operate and administer the Plan in its stead. A
member of the Board shall be ineligible to receive an Option under the Plan
unless he is an employee of the Company.
(b) The Committee shall have plenary authority in its discretion, subject
only to the express provisions of the Plan and, in reference to the Options, of
Code Section 422;
(i) to select the eligible persons who shall be granted Options (the
"Grantees"), the number of Shares subject to each Option and terms of the
Option granted to each Grantee, provided that, in making its determination,
the Committee shall consider the position and responsibilities of the
employee, the nature and value to the Company, of his or her services and
accomplishments, the employee's present and potential contribution to the
success of the Company and any other factors that the Committee may deem
relevant.
(ii) to determine the dates of the Option grants;
(iii) to prescribe the form of the instruments evidencing the Options;
(iv) to adopt, amend and rescind rules and regulations for the
administration of the Plan and for its own acts and proceedings;
(v) to decide all questions and settle all controversies and disputes
of general applicability that may arise in connection with the Plan; and
(vi) to amend certain terms of the Plan as provided in Section 9.
All decisions, determinations and interpretations with respect to the foregoing
matters shall be made by the Committee and shall be final and binding upon all
persons.
(c) EXCULPATION. No member of the Committee shall be personally liable for
monetary damages for any action taken or any failure to take any action in
connection with the administration of the Plan or the granting of Options under
it unless such action or failure to take action constitutes self-dealing, wilful
misconduct or recklessness; provided, however, that the provisions of this
subsection shall not apply to the responsibility or liability of a director
pursuant to any criminal statute or to the liability of a director for the
payment of taxes pursuant to local, state or federal law.
(d) INDEMNIFICATION. Each member of the Committee shall be entitled without
further act on his part or her part to indemnity from the Company to the fullest
extent provided by applicable law and the Company's Certificate of Incorporation
or Bylaws in connection with or arising out of any action, suit or proceeding
with respect to the administration of the Plan or the granting of Options under
it in which he or she may be involved by reason of being or having been a member
of the Committee at the time of the action, suit or proceeding.
4. EFFECTIVENESS AND TERMINATION OF THE PLAN.
The Plan shall become effective as of June 2, 2000, the date of its
adoption by the Board, provided that the Plan is approved by the stockholders of
the Company within one year of its adoption. Any Option outstanding under the
Plan at the time of termination under the Plan shall remain in effect in
accordance with its terms and conditions and those of the Plan. The Plan shall
terminate on the earliest of:
(a) June 2, 2010; or
(b) the date when all shares of Stock reserved for issuance under the Plan
shall have been acquired through exercise of Options granted under the Plan; or
(c) such earlier date as the Board or Committee may determine.
5. THE STOCK.
The aggregate number of shares of Stock issuable under the Plan shall be
one hundred fifty thousand (150,000) shares or the number and kinds of shares of
capital stock or other securities substituted for the Stock as provided in
Section 8. The aggregate number of shares of Stock issuable under the Plan may
be set aside out of the authorized but unissued shares of Stock not reserved for
any other purpose or out of shares of Stock held in or acquired for the treasury
of the Company. All shares of Stock subject to an Option that terminates
unexercised for any reason may thereafter be subjected to a new Option under the
Plan.
6. OPTION AGREEMENT.
Each Grantee shall enter into a written agreement with the Company setting
forth the terms and conditions of the Option issued to the Grantee, consistent
with the Plan. The form of agreement to evidence Options may be established at
any time or from time to time by the Committee. No Grantee shall have rights in
any Option unless and until a written option agreement is entered into with the
Company.
7. TERMS AND CONDITIONS OF OPTIONS.
Options may be granted by the Committee at any time and from time to time
prior to the termination of the Plan. Except as hereinafter provided, Options
granted under the Plan shall be subject to the following terms and conditions:
(a) GRANTEES. The Grantees shall be those employees of the Company
(including officers and directors) and any subsidiaries of the Company, selected
by the Committee, provided that no Incentive Stock Options shall be granted to
(i) any person owning Stock or other capital stock in the Company possessing
more than 10% of the total combined voting power of all classes of capital stock
of the Company, unless such Grantee meets the requirements of 7(b) and 7(e); or,
(ii) any director who is not an employee. The maximum number of Options which
may be granted to a Grantee within a calendar year is
-2-
fifty thousand (50,000) shares of the Company's Stock.
(b) PRICE. The exercise price of an Option shall be no less than the fair
market value of the Stock, without regard to any restriction, at the time the
Option is granted. If a Grantee owns more than 10% of the total combined voting
power of all classes of stock of the Company, the share price of any Options
granted to such individual shall be 110% of the fair market value of the Stock.
The Committee shall establish procedures to determine the fair market value of
the Stock.
(c) PAYMENT FOR STOCK. The exercise price of an Option shall be paid in
full at the time of the exercise in (i) cash, or (ii) by certified check payable
to the Company, or (iii) by other mode of payment as the Committee may approve.
(d) LIMITATION. Notwithstanding any provision of the Plan to the contrary,
an Option shall not be treated as an Incentive Stock Option to the extent to
which the aggregate fair market value (determined as of the time an Incentive
Stock Option is granted) of Stock for which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year exceeds
$100,000.
(e) DURATION AND EXERCISE OF OPTIONS. Options may be exercised for terms of
up to but not exceeding ten years from the date of grant. Subject to the
foregoing, Options shall be exercisable at the times and in the amounts (up to
the full amount thereof) determined by the Board or Committee at the time of
grant. If an Option granted under the Plan is exercisable in installments the
Board or Committee shall determine what events, if any, will make it subject to
acceleration. If an Option is granted to an employee who owns more than 10% of
the combined voting power of all classes of stock of the Company, the Option
must be exercised within 5 years.
(f) TERMINATION OF EMPLOYMENT. Upon the termination of the Grantee's
employment, the right to exercise an Option shall be set forth in the agreement
entered into between the Company and the Grantee.
(g) TRANSFERABILITY OF OPTION. No Option shall be transferable except by
will or the laws of descent and distribution. An Option shall be exercisable
during the Grantee's lifetime only by the Grantee.
(h) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms
and conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options granted under the Plan, or accept the
surrender of outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution thereof. Notwithstanding
the foregoing, however, no modification of an Option shall, without the consent
of the Grantee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan or adversely affect the status of an
Incentive Stock Option.
(i) OTHER TERMS AND CONDITIONS. Option agreements may contain any other
provision not inconsistent with the Plan that the Committee deems appropriate.
8. ADJUSTMENT FOR CHANGES IN THE STOCK.
(a) In the event the shares of Stock, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares or other
securities of the Company (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split, combination of shares
or otherwise), then there shall be substituted for or added to each share of
Stock theretofore or thereafter subject to an Option the number and kind of
shares of capital stock or other securities into, which each outstanding share
of Stock shall be changed, or for which each such share shall be exchanged, or
to which each such share shall be entitled, as the case may be. The price and
other terms of outstanding Options shall also be
-3-
appropriately amended to reflect the foregoing events. In the event there shall
be any other change in the number or kind of outstanding shares of the Stock, or
of any capital stock or other securities into which the Stock shall have been
changed or for which it shall have been exchanged, if the Committee shall, in
its sole discretion, determine that the change equitably requires an adjustment
in any Option theretofore granted or which may be granted under the Plan, then
adjustments shall be made in accordance with its determination.
(b) Fractional shares resulting from any adjustment in Options pursuant to
this Section 8 may be settled in cash or otherwise as the Committee shall
determine. Notice of any adjustment shall be given by the Company to each holder
of an Option that shall have been so adjusted, and the adjustment (whether or
not notice is given) shall be effective and binding for all purposes of the
plan.
(c) Notwithstanding Section 8(a), the Committee shall have the power, in
the event of the disposition of all or substantially all of the assets of the
Company, or the dissolution of the Company, or the merger or consolidation of
the Company, or the making of a tender offer to purchase all or a substantial
portion of outstanding Stock of the Company, to amend all outstanding Options
(upon such conditions as it shall deem fit) to (i) permit the exercise of
Options prior to the effective date of the transaction and to terminate all
unexercised Options as of that date, or (ii) require the forfeiture of all
Options, provided the Company pays to each Grantee the excess of the fair market
value of the Stock subject to the Option (determined in accordance with Section
7(b)) over the exercise price of the Option, or (iii) make any other provisions
that the Committee deems equitable.
9. AMENDMENT OF THE PLAN.
The Committee may amend the Plan, may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option in the
manner and to the extent deemed desirable to carry out the Plan without action
on the part of the stockholders of the Company; provided, however, that, except
as provided in Section 8 and this Section 9, unless the stockholders of the
Company shall have first approved thereof (i) the total number of shares of
Stock subject to the Plan shall not be increased, (ii) no Option shall be
exercisable more than ten years after the date it is granted, (iii) the
expiration date of the Plan shall not be extended and (iv) no amendment shall
permit the exercise price of any Option to be less than the fair market value of
the Stock at the time of grant, increase the number of shares of Stock to be
received on exercise of an Option, materially increase the benefits accruing to
a Grantee under an Option or modify the eligibility requirements for
participation in the Plan.
10. INTERPRETATION AND CONSTRUCTION. The interpretation and construction of any
provision of the Plan by the Committee shall be final, binding and conclusive
for all purposes.
11. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Stock pursuant to
this Plan will be used for general corporate purposes.
12. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon the Grantee to
exercise an Option.
13. PLAN NOT A CONTRACT OF EMPLOYMENT.
The Plan is not a contract of employment, and the terms of employment of
any Grantee shall not be affected in any way by the Plan or related instruments
except as specifically provided therein. The establishment of the Plan shall not
be construed as conferring any legal rights upon any Grantee for a continuance
of employment; nor shall it interfere with the right of the Company to discharge
Grantee.
-4-
14. EXPENSE OF THE PLAN.
All of the expenses of administering the Plan shall be paid by the Company.
15. COMPLIANCE WITH APPLICABLE LAW.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates for shares of
Stock issuable upon exercise of an Option unless and until the Company is
advised by its counsel that the issuance and delivery of the certificates is in
compliance with all applicable laws, regulations of government authorities and
the requirements of any exchange upon which shares of stock are traded. The
Company shall in no event be obligated to register any securities pursuant to
the Securities Act of 1933 (as now in effect or as hereafter amended) or to take
any other action in order to cause the issuance and delivery of certificates to
comply with any of those laws, regulations or requirements. The Committee may
require, as a condition of the issuance and delivery of certificates and in
order to ensure compliance with those laws, regulations and requirements, that
the Grantee make such covenants, agreements and representations as the Board or
Committee, in its sole discretion, deems necessary or desirable. Each Option
shall be subject to the further requirement that if at any time the Committee
shall determine in its discretion that the listing or qualification of the
Shares of Stock subject to the Option, under any securities exchange
requirements or under any applicable law, or the consent or approval of any
regulatory body, is necessary in connection with the granting of the Option or
the issuance of stock thereunder, the Option may not be exercised in whole or in
part unless the listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
16. GOVERNING LAW.
Except to the extent preempted by federal law, this Plan shall be construed
and enforced in accordance with, and governed by, the laws of the State of New
Jersey.
-5-
Exhibit 3
TECH LABORATORIES, INC.
2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE.
The purpose of the Tech Laboratories, Inc. ("Tech Labs" or the "Company")
2000 Non-employee Director Stock Option Plan (the "Plan") is to provide for the
grant of stock options as an incentive to selected non-employee directors of
Tech Labs and any Subsidiary of the Company, to acquire a proprietary interest
in the Company, to continue as directors, and to increase their efforts on
behalf of the Company.
2. THE PLAN.
The Plan provides for the grant of options to acquire shares of the
Company's common stock, par value $.01 (the "Stock"). Options granted under the
Plan are not intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.
3. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(c) "Committee" shall mean the committee of the Board of Directors
authorized and selected by the Board to administer the Plan.
(d) "Company" shall mean Tech Laboratories, Inc., a New Jersey corporation,
and any successor corporation.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(f) "Fair Market Value" means, as of any date, the value of Stock or other
property determined as follows:
(i) If the Stock is listed on any established stock exchange or a
national market system, including without limitation the Bulletin Board,
the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system for the last market trading day prior to the time
of determination;
(ii) If the Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be
the mean between the high bid and low asked prices for the Stock on the
last market trading day prior to the day of determination; or
(g) "Grantee" shall mean a non-employee director of the Company to whom an
Option has been granted under the terms of the Plan.
(h) "Nonemployee Director" shall mean a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3.
(i) "Option" shall mean the option to purchase the common stock of the
Company pursuant to this Plan.
(j) "Option Agreement" shall mean a written agreement between the Company
and a Grantee as described in Section 6.
(k) "Outside Director" shall mean a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code.
(l) "Plan" shall mean this Tech Labs 2000 Non-employee Director Stock
Option Plan, as amended from time to time.
(m) "Stock" shall mean shares of Common Stock, $.01 par value, of the
Company or such other securities or property as may become subject to Options
pursuant to an adjustment made under Section 8.
(n) "Subsidiary" shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns more
than 50% of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
4. ADMINISTRATION.
(a) The Plan shall be administered by a committee of directors who are not
eligible to participate in the Plan (the "Committee").
(b) The Committee shall have plenary authority in its discretion, subject
only to the express provisions of the Plan:
(i) to select the Grantees, the number of shares of Stock subject to
each Option and terms of the Option granted to each Grantee (including
without limitation the period during which such Option can be exercised and
any restrictions on exercise), provided that, in making its determination,
the Committee shall consider the value and accomplishment of the individual
to the Company, the individual's present and potential contribution to the
success of the Company, and any other factors that the Committee may deem
relevant.
(ii) to determine the dates of the Option grants;
(iii) to prescribe the form of the Option Agreements;
(iv) to adopt, amend and rescind rules and regulations for the
administration of the Plan and for its own acts and proceedings;
(v) to decide all questions and settle all controversies and disputes
of general applicability that may arise in connection with the Plan; and
(vi) to modify or amend any outstanding Option as provided in Section
8(h).
All decisions, determinations and interpretations with respect to the
foregoing matters shall be made by the Committee and shall be final and binding
upon all persons.
(c) EXCULPATION. No member of the Committee shall be personally liable for
monetary damages for any action taken or any failure to take any action in
connection with the administration of the Plan or the granting of Options under
it unless such action or failure to take action constitutes self-dealing,
willful misconduct or recklessness; provided, however, that the provisions of
this subsection shall not apply to the
-2-
responsibility or liability of a director pursuant to any criminal statute or to
the liability of a director for the payment of taxes pursuant to local, state or
federal law.
(d) INDEMNIFICATION. Each member of the Committee shall be entitled without
further act on his part or her part to indemnity from the Company to the fullest
extent provided by applicable law and the Company's Certificate of Incorporation
or Bylaws in connection with or arising out of any action, suit or proceeding
with respect to the administration of the Plan or the granting of Options under
it in which he or she may be involved by reason of being or having been a member
of the Committee at the time of the action, suit or proceeding.
5. EFFECTIVENESS AND TERMINATION OF THE PLAN.
The Plan shall become effective as of June 2, 2000, the date of its
adoption by the Board, provided that the Plan is approved by the stockholders of
the Company within one year of its adoption. Any Option outstanding at the time
of termination of the Plan shall remain in effect in accordance with its terms
and conditions and those of the Plan. The Plan shall terminate on the earliest
of:
(a) June 2, 2010; or
(b) the date when all shares of Stock reserved for issuance under Section 6
of the Plan shall have been acquired through exercise of Options granted under
the Plan; or
(c) such earlier date as the Board or Committee may determine.
6. THE STOCK.
The aggregate number of shares of Stock issuable under the Plan shall be
one hundred thousand (100,000) shares or the number and kinds of shares of
capital stock or other securities substituted for the Stock as provided in
Section 9. The aggregate number of shares of Stock issuable under the Plan may
be set aside out of the authorized but unissued shares of Stock not reserved for
any other purpose, or out of shares of Stock held in or acquired for the
treasury of the Company. All shares of Stock subject to an Option that
terminates unexercised for any reason may thereafter be subjected to a new
Option under the Plan.
7. OPTION AGREEMENT.
Each Grantee shall enter into an Option Agreement with the Company setting
forth the terms and conditions of the Option issued to the Grantee, consistent
with the Plan. The form of Option Agreement may be established at any time or
from time to time by the Committee. No Grantee shall have rights in any Option
unless and until an Option Agreement is entered into with the Company.
8. TERMS AND CONDITIONS OF OPTIONS.
Options may be granted by the Committee at any time and from time to time
prior to the termination of the Plan. Except as hereinafter provided, Options
granted under the Plan shall be subject to the following terms and conditions:
(a) GRANTEES. The Grantees shall be those non-employee directors of the
Company or its Subsidiaries selected by the Committee. The maximum number of
shares of Stock which may be issued pursuant to Options granted to a Grantee
within a calendar year is 50,000.
(b) PRICE. The exercise price of an Option shall be set by the Board but
shall be no less than the Fair Market Value of the Stock at the time the Option
is granted.
-3-
(c) PAYMENT FOR STOCK. The exercise price of an Option shall be paid in
full at the time of the exercise in (i) cash, or (ii) by certified check payable
to the Company, or (iii) by other mode of payment as the Committee may approve.
(d) DURATION AND EXERCISE OF OPTIONS. Options may be exercised for terms of
up to but not exceeding ten years from the date of grant. Subject to the
foregoing, Options shall be exercisable at the times and in the amounts (up to
the full amount thereof) determined by the Committee at the time of grant. If an
Option granted under the Plan is exercisable in installments the Committee shall
determine what events, if any, will make it subject to acceleration.
(e) STATUS OF NON-EMPLOYEE DIRECTOR. Upon the happening of any event which
causes Grantee to lose status as a non-employee director, Options held by the
Grantee may only be exercised to the extent and during the period, if any, set
forth in the Option Agreement.
(f) TRANSFERABILITY OF OPTION. No Option shall be transferable except by
will or the laws of descent and distribution. An Option shall be exercisable
during the Grantee's lifetime only by the Grantee.
(g) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms
and conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options granted under the Plan, or accept the
surrender of outstanding options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution thereof. Notwithstanding
the foregoing, however, no modification of an Option shall, without the consent
of the Grantee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
(h) OTHER TERMS AND CONDITIONS. Option Agreements may contain any other
provision not inconsistent with the Plan that the Committee deems appropriate.
9. ADJUSTMENT FOR CHANGES IN THE STOCK.
(a) In the event the shares of Stock, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares or other
securities of the Company (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split, combination of shares
or otherwise), then there shall be substituted for or added to each share of
Stock theretofore or thereafter subject to an Option the number and kind of
shares of capital stock or other securities into, which each outstanding share
of Stock shall be changed, or for which each such share shall be exchanged, or
to which each such share shall be entitled, as the case may be. The price and
other terms of outstanding Options shall also be appropriately amended to
reflect the foregoing events. In the event there shall be any other change in
the number or kind of outstanding shares of the Stock, or of any capital stock
or other securities into which the Stock shall have been changed or for which it
shall have been exchanged, if the Committee shall, in its sole discretion,
determine that the change equitably requires an adjustment in any Option
theretofore granted or which may be granted under the Plan, then adjustments
shall be made in accordance with its determination.
(b) Fractional shares resulting from any adjustment in Options pursuant to
this Section 9 may be settled in cash or otherwise as the Committee shall
determine. Notice of any adjustment shall be given by the Company to each holder
of an Option that shall have been so adjusted, and the adjustment (whether or
not notice is given) shall be effective and binding for all purposes of the
plan.
(c) Notwithstanding Section 9(a), the Committee shall have the power, in
the event of the disposition of all or substantially all of the assets of the
Company, or the dissolution of the Company, or the merger or consolidation of
the Company, or the making of a tender offer to purchase all or a substantial
portion of outstanding Stock of the Company, to amend all outstanding Options
(upon such conditions as it shall deem fit) to (i) permit the exercise of
Options prior to the effective date of the transaction and to terminate all
unexercised Options as of that date, or (ii) require the forfeiture of all
Options, provided the Company pays
-4-
to each Grantee the excess of the Fair Market Value of the Stock subject to the
Option over the exercise price of the Option, or (iii) make any other provisions
that the Committee deems equitable.
10. AMENDMENT OF THE PLAN.
The Committee or the Board may amend the Plan, may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Option
in the manner and to the extent deemed desirable to carry out the Plan without
action on the part of the stockholders of the Company; provided, however, that,
except as provided in Section 9 and this Section 10, unless the stockholders of
the Company shall have first approved thereof (i) the total number of shares of
Stock subject to the Plan shall not be increased, (ii) no Option shall be
exercisable more than ten years after the date it is granted, (iii) the
expiration date of the Plan shall not be extended and (iv) no amendment shall
permit the exercise price of any Option to be less than the Fair Market Value of
the Stock at the time of grant, increase the number of shares of Stock to be
received on exercise of an Option, materially increase the benefits accruing to
a Grantee under an Option or modify the eligibility requirements for
participation in the Plan.
11. INTERPRETATION AND CONSTRUCTION.
The interpretation and construction of any provision of the Plan by the
Committee shall be final, binding and conclusive for all purposes.
12. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Stock pursuant to
this Plan will be used for general corporate purposes.
13. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon the Grantee to
exercise an Option.
14. NO RIGHT TO CONTINUE AS DIRECTOR.
Neither the Plan nor any Option Agreement shall constitute an agreement or
understanding, expressed or implied, that the Company will retain a Grantee as a
Director for any period of time.
15. EXPENSE OF THE PLAN.
All of the expenses of administering the Plan shall be paid by the Company.
16. COMPLIANCE WITH APPLICABLE LAW.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates for shares of
Stock issuable upon exercise of an Option unless and until the Company is
advised by its counsel that the issuance and delivery of the certificates is in
compliance with all applicable laws, regulations of government authorities and
the requirements of any exchange upon which shares of Stock are traded. The
Company shall in no event be obligated to register any securities pursuant to
the Securities Act of 1933 (as now in effect or as hereafter amended) or to take
any other action in order to cause the issuance and delivery of certificates to
comply with any of those laws, regulations or requirements. The Committee may
require, as a condition of the issuance and delivery of certificates and in
order to ensure compliance with those laws, regulations and requirements, that
the Grantee make such covenants, agreements and representations as the
Committee, in its sole discretion, deems necessary or desirable. Each Option
shall be subject to the further requirement that if at any time the Committee
shall determine in its discretion that the listing or qualification of the
shares of Stock subject to the Option, under any securities exchange
requirements or under any applicable law, or the consent or approval of any
-5-
regulatory body, is necessary in connection with the granting of the Option or
the issuance of Stock thereunder, the Option may not be exercised in whole or in
part unless the listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
17. GOVERNING LAW.
Except to the extent preempted by federal law, this Plan shall be construed
and enforced in accordance with, and governed by, the laws of the State of New
Jersey.
-6-