As filed with the Securities and Exchange Commission on September 23, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TECHNOLOGY FLAVORS & FRAGRANCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 11-3199437
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10 Edison Street East
Amityville, New York 11701
(Address of Principal Executive Offices) (Zip Code)
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1993 Incentive Stock Option Plan
1996 Stock Option Plan
1999 Stock Option Plan
Option Agreement With Sydney Stein
(Full title of the Plans)
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Philip Rosner
Chairman of the Board and President
Technology Flavors & Fragrances, Inc.
10 Edison Street East
Amityville, New York 11701
(Name and Address of Agent for Service)
(516) 842-7600
(Telephone Number, Including Area Code, of Agent for Service)
With copies to: Jonathan J. Russo, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
(212) 702-5700
CALCULATION OF REGISTRATION FEE
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Title of Securities Amount to be Proposed Proposed Maximum Amount of
to be Registered Registered(1) Maximum Aggregate Offering Registration Fee
Offering Price Price(2)
Per Share(2)
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<S> <C> <C> <C> <C>
Common stock, par 2,598,000 shares $1.41 $3,663,180 $1,018.36
value $0.01 per share
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(1) The 1993 Incentive Stock Option Plan authorizes the issuance of a maximum
of 500,000 shares of common stock, of which 498,000 shares are reserved
for issuance pursuant to the grant of stock options under such plan. The
1996 Stock Option Plan authorizes the issuance of a maximum of 1,000,000
shares of common stock which are reserved for issuance pursuant to the
grant of stock options under such plan. The 1999 Stock Option Plan
authorizes the issuance of 1,000,000 shares of common stock which are
reserved for issuance pursuant to the grant of stock options under such
plan. A non-plan stock option for 100,000 shares of common stock was
granted to Sydney Stein, a former director.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended,
on the basis of $1.41 per share, the average of the closing bid and ask
prices of the common stock on the Nasdaq OTC Bulletin Board on September
21, 1999
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Pursuant to Rule 428(b)(1) under the Securities Act of 1933, as amended,
the documents containing the information specified in Part I of this
Registration Statement on Form S-8 will be sent or given to participants in each
of the following employee benefit plans of Technology Flavors & Fragrances, Inc.
("we" or the "Company"):
o 1993 Incentive Stock Option Plan;
o 1996 Stock Option Plan;
o 1999 Stock Option Plan; and
o Option Agreement with Sydney Stein.
These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended.
Item 2. Registrant Information and Employee Plan Annual Information.
Upon the written or oral request by a participant in any of the employee
benefit plans listed in Item 1 of this Part I, the Company will provide any of
the documents incorporated by reference in Item 3 of Part II of this
Registration Statement (which documents are incorporated by reference into this
Section 10(a) prospectus), any documents required to be delivered to
participants pursuant to Rule 428(b) and other additional information about such
plans. All of such documents and information will be available without charge.
Any and all such requests should be directed to the Company at 10 Edison Street
East, Amityville, New York 11701, telephone number (516) 842-7600, attention
Corporate Secretary.
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EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 and Form S-3 pursuant to the Securities Act of 1933, as
amended. The Form S-8 portion of this Registration Statement will be used for
offers of shares of common stock, par value $0.01 per share (the "Common
Stock"), of the Company, pursuant to each of the employee benefit plans listed
in Item 1 of Part I to this Registration Statement. In accordance with the Note
to Part I of Form S-8, the information specified by Part I for Form S-8 has been
omitted from this Registration Statement. The Reoffer Prospectus filed as a part
of this Registration Statement has been prepared in accordance with the
requirements of Part I of Form S-3 and will be used for reofferings or resales
of shares of Common Stock of the Company which are deemed to be control
securities, which have been acquired or will be acquired by control persons,
pursuant to each of the employee benefit plans.
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REOFFER PROSPECTUS
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
498,000 Shares of Common Stock under the 1993
Incentive Stock Option Plan of Technology Flavors & Fragrances, Inc.
1,000,000 Shares of Common Stock under the 1996 Stock
Option Plan of Technology Flavors & Fragrances, Inc.
1,000,000 Shares of Common Stock under the 1999 Stock
Option Plan of Technology Flavors & Fragrances, Inc.
100,000 Shares of Common Stock under the
Option Agreement with Sydney Stein
The shares of common stock, $0.01 per share (the "Common Stock"), of
Technology Flavors & Fragrances, Inc. (the "Company" or "we") covered by this
Reoffer Prospectus may be offered and sold to the public by stockholders of the
Company (the "Selling Stockholders"), some of whom may be deemed to be
"affiliates" (as that term is defined in Rule 405 of the General Rules and
Regulations under the Securities Act of 1933, as amended (the "Securities Act"))
of the Company. The Selling Stockholders may sell a maximum of 2,598,000 shares
of Common Stock (the "Shares"). The Selling Stockholders acquired or will
acquire the Shares through their exercise of stock options granted to them under
the Company's 1993 Incentive Stock Option Plan (the "1993 Plan"), 1996 Stock
Option Plan (the "1996 Plan"), and 1999 Stock Option Plan (the "1999 Plan")
(collectively, the "Plans"), and with respect to Mr. Stein, under an option
agreement he has with the Company dated April 8, 1994 (the "Stein Option").
All or a portion of the Shares may be offered for sale, from time to time,
on the Toronto Stock Exchange, the Nasdaq OTC Bulletin Board or otherwise, at
prices and terms then obtainable, subject to certain limitations. However, any
Shares covered by this Reoffer Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 instead of pursuant
to this Reoffer Prospectus. See "Plan of Distribution."
We will not receive any of the proceeds from the sale of the Shares by the
Selling Stockholders, but we will receive funds in connection with the exercise
of stock options relating to such Shares, which funds will be used by the
Company for working capital. All expenses of registration incurred in connection
with this offering are being borne by the Company, but all brokerage
commissions, discounts and other expenses incurred by individual Selling
Stockholders will be borne by such Selling Stockholders.
Our Common Stock is listed on the Toronto Stock Exchange under the symbol
"TFF", and is also quoted on the Nasdaq OTC Bulletin Board under the symbol
"TFFI". The last reported sale price of the Common Stock on the Toronto Stock
Exchange on September 21, 1999 was Cdn.$2.25 per share. The closing bid and ask
prices of our Common Stock on the Nasdaq OTC Bulletin Board on September 21,
1999 were U.S. $1.34 and U.S. $1.47, respectively.
See "Risk Factors" beginning on page 5 for information that should be
carefully considered by prospective investors.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Reoffer Prospectus is September 23, 1999
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TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION..........................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................3
PROSPECTUS SUMMARY.............................................................4
RISK FACTORS...................................................................5
FORWARD-LOOKING STATEMENTS....................................................11
USE OF PROCEEDS...............................................................11
SELLING STOCKHOLDERS..........................................................12
PLAN OF DISTRIBUTION..........................................................13
INDEMNIFICATION OF DIRECTORS AND OFFICERS.....................................14
LEGAL MATTERS.................................................................14
EXPERTS.......................................................................15
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can also be obtained by mail
from the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. You may obtain information on
the operation of the Public Reference Room by calling the Commission at 1-(800)
SEC-0330. The Commission also maintains a site on the World Wide Web that
contains reports, proxy and information statements and other information
regarding registrants that file electronically. The address of such site is
http://www.sec.gov. See "Incorporation of Certain Documents by Reference."
The Company has filed with the Commission a Registration Statement on Form
S-8 under the Securities Act with respect to the shares of Common Stock offered
by this Reoffer Prospectus. This Reoffer Prospectus does not contain all the
information set forth in or annexed as exhibits to the Registration Statement.
For further information with respect to the Company and the Shares of Common
Stock offered by this Reoffer Prospectus, reference is made to the Registration
Statement and to the financial statements, schedules and exhibits filed as part
thereof or incorporated by reference herein. Copies of the Registration
Statement, together with such financial statements, schedules and exhibits, may
be obtained from the public reference facilities of the Commission at the
addresses listed above, upon payment of the charges prescribed therefor by the
Commission. Statements contained in this Reoffer Prospectus as to the contents
of any contract or other document referred to are not necessarily complete and,
in each instance, reference is made to the copy of such contract or other
documents, each such statement being qualified in its entirety by such
reference. Copies of such contracts or other documents, to the extent that they
are exhibits to this Registration Statement, may be obtained from the public
reference facilities of the Commission, upon the payment of the charges
prescribed therefor by the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act are hereby incorporated by reference,
except as superseded or modified herein:
1. The description of the Common Stock contained in the Company's
Registration Statement on Form 10-SB (File No. 0-26682), pursuant to
Section 12(g) of the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
2. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998.
3. The Company's Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, 1999 and June 30, 1999.
4. The Company's Current Report on Form 8-K filed with the Commission
on July 16, 1999.
5. The Company's definitive Proxy Statement dated May 27, 1999 relating
to its annual and special meeting of stockholders held on June 24,
1999.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Reoffer
Prospectus and prior to the termination of the offering of the Shares of Common
Stock shall be deemed to be incorporated in and made a part of this Reoffer
Prospectus by reference from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Reoffer
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated by reference herein
modifies or replaces such statement. Any statements so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Reoffer Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner of Shares of Common Stock, to whom this Reoffer
Prospectus is delivered, on written or oral request of any such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents). Written or oral requests for such copies
should be directed to the Company, at 10 Edison Street East, Amityville, New
York 11701, telephone number (516) 842-7600, attention Corporate Secretary.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Reoffer
Prospectus. This summary is not complete and may not contain all of the
information that you should consider before purchasing our Common Stock. Certain
statements made in this Reoffer Prospectus constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. See
"Forward-Looking Statements."
Unless the context otherwise requires, all references to "dollars" refers
to U.S. dollars.
The Company
Our Business
We develop, manufacture and market flavors and fragrances which are used
in a wide variety of consumer and institutional products manufactured by other
companies. Our principal product categories are natural flavors, artificial
flavors and fragrances. Our products are found in beverages, baked goods,
confections, cosmetics and tobacco. Our proprietary formulas are currently used
in more than 1,200 products sold by more than 500 companies worldwide,
approximately 50 of which are Fortune 1,000 companies.
We sell our flavor products primarily to the beverage, food and tobacco
industries. Consumer products that contain our flavor products include alcoholic
and non-alcoholic beverages, confections, toothpaste, chewing gums, prepared
foods, ice creams, animal feeds, candy, poultry, seafood, processed meats and
tobacco. We sell our fragrance products primarily to the personal care, cosmetic
and toiletry and household and industrial product industries. Consumer products
that contain our fragrance products include cosmetic creams, lotions, powders,
after-shave lotions, deodorants, air fresheners, perfumes, colognes,
aromatherapy oils, hair care products, soaps, detergents and household cleaners.
Our History
We were incorporated in New York in 1989 under the name Aroma Globe, Inc.
In May 1991, we changed our name to Technology Flavors & Fragrances, Inc. when
we acquired the assets and business of another company that owned that name.
Since then, we have continued to expand our operations through acquisitions of
other businesses and internal growth. In November 1993, we reincorporated in
Delaware and merged with Canamerica Corp., a privately-held corporation owned by
Philip Rosner, our Chairman and President and one of our principal stockholders.
Our principal executive offices are located at 10 Edison Street East,
Amityville, New York 11701, and our telephone number is (516) 842-7600.
The Offering
The Selling Stockholders may offer and sell up to 2,598,000 Shares of our
Common Stock under this Reoffer Prospectus. We will not receive any of the
proceeds from the sale of these Shares, but we will receive funds in connection
with the exercise of stock options relating to such Shares, which funds will be
used by the Company for working capital. See "Use of Proceeds" and "Selling
Stockholders."
Risk Factors
Investing in our Common Stock involves significant risks. You should
consider the information under the caption "Risk Factors" beginning on page 5 of
this Reoffer Prospectus in deciding whether to purchase the Shares of Common
Stock offered under this Reoffer Prospectus.
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RISK FACTORS
Purchasing the Shares of Common Stock offered by this Reoffer Prospectus
involves a high degree of risk. Before purchasing our Common Stock, you should
carefully consider the following risk factors and the other information
contained elsewhere in this Reoffer Prospectus.
Risks Relating to Our Business
We have a history of losses and a significant amount of accumulated deficit.
We have a history of net losses over the last six years. For each of the
years ended December 31, 1998, 1997 and 1996 our net losses have been
approximately $2,036,000, $648,000 and $2,538,000, respectively. However, for
the six months ended June 30, 1999, we had net income of approximately $479,000.
Our future growth will depend on a number of factors, including demand for our
products, market acceptance of new products and prevailing economic conditions.
We cannot assure you that we will be able to sustain any level of profitability
in the future. Any losses that we incur in the future could be substantial and
could have a material adverse effect on our Company.
We have a substantial amount of indebtedness outstanding and we may be unable to
repay this indebtedness.
As of the date of this Reoffer Prospectus, we have indebtedness of
approximately $2,090,000, all of which is classified as short-term debt. The
existence of this indebtedness and any indebtedness which we may incur in the
future will require us to dedicate a substantial portion of our cash flow from
operations to the repayment of our indebtedness, which will reduce the funds
available to us for our operations and any business opportunities which may
arise in the future. Our outstanding indebtedness may also impair our ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate or other purposes. Any inability
to repay our indebtedness could have a significant adverse effect on the market
value and marketability of our Common Stock.
Our ability to repay interest and principal on our indebtedness will
depend upon our cash flow and our ability to generate profits in the future. If
we were unable to repay our indebtedness, our lender could proceed against the
collateral that secures our indebtedness, which consists of substantially all of
our assets. Our failure to repay our debt obligations could have a material
adverse effect on the Company, and we cannot assure you that we will be able to
repay our indebtedness when it becomes due and payable.
Our ability to obtain additional funding from our lender is subject to their
discretion, and we do not know whether any additional financing will be
available.
We have funded our operations to date mostly through public and private
sales of our shares and debt securities, as well as through the maintenance of
senior, secured credit facilities. Our current revolving credit facility
consists of a $3,000,000 revolving line of credit that is secured by
substantially all of our assets. Our obligations under the credit facility are
guaranteed by our subsidiaries. As of the date of this Reoffer Prospectus,
approximately $2,090,000 was outstanding under our credit facility. Additional
borrowings under our credit facility are subject to certain eligibility
requirements relating to our receivables and inventories and the discretion of
the lender. At June 30, 1999, we had working capital of approximately
$2,389,000. Based on our current plan of operations, we believe that our working
capital and expected operating revenues will provide sufficient working capital
for operations for the foreseeable future. We may, however, need additional
financing if we acquire any products or businesses, or for other business
reasons that are not part of our current plan. Our working capital
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requirements depend on many factors, including:
o our ability to obtain additional funding from our lender, who may refuse
our requests for additional funds even if we are otherwise in compliance
with our obligations under our current $3,000,000 revolving credit
facility;
o whether we are successful in continuing to generate revenues and income
from operations;
o whether we can successfully market and sell our products;
o whether marketing or other expenditures or the extent of service and
customer support that we will be required to provide will be greater than
expected;
o whether other opportunities arise which may require significant
investment;
o competing technological and market developments;
o whether we incur any costs involved in protecting and enforcing our
proprietary rights and any litigation related thereto; and
o the cost and availability of third-party financing.
We cannot assure you that, if we need additional financing, it will be
available on acceptable terms, or at all. If we raise money by issuing stock, or
securities convertible into stock, the percentage ownership of our then
stockholders will be reduced and our stockholders will experience dilution. In
addition, if we do issue stock, it may have rights, preferences or privileges
senior to those of our Common Stock, such as additional voting rights or rights
to receive dividends. If we do not have adequate funds to satisfy our capital
requirements, we may be required to limit operations significantly and we may be
unable to carry out our business plan.
We are highly dependent on our management.
The continued development of our business depends upon on our Chairman and
President, Philip Rosner, our Executive Vice President, A. Gary Frumberg, and a
number of our technical and sales personnel remaining with the Company. Messrs.
Rosner and Frumberg each have substantial experience in the flavor and fragrance
business, and the loss of their services would materially harm our Company.
Although we have entered into employment agreements with Messrs. Rosner and
Frumberg, we cannot assure you that they or any other of the Company's key
employees will remain with the Company. Our success will also depend on our
ability to attract and retain additional highly skilled personnel in all areas
of our business. The competition for qualified personnel in our industry is
intense, and we cannot assure you that we will be successful in attracting and
retaining such personnel.
Our intellectual property rights are not patented or registered and we face
risks in protecting and enforcing these rights.
We do not have any registered patents, trademarks or copyrights for our
flavor and fragrance formulas. We rely on copyright, trademark and trade secret
laws, and confidentiality and other contractual arrangements to establish and
protect our proprietary rights. We cannot assure you that the steps we take will
be adequate to deter misappropriation of our proprietary information, to detect
any unauthorized use of our proprietary information or to prevent others from
infringing upon our proprietary
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rights. Further, it is possible that others with whom we enter into
confidentiality and other contractual arrangements designed to protect our
proprietary rights may breach these agreements. In such cases, we may not have
adequate remedies and our trade secrets may become known to our competitors. It
is also possible that competitors may independently develop products based upon
our trade secrets. Our failure or inability to protect our proprietary
information could materially harm our business, financial condition or results
of operations.
Third parties may assert claims against our Company in the future relating
to intellectual property infringement. These assertions may result in costly
litigation and we may not prevail in such litigation. If we were required to
attempt to obtain licenses from third parties claiming infringement, we cannot
assure you that licenses would be available or, if available, that they would be
on commercially reasonable terms. Any claim for or litigation involving
intellectual property infringement could result in substantial costs and the
diversion of our resources from daily operations, which could materially harm
our business, financial condition or results of operations.
Product liability claims could be brought against us.
We are vulnerable to the risk of product liability claims. While we
believe we have obtained appropriate product liability insurance, we cannot
assure you that such insurance will continue to be available to the Company on
acceptable terms, if at all, or that such insurance will be sufficient to
protect us against such claims. If we lose a product liability lawsuit, it could
have a material adverse effect on our business, financial condition or
reputation.
Our relationships with our customers are critical to our success.
We cooperate with our customers in developing specific flavors and
fragrances for particular end products. In doing so, we do not typically enter
into agreements with our customers. Instead, we rely on the strong personal
relationships we have developed with our customers. Therefore, the success of
our business is reliant on our ability to maintain satisfactory relationships
with our customers. We cannot assure you that we will be able to continue to
maintain satisfactory relationships with our customers in the future.
While no customer accounted for more than 10% of our revenues in 1998, in
1997 one customer did account for approximately 21% of our sales. In addition,
in 1998 our top ten customers accounted for approximately 37% of our total
sales. The loss of, or reduction in the sale of goods to, one or more of our
customers could have a material adverse effect on our business, financial
condition or results of operations.
We may be unable to obtain important raw materials.
We utilize a significant number of different raw materials in the
production of our flavors and fragrances. Considerable effort is devoted to
ensuring that these ingredients remain uniform and consistent from year to year.
This is a critical process because many of these raw materials are inherently
unstable and/or are derived from plants that vary naturally with seasons and
crop years. We purchase these raw materials from a number of different suppliers
as we need them. We cannot assure you that these raw materials will continue to
be available on an as-needed basis, and that their quality will be consistent
from year to year. In addition, we cannot assure you that alternate sources of
raw materials will be available if an interruption in the supply of raw
materials from a single supplier occurs.
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Our business is seasonal.
Historically, our sales tend to be higher in the calendar quarters ending
June 30 and September 30, primarily due to higher consumer demand during the
spring and summer months from our beverage customers. Due to the seasonality of
our business, our financial results for a particular quarter may not be
indicative of our results for an entire year. If our results of operations are
below the expectations of market analysts and investors, the market price of our
Common Stock could be adversely affected. We cannot assure you that the
seasonality of our business will not have a material adverse effect on our
business, financial condition or results of operations or in the market price of
our Common Stock.
We are subject to numerous governmental regulations.
Our business involves the production of flavors for foods and beverages,
the handling of alcohol and the generation, storage, transportation and disposal
of hazardous wastes. Accordingly, we must comply with federal, state and local
laws and regulations concerning such matters, and with laws regarding the safety
and health of our employees. If we were found to be in violation of any of these
laws, we could be subject to sanctions, penalties and fines, and licenses and
permits which we need to operate our business could be suspended or revoked. Any
such violation could have a material adverse effect on our business, financial
condition or results of operations. We cannot assure you that we are or will
continue to be in compliance with such laws and regulations.
The competition in our industry is intense.
Competition among providers of flavor and fragrance products is very
intense. We face competition from small and large companies that offer products
which are similar to ours. Some of our competitors are International Flavors &
Fragrances, Inc., Haarmann & Reimer Corporation and Firmenich, Inc. Many of our
competitors have greater financial resources, more technical personnel and
greater manufacturing capabilities than we have. We cannot assure you that we
will be able to retain our current customers, attract new customers or generate
revenue within this competitive environment.
The industry in which we compete is subject to frequent introductions of
new products and product enhancements. We cannot assure you that we will be able
to develop new products or enhance existing products in a timely manner to meet
market demands or that changes in consumer tastes will not have a material
adverse effect on our business, financial condition or results of operations.
We face risks associated with the Year 2000.
The Year 2000 presents potential concerns for business and consumer
computing. The consequences of this issue may include systems failures and
business process interruption. In addition to the well known calculation problem
with the use of 2-digit date formats as the year changes from 1999 to 2000, the
Year 2000 is a special case leap year which may cause similar problems in many
systems unless corrected.
In 1997, we developed a plan with respect to evaluating and upgrading our
information and non-information technology systems so that such systems would be
Year 2000 compliant. During the latter part of 1997, our management information
systems personnel performed a comprehensive review and assessment of our systems
to verify that they were Year 2000 compliant. In connection with this review, we
found certain minor software applications to be non-Year 2000 compliant. In
response to such findings, we upgraded our non-Year 2000 compliant software and
conducted several tests, the results of which indicate that our systems are now
Year 2000 compliant. The historical and currently projected
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costs relating to these upgrades and the testing for Year 2000 compliance are
not material, and were expensed as incurred.
We are currently making inquiries of our suppliers and customers to
receive assurances that they are Year 2000 compliant. We believe that we will
complete this review by the end of the third quarter of 1999. We cannot assure
you that we will not be adversely affected by unanticipated Year 2000 issues,
including the failure of a material supplier or customer to become Year 2000
compliant.
We have not developed a "worst case" scenario with respect to Year 2000
issues, and we do not have a Year 2000 contingency plan other than to conduct
business with alternative suppliers that we have identified as Year 2000
compliant. These alternative suppliers are companies with whom we already
conduct business.
If we, or third parties which whom we have relationships, were to cease or
not successfully complete Year 2000 remediation efforts, our business could be
disrupted. We believe that any disruption would not have a material adverse
effect on our business, financial condition or results of operations. However,
we could be materially and adversely impacted by widespread economic or
financial market disruption, or by the Year 2000 computer system failures of
others that may generally occur as a result of the Year 2000 issues.
Risks Relating to Share Ownership
Control by management.
As of the date of this Reoffer Prospectus, management of the Company may
be deemed to beneficially own approximately 32% of our Common Stock.
Accordingly, these parties have the ability, if they act together, to
effectively control our management and policies, including matters requiring
stockholder approval, such as the election of directors. Their interests may
conflict with the interests of other stockholders.
Effect of exercise of outstanding warrants and options.
We are obligated to issue 1,201,250 shares of Common Stock if all of our
outstanding warrants are exercised. In addition, as of the date of this Reoffer
Prospectus, we have outstanding stock options to purchase an aggregate of
1,674,462 Shares of Common Stock under the Plans. The total number of shares
which could be issued upon the exercise of currently outstanding warrants and
options represent approximately 22.9% of our issued and outstanding shares of
Common Stock as of the date of this Reoffer Prospectus. Shares of Common Stock
issued as a result of the exercise of stock options will have a dilutive effect,
which could be substantial, on the currently and then outstanding shares of
Common Stock.
We have not paid dividends on our Common Stock.
To date, we have not paid any dividends on our Common Stock. Whether we
pay dividends in the future will be at the discretion of our Board of Directors
and will depend on our operating results, financial condition, capital
requirements and such other factors as our Board of Directors may deem relevant.
9
<PAGE>
Market and Currency Risks
The price of our Common Stock can be volatile.
The market price of our Common Stock has fluctuated significantly and may
be affected by our operating results, changes in our business, changes in the
industries in which we conduct business, and general market and economic
conditions which are beyond our control. In addition, the stock markets in
general have recently experienced extreme price and volume fluctuations. These
fluctuations have affected stock prices of many companies without regard to
their specific operating performance. The price of our Common Stock may
fluctuate significantly in the future.
Our Common Stock could be delisted.
Our Common Stock is listed on the Toronto Stock Exchange and quoted on the
Nasdaq OTC Bulletin Board. We are required to satisfy the continued listing
requirements of the Toronto Stock Exchange in order for our Common Stock to
remain listed on such exchange. If our Common Stock was delisted from the
Toronto Stock Exchange, we could not assure you that trading in our Common Stock
would not be adversely affected. We cannot assure you that we will be able to
satisfy these continued listing requirements in the future.
Any delisting of our Common Stock may adversely affect your ability to
dispose of, or to obtain quotations as to the market value of, our Common Stock.
In addition, any delisting may cause our Common Stock to be subject to the
"penny stock" regulations of the Commission or similar rules promulgated under
the Ontario Securities Act, if any. Under such regulations, broker-dealers would
be required to, among other things, comply with disclosure and special
suitability determinations prior to the sale of our Common Stock. If our Common
Stock becomes subject to these regulations, the market price of our Common Stock
and your ability to dispose of it could be adversely affected.
The future sale of shares into the market may depress the market price of our
Common Stock.
As of the date of this Reoffer Prospectus, we have 12,549,623 shares of
Common Stock outstanding. Future sales of shares of Common Stock, or the
perception that such sales are going to occur, could cause the market price of
our Common Stock to drop significantly.
In addition, as of the date of this Reoffer Prospectus, we had outstanding
stock options and warrants to purchase an aggregate of 2,875,712 shares of
Common Stock. Of such number, 1,674,462 represented shares of Common Stock
issuable upon the exercise of outstanding stock options, which shares are being
offered hereby, and 1,201,250 represented shares issuable upon the exercise of
outstanding warrants. In addition, we have available for grant under the 1996
Plan and 1999 Plan options to purchase a total of 748,538 Shares of Common
Stock, which options may be granted in the future from time to time to persons
eligible to participate in such plans. These options are also being registered
hereunder.
In order to make offers and sales using this Reoffer Prospectus, it must be
covered by applicable "Blue Sky" registration requirements.
We believe that this Reoffer Prospectus, which is part of our registration
statement, may be used by the Selling Stockholders for the sale of the Shares
offered hereby for a period of nine months after the date on the cover page
hereof, provided that the information contained herein (including our financial
statements) is not more than 16 months old from the date of such Reoffer
Prospectus and we otherwise comply with applicable securities laws. We cannot
assure you, however, that our registration statement
10
<PAGE>
will remain effective as we intend. The value of the Shares being offered by
this Reoffer Prospectus could deteriorate if a current Reoffer Prospectus
covering the Shares is not part of an effective registration statement, or if
the Common Stock is not registered for sale or exempt from registration in the
jurisdictions governing the sales made under this Reoffer Prospectus.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Reoffer Prospectus, including,
without limitation, statements containing the words "believes," "anticipates,"
"may," "intends," "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements (or industry results, performance or
achievements) expressed or implied by such forward-looking statements to be
substantially different from those predicted. Such factors might include, among
others, the following:
o general economic and business conditions, both nationally and in the
regions in which we operate;
o competition;
o changes in business strategy or development plans;
o delays in the development or testing of our products;
o technological, manufacturing, quality control or other problems
which could delay the sale of our products;
o our inability to obtain appropriate licenses from third parties,
protect our trade secrets, operate without infringing upon the
proprietary rights of others and prevent others from infringing on
our proprietary rights;
o our inability to obtain sufficient financing to continue operations;
and
o changes in demand for products of our customers.
Certain of these factors are discussed in more detail elsewhere in this
Reoffer Prospectus, including, without limitation, under the caption "Risk
Factors".
We do not undertake any obligation to publicly update or revise any
forward-looking statements contained in this Reoffer Prospectus or incorporated
by reference, whether as a result of new information, future events or
otherwise. Because of these risks and uncertainties, the forward-looking events
and circumstances discussed in this Reoffer Prospectus might not transpire.
USE OF PROCEEDS
All of the Shares of Common Stock are being offered by the Selling
Stockholders. We will not receive any proceeds from the sale of the Shares by
the Selling Stockholders, but we will receive funds in connection with the
exercise of stock options relating to such Shares. The Company will use these
funds for working capital.
11
<PAGE>
SELLING STOCKHOLDERS
The Shares offered under this Reoffer Prospectus are being registered for
reoffers and resales by Selling Stockholders of the Company who have and may in
the future acquire such Shares under the Plans and the Stein Option. The Selling
Stockholders named in the following table may resell all, a portion, or none of
such Shares. There is no assurance that any of the Selling Stockholders will
sell any or all of the Shares offered by them hereunder.
Participants under the Plans who are deemed to be "affiliates" of the
Company who acquire Shares of Common Stock under the Plans may be added to the
Selling Stockholders listed below from time to time by use of a prospectus
supplement filed pursuant to Rule 424(b) under the Securities Act.
The following table sets forth certain information concerning the Selling
Stockholders as of the date of this Reoffer Prospectus, and as adjusted to
reflect the sale by the Selling Stockholders of the Shares offered hereby,
assuming all of the Shares offered hereby are sold:
Percentage of Shares
Number of of Common Stock
Upon Shares Beneficially Owned(4)
Exercise of ---------------------
Number of Options to be Before After
Name Shares Owned(1) Offered(2)(3) Offering(1) Offering
- ---- --------------- ------------- ----------- --------
Philip Rosner(5)........ 2,178,009(6) 100,000 17.4% 17.2%
A. Gary Frumberg(7)..... 1,317,199 100,000 10.5 10.4
Sean Deson(8)........... 140,000 306,731 1.1 *
Werner F. Hiller(9)..... 132,620 206,731 1.0 *
Irwin D. Simon(10)...... 120,000 200,000 * *
Joseph A. Gemmo(11)..... 122,930 170,000 * *
Ronald J. Dintemann(12) 154,111 120,000 1.2 *
Harvey Farber(13)....... 44,732 80,000 * *
Sydney Stein(14)........ 100,000 100,000 * *
Paul E. Hoffmann(15).... 118,837 75,000 * *
- ----------
* Represents less than 1%.
(1) Represents shares beneficially owned by the named individual, including
shares that such person has the right to acquire within 60 days of the
date of this Reoffer Prospectus. Unless otherwise noted, all persons
referred to above have sole voting and sole investment power.
(2) Includes all outstanding options to purchase Shares of Common Stock
granted to the named individuals under the Plans and the Stein Option, as
the case may be, whether or not vested or exercisable within 60 days of
the date of this Reoffer Prospectus. Also includes all Shares issued to
such named individuals upon the exercise of options granted under the
Plans and the Stein Option, as the case may be. All of such Shares are
being registered hereunder. Does not include any shares that may be
acquirable under future grants of options under the 1996 Plan or the 1999
Plan.
(3) Does not constitute a commitment to sell any or all of the stated number
of Shares of Common Stock. The number of Shares offered shall be
determined from time to time by each Selling Stockholder at his sole
discretion.
12
<PAGE>
(4) Based on 12,549,623 shares of Common Stock outstanding as of the date of
this Reoffer Prospectus.
(5) Mr. Rosner is the Chairman of the Board and President of the Company.
(6) Includes 36,438 shares of Common Stock owned by Mr. Rosner's spouse. Mr.
Rosner disclaims beneficial ownership of the shares of Common Stock owned
by his spouse.
(7) Mr. Frumberg is a Director and the Executive Vice President of the
Company.
(8) Mr. Deson is a Director of the Company.
(9) Mr. Hiller is a Director of the Company.
(10) Mr. Simon is a Director of the Company.
(11) Mr. Gemmo is the Vice President, Chief Financial Officer, Secretary and
Treasurer of the Company.
(12) Mr. Dintemann is the Vice President--Operations of the Company.
(13) Mr. Farber is the Senior Vice President--Flavor Division of the Company.
(14) Mr. Stein is a former Director of the Company. Mr. Stein ceased to be a
Director on June 29, 1998.
(15) Mr. Hoffmann is a former Director, Secretary and Treasurer of the Company.
Mr. Hoffmann ceased to be a Director in June 1996, and ceased to be
Secretary and Treasurer of the Company on August 31, 1998.
PLAN OF DISTRIBUTION
The sale of the Shares by the Selling Stockholders may be effected in
transactions on the Toronto Stock Exchange, the Nasdaq OTC Bulletin Board, in
negotiated transactions, or a combination of such methods of sale. The Shares
may be sold at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. In addition, the
Shares of Common Stock covered by this Reoffer Prospectus may also be sold
pursuant to Rule 144 under the Securities Act, rather than pursuant to this
Reoffer Prospectus. Because the Company does not satisfy the requirements for
use of Form S-3 under the Securities Act, the number of Shares to be sold by any
Selling Stockholder (or any person with whom such Selling Stockholders is acting
in concert for the purpose of selling securities of the Company) selling
"control securities" or "restricted securities" (as such terms are defined under
the Securities Act), whether pursuant to this Reoffer Prospectus or otherwise,
may not exceed, during any three month period, the amount specified by Rule
144(e) under the Securities Act.
The Selling Stockholders may effect such transactions by selling the
Shares directly to purchasers or through underwriters or broker-dealers who may
act as agents or principals. Such underwriters or broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such underwriters
or broker-dealers may act as agent or to whom they may sell as principal, or
both (which compensation as to a particular underwriter or broker-dealer may be
in excess of customary compensation).
We will not receive any of the proceeds from the sale of the Shares, but
we will receive funds in connection with the exercise of stock options relating
to such Shares. While all expenses of registration incurred in connection with
this offering are being borne by the Company, all brokerage commissions and
other expenses incurred by individual Selling Stockholders will be borne by such
Selling Stockholders.
13
<PAGE>
Under the rules and regulations under the Exchange Act, subject to certain
exceptions, any person engaged in a distribution of securities may not
simultaneously engage in market making activities with respect to such
securities for a period of one business day (if such securities have an average
daily trading volume over a two month period of $100,000 and the public float
value of the issuer's equity securities is $25 million or more) or five business
days (in all other cases) prior to the day of the pricing of the securities that
are the subject of the distribution. Trading in "actively traded securities" by
persons other than the issuer (or selling stockholder) and affiliates is exempt
from such restrictions. "Actively traded securities" are securities with an
average daily trading volume of $1,000,000 issued by companies with a public
float of at least $150 million. In addition, and without limiting the foregoing,
the Selling Stockholders and any other person participating in such distribution
will be subject to other applicable provisions of the Exchange Act, including
without limitation, Rules 100 through 105 of Regulation M promulgated under the
Exchange Act, which provisions may limit the timing of purchases and sales of
any of the Shares of Common Stock by the Selling Stockholders and any other such
person.
There can be no assurance that any of the Selling Stockholders will sell
any or all of the Shares of Common Stock offered by them hereunder.
An investor may only purchase the Shares of Common Stock being offered
hereby if such shares are qualified for sale or are exempt from registration
under the applicable securities laws of the state in which such prospective
purchaser resides. We have not registered or qualified the Shares of Common
Stock under any state securities laws and, unless the sale of such Shares to a
particular investor is exempt from registration or qualification under
applicable state securities laws, the sale of such Shares to an investor may not
be effected until such Shares have been registered or qualified with applicable
state securities authorities.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of the State of Delaware permits a
corporation, through its certificate of incorporation, to eliminate the personal
liability of its directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, with certain exceptions. The
exceptions include breach of fiduciary duty of loyalty, acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, improper declarations of dividends and transactions from which the
directors derived an improper personal benefit. Our certificate of
incorporation, as amended, exonerates our directors from monetary liability to
the fullest extent permitted by this statutory provision but does not restrict
the availability of non-monetary and other equitable relief.
Our certificate of incorporation, as amended, and by-laws provide that we
shall indemnify our directors and officers to the fullest extent permitted by
Delaware law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be passed
upon for the Company by Baer Marks & Upham LLP, New York, New York.
14
<PAGE>
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-KSB for the year
ended December 31, 1998, as set forth in their report, which is incorporated
herein by reference. Our financial statements are incorporated by reference in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
15
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act are hereby incorporated by reference,
except as superseded or modified herein:
1. The description of the Common Stock contained in the Company's
Registration Statement on Form 10-SB (File No. 0-26682), pursuant to
Section 12(g) of the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
2. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998.
3. The Company's Quarterly Reports on Form 10-QSB for the quarterly
periods ended March 31, 1999 and June 30, 1999.
4. The Company's Current Report on Form 8-K filed with the Commission
on July 16, 1999.
5. The Company's definitive Proxy Statement dated May 27, 1999 relating
to its annual and special meeting of stockholders held on June 24,
1999.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
The securities offered hereby are registered under Section 12(g) of the
Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The General Corporation Law of the State of Delaware permits a
corporation, through its certificate of incorporation, to eliminate the personal
liability of its directors to the corporation or its
II-1
<PAGE>
stockholders for monetary damages for breach of fiduciary duty as a director,
with certain exceptions. The exceptions include breach of fiduciary duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, improper declarations of dividends and
transactions from which the directors derived an improper personal benefit. The
Company's certificate of incorporation, as amended, exonerates its directors
from monetary liability to the fullest extent permitted by this statutory
provision but does not restrict the availability of non-monetary and other
equitable relief.
The Company's certificate of incorporation, as amended, and by-laws
provide that the Company shall indemnify its directors and officers to the
fullest extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description
- ------ -----------
4.1 1993 Incentive Stock Option Plan.
4.2 1996 Stock Option Plan.
4.3 1999 Stock Option Plan.
4.4 Option Agreement between the Company and Sydney Stein dated April 8,
1994.
5.1 Opinion of Baer Marks & Upham LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Baer Marks & Upham LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this Registration
Statement).
Item 9. Undertakings.
The undersigned Company hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus
II-2
<PAGE>
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining liability under the
Securities Act, to treat each post-effective amendment as a new registration
statement of the securities offered herein, and that the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 23rd day of
September, 1999.
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
By: /s/ Philip Rosner
------------------------------------
Philip Rosner
Chairman of the Board and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Philip Rosner and Joseph A. Gemmo, and each of
them, as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board and
President (Principal Executive
/s/Philip Rosner Officer) September 23, 1999
------------------------
Philip Rosner
Vice President and Chief
Financial Officer (Principal
Financial Officer and Principal
/s/Joseph A. Gemmo Accounting Officer) September 23, 1999
------------------------
Joseph A. Gemmo
Director and Executive Vice
/s/A. Gary Frumberg President September 23, 1999
------------------------
A. Gary Frumberg
/s/Sean Deson Director September 23, 1999
------------------------
Sean Deson
/s/Werner F. Hiller Director September 23, 1999
------------------------
Werner F. Hiller
/s/Irwin D. Simon Director September 23, 1999
------------------------
Irwin D. Simon
II-4
<PAGE>
FORM S-8 REGISTRATION STATEMENT
ITEM 8
EXHIBITS
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 1993 Incentive Stock Option Plan.
4.2 1996 Stock Option Plan.
4.3 1999 Stock Option Plan.
4.4 Option Agreement between the Company and Sydney Stein dated
April 8, 1994.
5.1 Opinion of Baer Marks & Upham LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Baer Marks & Upham LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this
Registration Statement).
EXHIBIT 4.1
Adopted by Shareholders
on November 1, 1993
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
INCENTIVE STOCK OPTION PLAN (the "Plan")
1. Purpose of the Plan: The purpose of the Plan is to assist Technology
Flavors & Fragrances, Inc. (the "Corporation") in attracting, retaining and
motivating employees of the Corporation and of its subsidiaries and to closely
align the personal interests of such employees with those of the shareholders by
providing them with the opportunity, through options, to acquire Common Shares
in the capital of the Corporation.
2. Implementation: The grant and exercise of any options under the Plan
are subject to compliance with the applicable requirements of each stock
exchange on which the shares of the Corporation are or become listed, of any
governmental authority or regulatory body to which the Corporation is subject
and of Section 422 of the United States Internal Revenue Code.
3. Administration: The Plan shall be administered by the board of
directors of the Corporation which shall, without limitation, have full and
final authority in its discretion, but subject to the express provisions of the
Plan, to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations deemed necessary
or advisable for the administration of the Plan. The board of directors may
delegate any or all of its authority with respect to the administration of the
Plan and any or all of the rights, powers and discretions with respect to the
Plan granted to it under this Plan to the Executive Committee or such other
committee of directors of the Corporation as the board of directors may
designate. Upon any such delegation the Executive Committee or other committee
of directors, as the case may be, as well as the board of directors, shall be
entitled to exercise any or all of such authority, rights, powers and
discretions with respect to the Plan. When used in the context of this Plan
"board of directors" shall be deemed to include the Executive Committee or other
committee of directors acting on behalf of the board of directors.
4. Number of Shares Under Plan: The maximum number of Common Shares that
may be made the subject of options pursuant to the Plan shall not exceed 500,000
Common Shares of the Corporation, adjusted from time to time in accordance with
Section 6(i), (the "Optioned Shares") which number of shares shall be reserved,
set aside and made available for issue under and in accordance with the Plan
provided that in no event shall options be granted entitling any single
individual to purchase in excess of five percent of the then outstanding shares
in the Corporation. If option rights granted to an individual under the Plan
shall expire or terminate for any reason without having been exercised in
respect of certain Optioned Shares, such Optioned Shares may be made available
for other options to be granted under the Plan.
5. Eligibility: Options may be granted under the Plan to any person who is
an employee of the Corporation or of its subsidiaries as the board of directors
may from time to
<PAGE>
time designate as a participant (a "Participant") under the Plan. Subject to the
provisions of this Plan, the total number of Optioned Shares to be made
available under the Plan and to each participant, the time or times and price or
prices at which options shall be granted, the time or times at which such
options are exercisable, and any conditions or restrictions on the exercise of
options, shall be in the full and final discretion of the board of directors.
Nevertheless, the aggregate fair market value (determined as of the time the
option is granted) of the stock for which any employee may be granted options
under this Plan and all other incentive stock option plans of the Corporation or
any of its subsidiaries shall not exceed $100,000 plus any unused limit
carry-over to such year.
6. Terms and Conditions:
(a) Exercise Price: The exercise price to each Participant for each
Optioned Share shall be as determined by the board of directors, but shall in no
event be less than the mean between the high and low selling prices of the
Common Shares on the day the option is granted (or, if no sales are effected
that day, on the last day when sales were made) on the Toronto Stock Exchange or
such other more senior exchange on which the Common Shares are listed at the
time of the grant of the option (the "Normal Option Price"). Nevertheless, the
exercise price of an option granted to a person who owns more than 10% of the
total combined voting power of all classes of the Corporation's stock (or of the
Corporation's parent or of a subsidiary of the Corporation, if any) (a "10%
Person") shall be at least 110% of the Normal Option Price.
(b) Option Agreement: All options shall be granted under the Plan by
means of an agreement (the "Option Agreement") between the Corporation and each
Participant in the form as may be approved by the board of directors, such
approval to be conclusively evidenced by the execution of the Option Agreement
by any two (2) directors or officers of the Corporation.
(c) Length of Grant: All options granted under this Plan shall
expire not later than the tenth anniversary of the date such Options were
granted except that options granted to 10% Persons shall expire not later than
the fifth anniversary of the date such Options were granted.
(d) Non-Assignability of Options: An option granted under the Plan
shall not be transferable or assignable (whether absolutely or by way of
mortgage, pledge or other charge) by a Participant other than by will or other
testamentary instrument or the laws of succession and may be exercisable during
the lifetime of the Participant only by the Participant.
(e) Right to Postpone Exercise: Each Participant, upon becoming
entitled to exercise the option in respect of any Optioned Shares in accordance
with the Option Agreement, shall be entitled to exercise the option to purchase
such Optioned Shares at any time prior to the expiration or other termination of
the Option.
(f) Exercise and Payment: Any option granted under the Plan may be
exercised by a Participant or the legal representative of a Participant only
after the Plan has been approved by the Corporation's shareholders and only by
giving notice to the Corporation specifying the number of shares in respect of
which such option is being exercised, accompanied
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<PAGE>
by payment (by cash or certified cheque payable to the Corporation) of the
entire exercise price (determined in accordance with the Option Agreement) for
the number of shares specified in the notice. Upon any such exercise of an
option by a Participant, the Corporation shall cause the transfer agent and
registrar of the Common Shares of the Corporation to promptly deliver to such
Participant or the legal representative of such Participant, as the case may be,
a share certificate in the name of such Participant or the legal representative
of such Participant, as the case may be, representing the number of shares
specified in the notice. Such shares need not be registered under the securities
law of any relevant jurisdiction.
(g) Rights of Participants: The Participants shall have no rights as
shareholders in respect of any of the Optioned Shares (including, without
limitation, any right to receive dividends or other distributions, voting
rights, warrants or rights under any rights offering) other than Optioned Shares
in respect of which Participants have exercised their option to purchase and
which have been issued by the Corporation.
(h) Third Party Offer: If, at any time when an option granted under
the Plan remains unexercised with respect to any Optioned Shares, an Offer to
purchase all of the Common Shares of the Corporation is made by a third party,
the Corporation shall use its best efforts to bring such offer to the attention
of the Participants as soon as practicable and the Corporation may, at its
option, require the acceleration of the time for the exercise of the option
rights granted under the Plan and of the time for the fulfillment of any
conditions or restrictions on such exercise.
(i) Alterations in Shares: In the event of a share dividend, share
split, issuance of shares or instruments convertible into Common Shares (other
than pursuant to the Plan) for less than market value, share consolidation,
share reclassification, exchange of shares, recapitalization, amalgamation,
merger, consolidation, corporate arrangement, reorganization, liquidation or the
like of or by the Corporation, the board of directors may make such adjustment,
if any, of the number of Optioned Shares, or of the exercise price, or both, as
it shall deem appropriate to give proper effect to such event, including to
prevent, to the extent possible, substantial dilution or enlargement of rights
granted to Participants under the Plan. In any such event, the maximum number of
shares available under the Plan may be appropriately adjusted by the board of
directors. If because of a proposed merger, amalgamation or other corporate
arrangement or reorganization, the exchange or replacement of shares in the
Corporation of those in another company is imminent, the board of directors may,
in a fair and equitable manner, determine the manner in which all unexercised
option rights granted under the Plan shall be treated including, for example,
requiring the acceleration of the time for the exercise of such rights by the
Participants and of the time for the fulfillment of any conditions or
restrictions on such exercise. All determinations of the board of directors
under this paragraph 6(i) shall be full and final.
(j) Termination: Subject to paragraph 6(k), if a Participant is
dismissed as an employee by the Corporation or by one of its subsidiaries for
cause, all unexercised option rights of that Participant under the Plan shall
immediately terminate, notwithstanding the original term of the option granted
to such Participant under the Plan.
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(k) Disability or Retirement: Notwithstanding paragraph 6(j), if a
Participant ceases to be an employee of the Corporation or of one of its
subsidiaries as a result of:
(i) disability or illness preventing the Participant from
performing the duties routinely performed by such Participant;
(ii) resignation or retirement; or
(iii) such other circumstances as may be approved by the board
of directors;
such participant shall have the right for a period of 30 days from the date of
ceasing to be an employee (or, if earlier, until the expiry date of the option
rights of the Participant pursuant to the terms of the Option Agreement) to
exercise the option under the Plan with respect to all Optioned Shares of such
Participant to the extent they were exercisable on the date of ceasing to be an
employee. Upon the expiration of such 30 days period (or such earlier expiry
date as provided for in the Option Agreement) all unexercised option rights of
that Participant shall immediately terminate and shall lapse notwithstanding the
original term of the option granted to such Participant under the Plan.
(l) Deceased Participant: In the event of the death of any
Participant, the legal representatives of the deceased Participant shall have
the right for a period of 180 days from the date of death of the deceased
Participant (or if earlier, until the expiry date of the option rights of the
Participant pursuant to the terms of the Option Agreement) to exercise the
deceased Participant's option with respect to all of the Optioned Shares of the
deceased Participant to the extent they were exercisable on the date of death.
Upon the expiration of such period all unexercised option rights of the deceased
Participant shall immediately terminate, notwithstanding the original term of
the option granted to the deceased Participant under the Plan.
7. Amendment, Discontinuance and Termination of Plan: The board of
directors may from time to time amend or revise the terms of the Plan or may
discontinue the Plan at any time, provided that no such action may in any manner
adversely affect the rights under any options earlier granted to a Participant
under the Plan without the consent of that Participant. The Plan shall terminate
ten (10) years after the Plan is adopted or ten (10) years after it is approved
by the Corporation's shareholders, whichever is earlier.
8. No Further Rights: Nothing contained in the Plan nor in any option
granted under this Plan shall give any participant or any other person, any
interest or title in or to any Common Shares of the Corporation or any rights as
a shareholder of the Corporation or any other legal or equitable right against
the Corporation other than as set out in the Plan and pursuant to the exercise
of any option, nor shall it confer upon the Participants any right to continue
as an employee or officer of the Corporation or of its subsidiaries.
9. Compliance with Laws: The obligations of the Corporation to sell Common
Shares and deliver share certificates under the Plan are subject to such
compliance by the Corporation and the Participants as the Corporation deems
necessary or advisable with all applicable corporate and securities laws, rules
and regulations.
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10. Gender: The use of the masculine gender in this Plan shall be deemed
to include or be replaced by the feminine gender where appropriate to the
particular Participant.
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EXHIBIT 4.2
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
1996 STOCK OPTION PLAN
1. Purpose
The purpose of this plan (the "Plan") is to secure for TECHNOLOGY FLAVORS
& FRAGRANCES, INC. (the "Company") and its stockholders the benefits arising
from capital stock ownership by employees, officers and directors (who are also
either employees or officers) of the Company and its subsidiary corporations who
are expected to contribute to the Company's future growth and success. Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code"), shall apply only to Incentive Stock Options (as that term is defined in
the Plan). The Plan is also designed to attract and retain other persons who
will provide services to the Company.
2. Type of Options and Administration
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors (the "Board") of the Company (or
a committee designated by the Board) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the Code
or non-statutory options which are not intended to meet the requirements of
Section 422 of the Code ("Non-Qualified Options").
(b) Administration. The Plan will be administered by the Board or by a
committee consisting of two or more directors each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule ("Rule 16b-3") and an "outside director" within the meaning of
Treasury Regulation Section 1.162-27(e)(3) promulgated under Section 162(m) of
the Code (the "Committee") appointed by the Board, in each case whose
construction and interpretation of the terms and provisions of the Plan shall be
final and conclusive. If the Board determines to create a Committee to
administer the Plan, the delegation of powers to the Committee shall be
consistent with applicable laws or regulations (including, without limitation,
applicable state law and Rule 16b-3). The Board or Committee may in its sole
discretion grant options to purchase shares of the Company's Common Stock, $0.01
par value per share ("Common Stock"), and issue shares upon exercise of such
options as provided in the Plan. The Board or Committee shall have authority,
subject to the express provisions of the Plan, to construe the respective option
agreements and the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
option agreements, which need not be identical; and to make all other
determinations in the judgment of the Board or Committee necessary or desirable
for the administration of the Plan. The Board or Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of such
expediency.
<PAGE>
No director or person acting pursuant to authority delegated by the Board shall
be liable for any action or determination under the Plan made in good faith.
3. Eligibility
Options may be granted to persons who are, at the time of grant,
employees, officers or directors (who are also either employees or officers) of
the Company or any subsidiaries of the Company as defined in Sections 424(e) and
424(f) of the Code, provided, that Incentive Stock Options may only be granted
to individuals who are employees of the Company (within the meaning of Section
3401(c) of the Code). Options may also be granted to other persons, provided
that such options shall be Non-Qualified Options. A person who has been granted
an option may, if he or she is otherwise eligible, be granted additional options
if the Board or Committee shall so determine.
4. Stock Subject to Plan
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 1,000,000. If an
option granted under the Plan shall expire, terminate or is cancelled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.
5. Forms of Option Agreements
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan and the requirements of The Toronto Stock Exchange (to the extent such
requirements are binding upon the Company) as may be approved by the Board. Such
option agreements may differ among recipients.
6. Purchase Price
(a) General. The purchase price per share of stock issuable upon the
exercise of an option shall be determined by the Board or the Committee at the
time of grant of such option, provided, however, that in the case of an
Incentive Stock Option or Non-Qualified Option, the exercise price shall not be
less than 100% of the Fair Market Value (as hereinafter defined) of such stock
at the time of grant of such option, or less than 110% of such Fair Market Value
in the case of options described in Section 11(b). "Fair Market Value" of a
share of Common Stock of the Company as of a specified date for purposes of the
Plan shall mean the closing price of a share of the Common Stock on The Toronto
Stock Exchange (or, if such shares are not traded thereon, the principal
securities exchange on which such shares are traded) on the day immediately
preceding the date as of which Fair Market Value is being determined, or on the
next preceding date on which such shares are traded if no shares were traded on
such immediately preceding day, or if the shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of the high bid
and low asked prices of the shares in the over-the-counter market on the day
immediately preceding the date as of which Fair Market Value is being determined
or on the next preceding date on which such high bid and low asked prices were
recorded. If the shares are not publicly traded, Fair Market Value of a share of
Common Stock (including, in the case of any repurchase of shares, any
distributions with respect thereto which would be repurchased with the shares)
shall be determined in good faith by the
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Board. In no case shall Fair Market Value be determined with regard to
restrictions other than restrictions which, by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or by any other means which the Board determines are consistent with the purpose
of the Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3 and Regulation T promulgated by the
Federal Reserve Board).
7. Exercise Option Period
Subject to earlier termination as provided in the Plan, each option and
all rights thereunder shall expire on such date as determined by the Board or
the Committee and set forth in the applicable option agreement, provided, that
such date shall not be later than ten (10) years after the date on which the
option is granted.
8. Exercise of Options
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. Subject to the requirements in the immediately preceding sentence,
if an option is not at the time of grant immediately exercisable, the Board may
(i) in the agreement evidencing such option, provide for the acceleration of the
exercise date or dates of the subject option upon the occurrence of specified
events, and/or (ii) at any time prior to the complete termination of an option,
accelerate the exercise date or dates of such option.
9. Nontransferability of Options
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee, except by will or by the laws of descent and
distribution. An option may be exercised during the lifetime of the optionee
only by the optionee.
10. Effect of Termination of Employment or Other Relationship
Except as provided in Section 11(d) with respect to Incentive Stock
Options and except as otherwise determined by the Board or Committee at the date
of grant of an option, and subject to the provisions of the Plan, an optionee
may exercise an option at any time within three (3) months following the
termination of the optionee's employment or other relationship with the Company
or within one (1) year if such termination was due to the death or disability of
the optionee (to the extent such option is then exercisable) but in no event
later than the expiration date of the option. If the termination of the
optionee's employment is for cause or is otherwise attributable to a breach by
the optionee of an employment or confidentiality or non-disclosure agreement,
the option shall expire immediately upon such termination. The Board shall have
the power to determine what constitutes a termination for cause or a breach of
an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.
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<PAGE>
11. Incentive Stock Options
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:
(i) the purchase price per share of the Common Stock subject
to such Incentive Stock Option shall not be less than 110% of the
Fair Market Value of one share of Common Stock at the time of grant;
and
(ii) the option exercise period shall not exceed five (5)
years from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate Fair Market Value, as of the
respective date or dates of grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
(i) an Incentive Stock Option may be exercised within the
period of three (3) months after the date the optionee ceases to be
an employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), to the extent it is
then exercisable, provided, that the agreement with respect to such
option may designate a longer exercise period and that the exercise
after such three (3) month period shall be treated as the exercise
of a non-statutory option under the Plan,
(ii) if the optionee dies while in the employ of the Company,
or within three (3) months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised by the person
to whom it is transferred by will or the laws of descent and
distribution within the period of one (1) year after the date of
death (or within such lesser period as may be specified in the
applicable option agreement), to the extent it is then exercisable,
and
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(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provisions thereto)
while in the employ of the Company, the Incentive Stock Option may
be exercised within the period of one (1) year after the date the
optionee ceases to be such an employee because of such disability
(or within such lesser period as may be specified in the applicable
option agreement), to the extent it is then exercisable.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
12. Additional Provisions
(a) Additional Option Provisions. The Board or the Committee may, in its
sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation, restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses or to make, arrange for or guaranty loans or to transfer other property
to optionees upon exercise of options, or such other provisions as shall be
determined by the Board or the Committee, provided, that such additional
provisions shall not be inconsistent with the requirements of The Toronto Stock
Exchange governing employee stock option and purchase plans or with any other
term or condition of the Plan and such additional provisions shall not cause any
Incentive Stock Option granted under the Plan to fail to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board or the Committee may, in its
sole discretion (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised, or (ii). extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised, provided, however that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable to such option).
13. General Restrictions
(a) Investment Representations. The Company may require any person to whom
an option is granted, as a condition of exercising such option or award, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option or
award for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
or award upon any securities exchange or automated quotation system or under any
state or federal law, or the consent or approval of any
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<PAGE>
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition, is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, such option or award may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval or
satisfaction of such condition shall have been effected or obtained on
conditions acceptable to the Board or the Committee. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
14. Rights as a Stockholder
The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any right to
vote or to receive dividends or non-cash distributions with respect to such
shares) until the effective date of exercise of such option and then only to the
extent of the shares of Common Stock so purchased. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date of
exercise.
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<PAGE>
15. Adjustment Provisions for Recapitalizations, Reorganizations and Related
Transactions
(a) Recapitalizations and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction (i) the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other non-cash assets are distributed with respect to such
shares of Common Stock or other securities, an appropriate and proportionate
adjustment shall be made in (x) the maximum number and kind of shares reserved
for issuance under or otherwise referred to in the Plan, (y) the number and kind
of shares or other securities subject to any then-outstanding options under the
Plan, and (z) the price for each share subject to any then-outstanding options
under the Plan, without changing the aggregate purchase price as to which such
options remain exercisable. Notwithstanding the foregoing, no adjustment shall
be made pursuant to this Section 15 if such adjustment (A) would cause the Plan
to fail to comply with Section 422 of the Code or with Rule 16b-3 (if applicable
to such option), or (B) would be considered as the adoption of a new plan
requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event (as defined below), whether
or not such options are then exercisable under the provisions of the applicable
agreements relating thereto. For purposes of the Plan, a "Trigger Event" is any
one of the following events:
(i) the date on which shares of Common Stock are first
purchased pursuant to a tender offer or exchange offer (other than
such an offer by the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company or any entity holding shares or other securities of the
Company for or pursuant to the terms of such plan), whether or not
such offer is approved or opposed by the Company and regardless of
the number of shares purchased pursuant to such offer;
(ii) the date the Company acquires knowledge that any person
or group deemed a person under Section 13(d)-3 of the Exchange Act
(other than the Company, any subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company or
any entity holding shares of Common Stock or other securities of the
Company for or pursuant to the terms of any such plan or any
individual or entity or group or affiliate thereof which acquired
its beneficial ownership interest prior to the date the Plan was
adopted by the Board), in a transaction or series of transactions,
has become the beneficial owner, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of securities of the
Company entitling the person or group to 30% or more of all votes
(without consideration of the rights of any class or stock to elect
directors by a separate class vote) to which all stockholders of the
Company would be entitled in the election of the Board were an
election held on such date;
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(iii) the date, during any period of two (2) consecutive
years, when individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the stockholders of the Company, of each new director
was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of such period;
and
(iv) the date of approval by the stockholders of the Company
of an agreement (a "reorganization agreement") providing for:
(A) The merger or consolidation of the Company with
another corporation (x) where the stockholders of the Company,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
stockholders to 80% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all stockholders
of such corporation would be entitled in the election of
directors, or (y) where the members of the Board, immediately
prior to the merger or consolidation, do not, immediately
after the merger or consolidation, constitute a majority of
the Board of Directors of the corporation issuing cash or
securities in the merger or consolidation, or
(B) The sale or other disposition of all or
substantially all the assets of the Company.
(c) Board Authority to Make Adjustments. Any adjustments under this
Section 15 will be made by the Board or the Committee, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of any sale, merger, transfer or acquisition of
the Company or substantially all of the assets of the Company in which the
Company is not the surviving corporation, provided that after the merger,
transfer or acquisition the Company shall have requested the acquiring or
succeeding corporation (or an affiliate thereof) that equivalent options shall
be substituted and such successor corporation shall have refused or failed to
assume all options outstanding under the Plan or issue substantially equivalent
options, then any or all outstanding options under the Plan shall accelerate and
become exercisable in full immediately prior to such event. The Board or
Committee will notify holders of options under the Plan that any such options
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the options will terminate upon expiration of such notice.
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition
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by the Company, or one of its subsidiaries, of property or stock of the
employing corporation. The Company may direct that substitute options be granted
on such terms and conditions as the Board considers appropriate in the
circumstances.
17. No Special Employment Rights
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. Other Employee Benefits
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board.
19. Amendment, Modification or Termination of the Plan
(a) Subject to the prior consent of The Toronto Stock Exchange (to the
extent it is required), the Board may at any time modify, amend or terminate the
Plan provided, however, that if at any time the approval of the stockholders of
the Company is required under Section 422 of the Code or any successor provision
with respect to Incentive Stock Options, or under Rule 16b-3, the Board may not
effect such modification or amendment without such approval.
(b) The modification, amendment or termination of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board or the Committee may amend or modify outstanding option agreements in a
manner not inconsistent with the requirements of The Toronto Stock Exchange
governing employee stock option and purchase plans (to the extent such
requirements are binding upon the Company) or with the Plan. The Board shall
have the right to amend or modify (i) the terms and provisions of the Plan and
of any outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and (ii) the terms and
provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.
20. Withholding
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part by (i) causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option, or
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(ii) delivering to the Company shares of Common Stock already owned by the
optionee. The shares so delivered or withheld shall have a Fair Market Value
equal to such withholding obligation as of the date that the amount of tax to be
withheld is to be determined. An optionee who has made an election pursuant to
this Section 20(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify the
Company if any or all of such shares are disposed of by the optionee within two
(2) years from the date the option was granted or within one (1) year from the
date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.
21. Cancellation and New Grant of Options, etc.
Subject to the prior consent of The Toronto Stock Exchange (to the extent
such consent is required), the Board or the Committee shall have the authority
to effect, at any time and from time to time, with the consent of the affected
optionees the (i) cancellation of any or all outstanding options under the Plan
and the grant in substitution therefor of new options under the Plan covering
the same or different numbers of shares of Common Stock and having an option
exercise price per share which may be lower or higher than the exercise price
per share of the cancelled options, or (ii) amendment of the terms of any and
all outstanding options under the Plan to provide an option exercise price per
share which is higher or lower than the then-current exercise price per share of
such outstanding options.
22. Effective Date and Duration of the Plan
(a) Effective Date. The Plan shall become effective when adopted by the
Board, but no Incentive Stock Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring stockholder approval shall become effective when adopted by the Board
and amendments requiring stockholder approval (as provided in Section 19) shall
become effective when adopted by the Board, but no Incentive Stock Option
granted after the date of such amendment shall become exercisable (to the extent
that such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular optionee) unless and until such amendment
shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve (12) months of the Board's adoption of
such amendment, any Incentive Stock Options granted on or after the date of such
amendment shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such option to a particular optionee.
Subject to this limitation, options may be granted under the Plan at any time
after the effective date and before the date fixed for termination of the Plan.
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(b) Termination. Unless sooner terminated by the Board, the Plan shall
terminate upon the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board. After termination of the
Plan, no further options may be granted under the Plan; provided however, that
such termination will not affect any options granted prior to termination of the
Plan.
23. Provision for Foreign Participants
The Board may, without amending the Plan, modify awards or options granted
to participants who are foreign nationals or employed outside the United States
to recognize differences in laws, rules, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or
other matters.
24. Governing Law
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws.
11
EXHIBIT 4.3
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
1999 STOCK OPTION PLAN
1. Purpose
The purpose of this plan (the "Plan") is to secure for TECHNOLOGY FLAVORS
& FRAGRANCES, INC. (the "Company") and its stockholders the benefits arising
from capital stock ownership by employees, officers and directors (who are also
either employees or officers) of the Company and its subsidiary corporations who
are expected to contribute to the Company's future growth and success. Those
provisions of the Plan which make express reference to Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code"), shall apply only to Incentive Stock Options (as that term is defined in
the Plan). The Plan is also designed to attract and retain other persons who
will provide services to the Company.
2. Type of Options and Administration
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors (the "Board") of the Company (or
a committee designated by the Board) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the Code
or non-statutory options which are not intended to meet the requirements of
Section 422 of the Code ("Non-Qualified Options").
(b) Administration. The Plan will be administered by the Board or by a
committee consisting of two or more directors appointed by the Board (the
"Committee"), in each case whose construction and interpretation of the terms
and provisions of the Plan shall be final and conclusive. If the Board
determines to create a Committee to administer the Plan, the delegation of
powers to the Committee shall be consistent with applicable laws or regulations.
The Board or Committee may in its sole discretion grant options to purchase
shares of the Company's Common Stock, $0.01 par value per share ("Common
Stock"), and issue shares upon exercise of such options as provided in the Plan.
The Board or Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective option agreements, which
need not be identical; and to make all other determinations in the judgment of
the Board or Committee necessary or desirable for the administration of the
Plan. The Board or Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any option agreement in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. No director or person
acting pursuant to authority delegated by the Board shall be liable for any
action or determination under the Plan made in good faith.
3. Eligibility
Options may be granted to persons who are, at the time of grant,
employees, officers or directors (who are also either employees or officers) of
the Company or any subsidiaries of the
<PAGE>
Company as defined in Sections 424(e) and 424(f) of the Code, provided, that
Incentive Stock Options may only be granted to individuals who are employees of
the Company (within the meaning of Section 3401(c) of the Code). Options may
also be granted to other persons, provided that such options shall be
Non-Qualified Options. A person who has been granted an option may, if he or she
is otherwise eligible, be granted additional options if the Board or Committee
shall so determine. Notwithstanding the foregoing, no options will be granted to
any person under this Plan if as a result of such grant the number of shares of
Common Stock of the Company reserved for issuance to such person pursuant to (i)
options granted under the Plan and (ii) any other share compensation with the
Company, exceeds 5% of the number of shares of Common Stock of the Company then
issued and outstanding.
4. Stock Subject to Plan
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 1,000,000. If an
option granted under the Plan shall expire, terminate or is canceled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.
5. Forms of Option Agreements
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan and the requirements of The Toronto Stock Exchange (to the extent such
requirements are binding upon the Company) as may be approved by the Board. Such
option agreements may differ among recipients.
6. Purchase Price
(a) General. The purchase price per share of stock issuable upon the
exercise of an option shall be determined by the Board or the Committee at the
time of grant of such option, provided, however, that in the case of an
Incentive Stock Option or Non-Qualified Option, the exercise price shall not be
less than 100% of the Fair Market Value (as hereinafter defined) of such stock
at the time of grant of such option, or less than 110% of such Fair Market Value
in the case of options described in Section 11(b). "Fair Market Value" of a
share of Common Stock of the Company as of a specified date for purposes of the
Plan shall mean the closing price of a share of the Common Stock on The Toronto
Stock Exchange (or, if such shares are not traded thereon, the principal
securities exchange on which such shares are traded) on the day immediately
preceding the date as of which Fair Market Value is being determined, or on the
next preceding date on which such shares are traded if no shares were traded on
such immediately preceding day, or if the shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of the high bid
and low asked prices of the shares in the over-the-counter market on the day
immediately preceding the date as of which Fair Market Value is being determined
or on the next preceding date on which such high bid and low asked prices were
recorded. If the shares are not publicly traded, Fair Market Value of a share of
Common Stock (including, in the case of any repurchase of shares, any
distributions with respect thereto which would be repurchased with the shares)
shall be determined in good faith by the Board. In no case shall Fair Market
Value be determined with regard to restrictions other than restrictions which,
by their terms, will never lapse.
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(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or by any other means which the Board determines are consistent with the purpose
of the Plan and with applicable laws and regulations.
7. Exercise Option Period
Subject to earlier termination as provided in the Plan, each option and
all rights thereunder shall expire on such date as determined by the Board or
the Committee and set forth in the applicable option agreement, provided, that
such date shall not be later than ten (10) years after the date on which the
option is granted.
8. Exercise of Options
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. Subject to the requirements in the immediately preceding sentence,
if an option is not at the time of grant immediately exercisable, the Board may
(i) in the agreement evidencing such option, provide for the acceleration of the
exercise date or dates of the subject option upon the occurrence of specified
events, and/or (ii) at any time prior to the complete termination of an option,
accelerate the exercise date or dates of such option.
9. Nontransferability of Options
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee, except by will or by the laws of descent and
distribution. An option may be exercised during the lifetime of the optionee
only by the optionee.
10. Effect of Termination of Employment or Other Relationship
Except as provided in Section 11(d) with respect to Incentive Stock
Options and except as otherwise determined by the Board or Committee at the date
of grant of an option, and subject to the provisions of the Plan, an optionee
may exercise an option at any time within three (3) months following the
termination of the optionee's employment or other relationship with the Company
or within one (1) year if such termination was due to the death or disability of
the optionee (to the extent such option is then exercisable) but in no event
later than the expiration date of the option. If the termination of the
optionee's employment is for cause or is otherwise attributable to a breach by
the optionee of an employment or confidentiality or non-disclosure agreement,
the option shall expire immediately upon such termination. The Board shall have
the power to determine what constitutes a termination for cause or a breach of
an employment or confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon which such termination for cause or breach occurs. Any such
determination shall be final and conclusive and binding upon the optionee.
11. Incentive Stock Options
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
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<PAGE>
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual.
(i) the purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five (5) years from
the date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate Fair Market Value, as of the
respective date or dates of grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period of
three (3) months after the date the optionee ceases to be an employee of the
Company (or within such lesser period as may be specified in the applicable
option agreement), to the extent it is then exercisable, provided, that the
agreement with respect to such option may designate a longer exercise period and
that the exercise after such three (3) month period shall be treated as the
exercise of a non-statutory option under the Plan,
(ii) if the optionee dies while in the employ of the Company, or
within three (3) months after the optionee ceases to be such an employee, the
Incentive Stock Option may be exercised by the person to whom it is transferred
by will or the laws of descent and distribution within the period of one (1)
year after the date of death (or within such lesser period as may be specified
in the applicable option agreement), to the extent it is then exercisable, and
(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provisions thereto) while in the
employ of the Company, the Incentive Stock Option exercised within the period of
one (1) year after the date the optionee ceases to be such an employee because
of such disability (or within such lesser period as may be specified in the
applicable option agreement), to the extent it is then exercisable.
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<PAGE>
For all purposes of the Plan and any option granted hereunder,
"employment" shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no Incentive Stock Option may be
exercised after its expiration date.
12. Additional Provisions
(a) Additional Option Provisions. The Board or the Committee may, in its
sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation, restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses or to make, arrange for or guaranty loans or to transfer other property
to optionees upon exercise of options, or such other provisions as shall be
determined by the Board or the Committee, provided, that such additional
provisions shall not be inconsistent with the requirements of The Toronto Stock
Exchange governing employee stock option and purchase plans or with any other
term or condition of the Plan and such additional provisions shall not cause any
Incentive Stock Option granted under the Plan to fail to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code.
(b) Acceleration, Extension, Etc. The Board or the Committee may, in its
sole discretion (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised, or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised, provided, however that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 under the Securities Exchange Act of 1934, as amended
("the Exchange Act") (if applicable to such option).
13. General Restrictions
(a) Investment Representations. The Company may require any person to whom
an option is granted, as a condition of exercising such option or award, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option or
award for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
or award upon any securities exchange or automated quotation system or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition, is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option or
award may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to the
Board or the
5
<PAGE>
Committee. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration or qualification, or to satisfy such
condition.
14. Rights as a Stockholder
The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any right to
vote or to receive dividends or non-cash distributions with respect to such
shares) until the effective date of exercise of such option and then only to the
extent of the shares of Common Stock so purchased. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date of
exercise.
15. Adjustment Provisions for Recapitalization, Reorganization and Related
Transactions
(a) Recapitalizations and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar transaction (i) the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other non-cash assets are distributed with respect to such
shares of Common Stock or other securities, an appropriate and proportionate
adjustment shall be made in (x) the maximum number and kind of shares reserved
for issuance under or otherwise referred to in the Plan, (y) the number and kind
of shares or other securities subject to any then-outstanding options under the
Plan, and (z) the price for each share subject to any then-outstanding options
under the Plan, without changing the aggregate purchase price as to which such
options remain exercisable. Notwithstanding the foregoing, no adjustment shall
be made pursuant to this Section 15 if such adjustment (A) would cause the Plan
to fail to comply with Section 422 of the Code or with Rule 16b-3 (if applicable
to such option), or (B) would be considered as the adoption of a new plan
requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event (as defined below), whether
or not such options are then exercisable under the provisions of the applicable
agreements relating thereto. For purposes of the Plan, a "Trigger Event" is any
one of the following events:
(i) the date on which shares of Common Stock are first purchased
pursuant to a tender offer or exchange offer (other than such an offer by the
Company, any subsidiary of the Company, any employee benefit plan of the Company
or of any subsidiary of the Company or any entity holding shares or other
securities of the Company for or pursuant to the terms of such plan), whether or
not such offer is approved or opposed by the Company and regardless of the
number of shares purchased pursuant to such offer;
(ii) the date the Company acquires knowledge that any person or
group deemed a person under Section 13(d)-3 of the Exchange Act (other than the
Company, any subsidiary of the Company, any employee benefit plan of the Company
or of any subsidiary of the Company or any entity holding shares of Common Stock
or other securities of the Company for or pursuant to the terms of any such plan
or any individual or entity or group or affiliate thereof which acquired its
beneficial ownership interest prior to the date the Plan was adopted by
6
<PAGE>
the Board), in a transaction or series of transactions, has become the
beneficial owner, directly or indirectly (with beneficial ownership determined
as provided in Rule 13d-3, or any successor rule, under the Exchange Act), of
securities of the Company entitling the person or group to 30% or more of all
votes (without consideration of the rights of any class or stock to elect
directors by a separate class vote) to which all stockholders of the Company
would be entitled in the election of the Board were an election held on such
date;
(iii) the date, during any period of two (2) consecutive years, when
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election by stockholders of the Company, of each new director
was approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of such period; and
(iv) the date of approval by the stockholders of the Company of an
agreement (a "reorganization agreement") providing for:
(1) the merger or consolidation of the Company with another
corporation (x) where the stockholders of the Company, immediately prior to the
merger or consolidation, do not beneficially own, immediately after the merger
or consolidation, shares of the corporation issuing cash or securities in the
merger or consolidation entitling such stockholders to 80% or more of all votes
(without consideration of the rights of any class of stock to elect directors by
a separate class vote) to which all stockholders of such corporation would be
entitled in the election of directors, or (y) where the members of the Board,
immediately prior to the merger or consolidation, do not, immediately after the
merger or consolidation, constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the merger or consolidation, or
(2) The sale or other disposition of all or substantially all
the assets of the Company.
(c) Board Authority to Make Adjustments. Any adjustments under this
Section 15 will be made by the Board or the Committee, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
16. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of any sale, merger, transfer or acquisition of
the Company or substantially all of the assets of the Company in which the
Company is not the surviving corporation, provided that after the merger,
transfer or acquisition the Company shall have requested the acquiring or
succeeding corporation (or an affiliate thereof) that equivalent options shall
be substituted and such successor corporation shall have refused or failed to
assume all options outstanding under the Plan or issue substantially equivalent
options, then any or all outstanding options under the Plan shall accelerate and
become exercisable in full immediately prior to such event. The Board or
Committee will notify holders of options under the Plan that any such options
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the options will terminate upon expiration of such notice.
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<PAGE>
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board considers appropriate in the circumstances.
17. No Special Employment Rights
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. Other Employee Benefits
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board.
19. Amendment, Modification or Termination of the Plan
(a) Subject to the prior consent of the Toronto Stock Exchange (to the
extent it is required), the Board may at any time modify, amend or terminate the
Plan provided, however, that if at any time the approval of the stockholders of
the Company is required under Section 422 of the Code or any successor provision
with respect to Incentive Stock Options, or under Rule 16b-3, the Board may not
effect such modification or amendment without such approval.
(b) The modification, amendment or termination of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board or the Committee may amend or modify outstanding option agreements in a
manner not inconsistent with the requirements of The Toronto Stock Exchange
governing employee stock option and purchase plans (to the extent such
requirements are binding upon the Company) or with the Plan. The Board shall
have the right to amend or modify (i) the terms and provisions of the Plan and
of any outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and (ii) the terms and
provisions of the Plan and of any outstanding option to the extent necessary to
ensure the qualification of the Plan under Rule 16b-3.
20. Withholding
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with
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<PAGE>
respect to any shares issued upon exercise of options under the Plan. Subject to
the prior approval of the Company, which may be withheld by the Company in its
sole discretion, the optionee may elect to satisfy such obligations, in whole or
in part by (i) causing the Company to withhold shares of Common Stock otherwise
issuable pursuant to the exercise of an option, or (ii) delivering to the
Company shares of Common Stock already owned by the optionee. The shares so
delivered or withheld shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to be
determined. An optionee who has made an election pursuant to this Section 20(a)
may only satisfy his or her withholding obligation with shares of Common Stock
which are not subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify the
Company if any or all of such shares are disposed of by the optionee within two
(2) years from the date the option was granted or within one (1) year from the
date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company at the time of such disposition.
21. Cancellation and New Grant of Options, etc.
Subject to the prior consent of The Toronto Stock Exchange (to the extent
such consent is required), the Board or the Committee shall have the authority
to effect, at any time and from time to time, with the consent of the affected
optionees the (i) cancellation of any or all outstanding options under the Plan
and the grant in substitution therefor of new options under the Plan covering
the same or different numbers of shares of Common Stock and having an option
exercise price per share which may be lower or higher than the exercise price
per share of the canceled options, or (ii) amendment of the terms of any and all
outstanding options under the Plan to provide an option exercise price per share
which is higher or lower than the then-current exercise price per share of such
outstanding options.
22. Effective Date and Duration of the Plan
(a) Effective Date. The Plan shall become effective when adopted by the
Board, but no Incentive Stock Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring stockholder approval shall become effective when adopted by the Board
and amendments requiring stockholder approval (as provided in Section 19) shall
become effective when adopted by the Board, but no Incentive Stock Option
granted after the date of such amendment shall become exercisable (to the extent
that such amendment to the Plan was required to enable the Company to grant such
Incentive Stock Option to a particular optionee) unless and until such amendment
shall have been approved by the Company's stockholders. If such stockholder
approval is not obtained within twelve (12) months of the Board's adoption of
such amendment, any Incentive Stock Options granted on or after the date of such
amendment shall terminate to
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<PAGE>
the extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated by the Board, the Plan shall
terminate upon the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board. After termination of the
Plan, no further options may be granted under the Plan; provided however, that
such termination will not affect any options granted prior to termination of the
Plan.
23. Provision for Foreign Participants
The Board may, without amending the Plan, modify awards or options granted
to participants who are foreign nationals or employed outside the United States
to recognize differences in laws, rule, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or
other matters.
24. Governing Law
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws.
10
EXHIBIT 4.4
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
NON-QUALIFIED STOCK OPTION GRANT
WHEREAS, SYDNEY STEIN ("the Optionee") is an outside Director of
Technology Flavors & Fragrances, Inc. ("TFF"); and
WHEREAS, TFF believes that it is in the best interest of TFF that
each of its outside Directors have an equity interest in TFF Common Shares.
1. Grant of option. TFF hereby grants to the Optionee the option to
purchase 100,000 TFF Common Shares, $.01 par value, ("Option Shares") at a price
of Cdn. $1.90 per share on the terms and conditions herein set forth.
2. Term of Option. This option shall terminate on the tenth
anniversary of the date of this grant, subject to earlier termination as
provided in Paragraph 4.
3. Nontransferability. This option may not be assigned by operation
of law nor shall it be subject to execution, attachment, or similar process. Any
attempted assignment contrary to these provisions and any attempted execution,
attachment or similar process shall be null and void and without effect.
4. Effect of Termination of Directorship or Death.
(a) If the Optionee ceases to serve as a Director of TFF for
any reason, the Optionee may exercise the Option only during the succeeding
twelve month period.
(b) Nothing herein to the contrary, if the Optionee dies while
a Director of TFF or within the twelve-month period described in the
Sub-paragraph 4(a), the
<PAGE>
executor or administrator of the Optionee's estate or the person or persons to
whom an option has been validly transferred pursuant to will or the laws of
descent and distribution shall have the right to exercise the option only during
the period ending six months after the date of the Optionee's death.
(c) No transfer of an option by the Optionee by will or by the
laws of descent and distribution shall be effective to bind TFF unless TFF shall
have been furnished with written notice thereof and an authenticated copy of the
will or such other evidence as TFF may deem necessary to establish the validity
of the transfer.
5. Changes in Capital Structure. If there is any share dividend,
share split or reverse split, merger, consolidation, or reorganization or
liquidation as a result of which a holder of TFF Common Shares thereafter holds
a different number of Common Shares or holds any other securities, this option,
to the extent not previously exercised, may be exercised for the number of
Common Shares or other securities which would then be held by a person who
purchased on the date thereof, and continued to hold the number of Common Shares
for which the option remains exercisable. The aggregate exercise price of the
TFF Common Shares for which this option has not yet been exercised, shall be the
aggregate purchase price for all such Common Shares or other securities which
then may be purchased hereunder.
6. Method of Exercising Option. This option may be exercised by
written notice ("Exercise Notice") to TFF at its headquarters' which notice
shall be signed by the person exercising the option and shall state the number
of shares that the person opts to purchase. The notice shall be accompanied by
payment of the full purchase price of those shares. Payment shall be made in
cash or, if TFF Common Shares then trade on a public market, payment may be made
2
<PAGE>
in TFF Common Shares valued at the closing price on the relevant market on the
next trading day after TFF receives the Exercise Notice (the "Valuation Date").
For this purpose the "relevant" market is (a) the principal public market on
which shares of TFF Common Stock trade in the currency in which the exercise
price of this option is denominated, or if there is no such market (b) the
principal public market on which shares of TFF Common Stock trade in any other
currency (in which event the price shall be translated at the end of the
Valuation Date into the currency in which the exercise price of this option is
denominated). TFF shall promptly advise the person as to the additional amount,
if any, which in TFF's sole judgment must be paid to it in respect of income and
employment taxes to be withheld by TFF. Upon receipt of that additional amount
TFF shall promptly issue the purchased shares in the name of, and deliver the
certificate therefor to, the person who exercises the option. The Optionee shall
have no rights as a stockholder with respect to any Option Shares prior to the
date of issuance of a certificate for those shares. In the event this option is
exercised pursuant to Sub-paragraph 4(b) by a person other than the Optionee,
the exercise notice shall be accompanied by appropriate proof of that person's
right to exercise the option. The purchased shares shall be fully paid and
nonassessable but shall not be registered under the United States Securities Act
of 1933, as amended (the "Act") unless TFF then has in effect a registration
under the Act relating to those shares.
7. General. TFF shall at all times during the term of this option
reserve and keep available a sufficient number of unissued Common Shares to
satisfy the requirements of this option.
8. No Obligations. The grant of this option shall not entitle the
Optionee to remain a Director of TFF.
3
<PAGE>
9. Investment Representation. TFF may require the person who
exercises this option to furnish to TFF, prior to the issuance of any shares, an
agreement (in such form as TFF may specify) in which that person represents that
the shares are being acquired for investment and not for resale or with a view
to their distribution.
Dated: April 8, 1994
TECHNOLOGY FLAVORS & FRAGRANCES,
INC.
By: /s/ Philip Rosner
----------------------------------
Name: Philip Rosner
Title: President
4
BAER MARKS & UPHAM LLP
805 THIRD AVENUE EXHIBIT 5.1
NEW YORK, NY 10022-7513
--------
(212) 702-5700
TELECOPIER:
(212) 702-5941
September 23, 1999
Technology Flavors & Fragrances, Inc.
10 Edison Street East
Amityville, New York 11701
RE: Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Technology Flavors & Fragrances, Inc., a
Delaware corporation (the "Company"), in connection with a Registration
Statement on Form S-8 (the "Registration Statement") being filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to the offering of an aggregate of up to 2,598,000 shares of Common
Stock (the "Common Stock"), $.01 par value per share, that may be acquired upon
exercise of options to purchase Common Stock pursuant to the Company's 1993
Incentive Stock Option Plan (the "1993 Plan"), the 1996 Stock Option Plan (the
"1996 Plan") and the 1999 Stock Option Plan (the "1999 Plan") and the Company's
Option Agreement with Sydney Stein dated April 8, 1994 (the "Stein Agreement")
(the 1993 Plan, the 1996 Plan, the 1999 Plan and the Stein Agreement
collectively, the "Plans").
In connection with the foregoing, we have examined originals or copies,
satisfactory to us, of all such corporate records and of all such agreements,
certificates and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
all documents submitted to us as copies. As to any facts material to such
opinion, we have, without independent investigation, relied on certificates of
public officials and certificates of officers or other representatives of the
Company.
Based upon the foregoing and subject to the other limitations set forth
herein, we are of the opinion that, when the Registration Statement has become
effective and any newly issued Shares have been acquired at the election of a
participant in accordance with the Plans and paid for as provided therein, said
newly issued Shares will be validly issued, fully paid and non-assessable.
<PAGE>
BAER MARKS & UPHAM LLP
Technology Flavors & Fragrances, Inc.
September 23, 1999
Page 2
We are members of the bar of the State of New York and are not licensed or
admitted to practice law in any other jurisdiction. Accordingly, we express no
opinion with respect to the laws of any jurisdiction other than the laws of the
State of New York, Delaware General Corporate Law and the federal laws of the
United States.
We assume no obligation to advise you of any changes to this opinion which
may come to our attention after the date hereof. This opinion may not be relied
upon or furnished to any other person except the addressee hereof without the
express written consent of this firm.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the Prospectus forming part of the Registration
Statement. In giving such consent, we do not thereby concede that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended or the rules and regulations thereunder or that we are
"experts" within the meaning of such act, rules and regulations.
Very truly yours,
/s/ Baer Marks & Upham LLP
BAER MARKS & UPHAM LLP
RMR; JJR; LJL
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 of Technology Flavors & Fragrances, Inc. (the
"Company") pertaining to the 1993 Incentive Stock Option Plan, the 1996 Stock
Option Plan and the 1999 Stock Option Plan of the Company and the Option
Agreement between the Company and Sydney Stein and to the incorporation by
reference therein of our report dated March 15, 1999, with respect to the
consolidated financial statements of the Company included in its Annual Report
on Form 10-KSB for the year ended December 31, 1998, filed with the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Melville, New York
September 20, 1999
CONSENT OF BAER MARKS & UPHAM LLP
INCLUDED IN EXHIBIT 5.1
