As filed with the Securities and Exchange Commission on August 2, 1999
--Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VACU-DRY COMPANY
(Exact name of issuer specified in its charter)
Delaware 94-3115180
(State of incorporation) (I.R.S. Employer Identification No.)
--------------------
100 Stony Point Road, Suite 200, Santa Rosa, California 95401
(Address of Principal Executive Offices)
1996 STOCK OPTION PLAN, AS AMENDED
(Full Title of the Plan)
Gary L. Hess, Chief Executive Officer
100 Stony Point Road, Suite 200, Santa Rosa, California 95401
(925) 988-6550
(Name and Address and Telephone Number of Agent of Service)
Copies To:
Roger S. Mertz, Esq.
Severson & Werson
One Embarcadero Center, 26th Floor
San Francisco, California 94111
(415) 398-3344
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of Securities to Be Amount to Be Proposed Maximum Proposed Maximum Amount of
Registered Registered(1) Offering Price Aggregate Offering Registration Fee
Per Share (2) Price (2)
- ------------------------- ------------- ---------------- ------------------ ----------------
Common Stock, no par value, 89,474 $5.00 $447,370 $124
subject to outstanding options 122,500 8.00 980,000 272
with fixed exercise prices
under the Vacu-dry Company
1996 Stock Option Plan, as
amended
Common Stock, no par value, 63,026 $8.75(3) $551,478(3) $153.00(3)
not subject to outstanding
options with fixed exercise
prices under the Vacu-dry
Company 1996 Stock Option
Plan, as amended
</TABLE>
(1) This Registration Statement shall also cover any additional shares of Common
Stock which become issuable under the Registrant's 1996 Stock Option Plan in
order to adjust the number of shares reserved for issuance as the result of any
future stock split, stock dividend, or similar adjustment of the Registrant's
outstanding Common Stock.
(2) Computed pursuant to Rule 457(h) under the Securities Act of 1933, as
amended, based upon the exercise prices of options granted as of the filing date
of this Registration Statement.
(3) Estimated pursuant to Rules 457(c) and 457(h) under the Securities Act of
1933, as amended, solely for purposes of calculating the amount of the
registration fee, based on the average of the bid and asked sale prices of the
Registrant's common stock as reported on the Nasdaq National Market on July 29,
1999.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation Of Documents By Reference.
The following documents are incorporated by reference in this
Registration Statement:
(a) Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, filed pursuant to Section 13(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(b) All other reports, if any, filed by the Company pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 since the end of
the fiscal year ended June 30, 1998;
(c) The description of the Company's Common Stock contained in a
registration statement filed under the Securities and Exchange Act of 1934,
including any amendment or report filed for the purpose of updating such
description.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934 after the date of this
Registration Statement and prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all securities offered
hereunder have been sold, or which deregisters all securities then remaining
unsold under this Registration Statement, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Pursuant to the California Corporations Code (the "Code"), the
Company's Articles of Incorporation excludes personal liability on the part of
its directors to the Company for monetary damages based upon any violation of
their fiduciary duties as directors, except as to liability for any breach of
the duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts in violation of
Section 204 of the Code, or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit any right
which a director may have to be indemnified.
The Company's Articles of Incorporation and its Bylaws provide for
indemnification of directors and officers of the Company to the fullest extent
permitted by the Code for claims against them in their official capacities,
including stockholders' derivative actions.
Insofar as indemnification for liabilities arising under the Securities
Act, as amended, 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 SEC, such indemnification is against
the public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
5 Opinion of Severson & Werson, A Professional Corporation
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel (contained in Exhibit 5)
24 Power of Attorney (See Page II-4).
99.1 Vacu-dry Company 1996 Stock Option Plan, as amended
99.2 Form of Stock Option Agreement for use with Vacu-dry Company 1996
Stock Option Plan, as amended
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Santa Rosa, State of California, on August 2,
1999.
VACU-DRY COMPANY
By: /s/ Gary L. Hess
-----------------
Gary L. Hess
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gary L. Hess his true and lawful
attorney-in-fact and agent, with full power of substitution for him 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 SEC,
hereby ratifying and confirming all that said attorney-in-fact or his
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chief Executive Officer, Chief August 2, 1999
/s/ Gary L. Hess Financial Officer, and President
Gary L. Hess (Principal Executive, Financial
and Accounting Officer)
/s/ Edward Koplovsky Director August 2, 1999
Edward Koplovsky
/s/ Roger S. Mertz Director August 2, 1999
Roger S. Mertz
/s/ Fredric Selinger Director August 2, 1999
Fredric Selinger
Craig R. Stapleton Director August __, 1999
/s/ Donal Sugrue Director August 2, 1999
Donal Sugrue
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ---------- -----------
5 Opinion of Severson & Werson, A Professional Corporation
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel (contained in Exhibit 5)
24 Power of Attorney (See page II-4).
99.1 Vacu-dry Company 1996 Stock Option Plan, as amended
99.2 Form of Stock Option Agreement for use with Vacu-dry Company 1996
Stock Option Plan, as amended
EXHIBIT 5
SEVERSON & WERSON
A PROFESSIONAL CORPORATION
One Embarcadero Center, Suite 2600
San Francisco, CA 94111
Telephone: (415) 398-3344
Facsimile: (415) 956-0439
August 2, 1999
Vacu-dry Company
100 Stony Point Road, Suite 200
Santa Rosa, California 95401
Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Vacu-dry Company (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the registration of 275,000 shares of the Company's
Common Stock (the "Shares") pursuant to the Company's 1996 Stock Option Plan, as
amended (the "Plan").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company's Articles of Incorporation and Bylaws, as
amended, and such other records, documents, certificates, memoranda and other
instruments as in our judgment are necessary or appropriate to enable us to
render the opinion expressed below. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
We are admitted to practice law in the State of California. Our opinion
is rendered solely with respect to California law and federal law. On the basis
of the foregoing, and in reliance thereon, we are of the opinion that the Shares
of Common Stock of the Company to be issued pursuant to the terms of the Plan
are validly authorized and, assuming: (a) no change occurs in the applicable law
or the pertinent facts: (b) the pertinent provisions of such Blue Sky securities
laws as may be applicable have been complied with; (c) the Shares are issued in
accordance with the terms of the Plan; and (d) the Shares have been duly
delivered against payment therefor as contemplated by the Plan, the Shares of
Common Stock issuable will be validly issued, fully paid and nonassessable.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm or entity without our
prior written consent. We consent to the filing of this opinion as an Exhibit to
the Registration Statement.
SEVERSON & WERSON
A Professional Corporation
By: /s/ Roger S. Mertz
----------------------
Roger S. Mertz
A Member of the Firm
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 of our report dated August 21, 1998 included in
Vacu-dry Company's Form 10-K for the year ended June 30, 1998.
/S/ ARTHUR ANDERSEN LLP
- ------------------------
San Francisco, California
July 28, 1999
EXHIBIT 99.1
VACU-DRY COMPANY
1996 STOCK OPTION PLAN
(Amended and Restated as of February 11, 1999)
(a) Purpose and Scope. The purposes of this Plan are to induce persons of
outstanding ability and potential to join and remain with Vacu-dry Company (the
"Company"), to provide an incentive for such employees as well as for
non-employee consultants to expand and improve the profits and prosperity of the
Company by enabling such persons to acquire proprietary interests in the
Company, and to attract and retain key personnel through the grant of Options to
purchase shares of the Company's common stock. Unless otherwise stated herein,
the term "Option" includes both Incentive Stock Options and Non-qualified Stock
Options.
(b) Definitions. Each term set forth in this Section 2 shall have the
meaning set forth opposite such term for purposes of this Plan unless the
context otherwise requires, and for the purposes of such definitions, the
singular shall include the plural and the plural shall include the singular:
i) "Affiliate" shall mean any parent corporation or subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and (f)
respectively of the Internal Revenue Code of 1986, as amended.
ii) "Board" shall mean the Board of Directors of the Company.
iii) "Committee" shall have the meaning set forth in Section 3 hereof.
iv) "Company" shall mean Vacu-dry Company, a California corporation.
v) "Code" shall mean the Internal Revenue Code of 1986, as amended.
vi) "Fair Market Value" for a share of Stock means the price that the
Board or the Committee acting in good faith determines, through any reasonable
valuation method (including but not limited to reference to prices existing in
any established market in which the Stock is traded), to be the price at which a
share of Stock might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
vii) "Option" shall mean a right to purchase Stock granted pursuant to
the Plan.
viii) "Option Price" shall mean the purchase price for Stock under an
Option, as determined in Sections 7 - "Incentive Stock Options" - and 8 -
"Non-Incentive Stock Options" - below.
ix) "Participant" shall mean an employee or non-employee consultant to
the Company to whom an Option is granted under the Plan.
x) "Plan" shall mean this Vacu-dry Company 1996 Stock Option Plan.
xi) "Stock" shall mean the no par value common stock of the Company.
xii) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) Administration. The Plan shall be administered (i) with respect to
individuals who receive options under the Plan and who are or become subject to
the reporting requirements and short-swing liability provision of Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a committee consisting of at least two members of the Board of
Directors of the Company (the "Board"), each of whom is a non-employee director
(as such term is defined under Rule 16b-3 of the 1934 Act) (the "Reporting
Persons Committee") and (ii) with respect to all individuals who receive Options
under the Plan and who are not Reporting Persons, by a committee which consists
of at least two members of the Board ("Stock Option Committee"). For purposes of
this Plan, references to the "Committee" shall mean the Reporting Persons
Committee, the Stock Option Committee, or both, as the context may require. The
Committee shall have full authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to grant Options, to
determine the Option Price and term of each Option, the persons to whom, and the
time or times at which, Options shall be granted and the number of shares of
Stock to be covered by each Option; to interpret the Plan; to prescribe, amend,
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the option agreements (which need not be identical) entered
into in connection with the grant of Options under the Plan; to unilaterally
modify outstanding Options in any respect that is not adverse to the
Participants, including the right to accelerate the exercisability of Options,
and to waive minor conditions and requirements; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Board may delegate to one or more of their members, or to one or more
agents, such administrative duties as it may deem advisable, and the Board or
any person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Board or such
person may have under the Plan. The Board may employ attorneys, consultants,
accountants, or other persons, and the Board shall be entitled to rely upon the
advice, opinions, or valuations of such persons. All actions taken and all
interpretations and determinations made by the Board in good faith shall be
final and binding upon all Participants, the Company, and all other interested
persons. No member of the Board shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan;
and all members of the Board shall be fully protected by the Company in respect
of any such action, determination, or interpretation.
(d) Shares Subject to the Plan. Subject to adjustment under the provisions
of Section 14 - "Effect of Change in Stock Subject to Plan" - of the Plan, the
maximum number of shares of Stock that may be optioned or sold under the Plan is
Two Hundred Seventy Five Thousand (275,000). Such shares may be authorized but
unissued shares of Stock of the Company, or issued shares of Stock reacquired by
the Company, or shares purchased in the open market expressly for use under the
Plan. If for any reason any shares of Stock as to which an Option has been
granted cease to be subject to purchase thereunder, then (unless the Plan shall
have been terminated) such shares shall become available for subsequent awards
under this Plan in the discretion of the Board. The Company shall, at all times
while the Plan is in force, reserve such number of common shares as will be
sufficient to satisfy the requirements of all outstanding Options granted under
the Plan.
(e) Eligibility; Factors to be Considered in Granting Options.
i) Incentive Stock Options may be granted to any regular full-time
employee (including officers and directors) of either the Company or any
Affiliate of the Company.
ii) Non-qualified Stock Options may be granted to: (i) any regular
full-time employee (including officers and directors) of either the Company or
any Affiliate of the Company; and (ii) any non-employee consultant of the
Company, provided that bona fide services shall be rendered by such consultants
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction.
iii) In determining to whom options shall be granted and the number of
shares of Stock to be covered by each Option, the Board shall take into account
the nature of the participants' duties, their present and potential
contributions to the success of the Company, and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the Plan. The
Board shall also determine the time(s) of grant, the type and term of Option
granted, and the time(s) of exercise, in whole or part. A Participant who has
been granted an Option under the Plan may be granted new Options, which may be
in addition to prior Options granted under the Plan or may be in exchange for
the surrender and cancellation of prior Options having a higher or lower option
price and containing such other terms as the Board may deem appropriate.
(f) Terms and Conditions of Options.
i) General. Options granted pursuant to the Plan shall be authorized
by the Board and shall be evidenced by agreements ("Option Agreements") in such
form as the Board from time to time shall approve. Such Option Agreements shall
comply with and be subject to the following general terms and conditions, and
shall also comply with and be subject to the provisions of Section 7 relating to
Incentive Stock Options or Section 8 relating to Non-qualified Stock Options, as
applicable, as well as such other terms and conditions as set forth in this Plan
and as the Board may deem desirable, not inconsistent with the Plan.
ii) Employment Agreement. The Committee may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the employ of, and/or to render services to, the
Company for a period of time (specified in the Option Agreement) following the
date the Option is granted. No such Option Agreement shall impose upon the
Company any obligation to employ and/or retain the Participant for any period of
time.
iii) Manner of Exercise. A Participant may exercise an Option by
giving written notice of such exercise to the Company at its principal office,
attention to the Secretary, and paying the Option Price either (i) in cash in
full at the time of exercise, or (ii) in the discretion of the Board:
(A) by delivery of other previously outstanding common stock of the
Company,
(B) by an approved deferred payment schedule or other arrangement,
which arrangement shall be contained in writing in the Option Agreement, in
which event an interest rate will be stated which is not less than the rate then
specified which will prevent any imputation of higher interest under Section 483
of the Code, or
(C) any other form of legal consideration acceptable to the Committee
at the time of grant or exercise.
iv) Time of Exercise. Promptly after the exercise of an Option and the
payment of the Option Price, either in full or pursuant to the approved payment
schedule, the Participant shall be entitled to the issuance of a stock
certificate evidencing ownership of the appropriate number of shares of Stock. A
Participant shall have none of the rights of a shareholder until shares are
issued to him/her, and no adjustment will be made for dividends or other rights
for which the record date has occurred prior to the date such stock certificate
is issued.
v) Number of Shares. Each Option shall state the total number of
shares of Stock to which it pertains.
vi) Option Period, Vesting, and Limitations on Exercise. The Board
may, in its discretion, provide that an Option may not be exercised in whole or
part for any period(s) of time specified in the Option Agreement.
(g) Incentive Stock Options. The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section 422 of the Code, as amended from
time to time.
i) ISOs may be granted only to employees of the Company or its
Affiliates.
ii) Each ISO granted under the Plan must be granted within 10 years
from the date the Plan is adopted or is approved by the shareholders of the
Company, whichever is earlier.
iii) The purchase price shall not be less than the Fair Market Value
of the common shares at the time of grant, except that the purchase price shall
be 110% of the Fair Market Value at such time in the case of any person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its Affiliates at the time of grant.
iv) No ISO granted under the Plan shall be exercisable more than 10
years from the date of grant, except that in the case of any person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its Affiliates at the time of grant, no ISO shall be
exercisable more than five years from the date of grant.
v) To the extent that the aggregate Fair Market Value of Stock
(determined at the time of grant) with respect to which ISOs are exercisable for
the first time by any individual during any calendar year under all plans of the
Company and its subsidiaries exceeds $100,000, such Options shall be treated as
non-qualified stock Options, but only to the extent of such excess. Should it be
determined that an entire Option or any portion thereof does not qualify for
treatment as an ISO by reason of exceeding such maximum, or for any other
reason, such Option or portion shall be considered a non-qualified stock Option.
(h) Non-qualified Stock Options. The Board may grant Non-qualified Stock
Options ("NSOs") under the Plan in addition to or in lieu of Incentive Stock
Options. NSOs are not intended to meet the requirements of Section 422 of the
Code, and shall be subject to the following terms and conditions:
i) NSOs may be granted to any eligible Participant.
ii) The purchase price of the shares shall be determined by the Board
in its absolute discretion, but in no event shall such purchase price be less
than 85% of the Fair Market Value of the shares at the time of grant. In the
case of any person who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its Affiliates at the
time of grant, the price shall be 110% of the Fair Market Value, determined at
the time of grant.
iii) NSOs shall not be exercisable more than ten years from the date
of grant.
(i) Transferability. Options granted under this Plan shall not be
transferable other than by will or by the laws of descent and distribution, and
during a Participant's life shall be exercisable only by such Participant.
Options granted under this Plan shall not be subject to execution, attachment or
other process. In the event of (i) any attempt by a Participant to alienate,
assign, pledge, hypothecate or otherwise dispose of an Option granted pursuant
to the Plan, except as provided for herein; or (ii) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred, the
Company may terminate the Option by notice to the Participant and it shall
thereupon become null and void.
(j) Termination of Employment. Options held by employees, including
directors, shall terminate three months after termination of employment with the
Company or Affiliate, unless:
i) If termination is due to employee's permanent and total disability
within the meaning of Section 22(e)(3) of the Code, the Option may be exercised
at any time within one year following termination.
ii) The Option Agreement by its terms specifies whether it shall
terminate later than three (3) months after termination of employment. If the
Option may be exercised later than three months following termination, any
portion exercised beyond three months shall be a non-qualified stock option.
This paragraph shall not be construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.
iii) Options granted under this Plan shall not be affected by any
change of duties or position of the Participant so long as Participant continues
to be a regular, full-time employee of the Company. Any Option, or any rules and
regulations relating to the Plan, may contain such provisions as the Board shall
approve with reference to the determination of the date employment terminates.
Nothing in the Plan or in any Option granted pursuant to the Plan shall confer
upon any Participant any right to continue in the employ of the Company or shall
interfere in any way with the right of the Company to terminate such employment
at its will at any time.
iv) Notwithstanding any other provisions set forth in this Section 10
or in the Plan, if the Participant shall: (i) commit any act of malfeasance or
wrongdoing affecting the Company or any Affiliate; (ii) breach any covenant not
to compete, or employment contract, with the Company or any Affiliate; or (iii)
engage in any conduct that would warrant the Participant's discharge for cause
(excluding general dissatisfaction with the performance of the Participant's
duties, but including any act of disloyalty or any conduct clearly tending to
bring discredit upon the Company or any Affiliate), any unexercised portion of
the Option shall immediately terminate and be void. (k) Rights in the Event of
Death. If an employee dies during the term of this Option, his/her legal
representative or representatives, or the person or persons entitled to do so
under the employee's last will and testament or under applicable intestate laws,
shall have the right to exercise this Option, but only for the number of shares
as to which the employee was entitled to exercise this Option on the date of his
death, and such right shall expire and this Option shall terminate twelve (12)
months after the date of Grantee's death or on the expiration date of this
Option, whichever date is sooner. In all other respects, this option shall
terminate upon such death.
(l) Leaves of Absence. For purposes of the Plan, an employee on approved
leave of absence from the Company shall be considered as currently employed for
90 days following beginning the leave or for so long as his/her right to
reemployment is guaranteed by statute or contract, whichever is longer.
(m) Effect of Change in Stock Subject to Plan. In the event that
outstanding common shares are hereafter changed by reason of reorganization,
consolidation, recapitalization, reclassification, stock split, combination of
shares, stock dividends and the like, the Board shall make adjustments as it
deems appropriate in the number and/or kind of shares or securities for which
Options may thereafter be granted under the Plan and for which Options then
outstanding under this Plan may thereafter be exercised. Any such adjustment in
outstanding Options shall be made without changing the aggregate exercise price
applicable to the unexercised portions of such Options. Such adjustments shall
be made by or under authority of the Company's Board whose determinations as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
(n) Corporate Reorganizations. Following the merger of one or more
corporations into the Company, or any consolidation of the Company and one or
more corporations in which the Company is the surviving corporation, the
exercise of Options under this Plan shall apply to the surviving corporation.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to Options hereunder are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all of the property of the
Company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of the Company then outstanding by
another corporation or person, the Plan shall terminate, and all Options
theretofore granted hereunder shall terminate, unless provision be made in
writing in connection with such transaction for the continuance of the Plan
and/or for the assumption of Options theretofore granted, or the substitution
for such Options of Options covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. If the Plan and unexercised Options shall terminate pursuant to the
foregoing sentence, all persons entitled to exercise any unexercised portions of
Options then outstanding shall have the right, at such time prior to the
consummation of the transaction causing such termination, as the Company shall
designate, to exercise the unexercised portions of their Options, including the
portions thereof which would, but for this paragraph entitled "Corporate
Reorganizations," not yet be exercisable.
(o) Agreement and Representation of Employees.
i) Acquiring Stock for Investment Purposes. As a condition to the
exercise of any Option, the Company may require the person exercising such
Option to represent and warrant at the time of such exercise that any shares of
Stock acquired at exercise are being acquired only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
Company's counsel, such representation is required or desirable under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.
ii) Withholding. With respect to the exercise of any Option granted
under this Plan, each Participant shall fully and completely consent to whatever
the Board directs to satisfy the federal and state tax withholding requirements,
if any, which the Board in its discretion deems applicable to such exercise.
iii) Delivery. The Company is not obligated to deliver any common shares until
there has been qualification under or compliance with all state or federal laws,
rules and regulations deemed appropriate by the Company. The Company will use
all reasonable efforts to obtain such qualification and compliance.
(p) Financial Assistance. The Company is vested with authority under the
Plan to assist, within the Company's discretion, any employee to whom an Option
is granted hereunder (including any director or officer of the Company or any of
its Affiliates who is also an employee) in the payment of the purchase price
payable on exercise of that Option by lending the amount of such purchase price
to such employee on such terms and at such rates of interest and upon such
security (or unsecured) as shall have been authorized by or under authority of
the Board.
(q) Amendment and Termination of Plan. The Board, by resolution, may
terminate, amend, or revise the Plan with respect to any shares as to which
Options have not been granted; provided however, that any amendment that would:
(i) materially increase the benefits accruing to Participants; or (ii)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to shareholder approval within 12 months before or after
adoption. It is expressly contemplated that the Board may amend the Plan in any
respect necessary to provide employees with the maximum benefits available under
and/or to satisfy the requirements of or amendments to Section 422 of the Code.
No termination, modification or amendment of the Plan may
however, alter or impair the rights conferred by an Option previously granted in
any respect that is adverse to the Participant without the consent of the
Participant to whom the Option was previously granted.
Unless sooner terminated, the Plan shall remain in effect for
a period of ten years from the date of the Plan's adoption by the Board.
(r) Use of Proceeds. The proceeds from the sale of shares pursuant to
Options granted under the Plan shall constitute general funds of the Company.
(s) Effective Date of Plan. The Effective Date of the Plan is March 15,
1996, the date it was adopted by the Board. The Effective Date of this
restatement and amendment is February 11, 1999.
(t) Indemnification of Committee. In addition to such other rights of
indemnification as they may have and subject to limitations of applicable law,
the members of the Committee shall be indemnified by the Company against all
costs and expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or any
rights granted thereunder and against all amounts paid to them in settlement
thereof or paid by them in satisfaction of a judgment of any such action, suit
or proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the same
before such Committee member or members undertake to defend the same on their
own behalf.
(u) Information Requirements. The Company shall provide each Participant
with annual financial statements.
(v) Governing Law. The Plan shall be governed by, and all questions arising
hereunder, shall be determined in accordance with the laws of State of
California as such laws are applied to agreements between California residents
entered into and to be performed entirely within California.
Date of Board Adoption: April 15, 1996
Date of Shareholder Approval: October 30, 1996
Date of Board Adoption of Restatement and Amendment: February 11, 1999
EXHIBIT 99.2
VACU-DRY COMPANY
FORM OF STOCK OPTION AGREEMENT
PURSUANT TO
1996 STOCK OPTION PLAN, AS AMENDED
1. Grant of Option. Vacu-dry Company., a California corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase a total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the 1996 Stock Option Plan, as
amended (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option.
If designated an Incentive Stock Option, this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code.
2. Exercise of Option. This Option shall be exercisable during its term in
accordance with the Exercise Schedule set out in the Notice of Grant and with
the provisions of Section 6 of the Plan as follows:
(a) Right to Exercise.
i) This Option may not be exercised for a fraction of a share.
ii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(a)(iii).
iii) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.
(b) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of Common Stock as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
Price. This Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the Exercise Price.
No shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended, at the time this Option is exercised, Optionee shall, if
required by the Company, concurrently with the exercise of all or any portion of
this Option, deliver to the Company his investment representations in such form
as the Company may reasonably request.
4. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) in the discretion of the Board:
i) by delivery of other previously outstanding Common Stock of
the Company,
ii) by an approved deferred payment schedule or other
arrangement, which arrangement shall be contained in writing in the Option
Agreement, in which event an interest rate will be stated which is not less than
the rate then specified which will prevent any imputation of higher interest
under Section 483 of the Code,
iii) by retention by the Company of some of the Stock as to which
the Option is then being exercised, in which case the Optionee's notice of
exercise shall include a statement (A) directing the Company to retain so many
shares that would otherwise have been delivered by the Company upon exercise of
this Option as equals the number of shares that would have been surrendered to
the Company if the purchase price had been paid with previously outstanding
stock of the Company, and (B) confirming the aggregate number of shares as to
which this Option is being thus exercised and therefore surrendered, or
iv) in any other form of legal consideration acceptable to the
Committee at the time of grant or exercise.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event of termination of Optionee's
consulting relationship or status as an Employee, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not entitled to exercise this Option at
the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's status as an Employee as a
result of total and permanent disability (as defined in Section 22(e)(3) of the
Code), Optionee may, but only within twelve (12) months from the date of
termination of employment (but in no event later than the date of expiration of
the term of this Option as set forth in Section 10 below), exercise the Option
to the extent otherwise so entitled at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
8. Death of Optionee. Notwithstanding the provisions of Section 6 above, in
the event of the death of Optionee, the Option may be exercised at any time
within twelve (12) months following the date of death (but in no event later
than the date of expiration of the term of this Option as set forth in Section
10 below), by Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.
11. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and California tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO, there will be
no regular federal income tax liability or California income tax liability upon
the exercise of the Option, although the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to the alternative minimum tax in the year of
exercise.
(b) Exercise of Non-Qualified Stock Option ("NSO"). If this Option
does not qualify as an ISO, there may be a regular federal income tax liability
and a California income tax liability upon the exercise of the Option. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
employee, the Company will be required to withhold from Optionee's compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are held
for at least one year after exercise, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and California
income tax purposes. In the case of an ISO, if Shares transferred pursuant to
the Option are held for at least one year after exercise and are disposed of at
least two years after the Date of Grant, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal and California
income tax purposes. If Shares purchased under an ISO are disposed of within
such one-year period or within two years after the Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price.
(d) Notice of Disqualifying Disposition of ISO Shares. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (i) the date two years after the Date of Grant, or (ii) the date one
year after transfer of such Shares to the Optionee upon exercise of the ISO, the
Optionee shall immediately notify the Company in writing of such disposition.
Optionee agrees that Optionee may be subject to income tax withholding by the
Company on the compensation income recognized by the Optionee from the early
disposition by payment in cash or out of the current earnings paid to the
Optionee.
12. Repurchase on Termination.
(a) Definitions. Except as otherwise defined in this Agreement, for
purposes of this Section 12:
i) "Affiliate" shall mean another company controlling, controlled
by or under common control with the Company.
ii) "Repurchase Date" shall mean the date on which the Company
exercises a Repurchase Option.
iii) "Repurchase Option" shall mean the Company's right in
accordance with Section 12 of this Agreement to repurchase Shares bought under
this Agreement.
iv) "Termination Date" shall mean the date on which Optionee's
employment or consulting service contract with the Company is terminated.
(b) Repurchase Rights. If the Optionee's employment or consulting
service contract with the Company or a subsidiary of the Company is terminated
for any reason other than death or total disability, the Shares issued or
issuable to Optionee under this Agreement, may, at the sole option and
discretion of the Company, be repurchased, either in whole or in part, by the
Company within 90 days after the Termination Date in accordance with this
Agreement.
(c) Repurchase Price. The repurchase price per Share repurchased in
accordance with this Section 12 shall be the original per Share purchase price
set forth in the accompanying Notice of Stock Option Grant. Such repurchase
price shall be paid in cash in a lump sum on the Repurchase Date. The Company's
right to repurchase any and all vested Shares under the Option, whether
exercised or not, at such original per share purchase price, lapses at the rate
of 20% per year (from the date the Option is granted) of the total number of
Shares granted. To the extent the right to repurchase any Shares issued or
issuable under this Agreement at the original per Share purchase price has
lapsed, the repurchase price shall be the fair market value of the Shares on the
Termination Date. Thus, for example, if the Company grants an Option for 400
shares vesting over 4 years from the date of grant, and after one year 100
shares have vested, the Company's repurchase right is as follows: (i) 20% of the
400 total shares granted will be repurchasable at their fair market value on the
Termination Date, and (ii) the remaining 80% may be repurchased at the original
per share purchase price.
(d) Death or Disability. There shall be no Repurchase Right upon the
Optionee's death or total disability.
(e) Repurchase Right as to Other Shares. The Repurchase Right of the
Company shall apply as well to all shares or other securities issued in
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spin-off, split-off, merger, consolidation
or reorganization ("Other Shares") but such right shall expire on the earliest
to occur of the following: (i) the date on which shares of the same class of
stock as such Other Shares first become publicly traded; or (ii) the occurrence
of any event or transaction upon which the Option terminates.
VACU-DRY COMPANY,
a California corporation
By:___________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1996 STOCK OPTION PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under the Plan.
Dated:_______________ _________________________
[Optionee Signature]
