As filed with the Securities and Exchange Commission on August 26, 1998.
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
ORGANIC FOOD PRODUCTS, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
-----------
California 94-3076294
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
-----------
550 Monterey Road, Suite B, Morgan Hill, California 95037
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
1995 Stock Option Plan
----------------------
(Full title of the plan)
James F. Swallow, Chief Executive Officer
550 Monterey Road, Suite B
Morgan Hill, California 95037
(408) 782-1133
------------------------------------------
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after the Registration Statement becomes effective.
--------------------------------
Exhibit Index Begins at Page II-5
<PAGE>
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Amount to be Proposed Proposed Amount of
Securities Registered(1) Maximum Maximum Registration
to be Offering Aggregate Fee
Registered Price Per Offering
Security(2) Price(2)
- --------------------------------------------------------------------------------
Common Stock, 625,000 Shares $1.34 $837,500 $247.
No par value
================================================================================
(1) This Registration Statement, pursuant to Rule 416, covers any
additional shares of no par value Common Stock ("shares") which become issuable
under the 1995 Stock Option Plan ("Plan") set forth herein by reason of any
stock dividend, stock split, recapitalization or any other similar transaction
without receipt of consideration which results in an increase in the number of
shares outstanding.
(2) Estimated solely for the purpose of computing the amount of the
Registration fee under Rule 457 of the Securities Act of 1933, as amended. A
total of 625,000 shares are issuable under the Plan at an offering price per
share based upon the closing price of the Common Stock on the NASDAQ SmallCap
Market on August 20, 1998 of $1.34 per share.
ii
<PAGE>
<TABLE>
<CAPTION>
ORGANIC FOOD PRODUCTS, INC.
PART I
Cross Reference Sheet Required by Item 501
Item in Form S-8 Caption In Prospectus
---------------- ---------------------
<S> <C> <C>
1. General Plan Information.................... Cover Page; Issuer and Participating Employees;
Description of the Plan; Tax Consequences
2. Registrant Information and
Employee Plan Annual
Information................................. Available Information
3. Incorporation of Documents
by Reference................................ Incorporation of Documents by Reference
4. Description of Securities................... Description of Common Stock
5. Interests of Named Experts
and Counsel................................. Counsel
6. Indemnification of
Directors and Officers...................... SEC Position Regarding Indemnification
7. Exemption from Registration
Claimed..................................... Not Applicable
8. Exhibits.................................... Not Applicable (See Part II, Item 8)
9. Undertakings................................ Not Applicable (See Part II, Item 9)
</TABLE>
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the Note to Part I of Form S-8 and Rule
428(b)(1) of the Rules under the Securities Act of 1933, as amended, the
information required by Part I of Form S-8 is included in the Reoffer Prospectus
which follows. The Reoffer Prospectus together with the documents incorporated
by reference pursuant to Item 3 of Part II of this Registration Statement
constitute the Section 10(a) Prospectus.
iii
<PAGE>
REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning Part
II of this Registration Statement, constitutes a prospectus, prepared on Form
S-3, in accordance with General Instruction C to Form S-8, to be used in
connection with resales of securities acquired under the Registrant's 1995 Stock
Option Plan by directors of the Registrant, as defined in Rule 405 under the
Securities Act of 1933, as amended.
iv
<PAGE>
625,000 SHARES
COMMON STOCK
ORGANIC FOOD PRODUCTS, INC.
---------------
1995 STOCK OPTION PLAN
---------------
This Reoffer Prospectus ("Prospectus") relates to the offering by Organic
Food Products, Inc. (the "Company") and the Company's employees, officers,
directors and consultants of up to 625,000 shares (subject to adjustment in
certain circumstances) of the Company's no par value Common Stock (the "Common
Stock" or "shares"), purchasable by such employees, officers, directors and
consultants pursuant to Common Stock options ("options") under the Company's
1995 Stock Option Plan (the "Plan"). As of the date hereof, 534,000 options
issued under the Plan are outstanding.
---------------
This Prospectus will be used by non-affiliates of the Company as well as
persons who are "affiliates" (as that term is defined under the Securities Act
of 1933) to effect resales of the shares. See "Selling Stockholders." The
Company will receive no part of the proceeds of any such sales although it will
receive the exercise price of the options.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
No person is authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made hereby, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of the time subsequent to the date hereof.
----------------
The date of this Prospectus is August 26, 1998.
1
<PAGE>
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, including Sections 14(a) and 14(c) relating to
proxy and information statements, and in accordance therewith files reports and
other information with the Securities and Exchange Commission ("Commission").
Reports 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 N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; 7 World Trade Center, New York, New York 10048; and
5670 Wilshire Boulevard, Los Angeles, California 90036. Copies of such material
can be obtained from the Public Reference Section of the Commission, 450 Fifth
Street N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is traded on the NASDAQ SmallCap Market under the symbol "OFPI." Reports,
proxy and information statements may also be inspected at the NASDAQ SmallCap
Market offices, 1735 K Street Northwest, Washington, D.C. 20006.
The Company furnishes annual reports to its shareholders which include
audited financial statements. The Company may furnish such other reports as may
be authorized, from time to time, by its Board of Directors.
INCORPORATION BY REFERENCE
Certain documents have been incorporated by reference into this Prospectus,
either in whole or in part. The Company will provide without charge (i) to each
person to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference (not including exhibits to the information unless such exhibits are
specifically incorporated by reference into the information), and (ii) documents
and information required to be delivered to the Company's directors pursuant to
Rule 428(b). Requests for such information shall be addressed to the Company at
550 Monterey Road, Suite B, Morgan Hill, California 95037, (408) 782-1133.
2
<PAGE>
TABLE OF CONTENTS
-----------------
INTRODUCTION............................................................ 4
SELLING STOCKHOLDERS..................................................... 4
METHOD OF SALE........................................................... 5
SEC POSITION REGARDING INDEMNIFICATION................................... 5
DESCRIPTION OF THE PLAN.................................................. 5
APPLICABLE SECURITIES LAW RESTRICTIONS................................... 6
TAX CONSEQUENCES......................................................... 7
LEGAL MATTERS............................................................ 8
EXPERTS ................................................................ 8
3
<PAGE>
INTRODUCTION
Since 1987, the Company has manufactured and marketed pesticide-free
("organic") and preservative-free ("all natural") pasta sauces, salsas and
condiments under the brand names "Garden Valley Naturals" and "Parrot." The
Company began marketing its Parrot line of salsas in 1987, its Garden Valley
Naturals line of condiments in 1991 and its Garden Valley Naturals line of
pastas and salsas in 1994. In June 1996 the Company merged with Organic Foods
Products, Inc. ("OFP"), which also marketed a line of organic food products
(including pasta sauces and salsas, together with dry cut pastas and organic
children's meals) under the "Millina's Finest" brand name. In August 1997 the
Company completed an initial public offering of its securities ("IPO") selling
1,300,000 shares of its Common Stock to the public at $4.00 per share for gross
proceeds of $5,200,000. In January 1998 the Company acquired Sunny Farms Juice
Company, a manufacturer of branded beverages including natural juices and
bottled water.
All of the Company's products (with the exception of its pastas, kids'
meals, organic mustards and beverages) are manufactured at the Company's 24,000
square foot processing and warehouse facility in Morgan Hill, California. See
"Manufacturing Facilities." The Company sells its products either directly or
through distributors or independent commissioned food brokers and specialty food
brokers to (i) health food and specialty food stores, (ii) club stores and (iii)
retail chain and independent grocery stores.
SELLING STOCKHOLDERS
This Prospectus covers possible sales by officers and directors of the
Company (as well as employees whose names are not included herein) of shares
they acquire through exercise of options granted under the Plan. The names of
such officers and directors who may be Selling Stockholders from time to time
are listed below, along with the number of shares of Common Stock currently
owned by them and the number of shares offered for sale hereby. The number of
shares offered for sale by such individuals may be updated in supplements to
this Prospectus, which will be filed with the Securities and Exchange Commission
in accordance with Rule 424(b) under the Securities Act of 1933, as amended.
Number of
Name of Selling Shareholdings Shares Offered
Stockholder(1) Number Percent For Sale(*)
- -------------- ------ ------- -----------
Kenneth A. Steel 354,691 4.85% 50,000
Charles B. Bonner 25,000 .3% 25,000
Charles R. Dyer 57,000 .8% 25,000
* Represents all shares issuable under the Plan
4
<PAGE>
(1) The stockholders listed in the table have sole voting and investment powers
with respect to the shares. Their addresses are in care of the Company.
METHOD OF SALE
Sales of the shares offered by this Prospectus will be made on the NASDAQ
SmallCap Market, where the Company's Common Stock is listed for trading, in
other markets where the Company's Common Stock may be traded or in negotiated
transactions. Sales will be at prices current when the sales take place and will
generally involve payment of customary brokers' commissions. There is no present
plan of distribution.
SEC POSITION REGARDING INDEMNIFICATION
The Company's Article of Incorporation and Bylaws provide for
indemnification of officers and directors, among other things, in instances in
which they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company and in which, with
respect to criminal proceedings, they had no reasonable cause to believe their
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company under the provisions described above, the Company has
been informed that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.
DESCRIPTION OF THE PLAN
In November 1995, the Company's Board of Directors (and subsequently its
shareholders) approved the Plan for the benefit of employees, officers,
directors and consultants of the Company. The Company believes that the Plan
provides an incentive to individuals to act as employees, officers, directors
and consultants of the Company and to maintain a continued interest in the
operations and future of the Company. All options were issued under Section 422A
of the Internal Revenue Code, and include qualified and non-qualified stock
options.
The terms of the Plan provide that the Company is authorized to grant
options to purchase shares of Common Stock ("options" or "option shares") to
employees, officers, directors and consultants of the Company upon the majority
consent of the Company's Board of Directors acting as the Stock Option Committee
("Committee"). Any employee, officer, director or consultant of the Company is
eligible to receive options under the Plan. The option price to be paid by
optionees for shares under qualified stock options must not be less than the
fair market value of the options shares as reported by the NASDAQ SmallCap
Market on the date of the grant. (Fair market value is defined as the mean price
between the bid and offer prices on the grant date.) The option price for
nonqualified stock options must not be less than 100% of such fair market value.
Options must be exercised within 10 years following the date of grant (or sooner
5
<PAGE>
at the discretion of the Board of Directors), and the optionee must exercise
options during service to the Company or within 90 days of termination of such
service (12 months in the event of death on disability). The Board of Directors
may accelerate the time at which the option is exercisable or extend the
termination date of an option.
A total of 625,000 shares of the Company's authorized but unissued Common
Stock have been reserved for issuance pursuant to the Plan of which 534,000
options are currently outstanding at exercise prices ranging from $2.00 to $3.34
per share.
Options under the Plan may not be transferred, except by will or by the
laws of intestate succession. The number of shares and price per share of the
options under the Plan will be proportionately adjusted to reflect forward and
reverse stock splits. The holder of an option under the Plan has none of the
rights of a shareholder until shares are issued.
The Plan is administered by the Board of Directors, acting as the
Committee, which has the power to interpret the Plan, determine which persons
are to be granted options and the amount of such options.
The provisions of the Federal Employee Retirement Income Security Act of
1974 do not apply to the Plan. Shares issuable upon exercise of options will not
be purchased in open market transactions but will be issued by the Company from
authorized shares.
Payment for shares must be made by optionees in cash from their own funds.
No payroll deductions or other installment plans have been established. No
reports will be made to optionees under the Plan except in the form of updated
information for the Prospectus.
There are no assets administered under the Plan, and, accordingly, no
investment information is furnished herewith.
Shares issuable under the Plan may be sold in the open market, without
restrictions, as free trading securities. No options may be assigned,
transferred, hypothecated or pledged by the option holder. No person may create
a lien on any securities under the Plan, except by operation of law. However,
there are no restrictions on the resale of the shares underlying the options.
The Plan will remain in effect until April, 2005 but may be terminated or
extended by the Company's Board of Directors. Additional information concerning
the Plan and its administrators may be obtained from the Company at the address
and telephone number indicated under "Incorporation by Reference" above.
APPLICABLE SECURITIES LAW RESTRICTIONS
If the optionee is deemed to be an "affiliate" (as that term is defined
under the Securities Act of 1933, as amended), the resale of the shares
6
<PAGE>
purchased upon exercise of options covered hereby will be subject to certain
restrictions and requirements. The Company's legal counsel may be called upon to
discuss these applicable restrictions and requirements with any optionee who may
be deemed to be an affiliate, prior to exercising an option.
In addition to the requirements imposed by the Securities Act of 1933, the
antifraud provisions of the Securities Exchange Act of 1934 and the rules
thereunder (including Rule 10b-5) are applicable to any sale of shares acquired
pursuant to options.
Up to 625,000 shares may be issued under the Plan. The Company has
authorized 20,000,000 shares of Common Stock of which 7,235,113 shares were
outstanding as of June 30, 1998. Common shares outstanding and those to be
issued upon exercise of options are fully paid and nonassessable, and each share
of stock is entitled to one vote at all shareholders' meetings. All shares are
equal to each other with respect to lien rights, liquidation rights and dividend
rights. There are no preemptive rights to purchase additional shares by virtue
of the fact that a person is a shareholder of the Company. Shareholders do not
have the right to cumulate their votes for the election of directors unless a
candidate's name has been placed in nomination prior to commencement of voting
and a shareholder has given notice prior to commencement of the voting of the
shareholder's intention to cumulate votes.
Directors must comply with certain reporting requirements and resale
restrictions pursuant to Sections 16(a) and 16(b) of the Securities Exchange Act
of 1934 and the rules thereunder upon the receipt or disposition of any options.
TAX CONSEQUENCES
If an option is exercised and if the optionee does not dispose of the
shares acquired pursuant to the exercise within two years of the date of the
granting of the option nor within one year from the transfer of the shares
pursuant to exercise of the options, then there will not be any federal income
tax consequences to the Company from either the exercise of the option or the
receipt of the proceeds with respect to the exercise of the option. In such
circumstances, the optionee would not be required to recognize any taxable
income upon the exercise of the option.
Furthermore, the sale of the shares received pursuant to the exercise of
the option would result in long-term capital gain or long-term capital loss to
the optionee based on the difference between the amount received with respect to
such sale and the amount paid upon the exercise of the option.
If an optionee exercised an option and sold the shares acquired pursuant to
such exercise either within two years from the date of the granting of the
option or within one year from the date of the transfer of such shares to him
pursuant to his exercise of the option, then in general the Company would be
entitled to a deduction for federal income tax purposes equal to lessor of: (1)
the fair market value of the stock on the date of exercise over the option price
of the stock; or (2) the amount realized on disposition over the adjusted basis
7
<PAGE>
of the stock. The optionee would recognize income equal to the amount of the
Company's deduction. The Company's deduction would be allowed, and the
optionee's income would be taxable, in the year the optionee disposed of the
shares. However, if the disposition occurs within two years of the date of the
grant and the disposition is a sale or exchange with respect to which a loss, if
sustained, would be recognized (generally any disposition other than to a
related party), then the optionee's income and the Company's deduction would not
exceed the excess (if any) of the amount realized on such sale or exchange over
the adjusted basis of such shares. The Company expects that optionees will be
required to exercise their options within five years from the date of grant
although optionees may hold the shares issuable upon exercise of the options
indefinitely.
For options exercised after 1987, an individual generally must include in
alternative minimum taxable income the amount by which the option price paid is
exceeded by the fair market value at the time the individual's rights to the
shares are freely transferable or are not subject to a substantial risk of
forfeiture. The alternative minimum tax is payable only if the alternative
minimum tax exceeds the regular income tax liability.
The provision of Section 401(a) of the Code, relating to "qualified"
pension, profit sharing and stock bonus plans, do not apply to the options or
underlying shares covered hereby.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby upon exercise of
Options will be passed on for the Company by Gary A. Agron, 5445 DTC Parkway,
Suite 520, Englewood, Colorado 80111.
EXPERTS
The financial statements of the Company incorporated by reference in the
Company's Annual Report on Forms 10KSB for the years ended June 30, 1996 and
1997, were audited by Semple & Cooper LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference.
8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference in this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission:
(a) The Registrant's Annual Report on Form 10KSB for the year ended June
30, 1997, filed pursuant to Section 13(a) of the Securities Exchange Act of
1934 (the "Exchange Act");
(b) The Registrant's Quarterly Report on Form 10-QSB for the quarters ended
September 30, 1997, December 31, 1997 and March 31, 1998, filed pursuant to
Section 13(a) of the Exchange Act; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended (Registration No. 333-22997), including any amendments
or reports filed for the purpose of updating such description.
(d) All other reports and subsequent reports filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
All reports and definitive proxy or information statements filed by the
Registrant pursuant to Section 13(a), 13(c), 14 or 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 hereby have
been sold or which deregisters all securities then remaining unsold at the time
of such amendment will be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof 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 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.
Not applicable.
II-1
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article IV of the Registrant's Articles of Incorporation provides as
follows:
"The liabilities of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law."
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to officers,
directors or persons controlling the Company, the Company has been advised that,
in the opinion of the Securities and Exchange Commission, Washington, D.C.
20549, such indemnification is against public policy as expressed in the 1933
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the officer, director or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such officer, director 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 1933 Act and
will be governed by the final adjudication of such issue.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following is a list of Exhibits filed as part of the Registration
Statement:
4. 1995 Stock Option Plan.
4.1 Incentive Stock Option Agreement.
4.2 Nonqualified Stock Option Agreement.
5. Opinion of Gary A. Agron
24. Consent of Semple & Cooper, LLP, independent certified public
accountants
II-2
<PAGE>
Item 9. Undertakings
The Registrant hereby undertakes (1) to file, during any period in which
offers or sales are being made, a post-effective amendment to this Registration
Statement; to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (2) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
Registration Statement; (3) that, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (4) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the Plan.
The Registrant hereby undertakes to deliver or cause to be delivered with
the prospectus to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered, the Registrant 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 Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 Act, as amended, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-8 and has caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in Morgan
Hill, California, on August 10, 1998.
ORGANIC FOOD PRODUCTS, INC.
By: /s/ James F. Swallow
-----------------------------------------
James F. Swallow, Chief Executive Officer
Pursuant to the requirements of the 1933 Act, as amended, this Registration
Statement has been signed below by the following persons on the dates indicated.
[TOM TO UPDATE OFFICERS AND DIRECTORS.]
Signature Title Date
--------- ----- ----
/s/ James F . Swallow Chief Executive Officer August 10, 1998
- ----------------------------------- and Director
James F. Swallow
/s/ John Battendieri President and Director August 10, 1998
- -----------------------------------
John Battendieri
/s/ David J. O'Gorman Chief Financial Officer August 10, 1998
- -----------------------------------
David J. O'Gorman
/s/ Kenneth A. Steel, Jr. Director August 10, 1998
- -----------------------------------
Kenneth A. Steel, Jr.
/s/ Charles B. Bonner Director August 10, 1998
- -----------------------------------
Charles B. Bonner
/s/ Charles R. Dyer Director August 10, 1998
- -----------------------------------
Charles R. Dyer
II-4
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
----------- ------- --------
4. 1995 Stock Option Plan.
4.1 Incentive Stock Option Agreement.
4.2 Nonqualified Stock Option Agreement.
5. Opinion of Gary A. Agron.
24. Consent of Semple & Cooper, LLP, independent
certified public accountants.
11-5
1995 STOCK OPTION PLAN
OF
S & D FOODS. INC.,
- --------------------------------------------------------------------------------
a California corporation
I. PURPOSE.
-------
The purpose of this 1995 Stock Option Plan (the "Plan") of S & D FOODS,
INC., a California corporation (the "Company") is to encourage ownership in the
Company by one or more key employees whose long-term employment is considered
essential to the Company's continued progress and thus to provide such employee
or employees with a further incentive to continue in the employ of the Company.
The purpose of the Plan is to be carried out by issuing stock options
("Options") pursuant to the Plan. The purpose of the Plan is to be carried out
by issuing incentive stock options and nonqualified options pursuant to the Plan
(hereinafter referred to as "Options") to one or more key employees of the
Company. It is intended that to the maximum extent permissible under the Plan,
Options shall constitute incentive stock options ("Incentive Stock Options")
within the meaning of Section 422 of the Internal Revenue Code (the "Code") and
that to the extent not so permissible, such Options shall not constitute
Incentive Stock Options ("Nonqualified Stock Options"). For purposes of the
Plan, all references to a subsidiary or subsidiaries shall include only
wholly-owned subsidiaries of the Company.
II. ADMINISTRATION
---------------
1. Stock Option Committee.
-----------------------
The Plan shall be administered by the Board of Directors of the Company
(the "Board") sitting as a Stock Option Committee (the "Committee")
2. Duties and Powers of Committee.
--------------------------------
The Committee shall conduct the general administration of the Plan in
accordance with its provisions. The Committee shall from time to time at its
discretion determine to whom Options shall be issued, whether such Options shall
<PAGE>
be Incentive Stock Options, Nonqualified Stock Options or both, the amount of
stock to be optioned in each case, and the terms and conditions pursuant to
which each Option shall be granted. The Committee shall have the power to
interpret the Plan and the Options and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules shall be consistent with a purpose of the Plan to
grant "incentive stock options" within the meaning of Section 422 of the Code to
the maximum extent permissible under Section 422. The interpretation and
construction by the Committee of any provisions of the Plan or of any Option
shall be final.
3. Majority Rule.
-------------
The Committee shall act by a majority of its members in office either by
vote at a meeting or by a memorandum or other written instrument signed by a
majority of the Committee.
4. Compensation; Professional Assistance; Good Faith Actions.
---------------------------------------------------------
Members of the Committee shall not receive compensation for their services
as members but all expenses and liabilities they incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Optionees, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination or interpretation.
2
<PAGE>
III. MANDATORY REQUIREMENTS FOR STOCK OPTIONS.
----------------------------------------
Each Option shall be authorized by action of the Committee and shall be
evidenced by a written agreement in such form as the Committee shall from time
to time approve and shall comply with the following terms and conditions:
1. Stock Option Plan, Stock, Eligibility, and Shareholder Approval.
---------------------------------------------------------------
a. Stock Option Plan. Options shall be granted pursuant to the Plan.
-----------------
b. Stock. The stock subject to the Options shall. be shares of the
Company's authorized but unissued or reacquired Common Stock, no par value
("Common Stock"). The aggregate number of shares which may be issued under
Options shall not exceed Two Hundred Fifty Thousand (250,000) shares of Common
Stock. The limitation established by the preceding sentence shall be subject to
adjustment as provided in paragraph 4 of Article IV of the Plan. If any
outstanding Option for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of such Option may again be subjected
to an Option.
c. Eligibility.
-----------
(i) The persons who shall be eligible to receive Incentive Stock
Options ("ISO Eligible Individuals") shall be such key employees of the Company
as the Committee shall select from time to time. The holder of an Incentive
Stock Option (an "Incentive Stock Optionee") may hold more than one Option, but
only on the terms and subject to the restrictions hereinafter set forth.
(ii) The persons who shall be eligible to receive Nonqualified Stock
Options shall be such individuals whose participation the Committee determines
is in the best interests of the Company.
d. Shareholder Approval. The Plan shall not take effect until approved by
the holders of a majority of the outstanding shares of capital stock of the
Company, which approval must occur within the period beginning twelve months
before and ending twelve months after the date the Plan is approved by the
Board.
3
<PAGE>
2. Term of Plan.
------------
Subject to Section 9 hereof, Incentive Stock Options may be granted
pursuant to the Plan from time to time within ten (10) years from the date the
Plan is approved by the Board, or the date the Plan is approved by the holders
of a majority of the outstanding shares of capital stock of the Company,
whichever is earlier. Nonqualified Stock Options may be granted pursuant to the
Plan at any time, and the Plan shall not have any fixed termination date with
respect to Nonqualified Stock Options.
3. Commencement of Exercisability.
------------------------------
Options shall become exercisable at such times and in such installments
(which may be cumulative), if any, as the Committee shall provide in the terms
of each individual Option; provided, however, that:
a. By a resolution adopted after an Option is granted the Committee may, on
such terms and conditions as it may determine to be appropriate, accelerate the
time at which such Option or any portion thereof may be exercised.
b. Unless an Option specifically provides to the contrary, such Option
shall immediately become exercisable in full in the event of the consummation of
any of the following transactions:
(i) A merger or acquisition in which the Company is not the surviving
entity;
(ii) The sale, transfer or other disposition of all or substantially
all of the assets of the Company; or
(iii) Any merger in which the Company is the surviving entity but in
which fifty percent (50~) or more of the Company's outstanding voting stock is
issued to holders different from those who held the stock immediately prior to
such merger.
4. Expiration of Option.
--------------------
a. No Option may be exercised to any extent by anyone after the first to
occur of the following events:
(i) The expiration of ten years after the date the Option was granted;
4
<PAGE>
(ii) Except in the case~ of any of any Optionee who is Permanently Disabled
(as defined below), the expiration of three months after the date of the
Optionee's Termination of Employment (as defined below) for any reason other
than such Optionee's death unless the Optionee dies within such three-month
period; (iii) In the case of an Optionee who is Permanently Disabled, the
expiration of one year after the date of the Optionee's Termination of
Employment for any reason other than such Optionee's death unless the Optionee
dies within such one-year period; (iv) The expiration of one year after the date
of the Optionee's death. b. Subject to the foregoing provisions of this
paragraph 4, the Committee shall provide, in the terms of each individual
Option, when such Option expires and becomes unexercisable; provided that the
Committee may provide in the terms of such individual Option that said Option
expires immediately upon a Termination of Employment for any reason. c.
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee and the Company or a subsidiary is terminated
for any reason, including1 but not by a way of limitation, a termination by
resignation, discharge, death or retirement, but excluding terminations where
there is a simultaneous reemployment by the Company or a subsidiary. The
Committee, in its absolute discretion, shall determine the effect of all other
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a termination of Employment
resulted from a discharge for good cause, and all questions of whether
particular leaves of absence constitute Terminations of Employment; provided,
however, that a leave of absence shall constitute a Termination of Employment
if, and to the extent that, such leave of absence interrupts employment for the
purposes of Section 422 (a) (2) of the Code and the then applicable regulations
and revenue rulings under such section.
5
<PAGE>
d. "Permanently Disabled" shall mean the inability of the Optionee, while
in the employ of the Company and under the age of sixty-five (65) years, to
perform the Optionee's duties as such employee of the Company by reason of
sickness or accident for a continuous period of more than nine (9) months.
5. Option Agreement.
----------------
Each Option shall be evidenced by a written stock option agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with the Plan.
6. Option Price.
-------------
a. Each Option shall state the purchase price of each share of Common Stock
subject to the Option (the "Option Price"). The Option Price with respect to any
Incentive Stock Option shall be not less than 100% of the fair market value of
each share of Common Stock of the Company on the date such Incentive Stock
Option is granted. Subject to the foregoing, the Committee shall have full
authority and discretion to fix the Option Price.
b. For the purpose of this paragraph 6, the fair market value of a share of
Common Stock of the Company on the date of delivery to the Company's Secretary
at his office shall be: (i) the closing price of a share of such class of Stock
on the principal exchange on which shares of such class of Stock are then
trading, if any, on such date, or, if such shares were not traded on such date,
then on the next preceding trading day during which a sale occurred; or (ii) if
such class of stock is not traded on an exchange but quoted on NASDAQ or a
successor quotation system, (1) the last sale price (if the stock is then listed
as a National market Issue under the NASD National Market System) or (2) the
mean between the closing representative bid and asked prices (in all other
cases) for the stock on such date as reported by NASDAQ or such successor
quotation system; (iii) if such stock is not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the stock on such date as determined in good
6
<PAGE>
faith by the Committee; or (iv) if such stock is not publicly traded, the fair
market value established by the Committee.
7. Restrictions on Transfer.
------------------------
a. An Option shall not be transferable by the Optionee otherwise than by
will or the laws of descent and distribution, and is exercisable, during such
Optionee's lifetime, only by such Optionee. If an Optionee shall die while in
the employ of the Company and shall not have fully exercised any Option, such
Option may be exercised, subject to the condition that no Option shall be
exercisable after the expiration of ten years from the date it is granted, to
the extent that such Optionee's right to exercise such Option had accrued at the
time of his death and had not previously been exercised, at any time within one
year after such Optionee's death, by the executors or administrators of such
Optionee or by any person or persons who shall have acquired the Option directly
from the Optionee by bequest or inheritance.
b. The Committee, in its absolute discretion, may impose such restrictions
on the transferability of the shares purchasable upon the exercise of an Option
as it deem appropriate.
8. Certain Shareholders Not ISO Eligible Individuals.
-------------------------------------------------
The term "ISO Eligible Individual" shall not include an individual who, at
the time an Incentive Stock Option is granted, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of its parent or any subsidiary corporation. This paragraph 8 of
Article III shall not apply if at the time such Incentive Stock Option is
granted the Option Price is at least one hundred ten percent (l0%) of the fair
market value of the Common Stock subject to the Incentive Stock Option and such
Incentive Stock Option is by its terms not exercisable after the expiration of
five (5) years from the date such Incentive Stock Option is granted. For
purposes of determining whether an Optionee owns more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of its
parent or any subsidiary corporation, stock owned by other persons and entities
shall be attributed to such Optionee by operation of Section 424(d) of the Code.
7
<PAGE>
9. Limitation on Aggregate Fair Market Value.
-----------------------------------------
The aggregate fair market value (determined as of the time an Incentive
Stock Option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time for any ISO Eligible Individual
shall not exceed $100,000 during any calendar year, provided that
notwithstanding any other provision of the Plan, if the foregoing limitation is
exceeded for any calendar year, then the Options first exercisable during such
calendar year in excess of such limitation shall be Nonqualified Options.
IV. ADDITIONAL TERMS AND CONDITIONS. The Options shall comply with and be
subject to the following additional terms and conditions:
1. Number of Shares.
----------------
Each Option shall state the number of shares to which it pertains.
2. Partial Exercise.
----------------
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof becomes unexercisable under paragraph 4 of
Article III or paragraph 4 of this Article IV, such Option or portion thereof
may be exercised in whole or in part; provided, however, that the Company shall
not be required. to issue fractional shares and the Committee may, by the terms
of the Option, require any partial exercise to be with respect to a specified
minimum number of shares.
3. Manner of Exercise.
------------------
a. An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Company's Secretary or his office of all of
the following prior to the time when such Option or such portion becomes
unexercisable under paragraph 4 of Article III or paragraph 4 of this Article
IV;
8
<PAGE>
(i) Notice in writing signed by the Optionee or other person when
entitled to exercise such Option or portion, stating that such Option or portion
is exercised, such notice complying with all applicable rules established by the
Committee;
(ii) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is thereby exercised, or shares of Common Stock
owned by the Optionee or other person then entitled to exercise such option or
portion, duly endorsed for transfer to the Company with a fair market value (as
determined under paragraph 6.b of Article III) on the date of delivery equal to
the aggregate Option Price of the shares with respect to which such Option or
portion is thereby exercised;
(iii) Such representations and additional documents as the Committee,
in its absolute discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended, and
any other federal or state securities laws or regulations. The Committee may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop- transfer orders to transfer
agents and registrars; and
(iv) In the event that the Option or portion thereof shall be
exercised pursuant to paragraph 7 of Article III by any person or persons other
than the Optionee, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
b. For the purpose of this paragraph 3, the fair market value of a share of
Common Stock on the date of delivery to the Company's Secretary or his office
shall be determined in accordance with Article III, Section 6.b.
4. Adjustments in Outstanding Options.
----------------------------------
a. If the outstanding shares of the capital stock of the Company are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
9
<PAGE>
consolidation, or otherwise, or the Company spins off to its shareholders a
material amount of its assets, the Committee shall make an appropriate and
proportionate adjustment in the number and kind of shares as to which Options
may be granted. The Committee shall make a corresponding adjustment changing the
number or kind of shares and the exercise price per share allocated to
unexercised Options or portions thereof, which shall have been granted prior to
any such change. Any such adjustment, however, in an outstanding Option shall be
made without change in the total price applicable to the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) but with a corresponding adjustment
in the price for each share covered by the Option. Any such adjustment made by
the Committee shall be final and binding upon all Optionees, the Company and all
other interested persons.
b. Upon the dissolution or liquidation of the Company; or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the assets of the Company to
another corporation, the Plan shall terminate, and any Option theretofore
granted hereunder shall terminate, unless provision is made in connection with
such transaction for the assumption of Options theretofore granted, or the
substitution for such Options of new options covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices; and the Committee may, in its absolute
discretion and on such terms and conditions as it deems appropriate, provide,
either by the terms of such Option or by a resolution adopted prior to the
occurrence of such dissolution, liquidation, reorganization, merger,
consolidation or sale of assets, that, for some period of time prior to such
event, such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in paragraphs 3 and 4 of Article III or
any installment provisions of such Option.
10
<PAGE>
c. Adjustments under this paragraph 4 shall be made by the Committee, whose
determination as to what adjustments shall be made and the extent thereof shall
be final, binding, and conclusive; provided that no Incentive Stock Option shall
be adjusted in a manner which causes such Incentive Stock Option to fail to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
5. Rights as a Shareholder.
-----------------------
An Optionee or transferee of an Option shall have no rights as a
shareholder with respect to any shares covered by his Option until the date of
the issuance of a stock certificate to him for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
paragraph 4 of this Article IV.
6. Modification Extension and Renewal of Options.
---------------------------------------------
Subject to the terms and conditions and within the limitations of the Plan,
the Committee may modify, extend or renew outstanding Options granted under the
Plan (subject to the condition that no Incentive Stock Option shall be
exercisable after the expiration of ten years from the date it is granted), or
accept the surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution therefor.
The Committee shall not, however, modify any outstanding Option so as to specify
a lower price or accept the surrender of any outstanding Option and authorize
the granting of a new Option in substitution therefor specifying a lower price.
Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted under the Plan.
11
<PAGE>
7. Investment Purpose.
------------------
Each Option under the Plan shall be granted on the condition that the
purchase of Common Stock thereunder shall be for investment purposes only, and
not with a view to resale or for sale in connection with any distribution except
that in the event the Common Stock subject to such Option is registered under
the Securities Act of 1933 as amended, or in the event a resale of such Common
Stock without such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Company such condition
is not required under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
8. Consent of Commissioner of Corporations.
---------------------------------------
No shares shall be issued upon exercise of any Option unless and until the
Company shall obtain from the Commissioner of Corporations of the State of
California such permit, if any, as may be required authorizing such issuance of
shares. The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of the Options, shall pay all original issue and
transfer taxes with respect to issue and transfer of shares pursuant hereto and
all other fees and expenses necessarily incurred by the Company in connection
therewith, and shall from time to time us~ its best efforts to comply with all
laws and regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
9. Securities Act of 1933.
----------------------
a. Notwithstanding anything to the contrary herein, each certificate
representing shares issued to an Optionee hereunder, unless they have been
registered under the Securities Act of 1933, as amended, shall bear a legend
reading substantially as follows:
"The shares represented by this certificate have been issued in a
transaction exempt from the provisions of the Securities Act of 1933,
as amended, and consequently no sale, offer to sell or transfer of the
12
<PAGE>
shares represented by this certificate shall be made unless a
registration under the federal Securities Act of 1933, as amended,
with respect to said shares is then in effect or, in the opinion of
legal counsel for the corporation, an exemption from registration
requirements of such act is then in effect applicable to such shares."
b. Each Option shall be issued subject to the condition that if at any time
the Committee shall determine, in its discretion, that the registration or
qualification of the shares covered by the Option under any state or federal law
is necessary or desirable, delivery of any shares to the Optionee pursuant to
exercise of the Option shall be deferred until such registration or
qualification shall have been effected. In the event the Committee determines
that such registration or qualification is necessary or desirable, the Company
shall, at its expense, take such action as may be required to effect such
registration or qualification.
10. Other Provisions.
----------------
Each Option shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee shall
deem advisable. Each Incentive Stock Option shall contain such limitations and
restrictions upon the exercise of the Incentive Stock Option as shall be
necessary in order that such Incentive Stock Option will be an "incentive stock
option" as defined in Section 422 of the Code or to conform to any change in the
law.
V. INDEMNIFICATION OF COMMITTEE.
----------------------------
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, 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 Option granted thereunder, and
13
<PAGE>
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for gross negligence or
misconduct in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same.
VI. AMENDMENT OF THE PLAN.
----------------------
The Committee may, insofar as permitted by law, from time to time, with
respect to any shares at the time not subject to Options, suspend or discontinue
the Plan or revise or amend it in any respect whatsoever except that, without
approval of the shareholders, no such revision or amendment shall change the
number of shares subject to the Plan, change the designation of the classes of
persons eligible to receive Options, or decrease the price at which Options may
be granted. Furthermore, the Plan may not, without the approval of the
shareholders, be amended in any manner that will cause Incentive Stock Options
issued under it to fail to meet the requirements of incentive stock options as
defined in Section 422 of the Code.
VII. APPLICATION OF FUNDS.
--------------------
The proceeds received by the Company from the sale of Common Stock pursuant
to Options will be used for general corporate purposes.
VIII. NO OBLIGATION TO EXERCISE OPTION.
--------------------------------
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
14
<PAGE>
IX. LIMITATION OF RIGHTS
--------------------
1. No Right to an Option.
---------------------
Nothing in the Plan shall be construed to give any person any right to be
granted an Option.
2. No Employment Right.
-------------------
Neither the Plan, nor the granting of an Option nor any other action taken
pursuant to the Plan, shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will employ an Optionee for
any period of time or in any position, or at any particular rate of
compensation.
3. No Rights Granted.
-----------------
The grant of any Option pursuant to this Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, or sell or transfer all or any part of its
assets or business.
X. EFFECT OF PLAN UPON OTHER OPTIONS AND COMPENSATION PLANS.
--------------------------------------------------------
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any subsidiary of the Company.
Nothing in the Plan shall be construed to limit the right of the Company or any
subsidiary of the Company (a) to establish any other forms of incentives or
compensation for employees of the Company or any subsidiary of the Company or
(b) to grant or assume options otherwise than under the Plan in connection with
any proper corporate purpose, including, but not be way of limitation, the grant
or assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
15
<PAGE>
Article III, Section l.b, of the 1995 Stock Option Plan was amended on June
24, 1996, to increase the aggregate number of shares which may be issued under
Options to 525,000. It was subsequently amended on February 1, 1997, to increase
the aggregate number of shares which may be issued under Options to 625,000.
16
STOCK OPTION AGREEMENT
----------------------
(Incentive Stock Option)
THIS STOCK OPTION AGREEMENT is made as of __________ between ORGANIC FOOD
PRODUCTS, INC. a California corporation ("Company"), and __________________
("Optionee"), under the following circumstances:
A. Optionee is a key employee of Company whose knowledge of the operations
of Company and expertise is instrumental for Company.
B. Company has established its 1995 Stock Option Plan (the "Plan"), a copy
of which is attached hereto. The Board of Directors of Company, sitting as the
Stock Option Committee under the Plan, has approved the issuance of the stock
option described herein to Optionee.
C. In accordance with Article III, Section 9 of the Plan, the parties
hereto intend that to the maximum extent permissible, the option described
herein shall be an incentive stock option (an "lncentive Stock Option") as
described in Section 422 of the Internal Revenue Code (the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. In consideration of Optionee's continuing to
render services to Company, Company hereby grants Optionee an option to purchase
_________________ shares of Company's Common Stock (the "Shares"). This option
is granted upon the following terms and conditions:
a. Vesting. This option vests according to the following
schedule:
Number of Shares Vesting Date
---------------- ------------
Notwithstanding the foregoing, the option shall become immediately
exercisable as to all of the Shares during the ten (10) day period immediately
preceding a change in control (as defined below). Company shall give Optionee
written notice of a proposed change in control at least ten (10) days prior to a
scheduled change in control, during which time Optionee may exercise the option
as to all of the Shares.
For purposes of this paragraph, change in control shall mean (i)
consolidation or merger of Company in which Company is not the surviving entity,
or (ii) the sale of substantially all of the assets of Company.
b. Option Price. The option price shall be $_______ per share.
<PAGE>
c. Restriction on Transfer. This option is not transferable by
Optionee otherwise than by will or the laws of descent and distribution
applicable upon Optionee's death and is exercisable, during Optionee's lifetime,
only by Optionee. This option may not be transferred, assigned, pledged, or
hypothecated by Optionee during Optionee's lifetime, whether by operation of law
or otherwise, and is not subject to execution, attachment or similar process. If
an attempted transfer, assignment, pledge, or hypothecation is made in violation
of this provision, then Optionee's rights under this Stock Option Agreement
shall automatically terminate without notice.
d. Term. Unless earlier terminated as herein provided, this
option shall expire and terminate ten (10) years from the date hereof.
e. Exercise After Termination of Employment. Except as otherwise
provided herein, all rights of Optionee under this option, to the extent that it
has not been exercised, shall terminate upon the termination of Optionee' 5
employment for any reason (including without limitation death or disability). If
Optionee's employment is terminated by Optionee or Company, then except as
hereinafter provided, for a period of ninety (90) days following the date of
such employment termination, Optionee shall retain the right to exercise all or
a portion of the rights accrued under subparagraph 1.a above as of the date of
employment termination.
f. Exercise After Death or Disability. If Optionee's employment
is terminated by reason of Optionee's death or Optionee's permanent disability,
as defined in Section 22(e) of the Code or in any successor statute or
regulation, or if Optionee dies within three (3) months after any other
termination of his employment, then for a period of one (1) year after Optionee
dies or becomes permanently disabled this option may be exercised as to all or a
portion of the rights accrued under subparagraph 1.a above as of the date of
employment termination.
g. Manner of Exercise. This option shall be exercised by
delivering to the Company at its principal office a written notice stating the
number of shares as to which the option is exercised. The written notice must be
accompanied by payment of the full option price for such shares in cash.
h. Additional Documents. Optionee shall make such representations
and execute such additional documents as Company, in its absolute discretion,
deems necessary or advisable to effect compliance with all applicable provisions
of the Securities Act of 1933, as amended, and any other federal or state
securities laws or regulations. Such representations may include the
representation of Optionee that the purchase of Common Stock, under this Option,
shall be for investment purposes only and not with a view to resale or for sale
in connection with any distribution.
i. Stock Option Plan. This option is granted pursuant to the Plan
and is subject to the terms, conditions and limitations in the Plan. The terms
"an Optionee" and "such Optionee" and similar references in the Plan shall mean
the Optionee under this Agreement. The terms "an Option," "any Option," "such
Optionee's Options," "such Options" and "each Option" and similar references in
the Plan shall mean the option granted pursuant to this Agreement.
2
<PAGE>
j. Representations of Optionee. Optionee acknowledges and
represents to Company that Optionee, as a key employee of Company, (i) has had
full access to the books and records of Company concerning the operations and
financial condition of Company, (ii) is fully aware of Company's operations and
financial condition, and (iii) is satisfied that he has obtained any and all
information about Company that he desires in connection with the issuance of
this option.
2. No Stockholder Rights. Optionee shall have no rights as a
stockholder with respect to the shares covered by this option until the date of
the issuance to him or her of a stock certificate or certificates therefor, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such certificate is issued.
3. No Employment Agreement. The granting of this option shall not
constitute or be evidence of any agreement or understanding, express or implied,
that Company will employ Optionee for any period of time or in any position, or
at any particular rate of compensation.
4. Adjustment of Number of Shares. In the event of any reorganization,
recapitalization, stock dividend, stock split, or a merger or consolidation of
Company with another corporation in which Company is the surviving corporation,
or other change in the corporate structure or capitalization affecting Company's
present capital stock (each, a "Capital Event"), appropriate adjustment shall be
made by the Board of Directors in the number and kind of shares, and the option
price of shares which are or may become subject to options granted or to be
granted hereunder so that Optionee may receive, on exercise of this option, the
number of shares of Company to which Optionee would have been entitled on such
Capital Event if this option had been exercised immediately before such Capital
Event. Any determination or interpretation made by the Board of Directors in
connection with this provision shall be final and binding upon Company and
Optionee.
5. Notice. Any notice required or permitted under this Agreement shall
be given in writing by personal delivery or upon deposit in the United States
mall, by registered or certified mall, addressed to Optionee at the address
shown on Company's employment records and to Company at the address of its
principal corporate offices (attention: President) or at such other address as
such party may designate by written notice to the other party hereto.
6. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
7. Entire Agreement. This Agreement (including the Plan, which is
attached hereto) constitutes the full and entire understanding and agreement
between the parties and supersedes all prior agreements with respect to the
subject matter hereof. No amendment or modification of this Agreement shall be
binding unless set forth in writing and signed by each party hereto.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stock Option
Agreement as of the day and year first hereinabove written.
ORGANIC FOOD PRODUCTS, INC.,
a California corporation
By:
----------------------------------------
Its:
---------------------------------------
"Company"
---------------------------------------
"Optionee"
4
STOCK OPTION AGREEMENT
----------------------
(Non-Qualified Stock Option)
THIS STOCK OPTION AGREEMENT is made as of , between ORGANIC FOOD PRODUCTS,
INC. a California corporation ("Company"), and _________________________
("Optionee"), under the following circumstances:
A. Optionee is a [member of the Board of Directors/consultant] of Company.
B. Company has established its 1995 Stock Option Plan (the "Plan"), a copy
of which is attached hereto. The Board of Directors of Company, sitting as the
Stock Option Committee under the Plan, has approved the issuance of the stock
option described herein to Optionee.
C. Optionee desires that Company grant Optionee such stock option.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. In consideration of Optionee's continuing to
render services to Company, Company hereby grants Optionee an option to purchase
______________ (__________) shares of Company's Common Stock (the "Shares").
This option is granted upon the following terms and conditions:
a. Vesting. This option vests according to the following
schedule:
Number of Shares Vesting Date
---------------- ------------
Notwithstanding the foregoing, the option shall become immediately
exercisable as to all of the Shares during the ten (10) day period immediately
preceding a change in control (as defined below). Company shall give Optionee
written notice of a proposed change in control at least ten (10) days prior to a
scheduled change in control, during which time Optionee may exercise the option
as to all of the Shares.
For purposes of this paragraph, change in control shall mean (i)
consolidation or merger of Company in which Company is not the surviving entity,
or (ii) the sale of substantially all of the assets of Company.
b. Option Price. The option price shall be $__________ per share.
c. Restriction on Transfer. This option is not transferable by
Optionee otherwise than by will or the laws of descent and distribution
applicable upon Optionee's death and is exercisable, during Optionee's lifetime,
only by Optionee. This option may not be transferred, assigned, pledged, or
hypothecated by Optionee during Optionee's lifetime, whether by operation of law
or otherwise, and is not subject to execution, attachment or similar process.
<PAGE>
If an attempted transfer, assignment, pledge, or hypothecation is made in
violation of this provision, then Optionee's rights under this Stock Option
Agreement shall automatically terminate without notice.
d. Term. Unless earlier terminated as herein provided, this
option shall expire and terminate ten (10) years from the date hereof.
e. Exercise After Termination of Relationship.Except as otherwise
provided herein, all rights of Optionee under this option, to the extent that it
has not been exercised, shall terminate upon the termination of Optionee' 5
employment or Optionee's service to Company as a director or consultant for any
reason (including without limitation death or disability). If Optionee's
employment is terminated by Optionee or Company or Optionee's service to Company
as a director or consultant is terminated, then except as hereinafter provided,
for a period of ninety (90) days following the date of such termination,
Optionee shall retain the right to exercise all or a portion of the rights
accrued under subparagraph 1.a above as of the date of termination.
f. Exercise After Death or Disability. If Optionee's employment
or Optionee's service as a director or consultant is terminated by reason of
Optionee's death or Optionee's permanent disability, as defined in Section 22(e)
of the Code or in any successor statute or regulation, or if Optionee dies
within three (3) months after any other such termination, then for a period of
one (1) year after Optionee dies or becomes permanently disabled this option may
be exercised as to all or a portion of the rights accrued under subparagraph 1.a
above as of the date of such termination.
g. Manner of Exercise. This option shall be exercised by
delivering to the Company at its principal office a written notice stating the
number of shares as to which the option is exercised. The written notice must be
accompanied by payment of the full option price for such shares in cash.
h. Additional Documents. Optionee shall make such representations
and execute such additional documents as Company, in its absolute discretion,
deems necessary or advisable to effect compliance with all applicable provisions
of the Securities Act of 1933, as amended, and any other federal or state
securities laws or regulations. Such representations may include the
representation of Optionee that the purchase of Common Stock, under this Option,
shall be for investment purposes only and not with a view to resale or for sale
in connection with any distribution.
i. Stock Option Plan. This option is granted pursuant to the Plan
and is subject to the terms, conditions and limitations in the Plan. The terms
"an Optionee" and "such Optionee" and similar references in the Plan shall mean
the Optionee under this Agreement. The terms "an Option," "any Option," "such
Optionee's Options," "such Options" and "each Option" and similar references in
the Plan shall mean the option granted pursuant to this Agreement.
2
<PAGE>
j. Representations of Optionee. Optionee acknowledges and
represents to Company that Optionee, as a director of Company, (i) has had full
access to the books and records of Company concerning the operations and
financial condition of Company, (ii) is fully aware of Company's operations and
financial condition, and (iii) is satisfied that he has obtained any and all
information about Company that he desires in connection with the issuance of
this option.
2. No Stockholder Rights. Optionee shall have no rights as a
stockholder with respect to the shares covered by this option until the date of
the issuance to him or her of a stock certificate or certificates therefor, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such certificate is issued.
3. No Employment Agreement. The granting of this option shall not
constitute or be evidence of any agreement or understanding, express or implied,
that Company will employ or engage Optionee for any period of time or in any
position, or at any particular rate of compensation.
4. Adjustment of Number of Shares. In the event of any reorganization,
recapitalization, stock dividend, stock split, or a merger or consolidation of
Company with another corporation in which Company is the surviving corporation,
or other change in the corporate structure or capitalization affecting Company's
present capital stock (each, a "Capital Event"), appropriate adjustment shall be
made by the Board of Directors in the number and kind of shares, and the option
price of shares which are or may become subject to options granted or to be
granted hereunder so that Optionee may receive, on exercise of this option, the
number of shares of Company to which Optionee would have been entitled on such
Capital Event if this option had been exercised immediately before such Capital
Event. Any determination or interpretation made by the Board of Directors in
connection with this provision shall be final and binding upon Company and
Optionee.
5. Notice. Any notice required or permitted under this Agreement shall
be given in writing by personal delivery or upon deposit in the United States
mail, by registered or certified mail, addressed to Optionee at the address
shown on Company's employment records and to Company at the address of its
principal corporate offices (attention: President) or at such other address as
such party may designate by written notice to the other party hereto.
6. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
7. Entire Agreement. This Agreement (including the Plan, which is
attached hereto) constitutes the full and entire understanding and agreement
between the parties and supersedes all prior agreements with respect to the
subject matter hereof. No amendment or modification of this Agreement shall be
binding unless set forth in writing and signed by each party hereto.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stock Option
Agreement as of the day and year first hereinabove written.
ORGANIC FOOD PRODUCTS, INC.,
a California corporation
By:
--------------------------------------
Its:
-------------------------------------
"Company"
-------------------------------------
"Optionee"
4
August 10, 1998
Organic Food Products, Inc.
550 Monterey Blvd., Suite B
Morgan Hill, California 95037
Gentlemen:
We have assisted in the preparation and filing by Organic Food Products,
Inc. (the "Company") of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission relating to 625,000
shares of no par value Common Stock (the "Option Shares") of the Company
issuable upon exercise of options granted under the Company's 1995 Stock Option
Plan, as amended (the "Option").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that the
Option Shares have been duly authorized and reserved for issuance and such
Option Shares, when issued in accordance with the terms of the Option against
payment therefor, will be duly and validly issued, fully paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act of 1933, as amended, and applicable state
laws relating to the offer and sales of securities.
We consent to the filing of a copy of this opinion in the Registration
Statement and the use of our opinion in connection therewith.
Very truly yours,
Gary A. Agron
SEMPLE & COOPER, LLP BDO
Certified Public Accountants and Consultants SEIDMAN
================================================================================
2700 North Central Avenue, Eleventh Floor, Phoenix, Arizona 85004 - ALLIANCE
Tel 602-241-1500 - FAX 602-234-1867
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
As independent certified public accountants, we hereby consent to the inclusion
by reference of our report dated September 24, 1997, on the financial statements
of Organic Food Products, Inc. for the year ended June 30, 1997, in the
Company's Form S-8 Registration Statement.
/s/ Semple & Cooper, LLP
- -------------------------------
Semple & Cooper, LLP
Phoenix, Arizona
August 21, 1998
INDEPENDENT MEMBER OF THE BDO SEIDMAN ALLIANCE