As filed with the Securities and Exchange Commission on January 26, 2000
Registration No. _____
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
FRISBY TECHNOLOGIES, INC.
(exact name of Registrant as specified in its charter)
Delaware 62-1411534
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
77 East Main Street, Suite 2000, Bay Shore, New York 11706
(Address of principal executive offices)
Frisby Technologies, Inc. - 1998 Stock Option Plan
(Full title of the plan)
Gregory S. Frisby
Chief Executive Officer
Frisby Technologies, Inc.
77 East Main Street, Suite 2000
Bay Shore, New York 11706
(516) 969-8570
Copy to:
Norman M. Friedland, Esq.
Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
(516) 663-6510
(516) 663-6641 (facsimile)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Number of shares Proposed maximum Proposed maximum
Title of each class of to be Offering price aggregate offering Amount of
securities to be registered registered per share (1) price (1) Registration fee (1)
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<S> <C> <C> <C> <C>
Common Stock, $.001 par 750,000 $4.96 $3,722,722.00 $983
value (2)
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<FN>
(1) Estimated solely for the purposes of calculating the registration fee and
based (a) as to the 521,300 shares purchasable upon exercise of outstanding
options, upon the average price at which such options may be exercised and (b)
as to the remaining 228,700 shares issuable upon exercise of options reserved
for issuance, on the average of the high and low prices for the Company's Common
Stock as quoted on the Nasdaq SmallCap Market and the Boston Stock Exchange
("BSE") on January 21, 2000.
(2) Pursuant to Rule 416, there are also being registered additional shares of
Common Stock as may become issuable pursuant to the anti-dilution provisions of
the plans being registered.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION
In accordance with Rule 428 under the Securities Act of 1933, as amended
(the "Act"), and the Note to Part I of Form S-8, the information required by
this item has been omitted from this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
In accordance with Rule 428 under the Act and the Note to Part I of Form
S-8, the information required by this item has been omitted from this
Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Securities
and Exchange Commission (the "Commission") are hereby incorporated by reference
in this Registration Statement:
(a) The Company's Registration Statement on Form SB-2 (No. 333-45121)
filed with the Commission on March 30, 1998;
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998;
(c) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998;
(d) The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1998;
(e) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999;
(f) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1999;
(g) The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999
(h) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1999;
(i) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1998; and
(j) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A (No. 001-14005) filed with the
Commission on March 31, 1998.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which removes from registration all securities then remaining unsold,
shall 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.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the DGCL permits a corporation, by so providing in its
certificate of incorporation, to eliminate or limit director's liability to the
corporation and its stockholders for monetary damages arising out of certain
alleged breaches of their fiduciary duty. Section 102(b)(7) of the DGCL provides
that no such limitation of liability may affect a director's liability with
respect to any of the following: (i) breaches of the director's duty of loyalty
to the corporation or its stockholders; (ii) acts or omissions not made in good
faith or which involve intentional misconduct of knowing violations of law;
(iii) liability for dividends paid or stock repurchased or redeemed in violation
of the DGCL; or (iv) any transaction from which the director derived an improper
personal benefit. Section 102(b)(7) does not authorize any limitation on the
ability of the corporation or its stockholders to obtain injunctive relief,
specific performance or other equitable relief against directors.
Article Tenth of the Company's Certificate of Incorporation provides that a
director shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except: (i) for any
breach of the duty of loyalty; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or knowing violations of law; (iii) for
liability under Section 174 of the DGCL (relating to certain unlawful dividends,
stock repurchases or stock redemptions); or (iv) for any transaction from which
the director derived any improper personal benefit. The effect of this provision
in the Certificate is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of the Company)
to recover monetary damages against a director for breach of the fiduciary duty
of care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in certain limited situations. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. These provisions will not alter the liability of
directors under federal securities laws.
Article Eleventh of the Company's Certificate of Incorporation provides
that all persons who the Company is empowered to indemnify pursuant to the
provisions of Section 145 of the DGCL (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
The Company's By-Laws provide that the Company shall indemnify each
director and such of the Company's officers, employees and agents as the Board
of Directors shall determine from time to time to the fullest extent provided by
the laws of the State of Delaware.
The Company currently maintains directors' and officers' liability
insurance coverage for all directors and officers.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provision or otherwise, the Company has been advised that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
4.1 Frisby Technologies, Inc. - 1998 Stock Option Plan
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Ruskin, Moscou, Evans & Faltischek, P.C. (contained in
Exhibit 5.1 hereof)
24.1 Power of Attorney (contained in signature page hereof)
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Company 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 material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the Act, each
such 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.
(3) 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
offering.
(b) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement 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.
(c) The undersigned Company 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 Exchange Act; 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.
(d) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification is against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Company 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 Bay Shore,
state of New York on the ____ day of January, 2000.
FRISBY TECHNOLOGIES, INC.
By: /s/ Gregory S. Frisby
---------------------
Gregory S. Frisby, President
In accordance with the requirements of the Act, this Registration Statement
was signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby authorized each of
Gregory S. Frisby with full power of substitution to execute in the name of such
person and to file any amendment or post-effective amendment to this
Registration Statement making such changes in this Registration Statement as the
Company deems appropriate and appoints each of Gregory S. Frisby with full power
of substitution, attorney-in-fact to sign and to file any amendment and
post-effective amendment to this Registration Statement.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C>
/s/ Gregory S. Frisby Chairman of the Board of Directors, January 14, 2000
--------------------- President and Chief Executive Officer
Gregory S. Frisby
/s/ Stephen P. Villa Chief Financial Officer January 14, 2000
--------------------
Stephen P. Villa
/s/ Jeffry D. Frisby Director January 14, 2000
--------------------
Jeffry D. Frisby
/s/ Pietro A. Motta Director January 14, 2000
-------------------
Pietro A. Motta
/s/ Domenico De Sole Director January 14, 2000
--------------------
Domenico De Sole
/s/ Robert Grayson Director January 14, 2000
------------------
Robert Grayson
</TABLE>
<PAGE>
Index to Exhibits
Exhibit Number Description
-------------- -----------
4.1 Frisby Technologies, Inc. - 1998 Stock Option Plan
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Ruskin, Moscou, Evans & Faltischek, P.C.
(contained in Exhibit 5.1 hereof)
24.1 Power of Attorney (contained in signature page hereof)
Exhibit 4.1
FRISBY TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
1. Plan; Purpose; General. The purpose of this Stock Option Plan (the
"Plan") is to advance the interests of Frisby Technologies, Inc. and any present
and future subsidiaries (as defined below) of Frisby Technologies, Inc.
(hereinafter inclusively referred to as the "Company") by enhancing the ability
of the Company to attract and retain selected employees, consultants, advisors
and directors (collectively the "Participants") by creating for such
Participants incentives and rewards for their contributions to the success of
the Company, and by encouraging such Participants to become owners of shares of
the Company's Common Stock, par value $.001 per share, as the title or par value
may be amended (the "Shares").
2. Effective Date of Plan. The Plan will become effective upon approval by
the Board of Directors of the Company (the "Board"), and shall be subject to the
approval by the shareholders of the Company as provided under the Securities Act
of 1933, as amended (the "Act").
3. Administration of the Plan.
(a) The Plan will be administered by the Board, subject to Paragraph 3(b).
The Board will have authority, not inconsistent with the express provisions of
the Plan, to take all action necessary or appropriate thereunder, to interpret
its provisions, and to decide all questions and resolve all disputes which may
arise in connection therewith. Such determinations of the Board shall be
conclusive and shall bind all parties.
(b) The Board may, in its discretion, delegate its powers with respect to
the Plan to an employee benefit plan committee or any other committee (the
"Committee"), in which event all references to "the Board" hereunder, including
without limitation the references in Section 9, but excluding the references in
Section 2, shall be deemed to refer to the Committee. The Committee shall
consist of not fewer than two (2) members of the Board; provided, however, that
if, at any time the awards under the Plan are granted, the Company is subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), each of the members of the Committee must be a
"non-employee director" as that term is defined in Rule 16b-3 as promulgated and
amended from time to time by the Securities and Exchange Commission under the
Exchange Act, or any successor thereto ("Rule 16b-3"). In addition, at any time
the Company is subject to Section 162(m) of the Code, each member of the
Committee shall be an "outside director" within the meaning of such Section. A
majority of the members of the Committee shall constitute a quorum, and all
determinations of the Committee (including determinations of eligibility, the
number of Options granted to a Participant and the exercise price of Options)
shall be made by the majority of its members present at a meeting. Any
determination of the Committee under the Plan may be made without notice or
meeting of the Committee by a writing signed by all of the Committee members.
4.Eligibility. The Participants in the Plan shall be all employees,
consultants, advisors and directors of the Company who are selected by the Board
whether or not they are also officers of the Company; provided, however, that
Incentive Options shall only be granted to employees of the Company, and
provided further, however, that Gregory S. Frisby and Jeffry D. Frisby shall not
be eligible Participants.
5. Grant of Options.
(a) The Board shall grant Options to Participants that it, in its sole
discretion, selects. Options shall be granted in accordance with the terms and
conditions set forth in Section 6 hereof and on such other terms and conditions
as the Board shall determine. Such terms and conditions may include a
requirement that a Participant sell to the Company any Shares acquired upon
exercise of Options upon the Participant's termination of employment upon such
terms and conditions as the Board may determine. Incentive Options shall be
granted on terms that comply with the Code and Regulations thereunder.
(b) Options granted pursuant to the Plan (the "Options") may be (i)
incentive stock options ("Incentive Options") that are intended to qualify under
the Internal Revenue Code of 1986, as amended (the "Code"), or, (ii) options
that are not intended to so qualify, or, (iii) both. The proceeds received from
the sale of Shares pursuant to the Plan shall be used for general corporate
purposes.
(c) No Options shall be granted after December 31, 2007 but Options
previously granted may be exercised after that date until the expiration of the
Option.
6. Terms and Conditions of Options
(a) Exercise Price. The purchase price per share for Shares issuable upon
exercise of Options shall be a minimum of one hundred (100%) percent of fair
market value on the date of grant as determined by the Board. For this purpose,
"fair market value" will be determined as set forth in Section 8 hereof.
Notwithstanding the foregoing, if any person to whom an Option is to be granted
owns in excess of ten (10%) percent of the combined voting power of all classes
of outstanding capital stock of the Company (a "Principal Shareholder"), then no
Option may be granted to such person for less than one hundred ten (110%)
percent of the fair market value on the date of grant as determined by the
Board.
(b) Period of Options. The expiration of each Option shall be fixed by the
Board, in its discretion, at the time such Option is granted. No Option shall be
exercisable after the expiration of ten (10) years from the date of its grant
and each Option shall be subject to earlier termination as expressly provided in
this Section 6 hereof or as determined by the Board, in its discretion, on the
date such Option is granted.
(c) Payment for Delivery of Shares. Shares which are subject to Options
shall be issued only upon receipt by the Company of full payment of the purchase
price for the Shares as to which the Option is exercised. Payment for Shares may
be made (as determined by the Board at the time the Option is granted) (i) in
cash; (ii) by certified or bank check payable to the order of the Company in the
amount of the purchase price; (iii) by delivery of Shares owned by the
Participant having a fair market value equal to the purchase price; or (iv) by
any combination of the methods of payment described in (i) through (iii) above,
as determined by the Board at the time the Option is granted. In addition, any
grant of a nonqualified Option may provide that payment of the purchase price
for the Option may also be made in whole or in part in the form of Shares that
are subject to risk of forfeiture or restrictions of transfer. Unless otherwise
determined by the Board on or after the date of grant, whenever any purchase
price for an Option is paid in whole or in part by means of any of the forms of
consideration specified in this Section 6(c), the Shares received by the
Participant upon the exercise of the nonqualified Option shall be subject to the
same risk of forfeiture or restrictions on transfer as those that applied to the
consideration surrendered by the Participant; provided, however, that such risks
of forfeiture and restrictions on transfer shall apply only to the same number
of Shares received by the Participant as applied to the forfeitable or
restricted Shares surrendered by the Participant.
Any grant may, if there is then a public market for the Shares, provide for
deferred payment of the purchase price for the Option from the proceeds of sale
through a broker of some or all of the Shares to which the exercise relates.
The Company shall not be obligated to deliver any Shares unless and until,
in the opinion of the Company's counsel, all applicable federal and state laws
and regulations have been complied with and until all other legal matters in
connection with the issuance and delivery of Shares have been approved by the
Company's counsel. Without limiting the generality of the foregoing, the Company
may require from the person exercising an Option such investment representation
or such agreement, if any, as counsel for the Company may consider necessary in
order to comply with the Act and applicable state securities laws.
(d) Legend on Certificates. The stock certificates representing the Shares
shall carry such appropriate legends, and such written instructions shall be
given to the Company's transfer agent, as may be deemed necessary or advisable
by counsel to the Company in order to comply with the requirements of the Act or
any state securities laws.
(e) Rights as Shareholder. A Participant or a transferee of an Option shall
have no rights as a Shareholder with respect to any Shares covered by the 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 distribution of other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 7 hereof. Each grant of Options shall be evidenced by an
agreement, which shall be executed on behalf of the Company and delivered to and
accepted by the Participant and shall contain such terms and provisions as the
Board may determine consistent with the Plan.
(f) Vesting. Options granted shall vest in the Participant and become
exercisable by the Participant as follows: (i) 25% immediately as of the first
anniversary of the date of grant; (ii) 25% as of the second anniversary of the
date of grant; (iii) 25% as of the third anniversary of the date of grant; or
(iv) 25% immediately as of the fourth anniversary of the date of grant; or (v)
such earlier date as of the Board of Directors, at its sole discretion may
determine based upon the achievement of certain corporate sales and other
milestones to be established by the Board of Directors.
(g) Non-Transferability of Options. Except as provided in Sections 6(h)(ii)
and (iii), Options granted under this Plan may not be exercised during a
Participant's lifetime except by the Participant, other than by will or the laws
of descent and distribution. Options may not be sold, assigned or otherwise
transferred or disposed of in any manner whatsoever except as provided in
Section 6(h) hereof. Notwithstanding the foregoing, the Board, in its sole
discretion, may provide for the transferability of particular awards under this
Plan so long as such provisions would not disqualify the exemption for other
awards under Rule 16b-3, if then applicable to awards under the Plan. Moreover,
any grand made under this Plan may provide that all or any part of the Shares
issued or transferred by the Company upon exercise of Options shall be subject
to further restrictions on transfer.
(h) Termination of Relationship. Except as otherwise provided in an Option
or other agreement between the Company and a Participant, upon the termination
of a Participant's status as an employee, consultant, advisor or director, for
any reason other than as set forth in subsections (ii) and (iii) below, at a
time when the Shares are then Publicly Traded (as defined below), then the
following provisions shall apply:
(i) Such Participant may exercise Options to the extent exercisable on the
date of termination not later than three (3) months (or such shorter time as may
be specified in the grant), after the date of such termination. To the extent
that the Participant was not entitled to exercise the Option at the date of such
termination, or does not exercise such Option within the time specified herein,
such Option shall expire and terminate. Notwithstanding anything else herein, if
the employment or other relationship of any Participant shall be terminated
voluntarily by the Participant and without the consent of the Company, or for
"Cause" (as hereinafter defined), then any Option granted to such Participant
(whether or not then vested in the Participant) to the extent not previously
exercised shall expire immediately on the date of termination. For purposes of
the Plan, "Cause" shall mean "Cause" as defined in any employment agreement
between any employee Participant and the Company ("Employment Agreement"), and
in the absence of an Employment Agreement or in the absence of a definition of
"Cause" in such Employment Agreement, "Cause" shall mean: (i) any continued
failure by the employee Participant to obey the reasonable instructions of the
president or any member of the Board; (ii) continued neglect by the Participant
of his duties and obligations as an employee of the Company or a failure to
perform such duties and obligations to the reasonable satisfaction of the
president or the Board; (iii) willful misconduct of the Participant or other
actions in bad faith by the Participant which are to the detriment of the
Company, including, without limitation, commission of a felony, embezzlement or
misappropriation of funds or of confidential information or commission of any
act of fraud; or (iv) a breach of any material provision of any Employment
Agreement not cured within ten (10) days after written notice thereof.
(ii) Notwithstanding the provisions of subsection (i) above, in the event
of termination of a Participant's status as an employee as a result of
"permanent disability" (as such term is defined in any contract of employment
between the Company and the Participant or, if not defined, then such term shall
mean the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of twelve (12) months), the Participant (or, in the case of
the Participant's legal incapacity, such Participant's guardian or legal
representative acting in a fiduciary capacity on behalf of the Participant under
state law and court supervision) may exercise the Option, but only to the extent
such Option was exercisable on the date the Participant ceased working as the
result of the permanent disability. Such exercise must occur within six (6)
months (or such shorter time as is specified in the grant) from the date on
which the Participant ceased working as a result of the permanent disability. To
the extent that the Participant was not entitled to exercise such Option on the
date the Participant ceased working, or does not exercise such Option within the
time specified herein, such Option shall terminate.
(iii) Notwithstanding the provisions of subsection (i) above, in the event
of the death of a Participant, the Option may be exercised, at any time within
six (6) months following the date of death (or such shorter time as may be
specified in the grant), by the Participant's estate or by a person who acquired
the right to exercise the Option by will or the applicable laws of descent and
distribution, but only to the extent such Option was exercisable on the date of
the Participant's death. To the extent that the Participant was not entitled to
exercise such Option on the date of death, or the Option is not exercised within
the time specified herein, such Option shall terminate.
(iv) Notwithstanding subsections (i), (ii), and (iii) above, the Board
shall have the authority to extend the expiration date of any outstanding Option
in circumstances in which it deems such action to be appropriate (provided that
no such extension shall extend the term of an Option beyond the date on which
the Option would have expired if no termination of the Participant's
relationship's with the Company had occurred).
(h) Financial Assistance. The Company is vested with authority under this
Plan to assist any employee to whom an Option is granted hereunder (including,
to the extent permitted by law, any director or officer of the Company who is
also an employee of the Company) 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.
(i) Withholding Taxes. To the extent required by
applicable federal, state, local or foreign law, a Participant shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise by reason of an Option exercise or any sale of
Shares. The Company shall not be required to issue Shares until such obligations
are satisfied. The Board may permit these obligations to be satisfied by having
the Company withhold a portion of the Shares that otherwise would be issued to
the Participant upon exercise of the Option, or to the extent permitted, by
tendering Shares previously acquired.
7. Shares Subject to Plan.
(a) Number of Shares and Stock to be Delivered. Shares delivered pursuant
to this Plan shall in the discretion of the Board be authorized but unissued
Shares or previously issued Shares acquired by the Company. The unexercised
portion of any expired, terminated or cancelled Option shall again be available
for the grant of Options under the Plan. Subject to adjustment as described
below, the aggregate number of Shares which may be delivered under this Plan
shall not exceed seven hundred fifty thousand (750,000) Shares.
(b) Changes in Stock. In the event of a stock dividend, stock split,
combination of Shares, recapitalization or similar change in the capital
structure of the Company, merger in which the Company is the surviving Company,
consolidation, spin-off, split up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of warrants or other
rights to purchase securities or any other corporate transaction or event having
any effect similar to any of the foregoing, the number and kind of Shares of
stock or securities of the Company to be subject to the Plan and to Options then
outstanding or to be granted thereunder, the maximum number of Shares or
securities which may be delivered under the Plan, the Option price and other
relevant provisions may be appropriately adjusted by the Board, whose
determination shall be binding on all persons. In the event of a consolidation,
merger or tender offer in which the Company is not the surviving Company or
which results in the acquisition of substantially all the Company's outstanding
stock by a single person or entity, or in the event of the sale or transfer of
substantially all the Company's assets, all outstanding Options, whether or not
then exercisable, shall immediately become exercisable. In such event, the Board
shall notify the Participants that all outstanding Options shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. The Board may also
adjust the number of Shares subject to outstanding Options, the exercise price
of outstanding Options and the terms of outstanding Options to take into
consideration material changes in accounting practices or principles,
consolidations or mergers (except those described in the immediately preceding
paragraph), acquisitions or dispositions of stock or property or any other event
if it is determined by the Board that such adjustment is appropriate to avoid
distortion in the operation of the Plan.
8. Certain Definitions.
Certain terms used in the Plan have been defined above. In addition, as
used in the Plan, the following terms shall have the following meanings:
(a) A "subsidiary" is any company (i) in which the Company owns, directly
or indirectly, stock possessing fifty (50%) percent or more of the total
combined voting power of all classes of stock or (ii) over which the Company has
effective operating control.
(b) The "fair market value" of the Shares shall mean:
(i) If the Shares are then Publicly Traded: The closing price of the Shares
as of the day in question (or, if such day is not a trading day in the principal
securities market or markets for such Shares, on the nearest preceding trading
day), as reported with respect to the market (or the composite of markets, if
more than one) in which Shares are then traded, or, if no such closing prices
are reported, on the basis of the mean between the high bid and low asked prices
that day on the principal market or quotation system on which Shares are then
quoted, or, if not so quoted, as furnished by a professional securities dealer
making a market in such Shares selected by the Board; or
(ii) If the Shares are then not Publicly Traded: The price at which one
could reasonably expect such Shares to be sold in an arm's length transaction,
for cash, other than on an installment basis, to a person not employed by,
controlled by, in control of or under common control with the issuer of such
Shares. Such fair market value shall be that which has concurrently or most
recently been determined for this purpose by the Board, or at the discretion of
the Board by an independent appraiser or appraisers selected by the Board, in
either case giving due consideration to recent transactions involving Shares, if
any, the issuer's net worth, prospective earning power and dividend-paying
capacity, the goodwill of the issuer's business, the issuer's industry position
and its management, that industry's economic outlook, the value of securities of
issuers whose Shares are Publicly Traded and which are engaged in similar
businesses, the effect of transfer restrictions to which such Shares may be
subject under law and under the applicable terms of any contract governing such
Shares, the absence of a public market for such Shares and other matters as the
Board or its appraiser or appraisers deem pertinent. The determination by the
Board or its appraiser or appraisers of the fair market value shall, if not
unreasonable, be conclusive and binding notwithstanding the possibility that
other persons might make a different, and also reasonable, determination. If the
fair market value to be used was thus fixed more than twelve (12) months prior
to the day as of which fair market value is being determined, it shall in any
event be no less than the book value of the Shares being valued at the end of
the most recent period for which financial statements of the Company are
available; or
(iii) Shares are "Publicly Traded" if stock of that class is listed or
admitted to unlisted trading privileges on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. ("NASD") or if
sales or bid and offer quotations are reported for that class of stock in the
automated quotation system ("NASDAQ") operated by the NASD.
9. Indemnification of Board. In addition to and without affecting such
other rights of indemnification as they may have as members of the Board or
otherwise, each member of the Board shall be indemnified by the Company to the
extent legally possible against expenses, including reasonable attorney's fees,
actually and reasonably incurred in connection with any appeal therein, to which
he 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 against all
judgments, fines and amounts paid by him in settlement thereof; provided that
such payment of amounts so indemnified is first approved by a majority of the
members of the Board who are not parties to such action, suit or proceedings, or
by independent legal counsel selected by the Company, in either case on the
basis of a determination that such member acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; and except that no indemnification shall be made in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Board member is liable for a breach of the duty of loyalty, bad faith or
intentional misconduct in his duties; and provided further, that the Board
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend same.
10. Amendments. The Board may at any time discontinue granting Options
under the Plan. The Board may at any time or times amend the Plan or amend any
outstanding Option or Options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that (except to the extent explicitly
required or permitted hereinabove) no such amendment will, without the approval
of the shareholders of the Company: (a) increase the maximum number of Shares
available under the Plan; (b) reduce the Option price of outstanding Options or
reduce the price at which Options may be granted; (c) extend the time within
which Options may be granted, however, this period shall not exceed the term
provided in Section 5(c) hereof; (d) amend the provisions of this Section 10 of
the Plan; (e) adversely affect the rights of any Participant (without his
consent) under any Options theretofore granted; (f) cause any award under the
Plan to cease to qualify for any applicable exceptions to Section 162(m) of the
Code, or (g) be effective if shareholder approval is required by applicable
statute, rule or regulation.
11. Miscellaneous Provisions.
(a) Rule 16b-3. With respect to Participants subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable provisions of Rule 16b-3. To the extent any provision of the Plan or
action by the Plan administrators fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Board.
(b) Underscored References. The underscored references contained in the
Plan and in any Option agreement are included only for convenience, and they
shall not be construed as a part of the Plan or Option agreement or in any
respect affecting or modifying its provisions.
(c) Number and Gender. The masculine, feminine and neuter, wherever used in
the Plan or in any Option agreement, shall refer to either the masculine,
feminine or neuter and, unless the context otherwise requires, the singular
shall include the plural and the plural the singular.
(d) Governing Law. The place of administration of the Plan and each Option
agreement shall be in the State of New York. The corporate law of the Company's
state of incorporation shall govern issues related to the validity and issuance
of Shares. Otherwise, this Plan and each Agreement shall be construed and
administered in accordance with the laws of the State of New York, without
giving effect to principles relating to conflict of laws.
(e) No Employment Contract. Neither the adoption of the Plan nor any
benefit granted hereunder shall confer upon any Participant any right to
continued employment or other service with the Company, nor shall the Plan or
any benefit interfere in any way with the right of the Company to terminate any
Participant's employment or other service at any time.
Exhibit 5.1
OPINION OF COUNSEL REGARDING LEGALITY AND CONSENT OF COUNSEL
[LETTERHEAD OF RMEF, P.C.]
January 25, 2000
Frisby Technologies, Inc.
77 East Main Street, Suite 2000
Bay Shore, New York 11706
Re: Frisby 1998 Stock Option Plan
Ladies and Gentlemen:
We have acted as counsel to Frisby Technologies, Inc. (the "Company") in
connection with the registration with the Securities and Exchange Commission on
Form S-8 of shares of the Company's common stock, par value $.001 (the
"Shares"), which will be awarded to certain Company employees under the
above-referenced plan (the "Plan"). In connection with that registration, we
have reviewed the proceedings of the Board of Directors of the Company relating
to the registration and proposed issuance of the common stock, the Articles of
Incorporation of the Company and all amendments thereto, the Bylaws of the
Company and all amendments thereto, and such other documents and matters as we
have deemed necessary to the rendering of the following opinion.
Based upon that review, it is our opinion that the Shares when issued in
conformance with the terms and conditions of the Program, will be legally
issued, fully paid, and nonassessable under the General Corporation Law of the
State of Delaware.
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
blue sky laws of the various states as to the issuance and sale of the shares.
We consent to the use of this opinion in the registration statement filed
with the Securities and Exchange Commission in connection with the registration
of the Shares and to the reference to our firm under the heading "Interests of
Named Experts and Counsel" in the registration statement.
Very truly yours,
/s/RUSKIN, MOSCOU, EVANS
& FALTISCHEK, P.C.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Frisby Technologies, Inc.:
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-00000) pertaining to the 1998 Stock Option Plan of Frisby
Technologies, Inc. of our report dated February 3, 1999, with respect to the
financial statements of Frisby Technologies, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Winston-Salem, North carolina
January 26, 2000
