SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities and Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary information statement
[ ] Confidential, for use of the Commission
only (as permitted by Rule 14c-5(d)(2).
[X] Definitive information statement
eDiets.com, Inc.
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(Name of Registrant as Specified in Its Charter)
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Payment of Filing Fee (check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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ii
<PAGE>
eDIETS.COM, INC.
3467 W. Hillsboro Boulevard
Deerfield Beach, Florida 33442
NOTICE TO STOCKHOLDERS
The accompanying Information Statement is being mailed on or about
October 25, 2000 to all stockholders of record on October 19, 2000 of
eDiets.com, Inc. (the "Company") in connection with the approval by the
stockholders of the eDiets.com, Inc. Stock Option Plan (the "Plan").
The Plan was adopted by the Board of Directors on November 17, 1999. On
August 9, 2000, the Board amended the Plan to increase the number of shares of
common stock subject to the Plan from 1,830,000 to 2,730,000. On September 18,
2000, the Board of Directors further amended the Plan to provide that in the
event of the termination of an optionee's employment or association with the
Company (other than for cause) or in the event of an optionee's disability or
death, the three and twelve month period respectively during which the option
may be exercised (as provided in the Plan) may be extended by the Board or the
Compensation Committee in their sole discretion.
Holders representing a majority of the outstanding voting stock of
eDiets.com, Inc. recently voted by signing a stockholder consent to approve the
Plan as amended. Information concerning the Plan and the August and September
amendments are described in greater detail in the accompanying Information
Statement.
The accompanying Information Statement is furnished only to inform
stockholders of the action described above before it takes effect in accordance
with Rule 14c-2 promulgated under the Securities and Exchange Act of 1934.
WE ARE NOT ASKING FOR A PROXY. DO NOT SEND US A PROXY.
By Order of the Board of Directors
s/ David J. Schofield
----------------------------------
David J. Schofield, President and
Chief Executive Officer
October 25, 2000
<PAGE>
eDIETS.COM, INC.
3467 W. Hillsboro Boulevard
Deerfield Beach, Florida 33442
INFORMATION STATEMENT
October 23, 2000
APPROVAL OF eDIETS.COM, INC. STOCK OPTION PLAN
General.
This Information Statement is being delivered by eDiets.com, Inc., a
Delaware corporation, (the "Company") in connection with the approval by the
stockholders of the Company's Stock Option Plan, as amended (the "Plan"). On
October 19, 2000, the holders of 8,699,494 shares of the Company's common stock
constituting 64.2% of the issued and outstanding stock of the Company, delivered
to the Company a written consent approving the adoption of the Plan, as amended.
This Information Statement is being mailed on or about October 25, 2000 to
stockholders of the Company on October 19, 2000 (the "Record Date"). This
Information Statement is intended to serve as notice of adoption of the Plan by
non-unanimous written consent of the Company's stockholders as contemplated by
Section 228 of the Delaware General Corporation Law. It is being delivered only
to inform stockholders of the corporate action described above before it takes
effect in accordance with Rule 14c-2 promulgated under the Securities and
Exchange Act of 1934.
WE ARE NOT ASKING FOR A PROXY. DO NOT SEND US A PROXY.
Voting Information.
The Company has one class of voting securities issued and outstanding,
shares of common stock, par value $.001 per share. As of the Record Date, there
were 13,553,104 shares of common stock issued and outstanding. The approval of a
majority of the issued and outstanding shares are required to approve the Plan.
As of the Record Date, the Board of Directors has received written consents from
the holders of 8,699,494 shares approving the Plan, representing approximately
64.2 % of the issued and outstanding shares. Delaware law does not afford to the
Company's stockholders the opportunity to dissent from the action described in
this Information Statement or in connection therewith to receive value for their
shares.
APPROVAL OF THE eDIET.COM STOCK OPTION PLAN
Introduction.
The Board of Directors adopted the eDiets.com, Inc. Stock Option Plan
(the "Plan") as of November 17, 1999. The Plan is intended to encourage
ownership of the Company's shares by employees, directors, consultants and
advisors in order to attract and retain such persons in
<PAGE>
the employ of the Company or to provide services to the Company and to provide
additional incentives for such persons to promote the success of the Company.
Initially, there were reserved, for issuance under the Plan, an aggregate of
1,830,000 shares of common stock. On August 9, 2000, the Board of Directors
adopted an amendment to the Plan increasing the number of shares reserved for
issuance under the Plan to 2,730,000 shares. On September 18, 2000, the Board of
Directors further amended the Plan to provide that in the event of the
termination of an Optionee's employment or association with the Company (other
than for cause) or in the event of an Optionee's disabililty or death, the three
and twelve month period respectfully during which the Option may be exercised
(as provided in the Plan) may be extended by the Board or the Compensation
Committee in their sole discretion. A copy of the Plan, as amended, is included
as Exhibit A to this Information Statement.
Administration.
The Plan provides for administration by a committee to which the Board
of Directors delegates power to act, or the Board of Directors if no committee
is selected. Currently, the Plan is administered by the Company's Compensation
Committee. Subject to the provisions of the Plan, the Committee is authorized to
interpret the provisions of the Plan or of any option or option agreement and to
make all rules and determinations which it deems necessary advisable for the
administration of the Plan. The Committee also determines which of our employees
will be designated as key employees and which of our key employees will be
granted options and determines the key non-employees to whom options will be
granted.
The Committee also determines whether the option to be granted will be
an "incentive stock option" within the meaning of Section 442 of the Internal
Revenue Code of 1986, as amended (the "Code") or non-qualified option and
determines the number of shares for which an option or options will be granted
and may provide for acceleration of the right to exercise an option (or portion
thereof). The Committee also specifies the terms and conditions upon which
options may be granted.
With respect to incentive options, all such interpretations, rules,
determinations, terms and conditions will be made and prescribed in the context
of preserving the tax status of the incentive options as incentive stock options
within the meaning of Section 422 of the Code.
Eligible Participants of the Plan.
The Committee may from time to time grant one or more options to one or
more key employees or key non-employees and may designate the number of shares
to be subject to each option so granted, provided, however, that (i) each
participant receiving an incentive option must be one of the Company's employees
at the time an incentive option is granted; (ii) no incentive options will be
granted after the expiration of ten (10) years from the earlier of the date of
the adoption of the Plan or the approval of the Plan by the stockholders; and
(iii) the fair market value of the shares (determined at the time the option is
granted) as to which incentive option's are exercisable for the first time by
any key employee during any single
2
<PAGE>
calendar year (under the Plan and under any other incentive option plan we have)
will not exceed $100,000.
The Committee may authorize the grant of an option to a person not then
in the employ of or serving as one of the Company's non-employee Board members,
consultants, or independent contractors, conditioned upon such person becoming
eligible to become a participant at or prior to the execution of the option
agreement evidencing the actual grant of such option.
Terms and Conditions of Options under the Plan.
General.
Each option will be set forth in an option agreement, duly executed on
behalf of the Company and by the participant to whom such option is granted.
Except with respect to Formula Options, discussed below, the exercise price of
the shares covered by each option granted under the Plan will be determined by
the Committee. The option price per share will be such amount as may be
determined by the Committee in its sole discretion on the date of the grant of
the option. In the case of an incentive option, if the optionee owns directly or
by reason of the applicable attribution rules ten percent (10%) or less of the
total combined voting power of all classes of the Company's share capital, the
option price (per share) of the shares covered by each incentive option will be
not less than the "fair market value" (as defined in the Plan) of the shares on
the date of the grant of the incentive option. In all other cases of incentive
options, the option price will be not less than one hundred ten percent (110%)
of the fair market value on the date of grant.
Upon the authorization of the grant of an option, or at any time
thereafter, the Committee may prescribe the date or dates on which the option
becomes exercisable, and may provide that the option rights become exercisable
in installments over a period of years, or upon the attainment of stated goals.
Unless otherwise specified in an option agreement, a participant who
ceases to be an employee or key non-employee for any reason other than death,
disability, or termination for cause, may exercise any option granted to such
participant, to the extent that the right to purchase shares thereunder has
become exercisable on the date of such termination, but only within three (3)
months after such date or such greater period of time as the Board or the
Committee in their sole discretion shall determine, or, if earlier, within the
originally prescribed term of the option, and subject to the condition that no
option will be exercisable after the expiration of the term of the option. A
participant who ceases to be an employee or key non-employee for cause will,
upon such termination, cease to have any right to exercise any option. In the
event of a participant's disability or death, the participant or in the case of
death, the participant's estate or personal representative, may exercise the
option within a period of twelve months or such greater period of time as the
Board or the Committee in their sole discretion shall determine, after the date
of disability or date of death, as the case may be.
3
<PAGE>
The language "or such greater period of time as the Board or the Committee in
their sole discretion shall determine" was included in an amendment to the Plan
adopted by the directors in September, 2000 to afford flexibility in extension
of the three month and twelve month time periods after termination or employment
or association, death or disability, as the case may be.
Unless otherwise permitted by the Code and by Rule 16b-3 of the
Securities and Exchange Act (the "Exchange Act"), if applicable, and approved in
advance by the Committee, an option granted to a participant will not be
transferable by the participant and will be exercisable, during the
participant's lifetime, only by such participant or, in the event of the
participant's incapacity, his guardian or legal representative.
Formula Options Under the Plan.
Each non-employee Board member who served as of November 17, 1999, the
effective date of the Plan (the "Effective Date") was granted automatically a
formula option to purchase 25,000 shares (the "Formula Option"). In addition,
each non-employee Board member elected subsequent to the Effective Date of the
Plan was or will be granted automatically a Formula Option to purchase 25,000
shares, as of the date of his or her election. On each year anniversary of the
initial grant of a Formula Option to a non-employee Board member, the
non-employee Board member will be entitled to an automatic renewal grant of
25,000 Formula Options, provided such individual remains an incumbent
non-employee Board member as of such anniversary date. Each Formula Option will
be fully exercisable on the date of grant for a period of ten (10) years from
the date of grant.
The purchase price of the shares subject to the Formula Options granted
as of the Effective Date of the Plan was $2.00 per share. The purchase price of
the shares subject to the Formula Options granted subsequent to the Effective
Date will be equal to one hundred percent (100%) of the fair market value as of
the date of grant, with such fair market value to be determined as set forth in
the Plan.
No Stockholder Rights.
An optionee shall have no dividend rights, voting rights or any other
rights as a stockholder with respect to any shares of common stock covered by an
option prior to the issuance of a stock certificate for such common stock.
Amendment and Termination.
The Board may amend the Plan in any respect, provided, however that any
amendment shall be subject to the approval of the Company's stockholders at or
before the next annual meeting of the stockholders if such approval is required
by the Code, any federal or state law or regulation, the rules of any stock
exchange or automated quotation system on which the shares may be listed or
quoted or if the Board in its discretion, determines to submit such amendment to
the stockholders for approval.
4
<PAGE>
The Board may terminate the Plan at any time. However, no termination
or amendment will affect the rights of participants under options previously
granted without any participant's consent. Unless previously terminated, the
Plan will terminate on November 17, 2009, and no grant shall be made after that
date.
Federal Income Tax Consequences.
The Company believes that under present law, the following are the
federal income tax consequences that arise with respect to options granted under
the Plan.
Non-Qualified Options.
A participant who receives a non-qualified option will not realize
taxable income at the time of the grant of the option. In the case of a
non-qualified option, the participant must recognize ordinary income at the time
of exercise of the option in an amount equal to the excess of (i) the fair
market value of the common stock at the time of exercise over (ii) the option
exercise price. The Company will be entitled to a tax deduction in the same
amount as is recognized by the participant and at the same time, provided it
includes and reports such amounts on a timely filed Form W-2 or Form 1099-MISC
(or similar such IRS Form filing). Upon a disposition of shares acquired upon
exercise of a non-qualified option, any amount received in excess of the market
value of the shares at the time of exercise of the option generally will be
treated as long-term or short-term capital gain, depending on the holding period
of the shares. The Company will not be entitled to any tax deduction upon such
subsequent disposition.
Incentive Options.
A participant who receives an incentive option will not realize taxable
income at the time of grant of the option or at the time of exercising such
option. However, the fair market value of the common stock received less the
option exercise price is an item of tax preference for purposes of computing the
alternative minimum tax. Upon the sale or other disposition of the option shares
after the later of (i) two years after the grant date or (ii) one year after the
exercise date of the option (the "Required Holding Period"), any gain or loss
will be treated as long term capital gain or loss. The tax basis of the option
shares in such case generally will equal the amount paid for the shares (plus
the amount, if any, includable in the participant's gross income upon exercise
of the incentive option as a result of the alternative minimum tax). The Company
will not be entitled to a tax deduction with respect to the incentive option or
any shares issued pursuant to a participant's exercise of the incentive option
under these circumstances. Upon a disposition of the shares before the
expiration of the Required Holding Period, including the delivery of any such
shares as payment of the purchase price, the participant generally will realize
ordinary income in the year of the disposition in an amount equal to the
difference between the option exercise price and the lesser of (i) the fair
market value of the stock on the date at exercise or (ii) the amount realized on
such disposition. In
5
<PAGE>
such circumstances, the Company may deduct, in the year the participant
recognizes income, an amount equal to the ordinary income taxed to the
participant. Where the amount realized on the disposition of the common stock is
greater than the common stock's fair market value on the date of exercise and
the capital gain holding period has been satisfied, the excess of the gain will
be subject to long-term capital gain treatment.
Options Granted Under the Plan.
The following table sets forth certain information concerning the
options that the Company has issued under the Plan as of September 30, 2000 to
each of the following persons or groups:
Name and Position Options Granted(1)
----------------- ------------------
David R. Humble, Chairman 100,000
of the Board and former Chief
Executive Officer(2)
Isaac Kier, former Chief 150,000
Executive Officer(2)
Executive officers as a group 815,998
All non-executive directors as a group 450,000
All employees other than 315,500
executive officers as a group
(1) The exercise price on the options granted ranged between $1.87 to $2.41 per
share. The last reported trade price of the Company's common stock on the OTC
Bulletin Board on October 20, 2000 was $1.1875 per share.
(2) Mr. Humble served as the Company's Chief Executive Officer from November,
1999 through August, 2000. Mr. Kier served as the Company's Chief Executive
Officer until November, 1999.
Executive Compensation
Cash Compensation
The following table summarizes all compensation paid by the Company
during the fiscal years ended December 31, 1999, December 31, 1998 and December
31, 1997 to its former Chief Executive Officers, and each other executive
officer whose annual compensation exceeded $100,000 during the fiscal year ended
December 31, 1999.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Awards
------------------- ----------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary($) Bonus($) Compensation($) Options (#) Compensation
-------- ---- --------- -------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David R. Humble, former 1999 $17,309 $0 $0 100,000 $0
Chief Executive Officer 1998 0 0 0 0
1997 0 0 0 0
Isaac Kier, former Chief 1999 0 0 0 157,500 0
Executive Officer 1998 0 0 0 0
1997 0 0 0 0
</TABLE>
Option Grants in the Last Fiscal Year
The following provides summary information regarding stock options
granted to the former Chief Executive Officers during 1999:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(individual grants)
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARS
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year(1) ($/Sh) Date
----- ---------- -------------- ------ ----
<S> <C> <C> <C> <C>
David R. Humble 100,000(2) 9.0% 2.00 11/17/04
Isaac Kier 125,000(2) 14.2% 2.00 11/17/04
32,500(2) 1.425 11/17/04
</TABLE>
(1) Also include options granted to members of the Company's Board of Directors,
members of the Company's Executive Committee and to a consultant.
(2) These options were exercisable as of the date the Company granted them.
7
<PAGE>
Option Exercises and Holdings
The following table provides summary information regarding option
exercises during 1999 and the value of options held as of that date by the
Company's former Chief Executive Officers.
AGGREGATE OPTION EXERCISES FOR FISCAL 1999 AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
Shares 1999(#) 1999($)
Acquired Value($) Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
David R. Humble 0 0 100,000/0 0
Isaac Kier 0 0 157,500/0 $18,687.50 (1)
</TABLE>
(1) The total value of unexercised in-the-money options is based upon the
difference between the $2.00 price per share paid by investors in the Company's
1999 private placement and the exercise price of $1.425 of 32,500 of Mr. Kier's
options.
Employment Agreements
In November 1999, the Company we entered into a three-year employment
agreement with Mr. Humble. He receives a base salary of $150,000 per year and a
bonus to be determined by the Compensation Committee, based on income before
taxes. The employment agreement contains a non-competition provision for the
term of employment and two years thereafter and a non-disclosure provision. In
August, 2000, in connection with the employment of David J. Schofield as the
Company's new Chief Executive Officer and President, Mr. Humble resigned as
Chief Executive Officer and continues as Chairman of the Board of Directors.
In November 1999, Robert T. Hamilton became the Company's Chief
Financial Officer. The Company pays Mr. Hamilton an annual base salary of
$100,000. The Company also granted him 100,000 five-year stock options which
vest in four semi-annual installments over a two year period and are exercisable
at $2.00 per share. In addition, the Company agreed to grant him 15,000
additional options at the end of his first full year at an exercise price equal
to the fair market value at that time, if he achieves agreed upon performance
targets. While Mr. Hamilton does not have an employment agreement for a fixed
term, the Company has agreed
8
<PAGE>
that if it chooses to terminate his employment without cause, it shall provide
him with four months of severance at his then current salary.
Effective August 21, 2000, the Company entered into a three year
employment agreement with David J. Schofield under which he serves as the
Company's Chief Executive Officer and President. Mr. Schofield receives an
annual base salary of $250,000. He also received a grant of 500,000 stock
options which are exercisable over a period of five years at an exercise price
of $1.94 per share and vest over a period of three years in six equal
semi-annual installments.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table presents certain information as of October 19, 2000
regarding beneficial ownership of the Company's common stock by:
o each person or entity known by the Company's to own beneficially 5% or
more of the Company's outstanding common stock;
o each of the Company's directors;
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The address for each listed director is: c/o
eDiets.com, Inc., 3467 W. Hillsboro Boulevard, Suite 2, Deerfield Beach, Florida
33442. Except as indicated by footnote, the persons named in the table have sole
voting and investment power with respect to all shares of common stock shown as
beneficially owned by them. The number of shares of common stock outstanding
used in calculating the percentage for each listed person includes the shares of
common stock underlying options or warrants held by such person that are
exercisable within 60 days of October 19, 2000, but exclude shares of common
stock underlying options or warrants held by any other person. The percentage of
beneficial ownership is based on 13,553,104 shares of common stock outstanding
as of October 19, 2000, before any consideration is given to outstanding
options, warrants or convertible securities.
9
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
<S> <C> <C>
David R. Humble 7,905,065(1) 57.9%
FG II Management Co., LLC., 1,518,710(2) 10.8%
20 Dayton Avenue,
Greenwich, Connecticut 06430
Isaac Kier 986,804(3) 7.1%
Matthew Gohd 724,750(4) 5.2%
James M. Meyer 192,750(5) 1.4%
Lee S. Isgur 58,875(6) *
David J. Schofield -0-
All directors and executive 10,229,574(7) 69.8%
officers as a group (9 persons)
</TABLE>
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*Less than 1%
(1) Includes 100,000 shares issuable upon exercise of vested stock options.
(2) Includes 450,000 shares issuable upon the exercise of warrants issued in the
Company's 1999 private placement.
(3) Includes 166,875 shares issuable upon exercise of stock options that are
vested or exercisable within 60 days; 62,500 shares issuable upon exercise of
warrants issued in private placement; and 156,250 shares and 62,500 shares
issuable upon the exercise of warrants issued in the private placement to Coqui
Capital Partners, L.P., of which Mr. Kier is the general partner. Mr. Kier
disclaims beneficial ownership of shares held by Coqui Capital Partners, L.P.
except for his proportional interest therein.
(4) Includes 280,000 shares issuable upon the exercise of warrants issued to the
Company's placement agent Whale Securities Co., LP in the 1999 private placement
and transferred to Mr. Gohd; 125,000 shares issuable upon exercise of vested
stock options; and 62,500 shares issuable upon the exercise of warrants issued
in the private placement. Does not include 31,250 shares and 12,500 shares
issuable upon the exercise of warrants issued in the private placement to
Porpoise Investors I, L.P. Mr. Gohd is the President of the general partner of
the general partner of Porpoise Investors I, L.P. and disclaims beneficial
ownership of these shares.
(5) Includes 93,750 shares issuable upon the exercise of stock options that are
vested or exercisable within 60 days; and 25,000 shares issuable upon the
exercise of warrants issued in the private placement.
(6) Includes 34,375 shares issuable upon the exercise of stock options that are
vested or exercisable within sixty days.
(7) Includes an aggregate of 361,330 additional shares issuable upon exercise of
stock options that are vested or exercisable within 60 days held by three
executive officers.
10
<PAGE>
eDiets.com, Inc.
STOCK OPTION PLAN
1. PURPOSE AND DEFINITIONS
A. PURPOSE OF THE PLAN
The Plan is intended to encourage ownership of Shares by Key
Employees and Key Non-Employees in order to attract and retain
such Key Employees in the employ of the Company or an
Affiliate, or to attract such Key Non-Employees to provide
services to the Company or an Affiliate, and to provide
additional incentive for such persons to promote the success
of the Company or an Affiliate.
B. DEFINITIONS
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this Plan, have the
following meanings:
1. Affiliate means a corporation which, for purposes of
Section 422 of the Code, is a parent or subsidiary of
the Company, direct or indirect.
2. Board means the Board of Directors of the Company.
3. Code means the Internal Revenue Code of 1986, as
amended.
4. Committee means the committee to which the Board
delegates the power to act under or pursuant to the
provisions of the Plan, or the Board if no committee
is selected. If the Board delegates powers to a
committee, and if the Company is or becomes subject
to Section 16 of the Exchange Act, then, if necessary
for compliance therewith, such committee shall
consist initially of not less than two (2) members of
the Board, each member of which must be a
"non-employee director," within the meaning of the
applicable rules promulgated pursuant to the Exchange
Act. The failure of any Committee members to qualify
as a "non-employee director" shall not otherwise
affect the validity of the grant of an option, or the
issuance of shares of Common Stock otherwise validly
issued upon exercise of any such option. If the
Company is or becomes subject to Section 16 of the
Exchange Act, no member of the Committee shall
receive any Option pursuant to the Plan or any
similar plan of the Company or any Affiliate while
serving on the Committee unless the Board determines
that the grant of such an Option satisfies the then
current Rule 16b-3 requirements under the Exchange
Act.
EXHIBIT "A"
<PAGE>
Notwithstanding anything herein to the contrary, and
insofar as the Board determines that it is necessary
in order for compensation recognized by Participants
pursuant to the Plan to be fully deductible to the
Company for federal income tax purposes, each member
of the Committee also shall be an "outside director"
(as defined in regulations or other guidance issued
by the Internal Revenue Service under Code Section
162(m)).
5. Company means eDiets.com, Inc., a Delaware
corporation, and includes any successor or assignee
corporation or corporations into which the Company
may be merged, changed, or consolidated; any
corporation for whose securities the securities of
the Company shall be exchanged; and any assignee of
or successor to substantially all of the assets of
the Company.
6. Disability or Disabled means permanent and total
disability as defined in Section 22(e)(3) of the
Code.
7. Exchange Act means the Securities Exchange Act of
1934, as amended from time to time, or any successor
statute thereto.
8. Formula Option means a Nonstatutory Option granted
automatically to a Non-Employee Board Member in
accordance with Article VI of the Plan.
9. Incentive Option means an Option which, when granted,
is intended to be an "incentive stock option," as
defined in Section 422 of the Code.
10. Key Employee means an employee of the Company or of
an Affiliate (including, without limitation, an
employee who also is serving as all and officer or
director of the Company or of an Affiliate),
designated by the Board or the Committee as being
eligible to be granted one or more Options under the
Plan.
11. Key Non-Employee means a Non-Employee Board Member,
consultant, or independent contractor of the Company
or of an Affiliate who is designated by the Board or
the Committee as being eligible to be granted one or
more Options under the Plan.
12. Non-Employee Board Member means a director of the
Company who is not an employee of the Company or any
of its Affiliates. For purposes of this Plan, a
Non-Employee Board Member shall be deemed to include
the employer of such Non-Employee Board Member, if
the Non-Employee Board Member is so required, as a
condition of his
2
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employment, to provide that any Option granted
hereunder be made to the employer.
13. Nonstatutory Option means an Option which, when
granted, is not intended to be an "incentive stock
option," as defined in Section 422 of the Code.
14. Option means a right or option granted under the
Plan.
15. Option Agreement means an agreement between the
Company and a participant executed and delivered
pursuant to the Plan.
16. Participant means a Key Employee to whom one or more
Incentive Options or Nonstatutory Options are granted
under the Plan, and a Key Non-Employee to whom one or
more Nonstatutory Options are granted under the Plan.
17. Plan means this Stock Option Plan, as amended from
time to time.
18. Shares means the following shares of the capital
stock of the Company as to which Options have been or
may be granted under the Plan: treasury shares or
authorized but unissued Common Stock, $.001 par
value, or any shares of capital stock into which the
Shares are changed or for which they are exchanged
within the provisions of Article VII of the Plan.
II. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Options may be granted from
time to time shall be One Million Eight Hundred Thirty Thousand
(1,830,000) Shares (subject to adjustment for stock splits, stock
dividends, and other adjustments described in Article VII hereof).
Subject to the provisions of the immediately preceding paragraph, the
maximum number of shares as to which Options may be granted in any
calendar year to any one Key Employee shall not exceed 500,000 (subject
to adjustment for stock splits, stock dividends and other adjustments
described in Article VII hereof).
If an Option ceases to be "outstanding," in whole or in part, the
Shares which were subject to such Option, if the Option was not
exercised, shall be available for the granting of other Options. Any
Option shall be treated as "outstanding" until such Option is exercised
in full, terminates or expires under the provisions of the Plan or
Option Agreement, or is canceled by agreement of the Company and the
Participant.
Subject to the provisions of Article VII, the aggregate number of
Shares as to which Incentive Options may be granted shall be subject to
change only by means of an amendment of the Plan duly adopted by the
Company and approved by the stockholders
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of the Company within one year before or after the date of the adoption
of any such amendment.
III. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum at any meeting thereof (including
by telephone conference) and the acts of a majority of the members
present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for
purposes of this Plan. The Committee may authorize one or more of its
members or an officer of the Company to execute and deliver documents
on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan.
The Board shall have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the Committee and
the affected member. Any member of the Committee may resign upon notice
to the Board. The Committee may allocate among one or more of its
members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.
Subject to the provisions of the Plan, the Committee is authorized to:
A. interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the administration
of the Plan;
B. determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key
Employees shall be granted Options;
C. determine the Key Non-Employees to whom Nonstatutory Options
shall be granted;
D. determine whether the Option to be granted shall be an
Incentive Option or Nonstatutory Option;
E. determine the number of Shares for which an Option or Options
shall be granted;
F. provide for the acceleration of the right to exercise an
Option (or portion thereof); and
G. specify the terms and conditions upon which Options may be
granted;
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be
made and prescribed in the context
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<PAGE>
of preserving the tax status of the Incentive Options as incentive
stock options within the meaning of Section 422 of the Code.
All determinations of the Committee shall be reduced to writing and
signed by or on behalf of the Committee. No member of the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Option.
IV. ELIGIBILITY FOR PARTICIPATION
The Committee may at any time and from time to time grant one or more
Options to one or more Key Employees or Key Non-Employees and may
designate the number of Shares to be subject to each Option so granted,
provided, however, that (i) each Participant receiving an Incentive
Option must be a Key Employee of the Company or of an Affiliate at the
time an Incentive Option is granted; (ii) no Incentive Options shall be
granted after the expiration of ten (10) years from the earlier of the,
date of the adoption of the Plan by the Company or the approval of the
Plan by the stockholders of the Company; and (iii) the fair market
value of the Shares (determined at the time the Option is granted) as
to which Incentive Options are exercisable for the first time by any
Key Employee during any single calendar year (under the Plan and under
all other incentive option plan of the Company or an Affiliate) shall
not exceed $100,000.
Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Option to a person not then in the employ of
or serving as a Non-Employee Board Member, consultant, or independent
contractor of the Company or of an Affiliate, conditioned upon such
person becoming eligible to become a Participant at or prior to the
execution of the Option Agreement evidencing the actual grant of such
Option.
V. TERMS AND CONDITIONS OF OPTIONS
Each Option shall be set forth in an Option Agreement, duly executed on
behalf of the Company and by the Participant to whom such Option is
granted. Except for the setting of the Option price under Paragraph A,
no Option shall be granted and no purported grant of any Option shall
be effective until such Option Agreement shall have been duly executed
on behalf of the Company and by the Participant. Each such Option
Agreement shall be subject to at least the following terms and
conditions:
A. OPTION PRICE
Except with respect to Formula Options as set forth in Article
VI, the exercise price of the Shares covered by each Option
granted under the Plan shall be determined by the Committee.
The Option price per share shall be such amount as may he
determined by the Committee in its sole discretion on the date
of the grant of the Option. In the case of an Incentive
Option, if the optionee owns directly or by reason of the
applicable attribution rules ten percent (10%) or less
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of the total combined voting power of all classes of share
capital of the Company, the Option price (per share) of the
Shares covered by each Incentive Option shall be not less than
the "fair market value" of the Shares on the date of the grant
of the Incentive Option. In all other cases of Incentive
Options, the Option price shall be not less than one hundred
ten percent (110%) of the said fair market value on the date
of grant. If the Shares are listed on any national securities
exchange, the fair market value shall be the closing sales
price, if any, on the largest such exchange on the date of the
grant of the Option, or, if none, on the most recent trade
date thirty (30) days or less prior to the date of the grant
of the Option. If the Shares arc not then listed on any such
exchange, the fair market value of such Shares shall be the
closing sales price if such is reported or otherwise the mean
average of the closing "Bid" and the closing "Ask" prices, if
any, as reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") for the date of
the grant of the Option, or if none, on the most recent trade
date thirty (30) days or less prior to the date of the grant
of the Option for which such quotations are reported. If the
Shares are not then either listed on any such exchange or
quoted on NASDAQ, the fair market value shall be the mean
between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation
Service for the date of the grant of the Option, or, if none,
for the most recent trade date thirty (30) days or less prior
to the date of the grant of the Option for which such
quotations are reported. If the fair market value cannot be
determined under the preceding three sentences, it shall be
determined in good faith by the Committee.
B. NUMBER OF SHARES
Each Option shall state the number of Shares to which it
pertains.
C. TERM OF OPTION
Each Incentive Option shall terminate not more than ten (10)
years from the date of the grant thereof, or at such earlier
time as the Option Agreement may provide, and shall be subject
to earlier termination as herein provided, except that if the
Option price is required under Paragraph A of this Article V
to be at least one hundred ten percent (110%) of fair market
value, each such Incentive Option shall terminate not more
than five (5) years from the date of the grant thereof, and
shall be subject to earlier termination as herein provided.
D. DATE OF EXERCISE
Upon the authorization of the grant of an Option, or at any
time thereafter, the Committee may, subject to the provisions
of Paragraph C of this Article V, prescribe the date or dates
on which the Option becomes exercisable, and may
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provide that the option rights become exercisable in
installments over a period of years, or upon the attainment of
stated goals.
E. MEDIUM OF PAYMENT
The Option price shall be paid on the date of purchase
specified in the notice of exercise, as set forth in Paragraph
I. It shall be paid in such form (permitted by Section 422 of
the Code in the case of Incentive Options) as the Committee
shall, either by rules promulgated pursuant to the provisions
of Article III of the Plan, or in the particular Option
Agreement, provide.
F. TERMINATION OF EMPLOYMENT
1. A Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for
any reason other than death, Disability, or
termination for cause, may exercise any Option
granted to such Participant, to the extent that the
right to purchase Shares thereunder has become
exercisable on (the date of such termination, but
only within three (3) months after such date, or, if
earlier, within the originally prescribed term of the
Option, and subject to the condition that no Option
shall be exercisable after the expiration of the term
of the Option. A Participant's employment shall not
be deemed terminated by reason of a transfer to
another employer which is the Company or an
Affiliate.
2. A Participant who ceases to be an employee or Key
Non-Employee for cause shall, upon such termination,
cease to leave any right to exercise any Option. For
purposes of this Plan, cause shall be deemed to
include (but shall not be limited to) wrongful
appropriation of funds of the Company or an
Affiliate, divulging confidential information about
the Company or an Affiliate to the public, the
commission of a gross misdemeanor or felony, or the
performance of any similar action that the Board or
the Committee, in their sole discretion, may deem to
be sufficiently injurious to the interests of the
Company or an Affiliate to constitute substantial
cause for termination. The determination of the Board
or the Committee as to the existence of cause shall
be conclusive and binding upon the Participant and
the Company.
3. A Participant who is absent from work with the
Company or an Affiliate because of temporary
disability (any disability osier than a permanent and
total Disability as defined at Paragraph B(6) of
Article I hereof), or who is on leave of absence for
any purpose permitted by any authoritative
interpretation (i.e., regulation, ruling, case law,
etc,) of Section 422 of the Code, shall not, during
the period of any such absence, be deemed, by virtue
of such absence alone, to have terminated
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<PAGE>
his employment or relationship with the Company or
with an Affiliate, except as the Committee may
otherwise expressly provide or determine.
4. Paragraph F(1) shall control and fix the rights of a
Participant who ceases to be an employee or Key
Non-Employee of the Company or of an Affiliate for
any reason other than death, Disability, or
termination for cause, and who subsequently becomes
Disabled or dies. Nothing in Paragraphs G and H of
this Article V shall be applicable in any such case
except that, in the event of such a subsequent
Disability or death within the three (3) month period
after the termination of employment or, if earlier,
within the originally prescribed term of the Option,
the Participant or the Participant's estate or
personal representative may exercise the Option
permitted by this Paragraph F, in the event of
Disability, within twelve (12) months after the date
that the Participant ceased to be an employee or Key
Non-Employee of the Company or of an Affiliate or, in
the event of death, within twelve (12) months after
the date of death of such Participant.
G. TOTAL AND PERMANENT DISABILITY
A Participant who ceases to be an employee or Key Non-Employee
of the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant (i) to the
extent that the right to purchase Shares thereunder has become
exercisable on or before the date such Participant becomes
Disabled as determined by the Committee, and (ii) if the
Option becomes exercisable periodically under Paragraph D, to
the extent of any additional rights that would have become
exercisable had the participant not become so disabled until
after the close of business on the next periodic exercise
date.
A Disabled Participant shall exercise such rights, if at all,
only within a period of not more than twelve (12) months after
the date that the Participant became Disabled as determined by
the Committee (notwithstanding that the Participant might have
been able to exercise the Option as to some or all of the
Shares on a later date if the Participant had not become
Disabled) or, if earlier, within the originally prescribed
term of the Option.
H. DEATH
In the event that a Participant to whom an Option has been
granted ceases to be an employee or Key Non-Employee of the
Company or of an Affiliate by reason of such Participant's
death, such Option, to the extent that the right is exercised
but not exercised on the date of death, may be exercised by
the Participant's estate or personal representative within
twelve (12) months after the date of death of such Participant
or, if earlier, within the originally
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<PAGE>
prescribed term of the Option, notwithstanding that the
decedent might have been able to exercise the Option as to
some or all of the Shares on a later date if the participant
were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. EXERCISE OF OPTION AND ISSUANCE OF STOCK
Options shall be exercised by giving written notice to the
Company. Such written notice shall: (1) be signed by the
person exercising the Option, (2) state the number of Shares
with respect to which the Option is being exercised, (3)
contain the warranty required by Paragraph M of this Article
V, and (4) specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10)
days after the date of such written notice, as the date on
which the Shares will be purchased. Such tender and conveyance
shall take place at the principal office of the Company during
ordinary business hours, or at such other hour and place
agreed upon by the Company and the person of persons
exercising the Option. On the date specified in such written
notice (which date may be extended by the Company in order to
comply with any law or regulation, which requires the Company
to take any action with respect to the Option Shares prior to
the issuance thereof, whether pursuant to the provisions of
Article VII or otherwise), the Company shall accept payment
for the Option Shares and shall deliver to the person or
persons exercising the Option in exchange therefor an
appropriate certificate or certificates for fully paid
non-assessable Shares. In the event of any failure to take up
and pay for the number of Shares specified in such written
notice on the date set forth therein (or on the extended date
as above provided), the right to exercise the Option shall
terminate with respect to such number of Shares, but shall
continue, with respect to the remaining Shares covered by the
Option and not yet acquired pursuant thereto.
J. RIGHTS AS A STOCKHOLDER
No Participant to whom an Option has been granted shall have
rights as a stockholder with respect to any Shares covered by
such Option except as to such Shares as have been issued to or
registered in the Company's share register in the name of such
Participant upon the due exercise of the Option and tender of
the full Option price.
K. ASSIGNABILITY AND TRANSFERIBILITY OF OPTION
Unless otherwise permitted by the Code and by Rule 16b-3 of
the Exchange Act, if applicable, and approved in advance by
the Committee, an Option granted to a Participant shall not be
transferable by the participant and shall be exercisable,
during the Participant's lifetime, only by such Participant
or, in the event of the Participant's incapacity, his guardian
or legal representative. Except
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<PAGE>
as otherwise permitted herein, such Option shall not be
assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to
execution, attachment, or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other
disposition of any Option or of any rights grazed thereunder
contrary to the provisions of this Paragraph K, or the levy of
any attachment or similar process upon an option or such
rights, shall be null and void.
L. OTHER PROVISIONS
The Option Agreement for an Incentive Option shall contain
such limitations and restrictions upon the exercise of the
Option as shall be necessary in order that such Option can be
an "incentive stock option" within the meaning of Section 422
of the Code. Further, the Option Agreements authorized under
The Plan shall be subject to such other terms and conditions
including, without limitation, restrictions upon the exercise
of the Option, as the Committee shall deem advisable and
which, in tie case of incentive Options, are not inconsistent
with the requirements of Section 422 of the Code.
M. PURCHASE FOR INVESTMENT
Unless the Shares to be issued upon the particular exercise of
an Option shall have been effectively registered under the
Securities Act of 1933, as now III force or hereafter amended,
the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following
conditions have been fulfilled- In accordance with the
direction of the Committee, the persons who exercise such
Option shall warrant to the Company that, at the tune of such
exercise, such persons arc acquiring their Option Shares for
investment and not with a view to, or for sale in connection
with, the distribution of any such Shares, and shall make such
other representations, warranties, acknowledgments and
affirmations, if any, as the Committee may require. In such
event, the persons acquiring such Shares shall be bound by the
provisions of the following legend (or similar legend) which
shall be endorsed upon the certificate(s) evidencing their
Option Shares issued pursuant to such exercise:
"The shares represented by this certificate have been
acquired for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, in the absence of an effective registration
statement for the shares under the Securities Act of
1933 or an opinion of counsel satisfactory to the
Company that an exemption from registration is then
available."
Without limiting the generality of the foregoing, the Company
may delay issuance of the Shares until completion of any
action or obtaining any consent
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<PAGE>
that the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky"
laws).
VI. FORMULA OPTIONS
A. BOARD OPTIONS
Each Non-Employee Board Member serving. as of the Effective
Date of the Plan shall upon the Effective Date be granted
automatically a Formula Option to purchase 25,000 Shares at
an exercise price set forth in Section B herein. In addition,
each Non-Employee Board Member elected subsequent to the
Effective Date of the Plan shall be granted automatically a
Formula Option to purchase 25,000 Shares, as of the date of
his or tier election, at an exercise price set forth in
Section B herein. On each year anniversary of the initial
grant of a Formula Option to a Non-Employee Board Member, the
Non-Employee Board Member shall be entitled to an automatic
renewal grant of 25,000 Formula Options, at an exercise price
set forth in Section B herein, provided such individual
remains an incumbent Non-Employee Board Member as of such
anniversary date. Each Formula Option granted pursuant to
this Paragraph VI.A. shall be fully exercisable on the date
of grant for a period of ten (10) years from the date of
grant.
B. EXERCISE PRICE
The purchase price of the Shares subject to the Formula
Options granted as of the Effective Date of the Plan shall be
$2.00 per share. The purchase price of the Shares subject to
the Formula Options granted subsequent to the Effective Date
hereunder shall be equal to one hundred percent (100%) of the
fair market value as of the date of grant, with such fair
market value to be determined as set forth in Article V.
C. TERMS AND CONDITIONS
Formula Options shall be evidenced by an Option Agreement
which shall conform, to the requirements of the Plan, and may
contain such other provisions not inconsistent therewith, as
the Committee shall deem advisable. The provisions of Article
V governing Nonstatutory Options, and the exercise and
issuance thereof, shall apply to Formula Options to the
extent such provisions are not inconsistent with this Article
VI.
VII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; SALE OF COMPANY SHARES
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other
securities of the Company or of
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<PAGE>
another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, change in par value,
stock split-up, combination of shares or dividend payable in capital
stock, or the like, appropriate adjustments to prevent dilution or
enlargement of the rights granted to, or available for, Participants
shall be made in the manner and kind of shares fox the purchase of
which Options tray be granted under the Plan, and, in addition,
appropriate adjustment shall be made in the number and hind of Shares
and in the Option price per share subject to outstanding Options. No
such adjustment shall be made which shall, within the meaning of
Section 424 of the Code, constitute such a modification, extension, or
renewal of an Option as to cause the adjustment to be considered as the
grant of a new Option.
Notwithstanding anything herein to the contrary, the Company may, in
its sole discretion, accelerate the timing of the exercise provisions
of any Option in the event of a tender offer for the Company's Shares,
the adoption of a plan of merger or consolidation under which all the
Shares of the Company would be eliminated, or a sale of all or
substantially all of the Company's assets. Alternatively, the Company
may, in its sole discretion, cancel any or all Options upon any of the
foregoing events and provide for the payment to Participants in cash of
an amount equal to the difference between the Option price and the
price of a Share, as determined in good faith by the Committee, at the
close of business on the date of such event, multiplied by the number
of Shares subject to Option so canceled.
Upon a business combination by the Company or any of its Affiliates
with any corporation or other entity through the adoption of a plan of
merger or consolidation or a share exchange or through the purchase of
all or substantially all of the capital stock or assets of such other
corporation or entity, the Board or the Committee may, in its sole
discretion, grant Options pursuant hereto to all or any persons who, on
the effective date of such transaction, hold outstanding options to
purchase securities of such other corporation or entity and who, on and
after the effective date: of such transaction, will become employees or
directors of, or consultants to, the Company or its Affiliates. The
number of Shares subject to such substitute Options shall be determined
in accordance with the terms of the transaction by which the business
combination is effected. Notwithstanding the other provisions of this
Plan, the other terms of such substitute Options shall be substantially
the same as or economically equivalent to the terms of the options for
which such Options are substituted, all as determined by the Board or
by the Committee, as the case may be. Upon the grant of substitute
Options pursuant hereto, the options to purchase securities of such
oilier corporation or entity for which such Options are substituted
shall be canceled immediately.
VIII. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which the preceding Article VII is
applicable, all Options granted hereunder shall terminate and become
trill and void; provided, however, that if the
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<PAGE>
rights of a Participant under the applicable Options have not otherwise
terminated and expired, the Participant shall have the right
immediately prior to such dissolution or liquidation to exercise any
Option granted hereunder to the extent that the right to purchase
shares thereunder has become exercisable as of the date immediately
prior to such dissolution or liquidation.
IX. TERMINATION OF THE PLAN
The Plan shall terminate ten (10) years from the earlier of the date of
its adoption or the date of its approval by the stockholders. The Plan
may be terminated at an earlier date by vote of the stockholders or the
Board; provided, however, that any such earlier termination shall not
affect any Options granted or Option Agreements executed prior to the
effective date of such termination. Except as may otherwise be provided
for under Articles VII and VIII, and not-withstanding the termination
of the Plan, any Options granted prior to the effective date of the
Plan's termination may be exercised until the earlier of (i) the date
set forth in the Option Agreement, or (ii) ten (10) years from the date
the Option is granted, and the provisions of the Plan with respect to
the full and final authority of the Committee under the Plan shall
continue to control.
X. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any
amendment shall be subject to the approval of the stockholders of the
Company at or before the next annual meeting of the stockholders of the
Company if such stockholder approval is required by the Code, any
federal or state law or regulation, the rules of any stock exchange or
automated quotation system on which the Shares may be listed or quoted,
or if the Board, in its discretion, determines to submit such changes
to the Plan to its stockholders for approval.
XI. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to
prevent a Participant from terminating the Participant's employment
with the Company or an Affiliate.
XII. 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 all reasonable expenses,
including attorneys' fees, actually and reasonably 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 by them as members of the
Committee and against all amounts paid by them in settlement thereof
(provided such settlement is approved by
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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 the Committee member is liable for
gross negligence or willful misconduct in the performance of his or
leer duties. To receive such indemnification, a Committee member must
first offer in writing to the Company the opportunity, at its own
expense, to defend any such action, suit or proceeding.
XIII. SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law and
regulations, including, (i) with respect to those Participants who are
officers or directors for purposes of Section 16 of the Exchange Act,
Rule 16b-3 of the Securities and Exchange Commission, if applicable,
and (ii) with respect to executive officers, Code Section 162(m). In
case any one or more provisions of this Plan shall be held invalid,
illegal, or unenforceable in any respect under applicable law and
regulation (including Rule 16b-3 and Code Section 162(m)), the
validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby and the
invalid, illegal, or unenforceable provision shall be deemed null and
void; however, to the extent permitted by law, any provision that could
be deemed null and void shall first be construed, interpreted, or
revised retroactively to permit this Plan to be construed in compliance
with all applicable law (including Rule 16b-3 and Code Section 162(m))
so as to foster the intent of this Plan. Notwithstanding anything
herein to the contrary, with respect to Participants who are officers
and directors for purposes of Section 16 of the Exchange Act, no grant
of an Option to purchase Shares shall permit unrestricted ownership of
Shares by the Participant for at least six (6) months from the date of
the grant of such Option, unless the Board determines that the grant of
such Option to purchase Shares otherwise satisfies the then current
Rule 16b-3 requirements,
XIV. WITHHOLDING
Except as otherwise provided by the Committee,
A. The Company shall have the power and right to deduct or
withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes
required by law to be withhold with respect to any grant,
exercise, or payment made under or as a result of this Plan;
and
B. In the case of any taxable event hereunder, a Participant tray
elect, subject to the approval In advance by the Committee, to
satisfy the withholding requirement, if any, in whole or in
part, by having the Company withhold Shares of Common Stock
that would otherwise be transferred to the Participant having
a Fair Market Value, on the date the tax is to be determined,
equal to the, minimum marginal tax that could be imposed on
the transaction. All elections shall be made in writing and
signed by the Participant.
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XV. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board on the
effective date determined by the Board (the "Effective Date"), provided
that within one (1) year before or after such adoption by the Board the
Plan is approved by the stockholders of the Company.
XVI. GOVERNING LAW
This Plan shall be governed by the laws of the State of Delaware and
construed in accordance therewith.
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FIRST AMENDMENT TO THE
eDIETS.COM, INC.
STOCK OPTION PLAN
The eDiets.com, Inc. Stock Option Plan shall be amended, effective
August 9, 2000, as follows:
The first paragraph of Article II shall be deleted, and the following
is included in its place:
"The aggregate number of shares as to which Options may be granted from
time to time shall be 2,730,000 Shares (subject to adjustment for stock splits,
stock dividends, and other adjustments described in Article VII hereof). Subject
to provisions of the immediately preceding paragraph, the maximum number of
shares as to which Options may be granted in any calendar year to any one Key
Employee shall not exceed 1,000,000 (subject to adjustment for stock splits,
stock dividends and other adjustments described in Article VII hereof)."
<PAGE>
SECOND AMENDMENT TO THE
eDIETS.COM, INC.
STOCK OPTION PLAN
The eDiets.com, Inc. Stock Option Plan shall be amended, effective
September 18, 2000, as follows:
The language: "or such greater period of time as the Board or the
Committee in their sole discretion shall determine" shall be added to the
following sections:
a. Section V F. 1., immediately following the words "but only
within three (3) months after such date";
b. Section V G., immediately following the words "not more
than twelve (12) months"; and
c. Section V H., immediately following the words "within
twelve (12) months".
