SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. )
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
New Generation Foods, Inc.
(Name of Registrant As Specified In Its Charter)
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:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
2
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3) Filing Party:
4) Date Filed:
The Company intends to release copies of this Information Statement to
Securityholders on April 20, 1999.
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April 20, 1999
Dear Stockholder:
As you will note from this letterhead, New Generation Foods, Inc. is now
CreditRiskMonitor.com, providing credit information services to its subscribers
utilizing the Internet.
In this package, we have enclosed an Information Statement describing the
change of our corporate name to "CreditRiskMonitor.com, Inc." along with changes
to the Company's Restated Articles of Incorporation and By-Laws and the adoption
of the Company's 1998 Long-Term Incentive Plan.
We have also enclosed for your information a copy of the Company's Annual
Report on Form 10-KSB for 1998, as filed with the Securities and Exchange
Commission on March 31, 1999.
We would like to use the opportunity this corporate name change provides to
exchange as many outstanding stock certificates as possible for new certificates
which will reflect the new name of CreditRiskMonitor.com, Inc. and the new CUSIP
number which will be assigned to our company's stock certificates. Over the past
fifteen years, the company's stock underwent several splits and reverse splits
so that the stock certificate(s) in your possession may not accurately reflect
your actual share holdings.
WE URGE YOU TO SEND IN YOUR SHARE CERTIFICATES FOR REISSUANCE.
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To submit your certificate, please send the original certificate, with the
signed and dated exchange request enclosed to:
American Stock Transfer & Trust Co.
40 Wall St. 46th Floor
New York, NY 10005
Att: Transfer Department
New Generation Foods/CreditRiskMonitor.com
For safety of your valuable document(s) please consider certified or
registered mail.
New certificates will be sent out after the completion of the company name
change, which will take place on or about May 11, 1999.
Thank you for your cooperation and we hope that you will enjoy being part
of the Internet-based credit information service business of
CreditRiskMonitor.com.
Very truly yours,
NEW GENERATION FOODS, INC.
d/b/a CreditRiskMonitor.com
By:
------------------------------------
Jerome S. Flum
Chairman and Chief Executive Officer
Encl.
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To: American Stock Transfer & Trust Co.
40 Wall St. 46th Floor
New York, NY 10005
Att: Transfer Department
New Generation Foods/CreditRiskMonitor.com
Dear Transfer Agent:
Enclosed you will find share certificates owned by the undersigned stockholder
in New Generation Foods, Inc.
Please exchange the enclosed certificates for the correct number of shares of
CreditRiskMonitor.com, Inc.
The new certificates should be sent to the undersigned at the address of record
or at the changed address set forth below.
Thank you very much.
----------------------------------------
Signature of Stockholder as shown on the
Certificate (reflect any applicable
fiduciary status such Trustee, corporate
officer)
----------------------------------------
Signature of co-owner, if applicable
----------------------------------------
Date
Address of record:
Check here if address has changed [ ]
----------------------------------------
----------------------------------------
----------------------------------------
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NEW GENERATION FOODS, INC.
d/b/a CreditRiskMonitor.com
----------
web site: www.CreditRiskMonitor.com
INFORMATION STATEMENT IN CONNECTION WITH
WRITTEN CONSENT OF STOCKHOLDERS
----------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY
April 20, 1999
A written consent in lieu of a Special Meeting of Stockholders of New
Generation Foods, Inc., d/b/a CreditRiskMonitor.com, a Nevada corporation (the
"Company"), has been obtained from the stockholders and will become effective
Tuesday, May 11, 1999 for the following purposes:
(1) To approve an Amended and Restated Certificate of Incorporation of the
Company which will:
(a) Change the name of the Company to "CreditRiskMonitor.com, Inc.";
(b) Revoke descriptions of preferences for the Company's Series A, Series B
and Senior Preferred Stock (all shares of which have been redeemed or
converted to Common Stock) and retain only the existing authorization for
up to 5,000,000 shares of Preferred Stock, the particular designations,
powers, preferences and rights of which may be determined by the Board of
Directors from time to time.
(2) To approve the Company's new 1998 Long-Term Incentive Plan; and
(3) To amend the Company's By-Laws to permit election of members of the
Board of Directors by written consent of the stockholders.
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The Board of Directors has fixed the close of business on March 17, 1999 as
the record date for determination of (1) the number of shares of Common Stock
outstanding and (2) the stockholders who shall receive notice of action taken by
written consent of the holders of the majority of the outstanding Common Stock
of the Company.
As of the record date, the Company had outstanding 5,300,129 shares of
Common Stock, par value $.01 per share, of which the holders of 3,910,353
shares, constituting at least 73.78% had executed consents to the above
referenced actions, which action will become effective on or about May 11, 1999.
Flum Partners, the owner of 71.64% of the outstanding Common Stock of the
Company, has executed a written consent to each of the above referenced actions.
Flum Partners is a limited partnership of which Jerome S. Flum, Chairman and
President of the Company, is sole general partner. Mr. Flum, who owns or
controls 3,910,353 shares of such Common Stock, including the shares of Flum
Partners, has also executed a written consent to each of the above-referenced
actions.
By Order of the Board of Directors
Lawrence Fensterstock, Assistant Secretary
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NEW GENERATION FOODS, INC.
d/b/a CreditRiskMonitor.com
2001 Marcus Avenue, W290
Lake Success, New York 11042-1011
web site: www.CreditRiskMonitor.com
This Information Statement is being mailed to stockholders on or about April 20,
1999.
----------
INFORMATION STATEMENT
----------
This statement is furnished to notify stockholders of the receipt by the
Board of Directors of New Generation Foods, Inc., d/b/a CreditRiskMonitor.com, a
Nevada corporation (the "Company"), of written consents in lieu of a Special
Meeting of Stockholders of the Company to the matters described herein from the
holders of a majority of the outstanding shares of Common Stock of the Company.
Consent Procedure
Section 11 of the By-Laws of the Company (the "By-Laws") and Section 78.320
of the Nevada Revised Statutes ("NRS") provide that unless a different vote is
set forth, the holders of a majority of the voting power of the "Company Shares"
(a term which includes all voting stock) issued and outstanding and entitled to
vote at any Annual or Special Meeting may act by written consent and that notice
of the action shall be sent to all stockholders of the Company. Pursuant to
these provisions, the holders of a majority of the voting power of the Company's
Shares may therefore act in writing to adopt the Amended and Restated
Certificate of Incorporation, the 1998 Long-Term Incentive Plan and the
Amendment to the By-Laws described herein.
Stockholders of record at the close of business on March 17, 1999 were
counted for the purpose of determining what number of shares constituted a
majority and the names and addresses of those stockholders who should receive
notice of the consent. On that date, the only Company Shares outstanding were
5,300,129 shares of Common Stock, par value $.01 per share ("Common Stock"),
including 1,300,000 shares sold to Investors in the Company's December 1998
Private Placement, which closed on January 19, 1999 (the "1998 Private
Placement"), each of which was entitled to one vote.
Flum Partners, an investment holding company, owns 3,797,128 shares of
Common Stock, including 3,598,299 shares of Common Stock issued as a result of
the January 20, 1999 exercise of its conversion rights as holder of the
Company's Senior Preferred Stock, par value $.01 per share ("Senior Preferred
Stock"). Jerome S. Flum, Chairman, President and a director of the Company, is
the sole general partner of Flum Partners and has sole voting and dispositive
power with respect to the Company Shares owned by Flum Partners. Including the
Flum Partners shares, Mr. Flum owns or controls 3,910,353 Company Shares,
representing in the aggregate 73.78% of the votes entitled to be cast at a
Meeting of Stockholders.
<PAGE>
Flum Partners and Jerome S. Flum have each provided to the Board of
Directors their written consent to the actions described in this Information
Statement. The action having been approved by the holders of a majority of the
Company Shares outstanding, no other stockholder consents were solicited.
Cost of Consents and Distribution of Information Statements
The cost of obtaining written consents and the distribution of Information
Statements will be borne by the Company. In addition to mailings of this
Information Statement, arrangements have been made for brokers and nominees to
send Information Statements to their principals, and the Company will reimburse
them for their reasonable expenses in doing so. The Company's transfer agent,
American Stock Transfer & Trust Company, will distribute the Information
Statements to Stockholders of record, brokers and nominees. The fees for the
services of the transfer agent are included in the monthly fees paid by the
Company; however, the Company will reimburse the transfer agent for its
reasonable out-of-pocket expenses incurred in connection with providing mailing
services.
<PAGE>
ACTION 1. AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION.
General Description
The Board of Directors and the holders of a majority of the outstanding
Company Shares acting by written consent have approved a proposal to Amend and
Restate the Company's Restated Articles of Incorporation to (i) change the name
of the Company from New Generation Foods, Inc. to "CreditRiskMonitor.com, Inc.";
(ii) to eliminate the authority to issue shares of the Company's Series A,
Series B and Senior Preferred Stock; and (iii) to incorporate prior amendments
to the Restated Articles of Incorporation.
The full text of the Amended and Restated Articles of Incorporation (the
"Amendment") is included as Appendix A to this Information Statement. The
Amendment will become effective upon filing with the Secretary of State of
Nevada, which will occur on or about May 11, 1999.
Amendment to Change the Corporate Name
The applicable text of the Board and stockholder resolutions to amend
Article "First" of the Company's Restated Certificate of Incorporation to change
the corporate name resolution is as follows:
RESOLVED, that this Company shall adopt and file Amended and Restated
Articles of Incorporation, in the form annexed as Exhibit "A" to this
resolution, which Amendment and Restatement shall incorporate prior
amendments to the Restated Articles of Incorporation and shall make the
following substantive amendments:
Article "First" of the Company's Restated Articles of Incorporation is
amended to read in its entirety as follows:
"FIRST. The name of this corporation is CreditRiskMonitor.com, Inc."
In the judgement of the Board of Directors, the change of corporate name is
desirable in view of the change in the character of the business of the Company
resulting from its January 19, 1999 acquisition of the CreditRiskMonitor.com
("CRM") business previously owned by Market Guide Inc. This acquisition was part
of a strategic corporate program to move the Company into a new business in an
area with a high growth potential.
The Company filed assumed name certificate(s) entitling it to do business
under the name "CreditRiskMonitor.com" and uses the name "CreditRiskMonitor.com"
in its credit monitoring business. The new name will now be used in its
communications with stockholders and the investment community, including the
change of its stock designation on the NASD Electronic Bulletin Board and in any
additional listings.
<PAGE>
Accompanying this Information Statement is a letter from the Company
requesting that stockholders exchange their outstanding stock certificates for
new certificates reflecting the new name of the Company.
Approval of the proposal required the vote of the Board of Directors plus
the affirmative vote of the holders of a majority of the voting power of the
Company Shares entitled to vote at an annual meeting. The name change becomes
effective upon filing of the Amendment with the Secretary of the State of
Nevada, which filing is expected to take place on or about May 11, 1999.
Amendment to Eliminate Series A, Series B and Senior Preferred Stock of the
Company
In order to simplify the Company's Articles of Incorporation, the Board of
Directors adopted a proposal, which was approved by written consent of the
holders of a majority of the voting power of the Company Shares, to eliminate
from the Company's Restated Articles the Designations of Preferences for the
Company's Series A and Series B Cumulative Convertible Voting Preferred Stock
and its Senior Preferred Stock. These designations apply to series of Preferred
Stock which are no longer outstanding and which the Company has no intent to
reissue.
Under the Company's Articles of Incorporation, 5,000,000 shares of
Preferred Stock are authorized and may be issued in series, each series to
contain such designations, preferences, and relative, participating, optional or
other special rights, or qualifications, restrictions or limitations thereof as
is determined by the Board of Directors. A total of 2,333,333 shares of Series A
Cumulative Convertible Voting Preferred Stock ("Series A"), 310,000 shares of
Series B Cumulative Convertible Voting Preferred Stock ("Series B") and
1,100,000 shares of Senior Preferred Stock ("Senior Preferred") were issued, all
to Flum Partners.
Under the terms of the Series A and Series B, a sale or transfer of
substantially all of the assets of the Company was deemed to be a liquidation,
dissolution or winding up of the Company for the purposes of determining the
payment of the liquidation preference of the Series A and Series B to the
holders thereof. Accordingly, upon consummation of the sale of substantially all
of the Company's assets in October 1993, the holders of the Series A and Series
B became entitled to receive payment of their liquidation preference.
In November 1997, the Company received a letter from Flum Partners, the
holder of the Series A and Series B, demanding payment of the liquidation
preferences and accrued dividends relative to those shares. The total amount
payable pursuant to this demand was approximately $2,959,000. The Board of
Directors, on November 18, 1997, approved settlement of this demand by issuing
1,100,000 shares of Senior Preferred, and paying $1,800,000 in cash, among other
settlement terms, to Flum Partners.
Each share of Senior Preferred was convertible into Common Stock based upon
a ratio using an initial conversion price of $0.3057 per share. At December 31,
1998, the Senior Preferred was convertible in the aggregate into 3,598,299
shares of Common Stock.
On January 19, 1999, the Company completed a private placement of 1,300,000
shares of Common Stock to approximately 25 "accredited investors" at a purchase
price of $2.50 per
<PAGE>
share, for gross proceeds of $3,250,000. As a condition to the private
placement, the holder of the Senior Preferred converted all of its 1,100,000
shares into 3,598,299 shares of Common Stock on January 20, 1999. Certificates
for the shares sold in the private placement and the conversion shares will be
issued upon filing of the Amendment.
As a result of the foregoing transactions, no shares of the Series A and
Series B or of the Senior Preferred are currently outstanding. The Company has
no plan to reissue any shares of Series A, Series B or Senior Preferred. In the
event the Board determines to issue additional shares of Preferred Stock in the
future, it will determine the appropriate rights, privileges and preferences of
each series of Preferred Stock at the time of issuance. Accordingly, it will
have the most flexibility to make these determinations if all of the 5,000,000
shares of Preferred Stock now authorized are not limited to the terms of any
specific series no longer outstanding.
The Amendment eliminating the above Designations and retaining the
provision allowing the Company's Board of Directors to issue up to 5,000,000
shares of Preferred Stock, par value $.01 per share, with such series,
designations and preferences which may be fixed from time to time by the Board
of Directors, will become effective upon filing with the Secretary of State of
Nevada on or about May 11, 1999.
Other Changes
The filing of the Amendment will result in the amendment and restatement of
the Restated Articles of Incorporation in its entirety to reflect the foregoing
substantive changes as well as several non-substantive, ministerial changes as
contained in Appendix A. These changes change the Company's primary purpose to
the provision and sale of information products, eliminate the names and
addresses of the original incorporators of the Company, reflect the fact that
the Articles of Incorporation have been amended and restated, renumber certain
Articles, eliminate certain defined terms which are no longer necessary, and
correct misnumberings and misspellings.
<PAGE>
ACTION 2. ADOPTION OF 1998 LONG-TERM INCENTIVE PLAN.
The Board of Directors adopted the 1998 Long-Term Incentive Plan
(hereinafter referred to as the "Plan") on August 26, 1998, subject to approval
by the stockholders. The holders of the majority in voting interest of the
Company Shares have approved the Plan by written consent effective May 11, 1999.
The following summary of the Plan is qualified in its entirety by the text of
the Plan, which is attached hereto as Appendix B.
As approved by the stockholders, the Plan will provide management with a
vehicle in which to grant stock options, stock appreciation rights, restricted
stock and similar long term equity based incentives to key employees,
consultants and non-employee directors of the Company in order to offer those
persons valuable to the Company a stake in the growth and performance of the
Company and to provide an incentive to contribute to the Company's future
success. The Plan provides the authority to grant options or shares up to a
total of 1,500,000 shares of Common Stock. As of the date hereof, options to
purchase approximately 712,000 shares have been granted by the Board of
Directors, pursuant to, and contingent upon stockholder approval of, the Plan.
The Plan will terminate on the tenth anniversary of the date of the Plan, or at
such earlier time as the Board of Directors may determine.
Administration and Eligibility
The Plan will be administered by the Board of Directors of the Company or a
Committee designated by the Board to administer the Plan (the "Committee"),
which Committee shall be constituted in such a manner as to permit the Plan to
comply with Paragraph D of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Act"). The administrator will have authority to determine which
employees (including officers), non-employee directors and non-employee
consultants will be granted options, stock appreciation rights and/or restricted
stock and in what amounts. The Plan provides for the grant of both "Incentive
Stock Options" ("ISOs") and "Non-Qualified Stock Options," Stock Appreciation
Rights ("SARs") and stock awards, as described below. No monetary consideration
will be received by the Company in connection with the grant of any options or
award under the Plan. As of the date hereof, approximately 19 persons were
eligible to participate in the Plan, including non-employee directors.
Stock Options and Stock Appreciation Rights
ISOs, which provide certain tax benefits described below, may only be
granted to Company employees, including employees who may also be officers,
directors and stockholders. Non-Qualified Stock Options may be granted to
non-employee directors and consultants, as well as to employees. Each option
shall be granted within ten years of the effective date of the Plan. ISOs
granted under the Plan are subject to various restrictions including the
restriction that the exercise price shall not be less than the fair market value
of the Shares on the date on which the option is granted (hereinafter "FMV"), or
110% of FMV if the employee, immediately before the grant, owns more than 10% of
the total combined voting power of the Company Shares.
The term of any ISO (and any SAR issued in conjunction with an ISO) may not
exceed ten (10) years and may not exceed five (5) years if the employee owns
more than ten (10%) percent of the total combined voting power of the Company
Shares immediately before the grant;
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the shares may not be disposed of for a period of two (2) years from the date of
grant and for a period of one (1) year after the transfer of such shares to the
employee; and at all times from the date of grant and ending on the date three
(3) months before the date of exercise, an employee shall be employed by the
Company, unless employment is terminated because of disability, in which case
such disabled employee shall be employed from the date of grant to a year
preceding the date of exercise.
If the former employee dies during an eligible period of retirement or
disability, unexpired options may be exercised up to one year after death. The
options may be subject to a vesting formula.
SARs grant an employee or consultant the right to receive cash or other
stock compensation equal in value to the difference between the FMV of the
Company's stock between the date of grant and the date of exercise. No cash must
be paid by the employee at exercise. SARs may be granted "in tandem" with stock
options or "free standing." Any tandem SAR related to an ISO must be granted at
the same time as the option and be subject to the same stock price requirements
and other terms. Upon exercise of a tandem SAR or the related stock option, the
corresponding stock option or tandem SAR shall terminate.
Restricted Stock, Bonus Stock and Performance Shares
The Plan provides for the award by the Company of stock awards to
employees, consultants and non-employee directors, which may be restricted
stock, subject to a restriction period and/or performance measures, bonus stock,
which is not subject to any restriction period or performance measures and/or
"performance shares" which are the right to receive one share of Common Stock
(which may be restricted stock) or the cash equivalent, contingent upon the
attainment by the Company of specific performance measures during a designated
period. An employee who receives an award must remain an employee through the
restriction or performance period, as applicable.
Vesting and Exercise
The individual option and other agreements for employee and non-employee
grantees provide for the exerciseability of the Options, and for any vesting or
performance requirements for the various awards.
Except for ISOs, the Committee has the discretion to determine the extent
to which the holder of each stock option, SAR or performance share award (or his
estate) shall have the right to exercise the option or SAR following termination
of service based on the reasons for termination of service and other relevant
factors and can determine whether restrictions on restrictive stock will lapse
under certain circumstances.
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Change in Control
Upon the occurrence of a change in control, outstanding options and other
awards will terminate unless the Board elects to accelerate vesting or the
options or awards are otherwise assumed or substituted by the successor company,
provided that the options or awards will vest as to certain percentages of the
total in accordance with a formula based on the valuation of the Company upon a
change in control occurring at any time after the second anniversary of the date
of grant.
Amendment; Termination
The Board of Directors of the Company may at any time and from time to time
amend the Plan without the approval of the stockholders of the Company. The
Board may not, however, without stockholder approval, increase the aggregate
number of shares of stock which may be sold pursuant to Options or other
incentives granted or expand or change the class of persons eligible to
participate in the Plan, change the Plan so as to invalidate the ISO eligibility
or extend the term of the Plan. No amendment may impair the rights of a holder
of an outstanding award without the consent of such holder.
The Plan becomes effective on approval by the stockholders and shall
terminate ten years after its effective date unless terminated earlier by the
Board. No award may be made later than ten years after the effective date of the
Plan.
Federal Income Tax Treatment of Stock Awards, SARs and Non-Qualified Stock
Options
The value of restricted stock is taxable as ordinary income to the
recipient when the restrictions lapse; the value of bonus stock is taxable as
ordinary income when the award is made; and the value of performance shares is
taxable as ordinary income when the performance measures have been met with
respect to such shares; in each case the Company is allowed a corresponding
deduction. Upon a later sale of the stock, the holder will realize capital gain
or loss equal to the difference between the selling price and the value of the
stock at the time the option was granted.
In general, the optionee of Non-Qualified Stock Options will realize
ordinary income when the option is exercised equal to the excess of the value of
the stock over the exercise price (i.e., the option spread) and the Company is
allowed a corresponding deduction. Upon a later sale of the stock, an optionee
will realize capital gain or loss equal to the difference between the selling
price and the value of the stock at the time the option was exercised.
The value of an SAR is taxed to the recipient when the award is received;
the Company is allowed a corresponding deduction.
Federal Income Tax Treatment of ISOs
Generally, the recipient of ISOs does not realize any taxable income either
at the time of grant or exercise, and the Company is not entitled to a deduction
either at the time of grant or at the time of exercise of ISOs, provided that
the participant was an employee of the Company at all times during the period
beginning on the date of grant and ending three months
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prior to the date of exercise and does not sell the shares within two years from
the date of grant and one year from the date the shares are issued to the
participant upon exercise. At the time of ultimate sale following the applicable
holding periods, the participant will receive income taxable at capital gains
rates on the excess of the sale price over the ISO exercise price. If a
participant sells such shares prior to the expiration of the applicable holdings
periods, the participant will realize ordinary income at that time in an amount
equal to (a) the excess of the FMV of the shares on the date of exercise over
the ISO exercise price or (b) if the sale is for less than the FMV at the date
of exercise, the gain realized on the sale, and the Company will be entitled to
a deduction equal to the amount of such ordinary income. Such participant will
realize income taxable at capital gains rates on any excess of the sale price
over the FMV on the date of exercise.
An amount with respect to an ISO may be included in a participant's
alternative minimum taxable income at the time of exercise for purposes of
determining whether the alternative minimum tax for noncorporate taxpayers will
be imposed on the participant for a given year.
Withholding Tax
With respect to any payments made to a participant, the Company has the
right to withhold in cash or shares of Common Stock any taxes required by law to
be withheld because of such payments.
Determinable Benefits
The table below sets out as of December 31, 1998, the benefits or amounts
under the 1998 Plan that will be received by or allocated to the Chief Executive
Officer of the Company, each identified executive officer at the date hereof,
all current executive officers as a group, all current directors who are not
executive officers as a group and all employees, including all current officers
who are not executive officers, as a group.
<PAGE>
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NEW PLAN BENEFITS
1998 Long-Term Incentive Plan
- --------------------------------------------------------------------------------
Name and Position Dollar Value(1) Number of Units
- --------------------------------------------------------------------------------
Jerome S. Flum, Chairman, 0 0
President and CEO
- --------------------------------------------------------------------------------
Lawrence Fensterstock, (1) 150,000
Senior Vice President and
Assistant Secretary
- --------------------------------------------------------------------------------
Executive Group 150,000
(one person)
- --------------------------------------------------------------------------------
Non-Executive Directors 72,000
- --------------------------------------------------------------------------------
Non-Executive Officer 380,500(2)
Employee Group
================================================================================
(1) All awards made under the Plan to date are both restricted as to exercise
date and based on performance criteria and the dollar value is thus
unascertainable at the date hereof.
(2) See the description of awards under "Compensation Pursuant to Stock Option
Plans" for a complete listing of all stock-based compensation under the Plan
which was awarded during the Company's last fiscal year. Options to purchase an
additional 105,000 shares were awarded to new employees during 1999.
<PAGE>
ACTION 3. TO AMEND THE COMPANY'S BY-LAWS TO PERMIT
ELECTION OF DIRECTORS BY WRITTEN CONSENT.
Amendment of the By-Laws to Permit the Election of Company Directors by Written
Consent
The Board of Directors of the Company has voted to amend the Company's
By-Laws to permit the shareholders to elect directors, as well as take any and
all other actions which might be taken by shareholders at a meeting, by written
consent, without a meeting. This resolution has been approved by written consent
of the holders of a majority of the Company Shares entitled to vote thereon and
will take effect by its terms on May 11, 1999.
The text of the resolution reads as follows:
RESOLVED that the Board of Directors, upon approval of the
Stockholders, acting by written consent, amends Section 11 of the
Company's By-Laws to read as follows:
"11. Action Without Meeting. Except as provided below or by
the Articles of Incorporation, any action which may be taken at a
meeting of shareholders may be taken without a meeting and
without prior notice if a consent in writing setting forth the
action so taken is signed by the holders of outstanding shares
having not less than the minimum number of votes which would be
necessary to authorize or take such action at a meeting at which
all shares entitled to vote on such action were present and
voted. Unless the consents of all shareholders entitled to vote
have been solicited in writing, the corporation shall give, to
those shareholders entitled to vote who have not consented in
writing, a prompt written notice of the taking of any action
approved by shareholders without a meeting."
This amendment deletes the phrase "except election of directors" from
Section 11 of the Company's By-Laws previously in force and allows the
shareholders to elect directors, as well as to take all other actions, by
written consent and without a meeting. It also changes the term "a written
notice given promptly" to "prompt written notice."
Section 27 of the By-Laws permits amendment of any By-Law by the
affirmative vote of a majority of the outstanding shares entitled to vote, which
action may be taken by written consent, or by the Board of Directors.
NRS 78.320 permits the taking of any action by shareholders of a Nevada
corporation by written consent, without a meeting, unless it is prohibited by
the Certificate of Incorporation or the By-Laws.
While the Company intends to hold annual meetings of stockholders, at which
directors would be elected, from time to time, it may not choose to do so in
every year. The By-Law amendment enables directors to be elected by the
shareholders without the time and expense required to convene a shareholder
meeting, should the Board determine that it is in the Company's best interest to
do so.
<PAGE>
The Board of Directors plans, at a meeting, to fill a seat on the Board
which is now vacant with a representative of the Investors in the Company's 1998
Private Placement. The ByLaws, as currently drawn, permit this replacement by
Board action. The ability of the Board members to fill vacant Board seats
without action by shareholders will not be changed by this By-Law Amendment.
SECURITY HOLDINGS OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of March 22, 1999 information regarding
the beneficial ownership of the Company's voting securities (i) by each person
who is known to the Company to be the owner of more than five percent of the
Company's voting securities, (ii) by each of the Company's directors, and (iii)
by all directors and executive officers of the Company as a group. Except as
indicated in the following notes, the owners have sole voting and investment
power with respect to the shares:
<PAGE>
================================================================================
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME OF COMMON STOCK(1) COMMON STOCK
- --------------------------------------------------------------------------------
Flum Partners(2) 3,797,128(3) 71.62%
- --------------------------------------------------------------------------------
Jerome S. Flum(1) 3,910,353(4) 73.75%
- --------------------------------------------------------------------------------
Richard J. James(1) 1,000 --*
- --------------------------------------------------------------------------------
Leslie Charm(1) 1,000 --*
- --------------------------------------------------------------------------------
All directors and officers 3,912,353(4) 73.79%
(as a group (4 persons))
================================================================================
*less than 1%
- ----------
(1) Does not give effect to (a) the issuance of options to purchase up to
638,000 shares of Common Stock granted or to be granted to ten officers,
employees and consultants, (b) options to purchase 150,000 shares granted to Mr.
Flum pursuant to the 1992 Incentive Stock Option Plan of the Company, and (c)
options to purchase an aggregate of 36,000 shares granted to each of the other
directors. All of the foregoing options are not exercisable within sixty days.
Includes 2,000 shares of Common Stock issued to Flum Partners in consideration
of loans to the Company. Includes options to purchase 1,000 shares of Common
Stock granted to each of the non-employee directors which are immediately
exercisable.
(2) The sole general partner of Flum Partners is Jerome S. Flum, Chairman of the
Board, President and Chief Executive Officer of the Company.
(3) Includes 3,598,299 shares of Common Stock issued upon the conversion on
January 20, 1999 of the Senior Preferred Stock owned by Flum Partners.
(4) Includes 3,797,128 shares owned by Flum Partners, of which Mr. Flum is the
sole general partner which are also deemed to be beneficially owned by Mr. Flum
because of his power, as sole general partner of Flum Partners, to direct the
voting of such shares held by the partnership. Mr. Flum disclaims beneficial
ownership of the shares owned by Flum Partners. The 3,910,353 shares of Common
Stock, or 73.75% of the outstanding shares of Common Stock (giving effect to the
Senior Preferred Stock conversion and the issuance of stock to Investors in the
1998 Private Placement) may also be deemed to be owned, beneficially and
collectively, by Flum Partners and Mr. Flum, as a "group", within the meaning of
Section 13(d)(3) of the Act. Does not include options to purchase 150,000 shares
granted to Mr. Flum under the 1992 Incentive Stock Option Plan.
<PAGE>
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect to the
directors and executive officers of the Company and the period such persons held
their respective positions with the Company.
<TABLE>
<CAPTION>
=====================================================================================================
Name Age Position Held With Officer or Director
The Company Since
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jerome S. Flum 58 Chairman of the 1983
Board/President/
Chief Executive
Officer
- -----------------------------------------------------------------------------------------------------
Lawrence 48 Senior Vice January 20, 1999
Fensterstock President
- -----------------------------------------------------------------------------------------------------
Richard J. James 59 Director 1992
- -----------------------------------------------------------------------------------------------------
Leslie Charm 55 Director 1994
=====================================================================================================
</TABLE>
Executive Compensation
The following table shows, for the fiscal years ended December 31, 1998,
1997 and 1996, the compensation of the Chief Executive Officer. The Company had
no other executive officers during that period. The table also shows the
compensation of the Company's Senior Vice President, Lawrence Fensterstock, who
is an executive officer and would have been listed in the table if he had held
that position at the end of 1998. Mr. Fensterstock was named as Senior Vice
President and Assistant Secretary of the Company effective January 20, 1999.
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------
Annual
Compensation(2) Long Term Compensation
- --------------------------------------------------------------------------------------------------------
Number of
Name and Principal Securities All Other
Positions Year Salary Underlying Options Compensation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jerome S. Flum, 1998 $ -0-(1) 150,000 None
Chairman, President 1997 $113,859
and Chief Executive 1996 $121,506
Officer
- --------------------------------------------------------------------------------------------------------
Lawrence Fensterstock, 1998 N/A 150,000 None
Senior Vice President 1997 N/A
1996 N/A
========================================================================================================
</TABLE>
(1) Effective December 31, 1997 Mr. Flum's Employment Agreement was terminated.
Beginning January 20, 1999, Mr. Flum is being compensated by the Company at the
rate of $150,000 per annum, of which $90,000 per annum is being deferred until
such time as the Company achieves cash flow breakeven or until the Company's
Notes to Market Guide Inc. for the purchase of the CreditRisk Monitor business
have been paid in full, whichever occurs sooner.
(2) No Bonus or other Annual Compensation was paid during the past three fiscal
years.
Directors' Fees
Commencing September 1994, non-employee directors receive $450 for each
Board of Directors' meeting attended, up to a maximum payment of $1,800 per
Director per calendar year. During 1998, non-qualified options to purchase
36,000 shares of Common Stock at purchase price of $.0001 per share were granted
to each of the two non-employee directors.
Compensation Pursuant to Stock Option Plans
The following table sets forth all stock options granted to the Company's
Chief Executive Officer, who was the only executive officer during the last
fiscal year and to the Company's Senior Vice President, who became an executive
officer on January 20, 1999.
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Grant
Individual Grants Date
Value
- -----------------------------------------------------------------------------------------------------------------------------------
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Fiscal Exercise Basic Expiration Present
Name Amount (#) Year Price ($/Sh) Date Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jerome S. Flum, 150,000 100% $.00011(2) 8/25/2003 (3)
Chairman, President and
CEO
(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Lawrence Fensterstock, 150,000 N/A $.00010(4) 8/25/2008 (3)(4)
Senior Vice President
(5)
===================================================================================================================================
</TABLE>
(1) No stock appreciation rights were granted to the executive officers in
fiscal 1998.
(2) Represents 110% of fair market value at date of grant.
(3) 75,000 of the options granted to Mr. Flum and all of the options granted to
Mr. Fensterstock, are subject to performance based compensation as described
below.
(4) Represents fair market value at date of grant. Mr. Fensterstock was a
consultant to the Company during 1998 and was not an employee.
(5) All options are not exercisable until at least January 2002. The fair market
value of one share of Company Common Stock at December 31, 1998 was $5.00.
Pursuant to the 1992 Incentive Stock Option Plan of the Company, on August
26, 1998 Mr. Flum was granted incentive stock options to purchase 150,000 shares
of Common Stock, exercisable until August 25, 2003, at a price of $.00011,
constituting 110% of the fair market value of the Common Stock on the date of
issuance.
Non-Qualified Stock Options to purchase an aggregate of 530,500 shares of
Common Stock were granted on August 26, 1998 and November 11, 1998 subject to
Stockholder approval of the 1998 Long-Term Incentive Plan, exercisable for a
ten-year term, including options to individuals who were employed as consultants
to the Company in 1998 and became Company employees in 1999. All of the options
were issued at exercise prices constituting the fair market price of the Common
Stock on the respective grant dates, subject, however, to the Company's purchase
of the CRM business, which occurred on January 19, 1999.
<PAGE>
================================================================================
EXERCISE PRICE PER
NAME NUMBER OF SHARES SHARE
- --------------------------------------------------------------------------------
Lawrence Fensterstock 150,000 $.0001
- --------------------------------------------------------------------------------
Non-Officer 380,500 $.0001
Consultant/Employees
================================================================================
Options to purchase an additional 72,000 shares of Common Stock were issued
to non-employee directors.
In order to minimize the risk of a change in ownership of the Company's
stock which could limit the availability of the Company's net operating loss
carryforwards or other federal income tax attributes, none of the options,
including the options to non-employee directors, will vest or be exercisable,
under any circumstances, prior to the expiration of three years from the closing
of the 1998 Private Placement, unless accelerated in the sole discretion of the
Company.
All of the 530,500 options (including those granted to Lawrence
Fensterstock) and 75,000 of the options granted to Mr. Flum may be exercised
prior to their final two years only in installments upon the Company attaining
certain specified gross revenue and pre-tax profit margin objectives as set
forth in the table below, unless such objectives are modified in the sole
discretion of the Board of Directors. In order to achieve the vesting of the
applicable percentage of options at each level, both the minimum sales amount
and the pre-tax operating margin tests for that level must be met.
<TABLE>
<CAPTION>
=================================================================================================
MINIMUM ANNUAL
- -------------------------------------------------------
Pre-Tax Operating Cumulative
Level Gross Sales Margin Options Vested Options Vested
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 $3 Million 20% 6.7% 6.7%
- -------------------------------------------------------------------------------------------------
2 $4 Million 23% 6.7% 13.4%
- -------------------------------------------------------------------------------------------------
3 $5 Million 27% 10.0% 23.4%
- -------------------------------------------------------------------------------------------------
4 $6 Million 36% 10.0% 33.4%
- -------------------------------------------------------------------------------------------------
5 $7.5 Million 39% 13.3% 46.7%
- -------------------------------------------------------------------------------------------------
6 $9 Million 42% 13.3% 60.0%
- -------------------------------------------------------------------------------------------------
7 $11 Million 45% 16.6% 76.6%
- -------------------------------------------------------------------------------------------------
8 $14 Million 48% 16.6% 93.2%
- -------------------------------------------------------------------------------------------------
9 $17 Million 48% 6.8% 100.0%
=================================================================================================
</TABLE>
Notwithstanding that the objectives may not have been met in whole or in
part, each of the foregoing performance-based options will vest in full on a
date which is two years prior to the expiration date of the option or, in the
event of a change in control, will vest in whole or
<PAGE>
in part according to a formula based on the value of the Company at the time of
such change in control.
Compensation Policy
The goals of the Company's executive compensation policy are to (i) attract
and retain qualified executives and (ii) ensure that an appropriate relationship
exists between executive pay and the creation of shareholder value. To achieve
these goals, the Company's executive compensation policy will reward executives
for long term strategic management and the enhancement of stockholder value by
integrating annual base compensation with other forms of incentive compensation
based upon corporate results and individual performance. Measurement of
corporate performance will be primarily based on the level of achievement of
Company goals and upon Company performance levels compared with industry
performance levels.
The Board of Director's Compensation Committee (the "Committee"), or the
Board itself, if no Committee is appointed, will obtain compensation survey data
where available for the promotional wholesale distribution industry and similar
industries to be used as a guide to establish compensation levels to be
competitive with and comparable to other companies in its industry group.
1999 Compensation Program
Base Salary. The Board of Directors will review and approve all salary
changes and stock option grants for executive officers. The Committee will base
its approval of such salary changes on: (i) performance of the executive, (ii)
Company performance, (iii) experience, and (iv) external salary surveys.
Annual Incentive. The Company may use annual performance incentives to
focus management on achieving financial and operating results. The Company may
establish a bonus pool for executive officers for a particular year or years,
from which bonuses will be paid at the discretion of the President and Senior
Vice President upon approval of the Committee, except that bonuses awarded to
the President and Senior Vice President will be at the discretion of the Board,
based on the financial performance of the Company.
Long Term Incentive. The primary purpose of the long term incentive
compensation plan is to link management pay with the long term interests of
stockholders. The Board will use stock options and other awards under the 1998
Long-Term Incentive Plan to achieve this link. The grant of options at 100
percent of the fair market value assures that executive officers will receive a
benefit only when a stock price increases. In addition, most of the options
granted during this initial period are tied to the performance of the Company.
The amount of options granted is based on comparative data on the estimated
value of long term compensation for other industry executives. In determining
annual stock option grants, the Board will base its decision on the individual's
performance and potential to improve stockholder value.
In August and November 1998, certain executive officers of the Company,
members of the Board of Directors and key consultants to the Company were
awarded stock options pursuant
<PAGE>
to the Plan, subject to stockholder approval of the Plan. These options were
made at the direction of the Board, and the options were granted at the market
price of the Common Stock on the date of grant ($.0001 per share). The Board
believes that options and other stock-based performance compensation
arrangements are effective incentives for managers to create value for
stockholders since the value of an option bears a direct relationship to the
Company's stock price.
Conclusion
The Board of Directors and the Committee believe that the quality and
motivation of management make a significant difference in the long term
performance of the Company. The Board of Directors and the Committee also
believe that a compensation program which rewards performance that meets or
exceeds high standards also benefits the stockholders, so long as there is an
appropriate downside risk element to compensation when performance falls short
of such standards. The Board of Directors and the Committee are of the opinion
that the Company's management compensation program meets these requirements, has
contributed to the Company's success, and is deserving of stockholder support.
CERTAIN TRANSACTIONS
A detailed description of related party transactions during the past two
years is contained in Part III of the Company's Annual Report on Form 10-KSB,
which is being distributed with this Information Statement.
ANNUAL REPORT/FORM 10-KSB
The Company does not plan to prepare a separate Annual Report to
Shareholders of the Company for the year ended December 31, 1998. Instead, the
Company will mail copies of its Annual Report on Form 10-KSB, as filed with the
Securities and Exchange Commission on March 31, 1999, which includes audited
financial statements, to stockholders with this Information Statement. Such
Report is not incorporated in this Information Statement.
DOCUMENTS AVAILABLE UPON REQUEST
A copy of the By-Laws is available upon written request and without charge,
by first class mail or other equally prompt means. Such requests should be
directed to the Office of the Senior Vice President, New Generation Foods, Inc.
d/b/a CreditRiskMonitor.com, 2001 Marcus Ave., Suite W290, Lake Success, NY
11042-1011.
STOCKHOLDER PROPOSALS
The Company does not plan to hold a 1999 Annual Meeting. If any stockholder
desires to present a proposal for action at the Company's 2000 annual meeting,
such proposal must be in compliance with applicable laws and Securities and
Exchange Commission regulations and must be received by the Company on or prior
to January 15, 2000.
<PAGE>
SECTION 16 REQUIREMENTS
Section 16(a) of the Act requires the Company's directors and officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC"). Such persons are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file.
Based solely on its review of the copies of such reports received by it
with respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been timely complied with, except for
Jerome S. Flum who filed a Form 4 and 5 late and Flum Partners who filed a Form
4 and 5 late.
By Order of the Board of Directors
<PAGE>
APPENDIX A
----------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NEW GENERATION OF FOODS, INC.
(changing the corporation's name to CreditRiskMonitor.com)
The undersigned, the President and Assistant Secretary of NEW GENERATION
FOODS, INC., a corporation organized and existing under and by virtue of the
Nevada General Corporation law, DO HEREBY CERTIFY:
FIRST: The undersigned are, respectively, the President and Assistant
Secretary of NEW GENERATION FOODS, INC.;
SECOND: The original Articles of Incorporation of NEW GENERATION FOODS,
INC. (formerly RALSPICE, INC.) was filed with the Secretary of State of Nevada
on February 25, 1977;
THIRD: A certified copy of the Articles of Incorporation was filed with the
Washoe County Clerk on March 2, 1977;
FOURTH: Certificates of Amendment to Articles to Incorporation of NEW
GENERATION FOODS, INC. were filed with the Secretary of State of Nevada on April
7, 1977, August 15, 1977, September 17, 1979, February 22, 1980, March 26, 1980,
and July 15, 1980; Restated Articles of Incorporation were filed July 15, 1980;
Certificates of Amendment to Articles of Incorporation were filed December 9,
1980, September 8, 1987 and November 31, 1989; Certificates of Designation were
filed on December 16, 1988, January 3, 1989, April 13, 1989, December 31, 1997;
and two Certificates of Amendment of the Certificate of Designation
<PAGE>
filed on December 31, 1997, respectively, all of which were subsequently filed
with the Washoe County Clerk.
FIFTH: The Articles of Incorporation, as amended as of the date of this
certificate of NEW GENERATION FOODS, INC. are herein amended and restated in
their entirety:
FIRST. The name of this corporation is CreditRiskMonitor.com, Inc.
SECOND. Its principal office in the State of Nevada is located at One
East First Street, Reno, Washoe County, Nevada 89501. The name and address
of its resident agent is The Corporation Trust Company of Nevada, One East
First Street, Reno, Nevada 89501.
THIRD. The nature of the business, or objects or purposes proposed to
be transacted, promoted or carried on are:
To develop, provide, sell and distribute information products.
To engage in any lawful activity and to manufacture, purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell, assign and
transfer or otherwise dispose of, trade, deal in and deal with goods,
wares and merchandise and personal property of every class and
description.
To hold, purchase and convey real and personal estate and to
mortgage or lease any such real or personal estate with its franchises
and to take the same by devise or bequest.
To acquire, and pay for in cash, stock or bonds of this
corporation or otherwise, the good will, rights, assets and property,
and to undertake or assume the whole or any part of the obligations or
liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant license in
respect of, mortgage, or otherwise dispose of letters patent of the
United States or any foreign country, patent rights, licenses and
privileges, inventions, improvements and processes, copyrights,
trademarks and trade names, relating to or useful in connection with
any business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage,
pledge, or otherwise dispose of the shares of the capital stock of or
any bonds, securities or evidences of the indebtedness created by any
other corporation or corporations of this state, or any other state or
government, and, while owner of such stocks, bonds, securities or
evidence of indebtedness, to exercise all the rights, powers and
privileges or ownership, including the right to vote, if any.
<PAGE>
To borrow money and contract debts when necessary for the
transaction of its business, or for the exercise of its corporate
rights, privileges or franchises, or for any other lawful purpose of
its incorporation; to issue bonds, promissory notes, bills of
exchange, debentures, and other obligations and evidences of
indebtedness, payable at a specified time or times, or payable upon
the happening of a specified event or events, whether secured by
mortgage, pledge, or otherwise, or unsecured, for money borrowed, or
in payment for property purchased, or acquired, or for any other
lawful objects.
To purchase, hold, sell and transfer shares of its own capital
stock, and use therefore its capital, capital surplus, surplus, or
other property or funds; provided it shall not use its funds or
property for the purchase of its own shares of capital stock when such
use would cause any impairment of its capital; and provided further,
that shares of its own capital stock belonging to it shall not be
voted upon, directly or indirectly, nor counted as outstanding, for
the purpose of computing any stockholders' quorum or vote.
To conduct business, have one or more offices, and hold,
purchase, mortgage and convey real and personal property in this
state, and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and in
any foreign countries.
To do all and everything necessary and proper for the
accomplishment of the objects hereinbefore enumerated or necessary or
incidental to the protection and benefit of the corporation, and, in
general, to carry on any lawful business necessary or incidental to
the attainment of the objects of the corporation, whether or not such
business is similar in nature to the objects hereinbefore set forth.
The objects and purposes specified in the foregoing clauses
shall, except where otherwise expressed, be in nowise limited or
restricted by reference to, or inference from, the terms of any other
clause in these articles of incorporation, but the objects and
purposes specified in each of the foregoing clauses of this article
shall be regarded as independent objects and purposes.
FOURTH. The aggregate number of shares which this corporation shall
have the authority to issue is Twenty-Five Million (25,000,000) shares of
Common Stock of the par value of $.01 per share and Five Million
(5,000,000) shares of Preferred Stock, of the par value of $.01 per share.
The Preferred Stock may be divided into and issued in series. If the
shares of any such class are to be issued in series, then each series shall
be so designated as to distinguish the shares thereof from the shares of
all other series and classes. Any or all of the series of any such class
and variations and the relative rights and preferences as between different
series can be fixed and be determined by the Board of Directors. The
authority of the Board of Directors with respect to each series shall
include, without limitation thereto, the determination of any or all of the
following and the shares of each series may vary from shares of any other
series in the following respects:
<PAGE>
The Board of Directors of this corporation is hereby authorized to
issue the Preferred Stock at any time or from time to time, in one or more
series and for such consideration as may be fixed from time to time by the
then Board of Directors, but not less than the par value thereof. The
number of shares to comprise each such series, which number may be
increased (except where otherwise provided by the Board of Directors in
creating such series) or decreased (but not below the number of shares
thereof then outstanding) shall be determined from time to time by the
Board of Directors. The Board of Directors is hereby expressly authorized,
before issuance of any shares of a particular series, to determine any and
all designations, preferences and relative, participating, optional or
other special rights, or qualifications, restrictions or limitations
thereof, pertaining to such series including but not limited to:
(1) Voting rights, if any, including, without limitation, the
authority to confer multiple votes per share, voting rights as to
specified matters or issues such as mergers, consolidations or sales
of assets, or voting rights to be exercised either together with
holders of Common Stock as a single class, or independently as a
separate class;
(2) Rights if any, permitting the conversion or exchange of any
such shares, at the option of the holder, into any other class or
series of shares of this corporation and the price or prices or the
rates of exchange and any adjustment thereto at which such shares will
be convertible or exchangeable;
(3) The rate of dividends, if any, payable on shares of such
series, the conditions and the dates upon which such dividends shall
be payable and whether such dividends shall be cumulative or
non-cumulative;
(4) The amount payable on shares of such series in the event of
any liquidation, dissolution or distribution of the assets of or
winding up of the affairs of this corporation;
(5) Redemption, repurchase, retirement and sinking fund rights,
preferences and limitations, if any, the amount payable on shares of
such series in the event of such redemption, repurchase or retirement,
the terms and conditions of any sinking fund, the manner of creating
such fund or funds and whether any of the foregoing shall be payable
in preference to, or in relation to, the dividends payable on any
other class or classes of stock, or cumulative or non-cumulative; and
(6) Any other preference and relative, participating, optional or
other special rights and qualifications, limitations or restrictions
of shares of such series not fixed and determined herein, to the
extent permitted to do so by law.
All shares of Preferred Stock shall be of equal rank and shall be
identical except with respect to the particulars that may be fixed by
the Board of Directors as above provided and as to the date from which
dividends thereon, if any, shall be cumulative if made cumulative by
the Board of Directors.
<PAGE>
No stockholder shall be entitled as a matter of right to purchase or
subscribe for or receive additional shares of any class of stock of the
corporation, whether now or hereafter authorized, including, but not
limited to, treasury stock, or any notes, debentures, bonds or other
securities convertible into or carrying warrants or options to purchase
shares of any class now or hereafter authorized. Any such securities or
additional shares of stock may be issued or disposed of by the Board of
Directors to such persons and on such terms as in its discretion may be
deemed advisable.
At each election for directors every stockholder entitled to vote at
such election shall have the right to cast, in person or by proxy, the
number of votes represented by the shares owned by him for as many persons
as there are directors to be elected and for whose election he has a right
to vote. Each share of Common Stock shall be entitled to one vote.
Cumulative voting, for the election of directors or otherwise, is expressly
prohibited. On all matters coming before the stockholders, other than the
election of directors, each share of issued and outstanding Common Stock
shall be entitled to one vote.
FIFTH. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased
or decreased in such manner as shall be provided by the by-laws of this
corporation, provided that the number of directors shall not be reduced to
less than three (3), except that in cases where all the shares of the
corporation are owned beneficially and of record by either one or two
stockholders, the number of directors may be less than three (3) but not
less than the number of stockholders.
SIXTH. The capital stock, after the amount of the subscription price
or par value has been paid in, shall not be subject to assessment to pay
the debts of the corporation.
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized:
Subject to the by-laws, if any, adopted by the stockholders, to
make, alter or amend the by-laws of the corporation.
To fix the amount to be reserved as working capital over and
above its capital stock paid in, to authorize and cause to be executed
mortgages and liens upon the real and personal property of this
corporation.
By resolution passed by a majority of the whole board, to
designate one or more committees, each committee to consist of one or
more of the directors of the corporation, which, to the extent
provided in the resolution or in the by-laws of the corporation, shall
have and may exercise the powers of the board of directors in the
management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers
which may require it. Such committee or committees shall have such
name and names as
<PAGE>
may be stated in the by-laws of the corporation or as may be
determined from time to time by resolution adopted by the board of
directors.
When and as authorized by the affirmative vote of stockholders
holding stock entitling them to exercise at least a majority of the
voting power given at a stockholders' meeting called for that purpose,
or when authorized by the written consent of the holders of at least a
majority of the voting stock issued and outstanding, the board of
directors shall have power and authority at any meeting to sell, lease
or exchange all of the property and assets of the corporation,
including its good will and its corporate franchises, upon such terms
and conditions as its board of directors deem expedient and for the
best interests of the corporation.
NINTH. Meetings of stockholders may be held outside the State of
Nevada, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Nevada at such place or places as may be designated from time to time by
the board of directors or in the by-laws of the corporation.
TENTH. This corporation reserves the right to amend, alter, change or
repeal any provision contained in the articles of incorporation, in the
manner now or hereafter prescribed by statute, or by the articles of
incorporation, and all rights conferred upon stockholders herein are
granted subject to this reservation.
ELEVENTH. A director or officer of the corporation shall not be
personally liable to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, expect for liability (i)
for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) under NRS 78.300. If the Nevada General
Corporation Law is amended after approval by the stockholders of this
article to authorize corporate action further eliminating or limiting the
personal liability of directors or officers, then the liability of a
director or officer of the corporation shall be eliminated or limited to
the fullest extent permitted by the Nevada General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification.
SIXTH: The Board of Directors at a meeting duly called and held on March
22, 1999 adopted the foregoing resolutions by unanimous vote. Holders of the
majority of the outstanding shares of Common Stock of the corporation approved
and adopted the above resolutions setting forth the amendments to and
restatement of the Article of Incorporation by written consent dated
<PAGE>
April 8, 1999. Accordingly the amendments were adopted in accordance with the
provisions of Sections 78.390 and 78.403 of the Nevada General Corporation Law.
<PAGE>
IN WITNESS WHEREOF, New Generation Foods, Inc. has caused its corporate
seal to be hereunto affixed and the Amendment and Restatement of the Articles of
Incorporation to be signed by its President and Assistant Secretary on this ____
day of May, 1999.
- ------------------------------ ------------------------------
Jerome S. Flum, President Lawrence Fensterstock,
Assistant Secretary
<PAGE>
APPENDIX B
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NEW GENERATION FOODS, INC.
D/B/A CreditRiskMonitor.com
1998 LONG-TERM INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this 1998 Long-Term Incentive Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Consultants and Non-Employee Directors of the Company and its Subsidiaries, to
promote the success of the Company's business and to align the interests of the
Company's stockholders and the recipients of awards under this Plan. Any one or
a combination of the following awards (collectively "Awards" and individually an
"Award") may be made under this Plan: (i) Options to purchase shares of Common
Stock in the form of Incentive Stock Options or Non-Qualified Stock Options,
(ii) SARs in the form of Tandem SARs or Free-Standing SARs, (iii) Stock Awards
in the form of Restricted Stock or Bonus Stock, and (iv) Performance Shares.
2. Definitions. As used herein, the following definitions shall apply:
"Administrator" means the Board or any of its Committees appointed
pursuant to Section 4.
"Affiliate" of any Person shall be any other Person which controls, is
controlled by, or is under common control with, such Person. As used
herein, "control" shall be the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" shall have the meaning provided in Section 9.3 hereof.
"Award" shall have the meaning provided in Section 1 hereof.
"Board" means the Board of Directors of the Company.
"Bonus Stock" shall mean shares of Common Stock which are not subject
to a Restriction Period or Performance Measures.
"Bonus Stock Award" shall mean an award of Bonus Stock under this
Plan.
"Code" means the Internal Revenue Code of 1986, as amended.
"Change in Control" shall have the meaning provided in Section 9.8
hereof.
<PAGE>
"Committee" means the Committee appointed by the Board of Directors in
accordance with Section 4 of the Plan.
"Common Stock" means the Common Stock, par value $.01, of the Company.
"Company means New Generation Foods, Inc., d/b/a CreditRiskMonitor.
com, a Nevada corporation.
"Consultant" means any person, including an advisor, who is engaged by
the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the
event the Company registers any class of any equity security pursuant
to the Exchange Act, the term Consultant shall thereafter not include
directors who are not compensated for their services or are paid only
a director's fee by the Company.
"Continuous Status as an Employee" means the absence of any
interruption or termination of the employment relationship by the
Company or any Parent or Subsidiary. Continuous Status as an Employee
shall not be considered interrupted in the case of: (i) sick leave;
(ii) military leave; (iii) any other leave of absence approved by the
Board, provided that such leave is for a period of not more than
ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided
otherwise pursuant to Company policy adopted from time to time; or
(iv) in the case of transfers between locations of the Company or
between the Company, its Subsidiaries or its successor.
"Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of fees by the Company for a director's services as
director shall not be sufficient to constitute "employment" by the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, as of any date, the value of Common Stock
determined as follows.
(i) If the Common Stock is listed on any established stock exchange
or a national market system including without limitation the
NASDAQ ("Nasdaq") National Market System, its Fair Market Value
shall be the closing sales price for such stock (or the closing
bid, if no sales were reported, as quoted on such system or
exchange, or the exchange with the greatest volume of trading in
Common Stock, for the last market trading day prior to the time
<PAGE>
of determination) as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the Nasdaq National Market
System or regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices
for the Common Stock or;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good
faith by the Administrator.
"Free-Standing SAR" shall mean an SAR which is not issued in tandem
with, or by reference to, an Option, which entitles the holder thereof
to receive, upon exercise, shares of Common Stock (which may be
Restricted Stock), cash or a combination thereof with an aggregate
value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise over the base price of such SAR,
multiplied by the number of shares of Common Stock with respect to
which such SARs are exercised.
"Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
"Non-Employee Director" shall mean any director of the Company who is
not an Employee of the Company.
"Non-Qualified Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
"Option" means a stock option granted pursuant to the Plan.
"Optioned Stock" means the Common Stock subject to an Option.
"Optionee" means an Employee or Consultant who receives an Option.
"Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
"Participant" means a person to whom an Award is granted under the
Plan.
"Performance Measures" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met (i) as a
condition to the exercisability of all or a portion of an Option or
SAR, or (ii) as a condition to the grant of a Restricted Stock Award,
or (iii) during the applicable Restriction Period or Performance
Period as a condition to
<PAGE>
the holder's receipt, in the case of a Restricted Stock Award, of the
shares of Common Stock subject to such award. Such criteria and
objectives may include criteria selected by the Committee including,
but not limited to, one or more of the following: the attainment by a
share of Common Stock of a specified Fair Market Value for a specified
period of time, earnings per share, return on capital employed, return
to stockholders (including dividends), return on equity, earnings of
the Company, revenues, profit margins, market share, cash flow or cost
reduction goals, or any combination of the foregoing. If the Committee
desires that compensation payable pursuant to any award subject to
Performance Measures be "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code, the Performance
Measures shall be established by the Committee no later than the end
of the first quarter of the Performance Period (or such other time
designated by the Internal Revenue Service).
"Performance Period" shall mean a period designated by the Committee
during which the Performance Measures applicable to a Performance
Share Award shall be measured.
"Performance Share" shall mean a right, contingent upon the attainment
of specified Performance Measures within a specified Performance
Period, to receive one share of Common Stock, which may be Restricted
Stock, or in lieu thereof, the Fair Market Value of such Performance
Share in cash.
"Performance Share Award" shall mean an award of Performance Shares
under the Plan.
"Permanent and Total Disability" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"Plan" means this 1998 Long-Term Incentive Plan.
"Restricted Stock" shall mean shares of Common Stock which are subject
to a Restriction Period.
"Restricted Stock Award" shall mean an award of Restricted Stock under
this Plan.
"Restriction Period" shall mean a period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may
not be sold, transferred, assigned, pledged, hypothecated or otherwise
encumbered or disposed of, except as provided in this Plan or the
Agreement relating to such award.
"SAR" shall mean a stock appreciation right which may be a
FreeStanding SAR or a Tandem SAR.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Share" means a share of the Common Stock, as adjusted in accordance
with Section 9.7 of the Plan.
"Stock Award" shall mean a Restricted Stock Award or a Bonus Stock
Award.
"Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
"Tandem SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Qualified Stock Option
granted prior to the date of grant of the SAR), which entitles the
holder thereof to receive, upon exercise of such SAR and surrender for
cancellation of all or a portion of such option, shares of Common
Stock (which may be Restricted Stock), cash or a combination thereof
with an aggregate value equal to the excess of the Fair Market Value
of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock
subject to such option, or portion thereof, which is surrendered.
"Tax Date" shall have the meaning set forth in Section 9.5.
"Ten Percent Holder" shall have the meaning set forth in Section
6.1.1.
3. Stock Subject to the Plan. Subject to the provisions of Section of the
Plan, the maximum aggregate number of shares which may be awarded under the Plan
is 1,500,000 shares of Common Stock. The shares may be authorized, but unissued,
or reacquired Common Stock, including without limitation any shares of Common
Stock which are subject to an Option, an SAR, a Performance Share Award or a
Restricted Stock Award, and which were not issued prior to the expiration,
termination or cancellation of the Option, SAR or Performance Share Award or
which were forfeited upon the forfeiture of a Restricted Stock Award.
4. Administration of the Plan. The Plan shall be administered by (i) the
Board if the Board may administer the Plan in compliance with paragraph (d) of
Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") or any successor
thereto, or (ii) a Committee designated by the Board to administer the Plan,
which Committee shall be constituted in such a manner as to permit the Plan to
comply with paragraph (d) of Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by paragraph (d) of Rule 16b-3.
<PAGE>
4.1 Powers of the Administrator. Subject to the provisions of the Plan
and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the Employees, Consultants and Non-Employee
Directors to whom Awards from time to time may be granted hereunder;
(iii) to determine whether and to what extent Awards are granted
hereunder, including vesting arrangements (including without
limitation, in respect of a Change of Control);
(iv) to determine the number of shares of Common Stock to be
covered by each such Award granted hereunder;
(v) to approve the Agreement for use under the Plan;
(vi) upon a Change in Control, to determine whether to accelerate
the vesting of any Awards granted hereunder;
(vii) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder; and
(viii) to reduce the exercise price of any Option or base price
of an SAR to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or such SAR shall
have declined since the date the Option was or SAR granted.
4.2 Non-Employee Directors. In granting any Awards to Non-Employee
Directors, the Administrator shall be required to comply with the
applicable procedures, if any, set forth in Rule 16b-3 under the Exchange
Act.
4.3 Effect of Administrator's Decision. All decisions, determinations
and interpretations of the Administrator shall be final and binding.
5. Eligibility. All Employees, Consultants and Non-Employee Directors shall
be eligible to participate in this Plan. All Participants shall be selected by
the Committee.
6. Stock Options and Stock Appreciation Rights.
6.1 Stock Options. The Committee may, in its discretion, grant Options
to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each Option, or portion thereof, that is not an
Incentive Stock Option, shall be a Non-Qualified Stock Option. Each Option
shall be granted within ten years of the effective date of this Plan. To
the extent that the aggregate Fair Market Value (determined as of the date
of grant) of shares of Common Stock with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by
a participant during any calendar year (under this Plan or any other plan
of the Company, or any Parent or Subsidiary) exceeds the amount (currently
<PAGE>
$100,000) set forth in the Code, such Options shall constitute
Non-Qualified Stock Options. The terms of each Option granted by the
Committee shall be embodied in an Agreement.
Options shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable:
6.1.1 Number of Shares and Purchase Price. The number of shares
of Common Stock subject to an Option and the purchase price per share
of Common Stock purchasable upon exercise of the Option shall be
determined by the Committee; provided, however, that the purchase
price per share of Common Stock purchasable upon exercise of an
Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the date of grant of such Option;
provided further, that if an Incentive Stock Option shall be granted
to any person who, at the time such Option is granted, owns capital
stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Company (or of any Parent
or Subsidiary) (a "Ten Percent Holder"), the purchase price per share
of Common Stock shall be the price (currently 110% of Fair Market
Value) required by the Code in order to constitute an Incentive Stock
Option.
6.1.2 Option Period and Exercisability. The period during which
an Option may be exercised shall be determined by the Committee;
provided, however, that no Incentive Stock Option shall be exercised
later than ten years after its date of grant; provided further, that
if an Incentive Stock Option shall be granted to a Ten Percent Holder,
such Option shall not be exercised later than five years after its
date of grant. The Committee may, in its discretion, establish
Performance Measures which shall be satisfied or met as a condition to
the grant of an Option or to the exercisability of all or a portion of
an Option. The Committee shall determine whether an Option shall
become exercisable in cumulative or non-cumulative installments and in
part or in full at any time. An exercisable Option, or portion
thereof, may be exercised only with respect to whole shares of Common
Stock.
6.1.3 Method of Exercise. An Option may be exercised (i) by
giving written notice to the Company specifying the number of whole
shares of Common Stock to be purchased and accompanied by payment
therefor in full (or arrangement made for such payment to the
Company's satisfaction) either (A) in cash, (B) in shares of Common
Stock having a Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of
such exercise, (C) by authorizing the Company to withhold whole shares
of Common Stock which would otherwise be delivered upon exercise of
the Option having a Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of
such exercise, (D) in cash by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of
exercise or (E) a combination of (A), (B) and (C), in each case to the
extent set forth in the Agreement relating to the Option, (ii) if
applicable, by surrendering to the Company any Tandem SARs which are
cancelled by reason of the exercise of the Option and (iii) by
executing such documents as the Company may reasonably request. The
Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(E) and in the case of an
<PAGE>
Optionee who is subject to Section 16 of the Exchange Act, the Company
may require that the method of making such payment be in compliance
with Section 16 and the rules and regulations thereunder. Any fraction
of a share of Common Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall
be paid in cash by the holder. No certificate representing Common
Stock shall be delivered until the full purchase price therefor has
been paid.
6.1.4 Non-Employee Directors. Any Options granted to Non-Employee
Directors shall be Non-Qualified Options.
6.2 Stock Appreciation Rights. The Committee may, in its direction,
grant SARs to such eligible persons as may be selected by the Committee.
The Agreement relating to an SAR shall specify whether the SAR is a Tandem
SAR or a Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem advisable:
6.2.1 Number of SARs and Base Price. The number of SARs subject
to an award shall be determined by the Committee. Any Tandem SAR
related to an Incentive Stock Option shall be granted at the same time
that such Incentive Stock Option is granted and the base price thereof
shall be the purchase price per share of Common Stock of the related
Option. The base price of a Free-Standing SAR or an SAR granted in
tandem with, or by reference to, a Non-Qualified Stock Option shall be
determined by the Committee; provided, however, that such base price
shall not be less than 100% of the Fair Market Value of one share of
Common Stock on the date of grant of such SAR.
6.2.2 Exercise Period and Exercisability. The Agreement relating
to an award of SARs shall specify whether such award may be settled in
shares of Common Stock (including shares of Restricted Stock) or cash
or a combination thereof. The period for the exercise of an SAR shall
be determined by the Committee; provided, however, that no Tandem SAR
shall be exercised later than the expiration, cancellation, forfeiture
or other termination of the related Option. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or
met as a condition to the exercisability of an SAR. The Committee
shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An
exercisable SAR, or portion thereof, may be exercised, in the case of
a Tandem SAR, only with respect to whole shares of Common Stock and,
in the case of a Free-Standing SAR, only with respect to a whole
number of SARs. If an SAR is exercised for shares of Restricted Stock,
a certificate or certificates representing such Restricted Stock shall
be issued in accordance with Section 7.2.3 and the holder of such
Restricted Stock shall have such rights of a stockholder of the
Company as determined pursuant to Section 7.2.4. Prior to the exercise
of an SAR for shares of Common Stock, including Restricted Stock, the
holder of such SAR shall have no rights as a stockholder of the
Company with respect to the shares of Common Stock subject to such
SAR.
<PAGE>
6.2.3 Method of Exercise. A Tandem SAR may be exercised (i) by
giving written notice to the Company specifying the number of whole
SARs which are being exercised, (ii) by surrendering to the Company
any Options which are cancelled by reason of the exercise of the
Tandem SAR and (iii) by executing such documents as the Company may
reasonably request. A Free-Standing SAR may be exercised (i) by giving
written notice to the Company specifying the whole number of SARs
which are being exercised and (ii) by executing such documents as the
Company may reasonably request.
6.3 Termination of Employment.
6.3.1 Disability. Subject to Section 6.3.6 and Section 9.8 and
unless otherwise specified in the Agreement relating to an Option or
SAR, as the case may be, if the employment with the Company of the
holder of an Option or SAR terminates by reason of Permanent and Total
Disability, each Option and SAR held by such holder shall be
exercisable only to the extent that such Option or SAR is exercisable
on the effective date of such holder's termination of employment and
may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earlier to occur of (i)
the date set forth in the Agreement relating to such Option or SAR
after the effective date of such holder's termination of employment
and (ii) the expiration date of the term of such Option or SAR.
6.3.2 Retirement. Subject to Section 6.3.6 and Section 9.8 and
unless otherwise specified in the Agreement relating to an Option or
SAR, as the case may be, if the employment with the Company of the
holder of an Option or SAR terminates by reason of retirement on or
after age 55, each Option and SAR held by such holder shall be
exercisable only to the extent that such Option or SAR is exercisable
on the effective date of such holder's termination of employment and
may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earlier to occur of (i)
the date set forth in the Agreement relating to such Option or SAR
after the effective date of such holder's termination of employment
and (ii) the expiration date of the term of such Option or SAR.
6.3.3 Death. Subject to Section 6.3.6 and Section 9.8 and unless
otherwise specified in the Agreement relating to an Option or SAR, as
the case may be, if the employment with the Company of the holder of
an Option or SAR terminates by reason of death, each Option and SAR
held by such holder shall be exercisable only to the extent that such
Option or SAR is exercisable on the date of death and may thereafter
be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be,
until the earlier to occur of (i) the date set forth in the Agreement
relating to such Option or SAR after the date of death and (ii) the
expiration date of the term of such Option or SAR.
6.3.4 Other Termination. Subject to Section 6.3.6 and Section 9.8
and unless otherwise specified in the Agreement relating to an Option
or SAR, as the case may be, if the employment with the Company of the
holder of an Option or SAR is terminated by the Company for Cause or
is voluntarily terminated by such holder, each Option and SAR held by
such holder shall terminate automatically on the effective date of
such holder's termination of employment. "Cause" shall mean the
conviction of a felony or
<PAGE>
misdemeanor, failure to abide by reasonable requests of the Company's
Chief Executive Officer, the failure to perform duties as determined
by the Company's Chief Executive Officer, any act of dishonesty or
violation of any statutory or common law duty of loyalty to the
Company.
Subject to Section 6.3.6 and Section 9.8 and unless otherwise
specified in the Agreement relating to an Option or SAR, as the case
may be, if the employment with the Company of the holder of an Option
or SAR terminates for any reason other than Permanent and Total
Disability, retirement on or after age 55, death, Cause or voluntary
termination, each Option and SAR held by such holder shall be
exercisable only to the extent that such Option or SAR is exercisable
on the effective date of such holder's termination of employment and
may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earlier to occur of (i)
the date set forth in the Agreement relating to such Option or SAR
after the effective date of such holder's termination of employment
and (ii) the expiration date of the term of such Option or SAR.
6.3.5 Death Following Termination of Employment. Subject to
Section 6.3.6 below and Section 9.8 and unless otherwise specified in
the Agreement relating to an Option or SAR, as the case may be, if the
holder of an Option or SAR dies during the period of exercisability of
such Option or SAR following termination of employment for any reason
other than Cause or voluntary termination, each Option and SAR held by
such holder shall be exercisable only to the extent that such Option or
SAR, as the case may be, is exercisable on the date of such holder's
death and may thereafter be exercised by the holder's executor,
administrator, legal representative, beneficiary or similar person, as
the case may be, until the earlier to occur of (i) the date set forth
in the Agreement relating to such Option or SAR after the date of death
and (ii) the expiration date of the term of such Option or SAR.
6.3.6 Termination of Employment - Incentive Stock Options.
Subject to Section 9.8, if the employment with the Company of a holder
of an Incentive Stock Option terminates by reason of Permanent and
Total Disability, each Incentive Stock Option (including any related
Tandem SAR) held by such holder shall be exercisable only to the
extent that such Option or SAR is exercisable on the effective date of
such holder's termination of employment and may thereafter be
exercised by such holder (or such holder's legal representative or
similar person) until the earlier to occur of (i) the date which is
one year (or such shorter period as set forth in the Agreement
relating to such Option or SAR) after the effective date of such
holder's termination of employment and (ii) the expiration date of the
term of such Incentive Stock Option.
Subject to Section 9.8, if the employment with the Company of a
holder of an Incentive Stock Option terminates by reason of retirement
on or after age 55, each Incentive Stock Option (including any related
Tandem SAR) held by such holder shall be exercisable only to the
extent that such Option or SAR is exercisable on the effective date of
such holder's termination of employment and may thereafter be
exercised by such holder (or holder's legal representative or similar
person) until the earlier to occur of (i) the date which is three
months (or such shorter period as set forth in the Agreement
<PAGE>
relating to such Option or SAR) after the effective date of such
holder's termination of employment and (ii) the expiration date of the
term of the Incentive Stock Option.
Subject to Section 9.8, if the employment with the Company of the
holder of an Incentive Stock Option terminates by reason of death,
each Incentive Stock Option (including any related Tandem SAR) held by
such holder shall be exercisable (only to the extent that such Option
or SAR is exercisable on the date of death, and may thereafter be
exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be,
until the earlier to occur of (i) the date which is three months (or
such shorter period set forth in the Agreement relating to such Option
or SAR) after the date of death and (ii) the expiration date of the
term of such Incentive Stock Option.
If the employment with the Company of the holder of an Incentive
Stock Option is terminated by the Company for Cause or is voluntarily
terminated by such holder, each Incentive Stock Option (including any
related Tandem SAR) held by such holder shall terminate automatically
on the effective date of such holder's termination of employment. If
the employment with the Company of a holder of an Incentive Stock
Option terminates for any reason other than Permanent and Total
Disability, retirement on or after age 55, death, Cause or voluntary
termination, each Incentive Stock Option (including any related Tandem
SAR) held by such holder shall be exercisable only to the extent such
Option is exercisable on the effective date of such holder's
termination of employment and may thereafter be exercised by such
holder (or such holder's legal representative or similar person) until
the earlier to occur of (i) the date which is three months (or such
shorter period as set forth in the Agreement relating to such Option
or SAR) after the effective date of such holder's termination of
employment and (ii) the expiration date of the term of the Incentive
Stock Option.
If the holder of an Incentive Stock Option dies during the
one-year period (or such shorter period as set forth in the Agreement
relating to such Option or SAR) following termination of employment by
reason of Permanent and Total Disability or if the holder of an
Incentive Stock Option dies during the three-month period (or such
shorter period as set forth in the Agreement relating to such Option
or SAR) following termination of employment for any reason other than
Permanent and Total Disability, Cause or voluntary termination, each
Incentive Stock Option (including any related Tandem SAR) held by such
holder shall be exercisable only to the extent such Option is
exercisable on the date of the holder's death and may thereafter be
exercised by the holder's executor, administrator, legal
representative, beneficiary or similar person until the earlier to
occur of (i) the date which is one year (or such shorter period as set
forth in the Agreement relating to such Option or SAR) after the date
of death and (ii) the expiration date of the term of such Incentive
Stock Option.
7. Stock Awards.
7.1 The Committee may, in its discretion, grant Stock Awards to such
eligible persons as may be selected by the Committee. Grants of Restricted
Stock Awards may be conditioned upon the attainment of Performance
Measures. The Agreement relating to a Stock Award shall specify whether the
Stock Award is a Restricted Stock Award or Bonus Stock Award.
<PAGE>
7.2 Stock Awards shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem
advisable.
7.2.1 Number of Shares and Other Terms. The number of shares of
Common Stock subject to a Restricted Stock Award or Bonus Stock Award
and the Performance Measures (if any) and Restriction Period
applicable to a Restricted Stock Award shall be determined by the
Committee.
7.2.2 Vesting and Forfeiture. The Agreement relating to a
Restricted Stock Award shall provide, in the manner determined by the
Committee, in its discretion, and subject to the provisions of this
Plan, for the vesting of the shares of Common Stock subject to such
award (i) if specified Performance Measures are satisfied or met
during the specified Restriction Period or (ii) if the holder of such
award maintains Continuous Status as an Employee during the specified
Restricted Period and for the forfeiture of the shares of Common Stock
subject to such award (x) if specified Performance Measures are not
satisfied or met during the specified Restriction Period or (y) if the
holder of such award does not maintain Continuous Status as an
Employee during the specified Restriction Period. Bonus Stock Awards
shall not be subject to any Performance Measures or Restriction
Periods.
7.2.3 Share Certificates. During the Restriction Period, a
certificate or certificates representing a Restricted Stock Award
shall be registered in the holder's name and may bear a legend, in
addition to any legend which may be required pursuant to Section 9.6,
indicating that the ownership of the shares of Common Stock
represented by such certificate is subject to the restrictions, terms
and conditions of this Plan and the Agreement relating to the
Restricted Stock Award. All such certificates shall be deposited with
the Company, together with stock powers or other instruments of
assignment (including a power of attorney), each endorsed in blank
with a guarantee of signature if deemed necessary or appropriate,
which would permit transfer to the Company of all or a portion of the
shares of Common Stock subject to the Restricted Stock Award in the
event such award is forfeited in whole or in part. Upon termination of
any applicable Restriction Period (and the satisfaction or attainment
of applicable Performance Measures), or upon the grant of a Bonus
Stock Award, in each case subject to the Company's right to require
payment of any taxes in accordance with Section 9.5, a certificate or
certificates evidencing ownership of the requisite number of shares of
Common Stock shall be delivered to the holder of such award.
7.2.4 Rights With Respect to Restricted Stock Awards. Unless
otherwise set forth in the Agreement relating to a Restricted Stock
Award, and subject to the terms and conditions of a Restricted Stock
Award, the holder of such award shall have all rights as a stockholder
of the Company, including, but not limited to, voting rights, the
right to receive dividends and the right to participate in any capital
adjustment applicable to all holders Common Stock; provided, however,
that a distribution with respect to shares of Common Stock, other than
a distribution in cash, shall be deposited with the Company and shall
be subject to the same restrictions as the shares of Common Stock with
respect to which such distribution was made.
<PAGE>
7.2.5 Awards to Certain Executive Officers. Notwithstanding any
other provision of this Section 7, and only to the extent necessary to
ensure the deductibility of the award to the Company, and provided the
Company's Common Stock is registered under Section 12 of the Exchange
Act, the Fair Market Value of the number of shares of Common Stock
subject to a Restricted Stock Award granted to a "covered employee"
within the meaning of Section 162(m) of the Code shall not exceed the
maximum amount permissible under Section 162(m) (i) at the time of
grant in the case of an award granted upon the attainment of
Performance Measures and (ii) the earlier of (x) the date on which
restrictions lapse in the case of a Restricted Stock Award with
restrictions which lapse upon the attainment of Performance Measures,
and (y) the date the holder makes an election under Section 83(b) of
the Code.
7.3 Termination of Employment. Subject to Section 9.8, all of the
terms relating to a Restricted Stock Award, or any cancellation or
forfeiture of such Restricted Stock Award upon a termination of employment
with the Company of the holder of such Restricted Stock Award, whether by
reason of Disability, retirement, death or other termination, shall be set
forth in the Agreement relating to such Restricted Stock Award.
8. Performance Share Awards.
8.1 Performance Share Awards. The Committee may in its discretion
grant Performance Share Awards to such eligible persons as may be selected
by the Committee.
8.2 Terms of Performance Share Awards. Performance Share Awards shall
be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem advisable.
8.2.1 Number of Performance Shares and Performance Measures. The
number of Performance Shares subject to any award and the Performance
Period applicable to such award shall be determined by the Committee.
8.2.2 Vesting and Forfeiture. The Agreement relating to a
Performance Share Award shall provide, in the manner determined by the
Committee, in its discretion, and subject to the provisions of this
Plan, for the vesting of such award, if specified Performance Measures
are satisfied or met during the specified Performance Period, and for
the forfeiture of such award, if specified Performance Measures are
not satisfied or met during the specified Performance Period.
8.2.3 Settlement of Vested Performance Share Awards. The
Agreement relating to a Performance Share Award (i) shall specify
whether such award may be settled in shares of Common Stock (including
shares of Restricted Stock) or cash or a combination thereof and (ii)
may specify whether the holder thereof shall be entitled to receive,
on a current or deferred basis, dividend equivalents, and, if
determined by the Committee, interest on any deferred dividend
equivalents, with respect to the number of shares of Common Stock
subject to such award. If a Performance Share Award is settled in
shares of Restricted Stock, a certificate or certificates representing
such Restricted Stock shall be issued in accordance with Section 7.2.3
and the holder of such Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 7.2.4.
Prior to the settlement of a Performance Share Award in shares of
<PAGE>
Common Stock, including Restricted Stock, the holder of such award
shall have no rights as a stockholder of the Company with respect to
the shares of Common Stock subject to such award.
8.2.4 Awards to Certain Executive Officers. Notwithstanding any
other provision of this Section 8, and only to the extent necessary to
ensure deductibility of any payment under an award made by the
Company, and provided that the Company's Common Stock is registered
under Section 12 of the Exchange Act, the maximum amount payable upon
the attainment of the Performance Measures applicable to an award
granted to any employee who is a "covered employee" within the meaning
of Section 162(m) of the Code at the time of such payment shall be as
set forth in Section 162(m) of the Code.
9. General.
9.1 Effective Date and Term of Plan. This Plan shall be submitted to
the stockholders of the Company for approval and shall become effective on
approval thereof. This Plan shall terminate ten (10) years after its
effective date unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any award granted prior to
termination.
Awards hereunder may be made at any time on or after the date of
adoption of this Plan by the Board, subject to approval by the stockholders
of the Company as provided above, and prior to the termination, of this
Plan, provided that no award may be made later than ten (10) years after
the effective date of this Plan. In the event that this Plan is not
approved by the stockholders of the Company, this Plan and any awards
hereunder shall be void and of no force or effect.
9.2 Amendments. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation including Rule 16b-3 under the Exchange
Act and Section 162(m) of the Code; provided, however, that no amendment
shall be made without stockholder approval if such amendment would (a)
increase the maximum number of shares of Common Stock available for
issuance under this Plan (subject to Section 9.7), (b) effect any change
inconsistent with Section 422 of the Code or (c) extend the term of this
Plan. No amendment may impair the rights of a holder of an outstanding
Award without the consent of such holder.
9.3 Agreement. For each Award under the Plan, the Company shall
furnish a Notice of Grant to the recipient thereof and shall cause the
recipient to enter into an Agreement with respect thereto, unless and to
the extent otherwise determined by the Administrator. The form of Notice of
Grant and Agreement with respect to a Stock Option shall be in
substantially the form of Exhibits "A" and "B" hereto, respectively, with
such changes therein as the Administrator may determine from time to time,
consistent with the terms of the Plan. The form Notice of Grant and
Agreement with respect to any other Award shall be as determined from time
to time by the Administrator, consistent with the terms of the Plan. No
Award shall be valid until an Agreement is executed by the Company and the
recipient of such Award and, upon execution by each party and delivery of
the Agreement to the Company, such Award shall be effective as of the
effective date set forth in the Agreement.
<PAGE>
9.4 Non-Transferability of Stock Options, SARs and Performance Shares.
No Option, SAR or Performance Share shall be transferable other than (i) by
will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company or (ii) as otherwise
permitted under Rule 16b-3 under the Exchange Act as set forth in the
Agreement relating to such award. Each Option, SAR or Performance Share may
be exercised or settled during the participant's lifetime only by the
holder or the holder's guardian, legal representative or similar person, or
any such transferee as permitted under Rule 16b-3 as aforesaid. Except as
permitted by the second preceding sentence, no Option, SAR or Performance
Share may be sold, transferred, assigned, pledged, hypothecated, encumbered
or otherwise disposed of (whether by operation of law or otherwise) or be
subject to execution, attachment or similar process. Upon any attempt to so
sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose
of any Option, SAR or Performance Share, such award and all rights
thereunder shall immediately become null and void.
9.5 Tax Withholding. The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash pursuant to an award made hereunder, payment by the
holder of such award of any federal, state, local or other taxes which may
be required to be withheld or paid in connection with such award. An
Agreement may provide that (i) the Company shall withhold whole shares of
Common Stock which would otherwise be delivered to a holder, having an
aggregate Fair Market Value determined as of the date the obligation to
withhold or pay taxes arises in connection with an award (the "Tax Date"),
or withhold an amount of cash which would otherwise be payable to a holder,
in the amount necessary to satisfy any such obligation or (ii) the holder
may satisfy any such obligation by any of the following means: (A) a cash
payment to the Company, (B) delivery to the Company of shares of Common
Stock having an aggregate Fair Market Value, determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation, (C)
authorizing the Company to withhold whole shares of Common Stock which
would otherwise be delivered having an aggregate Fair Market Value,
determined as of the Tax Date, or withhold an amount of cash which would
otherwise be payable to a holder, equal to the amount necessary to satisfy
any such obligation, (D) in the case of the exercise of an Option, a cash
payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (E) any combination of
(A), (B) and (C), in each case to the extent set forth in the Agreement
relating to the award; provided, however, that the Committee shall have
sole discretion to disapprove of an election pursuant to any of clauses
(B)-(E) and that in the case of a holder who is subject to Section 16 of
the Exchange Act, the Company may require that the method of satisfying
such an obligation be in compliance with Section 16 and the rules and
regulations thereunder. An Agreement may provide for shares of Common Stock
to be delivered or withheld having an aggregate Fair Market Value in excess
of the minimum amount required to be withheld, but not in excess of the
amount determined by applying the holder's maximum marginal tax rate. Any
fraction of a share of Common Stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be
paid in cash by the holder.
9.6 Restrictions on Shares. Each Award shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the
delivery of shares thereunder,
<PAGE>
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected
or obtained, free of any conditions not acceptable to the Company. Each
Award shall be subject to any further restriction upon the acquisition or
disposition of Common Stock subject to such Award which may be set forth in
the Certificate of Incorporation or By-Laws of the Company, whether adopted
or effective before or after the making of such Award.
The Company may require that certificates evidencing shares of Common
Stock delivered pursuant to any Award bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited
except in compliance with the Securities Act and the rules and regulations
thereunder, and/or (ii) except in compliance with the Certificate of
Incorporation or By-Laws of the Company.
9.7 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock
other than a regular cash dividend, the number and class of securities
available under this Plan, the number and class of securities subject to
each outstanding Option and the purchase price per security, the terms of
each outstanding SAR, the number and class of securities subject to each
outstanding Stock Award, and the terms of each outstanding Performance
Share shall be appropriately adjusted by the Committee, such adjustments to
be made in the case of outstanding Options and SARs without an increase in
the aggregate purchase price or base price, other than an increase
resulting from rounding. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive. If any such adjustment
would result in a fractional security being (i) available under this Plan,
such fractional security shall be disregarded, or (ii) subject to an award
under this Plan, the Company shall pay the holder of such award, in
connection with the first vesting, exercise or settlement of such award, in
whole or in part, occurring after such adjustment, an amount in cash
determined by multiplying (i) the fraction of such security (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value
on the vesting, exercise or settlement date over (B) the exercise or base
price, if any, of such award.
9.8 Change in Control.
(a) Except as set forth in Section 9.8(c) below or unless
provided otherwise in the Agreement, a Change in Control of the
Company shall not result in (i) any outstanding Options and SARs
immediately becoming exercisable in full, (ii) the lapse of any
Restriction Period applicable to any outstanding Restricted Stock
Award, (iii) the lapse of any Performance Period applicable to any
outstanding Performance Share and (iv) the deemed satisfaction of any
Performance Measures applicable to any outstanding Restricted Stock
Award and to any outstanding Performance Share. Unless provided
otherwise in the Agreement, in the event of a merger of the Company
with or into another corporation in which the Company is not the
survivor, there shall be no requirement for an Award to be substituted
for or assumed, and such Award shall terminate as of the date of the
merger, and the grantee shall have no claim against the Company, its
officers or directors, the successor corporation or its officers or
directors. Nothing contained herein shall prohibit the Board or the
Committee from accelerating the vesting of any Awards upon the
occurrence of a Change of
<PAGE>
Control. Any good faith determination by the Board as to whether a
Change in Control within the meaning of this Section has occurred
shall be conclusive and binding on the Participants.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange
Act, of 50% or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided that the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from
the Company (excluding any acquisition resulting from the
exercise of a conversion or exchange privilege in respect of
outstanding convertible or exchangeable securities), (B) any
acquisition by the Company, (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (D) any
acquisition by any corporation pursuant to a reorganization,
merger or consolidation involving the Company, if, immediately
after such reorganization, merger or consolidation, each of the
conditions described in clauses (i), (ii) and (iii) of subsection
(3) of this Section 9.8(b) shall be satisfied; provided, however,
that in no event shall a Change in Control be deemed to have
occurred with respect to a Participant if that Participant is
part of a purchasing group which consummates a Change in Control
transaction. A Participant shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if it is an equity
Participant or has been identified as a potential equity
Participant or has agreed to become an equity Participant in the
purchasing company or group, except for (x) passive ownership of
less than three (3%) percent of the shares or voting securities
of the purchasing Company or companies comprising the purchasing
group, or (y) such other ownership of equity participation in the
purchasing company or group which is otherwise not deemed to be
significant, as determined prior to the Change in Control by a
majority of the disinterested Directors.
(2) individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason
to constitute at least two-thirds of such Board; provided that
any individual who becomes a director of the Company subsequent
to the date hereof whose election, or nomination for election by
the Company's stockholders, was nominated and approved by the
Board of Directors shall be deemed to have been a member of the
Incumbent Board; and provided further, that no individual who was
initially elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act,
or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall
be deemed to have been a member of the Incumbent Board and such
person shall not thereafter become
<PAGE>
a member of the Incumbent Board unless approved by two-thirds of
the members of the then Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation unless, in any such case,
immediately after such reorganization, merger or consolidation,
(i) more than 60% of the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation and more than 60% of the combined voting power of
the then outstanding securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals or entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation and in substantially the
same proportions relative to each other as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (other than the Company, any employee benefit plan (or
related trust) sponsored or maintained by the Company or the
corporation resulting from such reorganization, merger or
consolidation (or any corporation controlled by the Company) and
any Person which beneficially owned, immediately prior to such
reorganization, merger or consolidation, directly or indirectly,
50% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 50% or more of the
then outstanding shares of common stock of such corporation or
50% or more of the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the
members of the Board of Directors of the corporation resulting
from such reorganization merger or consolidation were members of
the Incumbent Board at the time of the execution of the initial
agreement or action of the Board of Directors providing for such
reorganization merger or consolidation; or
(4) approval by the stockholders of the Company of (i) a
plan of complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company other than to a corporation with
respect to which, immediately after such sale or other
disposition, (A) more than 60% of the then outstanding shares of
common stock thereof and more than 60% of the combined voting
power of the then outstanding securities thereof entitled to vote
generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
sale or other disposition and in substantially the same
proportions relative to each other as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (other than
the Company, an Exempt Person, any employee benefit plan (or
related trust) sponsored or maintained by the Company or such
corporation (or
<PAGE>
any corporation controlled by the Company) and any Person which
beneficially owned, immediately prior to such sale or other
disposition, directly or indirectly, 50% or more of the
Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 50% or more of the then outstanding
shares of common stock thereof or 50% or more of the combined
voting power of the then outstanding securities thereof entitled
to vote generally in the election of directors and (C) at least a
majority of the members of the Board of Directors thereof were
members of the Incumbent Board at the time of the execution of
the initial agreement or action of the Board providing for such
sale or other disposition.
Notwithstanding anything in this Section 9.8(b) to the
contrary, an event or occurrence (or a series of events or
occurrences) which would otherwise constitute a Change in Control
under the foregoing shall not constitute a Change in Control for
purposes of this Plan if the Board, by majority vote, determines
that a Change in Control does not result therefrom; but only if
Incumbent Directors constitute a majority of the directors voting
in favor of such determination. Further, an event or occurrence
(or a series of events or occurrences) which would not otherwise
constitute a Change in Control under the foregoing shall be
deemed to constitute a Change in Control for purposes of this
Plan if the Board, by majority vote, determines that a Change in
Control does result therefrom; but only if Incumbent Directors
constitute a majority of the directors voting in favor of such
determination. A determination by directors under the provisions
of this paragraph shall be made solely for purposes of this Plan
and shall not directly or indirectly affect any determination or
analysis of whether a change in control results for any other
purpose. Any determination made with respect to whether a change
in control results for purposes of any other plan or agreement of
the Company shall have no effect for purposes of this Plan.
(c) (1) Notwithstanding any contrary provision of this
Section 9.8, upon the occurrence of a Change in Control at any
time after the second anniversary of the date of grant of any
Award hereunder and before the earlier to occur of (i) the
expiration date of the Award or (ii) the sixth anniversary of
such date of grant, and if in connection with such Change in
Control consideration is or is to be paid to the Company or its
shareholders, whether in cash, notes or other property, then, to
the extent set forth in Subsection (c)(2) below, Options and SARs
shall immediately become exercisable, the Restriction Period
shall lapse with respect to any outstanding Restricted Stock
Award, the Performance Period shall lapse with respect to any
outstanding Performance Share and the Performance Measures shall
be deemed satisfied with respect to any outstanding Restricted
Stock Award and Performance Share (the occurrence of such
condition of immediate exercisability, lapse of a Restriction
Period or Performance Period or deemed satisfaction of a
Performance Measure hereinafter called a "Vesting").
(2) An Award shall Vest as provided in Section 9.8(c)(1)
above as to a specified percentage of the outstanding Award,
including in such percentage all Awards, if any, which may have
Vested prior to the Change in Control,
<PAGE>
whether or not then exercised, based on (i) the "Market Value" of
the Company at the time of and giving effect to the Change in
Control, and (ii) the number of full years which have elapsed
since the date of grant of the Award at the time of the Change in
Control, as set forth in the following table, which may be
modified if deemed appropriate by the Administrator:
================================================================================
No. of Years Market Value
------------------------------------
At Least But Less Than Percentage Vesting
- --------------------------------------------------------------------------------
2 $60,000,000 $ 90,000,000 30%
- --------------------------------------------------------------------------------
$90,000,000 $120,000,000 50%
- --------------------------------------------------------------------------------
$120,000,000 $150,000,000 75%
- --------------------------------------------------------------------------------
$150,000,000 100%
- --------------------------------------------------------------------------------
3 or more $120,000,000 $150,000,000 20%
- --------------------------------------------------------------------------------
$150,000,000 $180,000,000 30%
- --------------------------------------------------------------------------------
$180,000,000 $210,000,000 40%
- --------------------------------------------------------------------------------
$210,000,000 $240,000,000 50%
- --------------------------------------------------------------------------------
$240,000,000 $270,000,000 60%
- --------------------------------------------------------------------------------
$270,000,000 $300,000,000 70%
- --------------------------------------------------------------------------------
$300,000,000 $330,000,000 80%
- --------------------------------------------------------------------------------
$330,000,000 $360,000,000 90%
- --------------------------------------------------------------------------------
$360,000,000 100%
================================================================================
(3) As used herein, "Market Value" shall be determined by
(i) calculating the aggregate consideration being paid in
connection with the Change in Control, (ii) calculating the
aggregate percentage of the Company as to which Control is being
Changed, (iii) dividing (i) by (ii) to determine the
consideration being paid for each percentage point of the
Company, and (iv) multiplying the amount of (iii) by 100. By way
of example, if 75% of the outstanding shares of voting stock of
the Company is being acquired by a purchaser for $150,000,000,
the Market Value would be $200,000,000 ($150,000,000 divided by
75 = $2,000,000 x 100 = $200,000,000). Any good faith
determination by the Board as to the Market Value within the
meaning of this Section shall be conclusive and binding on the
Participants.
9.9 No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by
the Company any Subsidiary or any affiliate of the Company or affect in any
manner the right of the Company, any Subsidiary or any
<PAGE>
affiliate of the Company to terminate the employment of any person at any
time without liability hereunder
9.10 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or
other equity security of the Company which is subject to an Award unless
and until such person becomes a stockholder of record with respect to such
shares of Common Stock or equity security.
9.11 Governing Law. This Plan, each Award and the related Agreement,
and all determinations made and actions taken pursuant thereto, to the
extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Nevada and construed in
accordance therewith without giving effect to principles of conflicts of
laws.
9.12 Conditions Upon Issuance of Shares. As a condition to the
exercise of an Option or the issuance of any shares of Common Stock subject
to an Award, the Company may require the person exercising such Option or
receiving such shares to represent and warrant at the time of any such
exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is necessary or required by any of the aforementioned relevant provisions
of law.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any shares of
Common Stock hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained.
9.13 Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of shares of
Common Stock as shall be sufficient to satisfy the requirements of the
Plan.
