As filed with the Securities and Exchange Commission on December 23, 1996
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement
Under
The Securities Act of 1933, as Amended
FOOD CONCEPTS, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada 13-3124057
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (Identification Number)
6601 Lyons Road
C-12
Coconut Creek, Florida 33073
(954) 420-0882
(Address and telephone number of registrant's principal
executive offices and place of business)
1996 NONSTATUTORY STOCK OPTION PLAN
Herbert Glaubman, Chairman
Food Concepts, Inc.
6601 Lyons Road
C-12
Coconut Creek, Florida 33073
(954) 420-0882
(Name, address and telephone number of agent for services)
Copies of all communications, including all communications
sent to the agent for service, should be sent to:
Verdiramo & Verdiramo, P.A.
3163 Kennedy Boulevard
Jersey City, New Jersey 07306
(201) 798-7082
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the Registration Statement
becomes effective
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividends or interest reinvestment plans, check the following
line:
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following line: X
<TABLE>
CALCULATION OF REGISTRATION FEE
Title of each
class of Amount Proposed Proposed Amount of
Securities to be maximum aggregate registration
to be registered registered offering price offering fee fee
per share price
<C> <C> <C> <C> <C>
Common Shares, $.001
par value per share,
issuable upon exercise
of stock options by
Selling Shareholders 1,125,000 $ .01 $ 11,250.00 $ 3.41
525,000 $ .05 $ 26,250.00 7.95
1,000,000 $ .20 $200,000.00 60.67
1,000,000 $ .25 $250,000.00 75.76
600,000 $ .50 $300,000.00 90.91
750,000 $1.00 $750,000.00 227.27
TOTAL 5,000,000 $1,537,500.00 $465.91
</TABLE>
<PAGE>
REOFFER
PROSPECTUS
5,000,000 Shares
FOOD CONCEPTS, INC.
Common Stock
$.001 Par Value
The shares of common stock offered hereby are being sold by certain
shareholders of Food Concepts, Inc. (the "Company")and such shareholders are
hereinafter referred to as "Selling Shareholders". The Company will not
receive any of the proceeds from the sale of the common stock, however, the
Company will receive the proceeds, upon exercise of any and all of the
outstanding option, of which there is no assurance. The common stock as
listed on the OTC Bulletin Board under the symbol JAVA. On December 20, 1996
the closing price for the Company's common stock on the OTC Bulletin Board
was .17 per share. Sales by the Selling Shareholders will be made from time to
time at market prices then obtainable on the OTC Bulletin Board through
securities dealers. See "Plan of Distribution".
THIS OFFERING INVOLVES CERTAIN RISKS. SEE "RISK FACTORS:
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 23, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company can be inspected and copied at the public referenced facilities
maintained by the Commission at Room 1024, 450 Fifth Street N.W., Washington,
D.C. 20549; 7 World Trade Center, New York, New York 10048; and Citicorp
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60601-2511; and
copies of such material can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W. Washington, D.C. 20549 at
prescribed rates. In addition, the Company's securities are listed on the
OTC Bulletin Board and such material can be inspected at such exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this prospectus the
Company's annual report on Form 10-K for its fiscal year ended June 30, 1996,
filed pursuant to Section 13(a) of the Exchange Act, the Company's quarterly
reports on form 10-Q for the fiscal quarters ended September 30, 1996 and all
documents subsequently filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities and Exchange Act of 1934 prior to the
termination of the offering described herein shall be deemed to be incorporated
in this prospectus and to be a part hereof from the date of the filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein modified or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this prospectus.
Any person receiving a copy of this prospectus may obtain without
charge, upon request, a copy of any of the documents incorporated by reference
herein, except for the exhibits to such documents. Requests should be directed
to Herbert Glaubman, Food Concepts, Inc., 6601 Lyons Road, C-12, Coconut Creek,
Florida 33073.
<PAGE>
THE COMPANY
The Company roasts and sells gourmet coffee to various outlets, both
wholesale and mail order. The registrant purchases its raw materials through
coffee importers and agents. The principal source of such raw material is
South America, Central America and Africa. In certain areas distribution of
coffee beans is controlled by government cartels. Therefore, you cannot
purchase the raw materials directly from an intermediary organization. While
the registrant is of the opinion that the sources of raw materials are
plentiful it is still dependent upon the various governments that do control
the raw materials markets.
RISK FACTORS
1. Dependence on a few major customers. The registrants market is very
diverse. Major customers include the Christmas Tree Shops and Palm
Beach Gourmet and the Company is not dependant on any one account.
2. History of Operating Losses. The Company has since its inception not
been profitable. However, although the Company believes its prospects
will be highly successful, there can be no assurance that the
Company's increased sales revenues will continue.
3. Dependence on Personnel. The Company is highly dependent on the
continued services of Herbert Glaubman, its president and founder.
Loss of the services of Mr. Glaubman for any reason would have a
material adverse affect on the Company as they relate both to the
results of its operations and its business prospects. The Company's
ability to maintain its competitive position will depend in part on
its ability to attract and retain qualified personnel. Competition
for such personnel, while not intense, is difficult insomuch as the
individuals have to have various areas of expertise in order to
combine distribution and marketing ability. Further, the Company must
recruit and organize marketing and sales personnel so that it can
continue expansion. The Company competes primarily on the basis of
quality performance and reliability of its product. Competition from
other companies in this field is intense and is expected to increase.
Many of these companies have substantially greater resources,
experience, marketing,financial and managerial resources and
represent significant competition for the Company.
4. Dividends Not Likely. For the foreseeable future it is anticipated
that any earning which are to be generated
<PAGE>
from the operations of the Company will be used to finance the growth
of the Company and that cash dividends will not be paid to stockholders.
5. Fluctuations in Stock Price. The market price of the Company's common
stock could be subject to significant fluctuations in response to
variations and financial results or announcements of material events by
the Company or its competitors.
SELLING SHAREHOLDERS
The Company has instituted a 1996 Nonstatutory Stock Option Plan ("Plan").
The Plan provides for issuance of stock options to certain employees,
consultants, etc. The stock options can be exercised for shares of the
Company's common stock.
PLAN OF DISTRIBUTION
Selling Shareholders may sell all or part of the shares from time to
time at market prices then obtainable on the Bulletin Board through securities
dealers. The ability of the Selling Shareholders to sell any of the shares
however, is subject to any and all restrictions and limitations imposed upon
the Selling Shareholders by the Plan or Plans pursuant to which they acquired
the shares. The Common Stock of the Company is traded on the Bulletin Board.
EXPERTS
The consolidated balance sheet as of June 30, 1996 and the consolidated
statements of income, retained earnings, cash flows and financial statements
schedule for each of the two years in the period ended June 30, 1996,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report which includes an explanatory paragraph as to certain
litigation, by Saul Lipson, 1515 University Drive, Suite 222, Coral Springs,
Florida 33071, independent accountants, given on the authority of that Firm as
experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Shares offered hereby will be passed upon for the
Company by the Law Office of Verdiramo & Verdiramo, P.A., 3163 Kennedy
Boulevard, Jersey City, New Jersey 07306.
<PAGE>
INDEMNIFICATION
Section 78.751 of the general corporation rule of the State of Nevada
under which the registrant is organized empowers a corporation subject to
certain limitations to indemnify its officers, directors, employees and agents
or others acting in similar capacities for other entities at the request of
the registrant including attorneys fees, judgments, fines and other amounts
which may be paid or incurred by them in their capacities as such officers,
directors, employees and agents. The registrants certificate of incorporation
authorizes the Board of Directors to indemnify officers, directors, employees
and agents in the fullest extent permitted by law.
The registrant's bylaws authorize the Board of Directors to indemnify
officers, directors, employees and agents in the same circumstances set forth
in the certificate of incorporation. The bylaws also authorize the registrant
to purchase liability insurance for the benefit of officers, directors,
employees and agents and to enter into indemnity agreements with officers,
directors, employees and agents.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this
registration statement.
(a) Registrant's Annual Report on Form 1O-K for the fiscal year ended
June 30, 1996, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended.
(b) Registrant's quarterly reports on Form 10-Q for the fiscal
quarter ended September 30, 1996 and all other reports, if any,
filed by the Company pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 since the end of the fiscal
year ended June 30, 1996.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934 after the date of this
registration statement and prior to the filing of a post-effective amendment
to this registration statement which indicates that all securities offered
hereunder
<PAGE>
have been sold, or which deregisters all securities then remaining unsold
under this registration statement, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable; the class of securities to be offered is registered
under Section 12 of the Securities Exchange Act of 1934.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the General Corporation law of the State of Nevada,
under which the Registrant is organized, empowers a corporation,
subject to certain limitations, to indemnify its officers, directors,
employees and agents, or others acting in similar capacities for other
entities at the request of the Registrant, against certain expenses,
including attorneys fees, judgments, fines and other amounts which may
be paid or incurred by them in their capacities as such officers,
directors, employees and agents.
The Registrant's certificate of incorporation authorizes the board of
directors to indemnify officers, directors, employees and agents to
the fullest extent permitted by law.
The Registrant's bylaws authorize the board of directors to indemnify
officers, directors, employees and agents the same circumstances set
forth in the certificate of incorporation. The bylaws also authorize
the Registrant to purchase liability insurance for the benefit of
officers, directors, employees and agents and to enter into indemnity
agreements with officers, directors, employees and agents.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
With respect to restricted securities issued under any of the Plan
and to be reoffered or resold pursuant to this Registration Statement,
Registrant relied on the exemption from registration contained in
Section 4(2) of the Securities Act of 1933, as amended, in that the
issuance of such restricted securities involved a transaction by an
issuer not involving a public offering.
<PAGE>
Item 8. EXHIBITS
Exhibit Sequential
Number Page Number Description
I 11 Opinion of Vincent L. Verdiramo, Esq.
II 12 Opinion of Saul Lipson
III 13 1996 Nonstatutory Stock Option Plan
Item 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information
set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the registration statement or any material change
to such information in the registration statement.
Provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to
<PAGE>
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that for
purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report
pursuant to section 23(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person
in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in
FOOD CONCEPTS, INC.
By: /s/ Herbert Glaubman
HERBERT GLAUBMAN, PRESIDENT
<PAGE>
VERDIRAMO & VERDIRAMO, P.A.
3163 Kennedy Boulevard
Jersey City, New Jersey 07306
201.798.7082
December 19, 1996
Gentlemen:
You have requested our opinion as counsel for Food Concepts, Inc. a Nevada
corporation (the "Company") in connection with the Registration and Securities
Act of 1993, as amended, and the rules and regulations thereunder, of
5,000,000 shares of common stock issuable under the Food Concepts, Inc. 1996
Nonstatutory Stock Option Plan. We have examined the Company's registration
statement on Form S-8 and the form to be filed with the Securities and
Exchange Commission on or about December 23, 1996 (the "Registration
Statement"). We further have examined the certificate of incorporation of
the Company as certified by the Secretary of State of the State of Nevada, the
bylaw and minute books of the Company as a basis for the opinion hereinafter
expressed.
Based on the foregoing examination we are of the opinion that, upon issuance
and sale in the manner described in the registration statement, the shares of
common stock covered by the registration statement will be legally issued,
fully paid and nonassessable. We consent to the filing of this opinion as an
exhibit to the registration statement.
VERDIRAMO & VERDIRAMO, P.A.
BY: /s/Vincent L. Verdiramo
Vincent L. Verdiramo
<PAGE>
SAUL B. LIPSON & COMPANY
1515 UNIVERSITY DRIVE, SUITE 222
CORAL SPRINGS, FLORIDA 33071
954.755.4405
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
of Food Concepts, Inc. on form S-8 of our report, which includes an explanatory
paragraph as to certain litigation, dated June 30, 1996, on our audits of
the consolidated financial statements and financial statement schedule of Food
Concepts, Inc. as of June 30, 1996 and September 30, 1996, and for each of
the two years in the period ended June 30, 1996. We also consent to the
reference to our Firm under the caption "experts."
/s/Saul B. Lipson
<PAGE>
FOOD CONCEPTS INC.
1996 NONSTATUTORY STOCK OPTION PLAN
SECTION 1. PURPOSE AND SCOPE OF PLAN
The purpose of this Plan is to advance the interests of the Company
and its stockholders by helping the Company obtain and retain the services of
key management employees, officers, directors and consultants upon whose
judgment, initiative, and efforts the Company is substantially dependent, and
to provide those persons with further incentives to advance the interests of
the Company. These goals will be effectuated by granting Options to purchase
stock to certain key management employees and directors of the Company. Such
Options are not intended to qualify as Incentive Stock Options under Section
422A of the Internal Revenue Code of 1986, as amended.
SECTION 2. CERTAIN DEFINITIONS
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan) will
govern the construction of this Plan, and of any stock option agreements
entered into pursuant to this Plan:
A. "1933 Act" means the federal Securities Act of 1933, as amended;
B. "Board of Directors" means the Board of Directors of the Company;
C. "Cause" shall mean such acts or conduct on the part of an employee or
director which are contrary to the interests of the Company, as determined by
the Board.
D. "Change of Control' shall mean (i) an acquisition of the Company,
which in the sole discretion of the Board immediately prior to such
acquisition, is determined to be an acquisition hostile to, and not in the
best interests of, the stockholders of the Company, or (ii) an acquisition of
fifty percent (50%) or more of the combined voting power of the Company's
then outstanding securities by any person, as such term is used in Sections
13(d)and 14(d)(ii) of the Securities Exchange Act of 1934, as amended (other
than Herbert Glaubman), or (iii) a change in the composition of the Board so
that a majority of the members of the Board immediately prior to such change of
control or change in composition of the Board, is determined to be a change
hostile to, and not in the best interests of, the stockholders of the Company.
E. "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to Sections of
the Code as enacted at the time of this Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor provisions of
the Code resulting from remodification, renumbering or otherwise);
F. "Committee" means the committee of two Disinterested
<PAGE>
Directors, appointed by the Board pursuant to subsection 3(a), below, to
administer and interpret this Plan; provided that the term "Committee" will
refer to the Board during such times as no Committee is appointed by the
Board;
G. "Common Stock" means shares of the Company's Common Stock, $.001 par
value;
H. "Company" means Food Concepts Inc. a Nevada corporation, and/or its
Subsidiaries;
I. "Disability" has the same meaning as "permanent and total disability,"
as defined in Section 22(e)(3) of the Code;
J. "Disinterested Director" means a member of the Board who has not
been, during the period of one year prior to his or her service as an
administrator of the Plan, and is not, during the period of such service,
eligible to be granted or awarded Options under this Plan or any similar plan of
the Company;
K. "Eligible Participant"' means a person who, at a particular time, is
an employee, officer, or director of the Company or of any of its
subsidiaries;
L. "Fair Market Value" means the closing price of the Common Stock, as
traded on the Bulletin Board, on the Grant Date or, if there shall have been
no trades of the Common Stock on such Grant Date, then the closing price of
the Common Stock on the last date, prior to the Grant Date, when the stock
was traded;
M. "Grant Date" means the date on which the option is deemed to be
granted to the Optionee, as determined by the Committee.
N. "Option" means an Option granted pursuant to this Plan entitling the
option holder to acquire shares of Stock issued by the Company pursuant to
the valid exercise of the Option;
O. "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of the Option
Stock called for under such Option;
P. "Option Stock' means Stock issued or issuable by the Company pursuant
to the valid exercise of an Option;
Q. "Optionee" means an Eligible Participant to whom Options are granted
hereunder, and any transferee thereof pursuant to a Transfer authorized under
this Plan;
R. "Plan" means this 1993 Nonstatutory Stock Option Plan of the Company;
S. "QDRO" has the same meaning as "qualified domestic relations order"
as defined in Section 414(p) of the Code;
T. "Stock Option Agreement" means an agreement between the
<PAGE>
Company and an Optionee, in form and substance satisfactory to the Committee
in its sole discretion, consistent with this Plan;
U. "Subject to an Option," or words to similar effect, means issuable
pursuant to the exercise of an Option;
V. "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
W. "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment
or levy of such Option Stock, including without limitation an assignment for the
benefit of creditors of the Optionee, a transfer by operation of law, such as
a transfer by will or under the laws of descent and distribution, an execution
of judgment against the Option Stock or the acquisition of record or
beneficial ownership thereof by a lender or creditor, a transfer pursuant to
a QDRO, or to any decree of divorce, dissolution or separate maintenance, any
property settlement, any separation agreement or any other agreement with a
spouse (except for estate planning purposes) under which a part or all of the
shares of Option Stock are transferred or awarded to the spouse of the
Optionee or are required to be sold; or a transfer resulting from the filing
by the Optionee of a petition for relief, or the filing of an involuntary
petition against such Optionee, under the bankruptcy laws of the United
States or of any other nation.
SECTION 3. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by the Nonstatutory Stock
Option Committee of the Board of Directors of the Company. The Committee
shall consist of not less than two members of the Board of Directors.
(b) The Committee and the president of Food Concepts, Inc. (the
"President") shall each have full authority and discretion to determine,
consistent with the provisions of this Plan, the Eligible Participants to be
granted Options, the times at which Options shall be granted, the Option
Price of the shares subject to each Option (subject to Section 7 of this Plan),
the number of shares subject to each Option, the period during which each Option
becomes exercisable, and the terms to be set forth on each Option certificate.
The Committee also shall have full authority and discretion to adopt and
revise such rules and procedures as it shall deem necessary for the
administration of this Plan.
(c) The Committee's interpretation and construction of any
provisions of this Plan or any Option granted hereunder shall be final,
conclusive, and binding.
SECTION 4. ELIGIBILITY AND AWARD OF STOCK OPTIONS
(a) The Board of Directors, upon recommendation of the Committee
or of the President, may from time to time determine the Eligible Participants
who shall be granted Options under this Plan. An Eligible Participant who has
been granted an Option may be granted an additional Option or Options under
this Plan if the Committee shall so determine. The granting of an
<PAGE>
Option under this Plan shall not affect any outstanding stock option
previously granted to a Optionee under this Plan or any other plan of the
Company.
(b) Additional Options may be granted by the Board of Directors,
upon recommendation of the Committee, at any time and from time to time to new
Optionees, or to then Optionees, or to a greater or lesser number of Optionees,
and may include or exclude previous Optionees. Options granted at different
times need not contain similar provisions.
(c) Notwithstanding the provisions of subsections 4(a) and (b),
above, Options granted to an individual, not previously employed by the
Company, as an inducement essential to entering a contract of employment with
the Company, may not authorize the issuance of more than five percent (5%) of
the Company's issued and outstanding Common Stock, for this purpose.
SECTION 5. SHARES OF STOCK SUBJECT TO PLAN
Subject to the provisions of Section 13 of this Plan, the number of
shares that may be issued pursuant to the Options granted by the Committee
under this Plan shall not exceed five million (5,000,000) shares of Common
Stock of the Company. Any shares subject to an Option under this Plan that
expires for any reason or is terminated unexercised as to such shares may
again be subject to an Option under this Plan.
SECTION 6. STOCK OPTION AGREEMENTS
Options granted pursuant to this Plan shall be authorized by the
Board of Directors of this Company and shall be evidenced by such Stock Option
Agreements or other agreements, in such form as the Board of Directors, upon
recommendation of the Committee, shall from time to time approve. Such
agreements shall comply with and be subject to the terms and conditions of
this Plan.
SECTION 7. OPTION PRICE
(a) Each Option shall state the number of shares to which it
pertains and shall state the Option Price, on the date the Option is granted,
but in no event shall such Option Price be less than the par value of the
Common Stock.
(b) The Option Price shall be payable in United States dollars upon
the exercise of the Option and may be paid in cash or by check, provided,
however, that the Committee, in its discretion, may permit a particular
Optionee to pay all or a portion of the Option Price, and/or the tax
withholding liability set forth in subsection 8(c), below, with respect to the
exercise of an Option either by surrendering shares of Common Stock already
owned by such Optionee or by withholding shares of Option Stock, provided that
the Committee determines that the fair market value of such surrendered Common
Stock or withheld Option Stock is equal to the corresponding portion of such
Option Price and/or tax withholding liability, as the case may be, to be paid
for therewith.
<PAGE>
(c) The Company may, at the sole discretion of the President
and/or the Committee, lend to an Optionee the full amount of the Option Price,
or any portion thereof, on such terms and conditions as the Company and the
Optionee shall agree.
(d) The cash proceeds from the sales of Common Stock pursuant to
the exercise of Options are to be added to the general funds of the Company
and used for its corporate purposes.
SECTION 8. TERM AND EXERCISE OF OPTIONS
(a) Subject to the provisions of subsection 8(c) and Sections 11,
12, and 13, below, the terms of exercisability of each Option granted
hereunder shall be determined by the President and the Committee at their
discretion.
(b) An Option may be exercised to the extent exercisable by: (i)
giving written notice of exercise to the Company, specifying the number of
full shares of Option Stock to be purchased and accompanied by full payment of
the Option Price thereof and the amount of withholding taxes pursuant to
subsection 8(c), below; and (ii) giving assurances satisfactory to the Company
that the shares of Option Stock to be purchased upon such exercise are being
purchased for investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided, however,
that in the event the Option Stock called for under the Option is registered
under the 1933 Act, or in the event resale of such Option Stock without such
registration would otherwise be permissible, this second condition will be
inoperative if, in the opinion of counsel for the Company, such condition is
not required under the 1933 Act, or any other applicable law, regulation or
rule of any governmental agency.
(c) As a condition to the issuance of the shares of Option Stock
upon full or partial exercise of an Option granted under this Plan, the
Committee, in its discretion, may request that the Optionee pay to the Company
in cash, or in such other form as the Committee may determine, the amount of
the Company's tax withholding liability required in connection with such
exercise. For purposes of this subsection 8(c), "tax withholding liability"
will mean all federal and state income taxes, social security tax, and any
other taxes applicable to the compensation income arising from the transaction
required by applicable law to be withheld by the Company.
SECTION 9. NONTRANSFERABILITY
All Options granted under this Plan shall be nontransferable by the
Optionee, otherwise than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime, only by him, her or them.
SECTION 10. REQUIREMENTS OF LAW
The granting of Options and the issuance of shares of Common Stock
upon the exercise of an Option shall be subject to all applicable laws, rules,
and regulations and shares shall not be issued except upon approval of proper
government agencies or stock exchanges as may be required.
<PAGE>
SECTION 11. TERMINATION OF EMPLOYMENT
(a) If an Optionee shall cease to be employed by, or cease to serve
as a director of, the Company as a result of early retirement or retirement for
age or disability, all in accordance with applicable Company policies, all
outstanding Options held by such Optionee shall become immediately exercisable
in full and shall remain exercisable in full during the full term of the
remaining period of exercisability of such Option.
(b) Termination of an Optionee's employment or service by the
Company for Cause in accordance with applicable Company policies shall result in
the immediate cancellation of all outstanding Options held by such Optionee,
whether or not such Options are then exercisable as of the date of such
termination, unless the Board of Directors, in its discretion, shall determine
otherwise.
(c) if an Optionee shall cease to be employed by, or serve with,
the Company for any reason other than those set forth in subsections 11(a)
and (b), above, such Optionee may, but only within a period of 90 days beginning
the day following the date of such termination of employment, exercise his or
her Option, to the extent that such Optionee was entitled to exercise it at
the date of such termination.
SECTION 12. DEATH OF OPTIONEE
In the event of the date of death of an Optionee while in the employ of
the Company or its Subsidiaries, the Option theretofore granted shall be
exercisable only by the proper beneficiary within a period of one year after
death. In the case of an Optionee who dies subsequent to the termination of
his or her employment or term of service with the Company in accordance with
subsections 11 (a) or (c), such deceased Optionee' legal heirs or estate shall
have the right to exercise all outstanding Options to the extent that such
deceased Optionee was entitled to exercise them at the date of his or her
death.
SECTION 13. CHANGE IN CONTROL
In the event there shall be a Change in Control of the Company, all
outstanding Options theretofore granted under this Plan shall become
immediately exercisable and shall remain exercisable during the full term of
the remaining respective periods of exercisability of such Options.
SECTION 14. ADJUSTMENTS
In the event of any change in the number of outstanding shares of
Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination, or exchange of shares,
or other similar corporate change, then if the Committee shall determine, in
its sole discretion, that such change necessarily or equitably requires an
<PAGE>
adjustment in the number of shares subject to each outstanding Option and the
Option Prices or in the maximum number of shares subject to this Plan, such
adjustments shall be made by the Committee and shall be conclusive and binding
for all purposes of this Plan.
SECTION 15. CLAIM TO STOCK OPTION, OWNERSHIP, OR EMPLOYMENT RIGHTS
No employee or other person shall have any claim or right to be
granted Options under this Plan. No Optionee, before issuance of the stock,
shall be entitled to voting rights, dividends, or other rights of stockholders
except as otherwise provided in this Plan. Neither this Plan nor any action
taken hereunder shall be construed as giving any employee or other person any
right to be retained in the employ of the Company or a Subsidiary.
SECTION 16. UNSECURED OBLIGATION
Optionees under this Plan shall not have any interest in any fund or
specific asset of the Company by reason of this Plan. No trust fund shall be
created in connection with this Plan or any award thereunder, and there shall
be no required funding of amounts that may become payable to any Optionee.
SECTION 17. EXPENSES OF PLAN
The expenses of administering the Plan shall be borne by the Company and
its Subsidiaries.
SECTION 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee or of
the Board of Directors shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred in connection with or resulting from any claim,
action, suit, or proceeding to which the person may be a party or in which he
or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid in satisfaction of
judgment in any such action, suit, or proceeding against the person, provided
the Company shall be given an opportunity, at its own expense, to handle and
defend the action on the individual's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power than
the Company may have to indemnify them or hold them harmless.
SECTION 19. AMENDMENT AND TERMINATION
Unless this Plan shall theretofore have been terminated as hereinafter
provided, no Options may be granted after December 19, 2006. The Board of
Director may terminate this Plan or modify or amend this Plan in such respect
as it shall deem advisable, provided, however, that the Board of Directors may
not without prior approval by the Company's shareholders:
(a) Increase the aggregate number of shares of Common Stock as to
which Options may be granted under the Plan except as
<PAGE>
provided in Section 13, above; or
(b) Extend the period during which Options may be granted.
SECTION 20. APPLICABILITY OF PLAN TO OTHER OUTSTANDING STOCK OPTIONS
This Plan shall not affect the terms and conditions of any other
statutory or nonstatutory stock options heretofore granted to any employee of
the Company or its Subsidiaries or to any other person under any other plan
relating to statutory or nonstatutory stock options, nor shall it affect any
of the rights of any employee to whom such a statutory or nonstatutory stock
option was granted.
SECTION 21. EFFECTIVE DATE OF PLAN
The plan shall become effective as of December 20, 1996.
