SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BERENS INDUSTRIES, 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 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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<PAGE>
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
<PAGE>
BERENS INDUSTRIES, INC.
701 N. POST OAK, SUITE 350
HOUSTON, TEXAS 77024
PHONE (713)682-7400 FACSIMILE (713)682-7402
May 5, 2000
Dear Stockholder:
You are cordially invited to attend our 2000 Annual Meeting of Stockholders
of Berens Industries, Inc. to be held on Wednesday, June 7, at 701 N. Post Oak,
Suite 350 at 10:00 a.m. Houston, Texas 77024. We look forward to this
opportunity to update you on developments at Berens Industries, Inc.
We hope you will attend the meeting in person. Whether you expect to be
present and regardless of the number of shares you own, please mark, sign and
mail the enclosed proxy in the envelope provided. Matters on which action will
be taken at the meeting are explained in detail in the notice and proxy
statement following this letter.
Sincerely,
/S/ Marc I. Berens
-------------------
Marc I. Berens
Chief Executive Officer
<PAGE>
BERENS INDUSTRIES, INC.
701 N. POST OAK, SUITE 350
HOUSTON, TEXAS 77024
____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 7, 2000
To the Stockholders of Berens Industries, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Berens
Industries, Inc., will be held at 701 N. Post Oak, Suite 350, Houston, Texas
77024, at 10:00 a.m. on Wednesday, June 7, 2000 for the following purposes:
1. Elect Three Directors. The Board has nominated for re-election Marc
I. Berens, Yolana Berens, and William Ranshaw as directors until the
next annual meeting.
2. Ratify and Approve the Board's Appointment of Ham, Langston &
Brezina, L.L.P. as the Company's Independent Auditors for fiscal
year 2000. Ham, Langston & Brezina, L.L.P. served in this capacity
for fiscal year 1999.
3. Adoption of 2000 Stock Option Plan. The Board seeks approval of the
2000 Stock Option Plan.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 19, 2000 will
be entitled to notice of and to vote at the meeting.
Stockholders unable to attend the Annual Meeting in person are requested to
read the enclosed Proxy Statement and then complete and deposit the proxy
together with the power of attorney or other authority, if any, under which it
was signed, or a notarized certified copy, with the Company at N. Post Oak,
Suite 350, Houston, Texas 77024, at least 48 hours (excluding Saturdays and
Sundays) before the time of the Annual Meeting or with the chairman of the
Annual Meeting prior to the commencement of the Annual Meeting.
Unregistered stockholders who received the proxy through an intermediary
must deliver the proxy in accordance with the instructions given by such
intermediary.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Marc I. Berens
---------------------------------------
Marc I. Berens, Chief Executive Officer
May 5, 2000
THE PROXY STATEMENT WHICH ACCOMPANIES THIS NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS CONTAINS MATERIAL INFORMATION CONCERNING THE MATTERS TO BE
CONSIDERED AT THE MEETING, AND SHOULD BE READ IN CONJUNCTION WITH THIS NOTICE.
<PAGE>
BERENS INDUSTRIES, INC.
701 N. POST OAK, SUITE 350
HOUSTON, TEXAS 77024
(PRINCIPAL EXECUTIVE OFFICE)
____________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
___________
INTRODUCTION
This Proxy Statement is being furnished to stockholders in connection with
the solicitation of proxies by and on behalf of the Board of Directors of Berens
Industries, Inc. for use at the 2000 Annual Meeting of Stockholders ("Meeting")
to be held at 701 N. Post Oak, Suite 350, Houston, Texas 77024, at 10:00 a.m. on
Wednesday, June 7, 2000, for the purpose of considering and voting upon the
matters set forth in the accompanying Notice of Annual Meeting of Stockholders.
This Proxy Statement and the accompanying form of proxy are first being mailed
to stockholders on or about May 5, 2000.
The close of business on April 19, 2000, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting. As of the record date, there were 19,644,860 shares of the Company's
common stock, par value $.001 per share ("Common Stock"), issued and
outstanding. Each share of common stock entitles the holder thereof to one vote
upon any proposal submitted for a vote at the Meeting. The presence, in person
or by proxy, of a majority of the outstanding shares of Common Stock on the
record date is necessary to constitute a quorum at the Meeting. Abstentions and
broker non-votes will be counted towards a quorum. Abstentions will have the
same effect as a vote against a proposal.
Brokers who hold shares in street name for customers are required to vote
those shares in accordance with instructions received from the beneficial
owners. Broker non-votes will have no effect on any of the proposals.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Meeting in accordance with
the directions on the proxies.
If no direction is indicated, the shares will be voted:
1. FOR election of all the nominated directors;
2. FOR ratification of Ham, Langston & Brezina, L.L.P. as the Company's
auditors;
3. FOR ratification of the Company's 2000 Stock Option Plan; and
4. TO transact such other business as may properly come before the
meeting.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy by any one of the following methods:
(a) execution and submission of a revised proxy,
(b) written notice to the Secretary of the Company, or
(c) voting in person at the Meeting.
<PAGE>
ANNUAL REPORT
A copy of the Company's 1999 Annual Report on Form 10-KSB is being mailed
with this Proxy Statement. The Annual Report does not form any part of the
material for solicitation of proxies.
The Company will provide, without charge, a copy of any exhibits to the
Company's Form 10-KSB, upon written request to Marc I. Berens, at N. Post Oak,
Suite 350, Houston, Texas 77024.
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to the Company's By-Laws, the members of the Board of Directors
serve for one-year terms. The number of directors constituting the whole Board
is currently three and the selected nominees are listed below. Each of the
nominees is currently a director of the Company. Unless authority to vote for
any nominee is withheld in the proxy, the persons named in the accompanying
proxy intend to vote FOR the election of the three nominees for director listed
below.
All nominees have indicated a willingness to serve as directors, but if any
of them should decline or be unable to act as a director, the persons named in
the proxy will vote for the election of such nominee or nominees as may be
recommended by the Board of Directors. Under Nevada Corporation Law, each of
the nominees must receive a plurality of the votes of shares of Common Stock
present in person or by proxy at the meeting to be elected as a director. A
plurality means receiving the largest number of votes, regardless of whether
that is a majority. Abstentions will be counted as shares present at the
meeting. The Company anticipates that the holders of a majority of the
outstanding common stock will be present in person or by proxy at the Meeting.
The following biographical information is furnished with respect to each of
the nominees. The information includes the individual's present position with
the Company, period served as a director, and other business experience during
the past five years.
DIRECTORS NOMINATED FOR ELECTION
Marc I. Berens has served as the Company's chief executive officer and has
served as a director since the Company commenced its current operations in June
1999. From 1991 until 1998, Mr. Berens served as chief executive officer of
Mercosur Industries, Inc.
Yolana Berens has served as a director since the Company commenced its
current operations in June 1999. From 1989 until 1998, Ms. Berens served as
director of Mercosur Industries, Inc.
William Ranshaw has served as the Company's chief financial officer
and has served as a director since the Company commenced its current operations
in June 1999. Since November 1998, Mr. Ranshaw has served as the president of
McGuffy Industries, Inc. From January 1997 until March 1998, Mr. Ranshaw served
as vice president and chief financial officer of Superior Wellhead, Inc. From
August 1995 until August 1997, Mr. Ranshaw served as treasurer of Citadel
Computer Systems, Inc.
During the fiscal year ended December 31, 1999, the Company's Board of
Directors held one meeting. No incumbent director attended fewer than 75%
of the meetings. The Company has no audit, compensation, or nominating
committees.
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own beneficially
more than ten percent of the common stock of the Company, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission.
Based solely on the reports received by the Company and on written
representations from certain reporting persons, the Company believes that the
directors, executive officers, and greater than ten percent beneficial owners
have complied with all applicable filing requirements, except for a Form 5 for
Ms. Berens and Mr. Ranshaw that was not timely filed in February 2000 reporting
three transactions, which was filed in May 2000, and a Form 3 for Mr. Ranshaw
that was not timely filed in September 1999, which was filed in May 2000.
The Board of Directors has nominated the above-referenced directors for
election by the stockholders and recommends a vote for such election. The
election of the directors requires a plurality of the votes of the shares of
common stock present in person or represented by proxy at the Meeting.
PROPOSAL 2
RATIFICATION AND APPROVAL OF HAM, LANGSTON, & BREZINA, L.L.P. AS THE COMPANY'S
INDEPENDENT AUDITORS
The Board of Directors has approved the engagement of Ham, Langston, &
Brezina, L.L.P. as independent auditors for the Company. The Board of Directors
wishes to obtain from the stockholders a ratification of the Board's action in
appointing Ham, Langston, & Brezina, L.L.P. as independent auditors of the
Company.
In the event the appointment of Ham, Langston, & Brezina, L.L.P. as
independent auditors is not ratified by the stockholders, the adverse vote will
be considered as a direction to the Board of Directors to select other auditors
for the following year.
Representatives of Ham, Langston, & Brezina, L.L.P. are expected to be
present at the meeting. Representatives of Ham, Langston, & Brezina, L.L.P.
will be given the opportunity to make a statement if they desire to do so. Such
representatives are also expected to be available to respond to questions.
The Board of Directors has recommended the ratification of Ham, Langston, &
Brezina, L.L.P. as independent auditors. Such ratification requires the
affirmative vote of the majority of outstanding shares of common stock present
at the Meeting or represented by proxy.
PROPOSAL 3
ADOPTION OF THE 2000 STOCK OPTION PLAN
The 2000 Stock Option Plan was adopted by the Board of Directors in April
2000, subject to shareholder approval. The Plan will allow stock option grants,
performance stock awards, restricted stock awards, and stock appreciation rights
("SAR") as determined by the Company's compensation committee. The Board has
reserved 2,000,000 shares of common stock for issuance pursuant to the Plan.
The purpose of the Plan is to foster and promote the financial success of the
Company and increase stockholder value by enabling eligible key employees and
others to participate in the long-term growth and financial success of the
company. A summary of the Plan is set forth below, and the full text of the
Plan is attached hereto as Exhibit "A."
ELIGIBILITY. The Plan is open to key employees (including officers and
directors) and consultants of the company and its affiliates ("Eligible
Persons").
TRANSFERABILITY. The grants are not transferable.
<PAGE>
CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The Plan will not effect the right
of the company to authorize adjustments, recapitalizations, reorganizations or
other changes in the company's capital structure. In the event of an
adjustment, recapitalization or reorganization the award shall be adjusted
accordingly. In the event of a merger, consolidation, or liquidation, the
Eligible Person will be eligible to receive a like number of shares of stock in
the new entity he would have been entitled to if immediately prior to the merger
he had exercised his option. The Board may waive any limitations imposed under
the Plan so that all options are immediately exercisable. All outstanding
options may be cancelled by the Board upon written notice to the Eligible Person
and by granting a period in which the options may be exercised.
OPTIONS AND SARS. The company may grant incentive or nonqualified stock
options.
OPTION PRICE. Incentive options shall be not less than the greater of (i) 100%
of fair market value on the date of grant, or (ii) the aggregate par value of
the shares of stock on the date of grant. The compensation committee, at its
option, may provide for a price greater than 100% of fair market value. The
price for 10% or more stockholders shall be not less than 110% of fair market
value.
DURATION. No Option or SAR may be exercisable after the period of 10 years. In
the case of 10% or more stockholder no incentive option may be exercisable after
the expiration of five years.
AMOUNT EXERCISABLE INCENTIVE OPTIONS. No option may be exercisable within six
months from its date of grant unless a shorter time is designated by the Board.
In the event an Eligible Person exercises incentive options during the calendar
year whose aggregate fair market value exceeds $100,000, the exercise of options
over $100,000 will be considered non qualified stock options.
EXERCISE OF OPTIONS. Options may be exercised by written notice to the
compensation committee with:
- - Cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the option price
of the shares;
- - Stock at its fair market value on the date of exercise;
- - An election to make a cashless exercise through a registered broker-dealer
(if approved in advance by the compensation committee).
- - Any other form of payment which is acceptable to the compensation
committee, including with limitation, payment in the form of a promissory
note, and specifying the address to which the certificates for the shares
are to be mailed.
SARS. SARs may, at the discretion of the compensation committee, be included in
each option granted under the Plan to permit the Eligible Person to surrender
that option, or a portion of the part which is then exercisable, and receive in
exchange an amount equal to the excess of the fair market value, in cash, or
partly in cash and partly in shares of stock, as the compensation committee
determines. SARs may be exercised only when the fair market value of the stock
covered by the option surrendered exceeds the exercise price of the stock. In
the event of the surrender of an option, or a portion of it, to exercise the
SARs, the shares represented by the option or that part of it which is
surrendered, shall not be available for reissuance under the Plan. Each SAR
issued in tandem with an option (a) will expire no later than the expiration of
the underlying option, (b) may be for no more than 100% of the difference
between the exercise price of the underlying option and the fair market value of
a share of stock at the time the SAR is exercised, (c) is transferable only when
the underlying option is transferable, and under the same conditions, and (d)
may be exercised only when the underlying option is eligible to be exercised.
TERMINATION OF OPTIONS OR SARS. Unless expressly provided in the option or SAR
agreement, options or SARs shall terminate one day less than three months after
an employees severance of employee with the company other than death, disability
or retirement.
DEATH. Unless the option or SAR expires sooner, the option or SAR will expire
one year after the death of the Eligible Person.
DISABILITY. Unless the option or SAR expires sooner, the option or SAR will
expire one day less than one year after the disability of the Eligible Person.
<PAGE>
RETIREMENT. Unless it is expressly provided otherwise in the option agreement,
before the expiration of an incentive option, the employee shall be retired in
good standing from the employ of the company under the then established rules of
the company, the incentive option shall terminate on the earlier of the options
expiration date or one day less than one year after his retirement; provided,
if an incentive option is not exercised within specified time limits prescribed
by the Internal Revenue Code, it will become a nonqualified option by operation
of law. Unless it is expressly provided otherwise in the option agreement, if
before the expiration of a nonqualified option, the employee shall be retired in
good standing from the employ of the company under the then established rules of
the company, the nonqualified option shall terminate on the earlier of the
nonqualified option's expiration date or one day less than one year after his
retirement. In the event of retirement, the employee shall have the right prior
to the termination of the nonqualified option to the extent to which he was
entitled to exercise it immediately prior to his retirement, unless it is
expressly provided otherwise in the option agreement. Upon retirement, a SAR
shall continue to be exercisable for the remainder of the term of the SAR
agreement.
RELOAD OPTIONS. The Board or compensation committee shall have the authority
(but not an obligation) to include as part of any option agreement a provision
entitling the Eligible Person to further option (a "Reload Option") in the event
the Eligible Person exercises the option in accordance with the Plan and the
terms and conditions of the option agreement. Any such Reload Option (a) shall
be for a number of shares equal to the number of shares surrendered as part or
all of the exercise price of such option, (b) shall have an expiration date
which gave rise to such Reload Option, and (c) shall have an exercise price
which is equal to one hundred percent (100%) of the fair exercise of the
original option. Notwithstanding the foregoing, a Reload Option which is an
incentive option and which is granted to a 10% Stockholder, shall have an
exercise price which is equal to one hundred ten percent (110%) of the fair
market value of the stock subject to the Reload Option on the date of exercise
of the original option and shall have a term which is no longer than five (5)
years.
RESTRICTED STOCK AWARDS. The compensation committee may issue shares of stock
to an Eligible Person subject to the terms of a restricted stock agreement. The
restricted stock may be issued for no payment by the Eligible Person or for a
payment below the fair market value on the date of grant. Restricted stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of time
specified in the restricted stock agreement. The compensation committee shall
determine the period of vesting, the number of shares, the price, if any, of
stock included in a restricted stock award, and the other terms and provisions
which are included in the restricted stock agreement.
AWARD OF PERFORMANCE STOCK The compensation committee may award shares of
stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Compensation Committee are
Satisfied. The terms and provisions herein relating to these performance based
awards are intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific performance
stock award shall be made by the compensation committee in writing prior to the
beginning of the period for which the performance is measured (or within such
period as permitted by IRS regulations).
AMENDMENT OR TERMINATION OF THE PLAN. The Board may amend, terminate or suspend
the Plan at any time, in its sole and absolute discretion; provided, however,
that to the extent required to qualify the Plan under Rule 16b-3 promulgated
under Section 16 of the Exchange Act, no amendment that would (a) materially
increase the number of shares of stock that may be issued under the Plan, (b)
materially modify the requirements as to eligibility for the participation in
the Plan, or (c) otherwise materially increase the benefits accruing to
participants under the Plan, shall be made without the approval of the company's
Stockholders; provided further, however, that to the extent required to maintain
the status of any incentive option under the Code, no amendment that would (a)
change the aggregate number of shares of stock which may be used under incentive
options, or (c) decreases the option price for incentive options below the fair
market value of the stock at the time it is granted, shall be made without the
approval of the Stockholders. Subject to the preceding sentence, the Board
shall have the power to make any changes in the Plan and in the regulations and
administrative provisions under it or in any outstanding incentive option as in
the opinion of counsel for the company may be necessary or appropriate from time
to time to enable any incentive option granted under this Plan to continue to
qualify as an incentive stock option or such other stock option as may be
defined under the Code so as to receive preferential federal income tax
treatment.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES. Under present federal income tax laws, awards
under the Plan will have the following consequences:
- - The grant of an award will not, by itself, result in the recognition of
taxable income to the participant nor entitle the Company to a deduction at
the time of such grant.
- - The exercise of a stock option which is an incentive option within the
meaning of Section 422 of the Code will generally not, by itself, result in
the recognition of taxable income to the participant nor entitle the
Company to a deduction at the time of such exercise. However, a participant
must generally include in alternative minimum taxable income the amount by
which the fair market value on the date of exercise exceeds the exercise
price. The basis of the stock for alternative minimum tax purposes is
adjusted to reflect the gain realized so that the participant will receive
a corresponding deduction for alternative minimum tax purposes in the year
the stock is sold. No alternative minimum tax consequences result for the
Company.
- - If the shares acquired upon exercise of an incentive option are not held
for at least one year after transfer of such shares to the participant or
two years after the grant of the incentive option, whichever is later
(disqualifying disposition), the participant will recognize ordinary income
upon the disposition of the shares in an amount equal to excess of fair
market value on the date of exercise over the exercise price. However, the
amount reportable as compensation is limited to the actual gain realized on
the sale in cases where the sales prices is less than the fair market value
of the stock on the date of exercise. In addition, where a loss is realized
on the sale, no income is reported as compensation. Where the sales price
is in excess of the exercise price, the participant will also recognize
capital gain or loss in an amount equal to the difference between the sales
price and the basis in the stock increased by any income reported as
compensation. In cases where the exercise price is in excess of the sales
price, the participant will recognize capital loss in an amount equal to
the difference between the sales price and the exercise price. Capital
gains or losses will be characterized as short-term if the shares were not
held for more than one year after the exercise date of the incentive option
and as long-term if the shares were held for more than one year after the
exercise date of the incentive option.
- - Where a disqualifying disposition occurs and the participant recognizes
income, the Company will generally be entitled to a corresponding
deduction. The Company will not be entitled to a corresponding deduction
for any capital gain or loss recognized by the participant.
- - If the shares acquired upon exercise of an incentive option are held by the
participant for one year after the incentive option is exercised and two
years after the incentive option was granted, the participant will
recognize a capital gain or loss upon disposition of the shares in an
amount equal to the difference between the sale price and the exercise
price; such capital gain or loss will be characterized as short-term if the
shares were not held for more than one year after the exercise of the
incentive option and long-term if the shares were held for more than one
year after the exercise of the incentive option. The Company will not be
entitled to a corresponding deduction for such capital gain or loss.
- - The exercise of a non-qualified stock option will result in the recognition
of ordinary income by the participant on the date of exercise in an amount
equal to the difference between the exercise price and the fair market
value on the date of exercise of the option shares acquired pursuant to the
stock option.
- - The Company will be allowed a deduction at the time, and in the amount of
any ordinary income recognized by the participant upon the exercise of a
non-qualified stock option, provided the Company meets its federal
withholding tax obligations.
<PAGE>
- - Upon sale of the shares acquired upon exercise of a non-qualified stock
option, any appreciation or depreciation in the value of such shares from
the time of exercise will result in the recognition of a capital gain or
loss by the participant. Such capital gain or loss will be short-term if
the shares were not held by the participant for more than one year after
the exercise of the non-qualified stock option and long-term if the
participant held the shares for more than one year following exercise of
the non-qualified stock option.
AWARDS UNDER THE STOCK OPTION PLAN. At the present time, the Company has
not determined if any options under the 2000 Stock Option Plan will be issued to
the chief executive officer, any executives, any directors, or any employees.
To date, no options have been issued under the Plan.
The Board of Directors has recommended the adoption of the 2000 Stock Option
Plan. Such ratification requires the affirmative vote of the majority of
outstanding shares of common stock present at the Meeting or represented by
proxy.
<PAGE>
EXECUTIVE OFFICERS
The Company's directors and executive officers are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------ --- ------------------------------------
<S> <C> <C>
Marc I. Berens 42 Director and Chief Executive Officer
- ------------------ --- ------------------------------------
Yolana Berens 75 Director
- ------------------ --- ------------------------------------
William Ranshaw 58 Director and Chief Financial Officer
- ------------------ --- ------------------------------------
Kevin P. Willcutts 36 Vice-President of Marketing
- ------------------ --- ------------------------------------
</TABLE>
Please refer to page 2 of this proxy statement for biographies on Messrs.
Berens and Ranshaw and Ms. Berens.
Kevin P. Willcutts has served as the Company's vice-president of marketing
since August 1999. From February 1998 until August 2000, Mr. Willcutts served
as vice-president of marketing of Smilex, Inc. From March 1995 until February
1998, Mr. Willcutts served as director of marketing of Plan 21.
Marc I. Berens is the son of Yolana Berens. There are no other family
relationships among the officers or directors. Pursuant to the Company's
by-laws, each director is elected annually by the Company's stockholders at the
Company's annual meeting. The Company's officers serve at the discretion of the
Board of Directors.
EXECUTIVE COMPENSATION
The following tables contain compensation data for the chief executive
officer of the Company for the fiscal year ended December 31, 1999. No
executive officer or director received in excess of $100,000 in compensation
during the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual
------
Compensation Long Term Compensation
------------ ------------------------------------
Awards
Securities
Name and Restricted Underlying All Other
Principal Positions Year Salary ($) stock award(s) ($) Options/SARs (#) Compensation ($)
- ------------------- ---- ---------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Marc I. Berens, 1999 $37,500 -- -- --
Chief Executive Officer
</TABLE>
EMPLOYMENT AGREEMENTS
In June 1999, Marc I. Berens entered into a three-year employment
agreement with Berensgallery.com, Inc., a wholly-owned subsidiary of the
Company. The employment agreement provides for a monthly salary of $7,500 for
the first year, $10,000 for the second year, and $12,500 for the third year,
plus an annual bonus equal to 5% of the pretax operating profit of the Company.
The employment agreement may be terminated by either party during the term of
the agreement.
In August 1999, Kevin P. Willcutts entered into a six-month employment
agreement with the Company that was renewed for an additional six months in
February 2000. The employment agreement provides for a monthly salary of
$5,000. The employment agreement also provided for the issuance of options to
purchase 50,000 shares of common stock at a price of $1.00 per share expiring in
August 2001.
<PAGE>
The Company does not have any employment agreements with any other of
its officers or directors. The Company maintains life insurances for Mr. Berens
and Ms. Berens in the amounts of $500,000 and $250,000, respectively.
STOCK OPTIONS
As of December 31, 1999, the Company had outstanding options to purchase an
aggregate of 709,250 shares of Common Stock at exercise prices ranging from $.01
to $1.00 per share. Of these options, options to purchase 500,000, 10,000, and
20,000 shares of Common Stock were issued to Ms. Berens, Mr. Willcutts, and Mr.
Ranshaw at an exercise price of $.01 per share. Mr. Willcutts was also issued
an option to purchase 50,000 shares of Common Stock at an exercise price of
$1.00 per share. No options were issued to Mr. Berens.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 19, 2000 the number and
percentage of outstanding shares of Company Common Stock owned by:
- - each person known to the Company to beneficially own more than 5% of its
outstanding Common Stock;
- - each director;
- - each named executive officer; and
- - all executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK BENEFICIALLY OWNED PERCENTAGE OF OWNERSHIP
- ----------------------------------------------------------- ------------------------------- ------------------------
<S> <C> <C>
Marc I. Berens 250,000 1.3%
Yolana Berens 7,400,000 37.7%
William Ranshaw 140,000 less than 1%
All executive officers and directors as a
group (4 persons)
8,050,000 40.8%
</TABLE>
Of the shares held by Ms. Berens, 7,000,000 is held by a trust that is
controlled by Ms. Berens. The business address of each person listed is the
same as the address of the Company's principal executive office, except for
Mr. Ranshaw whose business address is 18635 Telge Road, Cypress, Texas 77077.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1999, the Company completed as reverse merger with
Berensgallery.com, Inc. in which it issued 2,893,250 shares of Company Common
Stock to the shareholders of Berensgallery.com, Inc. Of these shares, an
aggregate of 2,623,000 shares of Company Common Stock were issued to Ms. Berens,
Messrs. Berens and Ranshaw, and a family member of the Berens'. In December
1999, the Company acquired Artmovement.com, Inc. for 12,960,000 shares of
Company Common Stock. Of these shares, an aggregate of 5,340,000 shares of
Company Common Stock were issued to Ms. Berens, Messrs. Berens, Ranshaw, and
Willcutts, and a family member of the Berens'. In February 2000, Mr. Berens was
issued 250,000 shares of Company Common Stock in exchange for his guarantee of
Company credit line.
VOTING PROCEDURES
The Company has one class of voting shares outstanding, namely Common
Stock, of which there were 19,644,860 outstanding at the close of business on
April 19, 2000 (the "Record Date"). Each shareholder present or represented at
the Meeting will be entitled to one vote per share. Shareholder action requires
the affirmative vote by the holders of a majority of the Common Stock voting at
the Meeting.
<PAGE>
COST OF SOLICITATION
The Company will bear the cost of the solicitation of proxies from its
stockholders. In addition to the use of mail, proxies may be solicited by
directors, officers, and regular employees of the Company in person or by
telephone or other means of communication. The directors, officers, and
employees of the Company will not be compensated additionally for the
solicitation, but may be reimbursed for out-of-pocket expenses in connection
with this solicitation.
OTHER MATTERS
The Board of Directors and management of the Company know of no other
matters to be brought before the Meeting. If a shareholder proposal that was
excluded from this Proxy Statement in accordance with Rule 14a-8 of the Exchange
Act is properly brought before the Meeting, it is intended that the proxy
holders will use their discretionary authority to vote the proxies against such
proposal. If any other matters should arise at the Meeting, shares represented
by proxies will be voted at the discretion of the proxy holders.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Under Rule 14a-8 of the Exchange Act, proposals that shareholders intend to
have included in the Company's proxy statement and form of proxy for the 2001
Annual Meeting of Stockholders must be received by the Company no later than
January 5, 2001. However, if the date of the 2001 Annual Meeting of
Shareholders changes by more than 30 days from the date of the 2000 Annual
Meeting of Shareholders, the deadline is a reasonable time before the Company
begins to print and mail its proxy materials, which deadline will be set forth
in a quarterly report on Form 10-QSB or will otherwise be communicated to
shareholders. Shareholder proposals must also be otherwise eligible for
inclusion.
Moreover, with respect to any proposal by a shareholder not seeking to have
the proposal included in the proxy statement but seeking to have the proposal
considered at the 2001 Annual Meeting of Stockholders, such stockholder must
provide written notice of such proposal to the Secretary of the Company at the
principal executive offices of the Company by March 21, 2001. With respect to a
proposal not to be included in the proxy statement, in the event notice is not
timely given to the Company, the persons who are appointed as proxies may
exercise their discretionary voting authority with respect to such proposals, if
the proposal is considered at the 2001 Annual Meeting of Stockholders, even if
the stockholders have not been advised of the proposal. In addition,
stockholders must comply in all respects with the rules and regulations of the
Securities and Exchange Commission then in effect and the procedural
requirements of the Company's Bylaws.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Marc I. Berens
---------------------------------------
Marc I. Berens, Chief Executive Officer
May 5, 2000
<PAGE>
BERENS INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
June 7, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BERENS
INDUSTRIES, INC. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of BERENS INDUSTRIES, INC. (the "Company")
hereby appoints Debra Tritt, the true and lawful attorney, agent and proxy of
the undersigned with full power of substitution for and in the name of the
undersigned, to vote all the shares of Common Stock or Common Stock Equivalents
of the Company which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Company's principal
executive offices at 701 N. Post Oak, Suite 350, Houston, Texas 77024, on
Wednesday, June 7, 2000 at 10:00 a.m., and any and all adjournments thereof,
with all of the powers which the undersigned would possess if personally
present, for the following purposes:
FOR AGAINST ABSTAIN
--- ------- -------
1. To elect Marc I. Berens as director. [ ] [ ] [ ]
2. To elect Yolana Berens as director. [ ] [ ] [ ]
3. To elect William Ranshaw as director. [ ] [ ] [ ]
4. To ratify the appointment of Ham, Langston, [ ] [ ] [ ]
& Brezina, LLP as the Company's independent
public accountants.
5. To ratify the 2000 Employee Stock Option Plan [ ] [ ] [ ]
The proxies are authorized to vote as they determine in their discretion upon
such other matters as may properly come before the meeting.
THIS PROXY WILL BE VOTED FOR THE CHOICE SPECIFIED. IF NO CHOICE IS SPECIFIED
FOR EACH ITEM, THIS PROXY WILL BE VOTED FOR THAT ITEM.
The undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy
Statement.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
DATED:
------------------------------ -----------------------------
[Signature]
-----------------------------
[Signature if jointly held]
-----------------------------
[Printed Name]
Please sign exactly as name appears on stock certificate(s). Joint owners
should each sign. Trustees and others acting in a representative capacity
should indicate the capacity in which they sign.
<PAGE>
BERENS INDUSTRIES, INC.
2000 STOCK OPTION PLAN
ARTICLE I - PLAN
1.1 PURPOSE. This Plan is a plan for key Employees (including officers
-------
and employee directors) and Consultants of the Company and its Affiliates and is
intended to advance the best interests of the Company, its Affiliates, and its
stockholders by providing those persons who have substantial responsibility for
the management and growth of the Company and its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in the employ of the
Company or any of its Affiliates.
1.2 RULE 16B-3 PLAN. The Company is subject to the reporting
-----------------
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and therefore the Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the 1934 Act. To the extent any provision of the Plan or action by the
Board of Directors or Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee. In
addition, the Board of Directors may amend the Plan from time to time as it
deems necessary in order to meet the requirements of any amendments to Rule
16b-3 without the consent of the shareholders of the Company.
1.3 EFFECTIVE DATE OF PLAN. The Plan shall be effective June 2000 (the
----------------------
"Effective Date"), provided that within one year of the Effective Date, the Plan
shall have been approved by at least a majority vote of stockholders. No
Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted
Stock Award or Performance Stock Award shall be granted pursuant to the Plan ten
years after the Effective Date.
ARTICLE II - DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
2.2 "AWARD" means each of the following granted under this Plan:
Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted
Stock Award or Performance Stock Award.
2.3 "BOARD OF DIRECTORS" means the board of directors of the Company.
2.4 "CHANGE IN CONTROL" shall mean and include the following
transactions or situations:
<PAGE>
(1) A sale, transfer, or other disposition by the Company through
a single transaction or a series of transactions of securities of the Company
representing thirty (30%) percent or more of the combined voting power of the
Company's then outstanding securities to any "Unrelated Person" or "Unrelated
Persons" acting in concert with one another. For purposes of this definition,
the term "Person" shall mean and include any individual, partnership, joint
venture, association, trust corporation, or other entity (including a "group" as
referred to in Section 13(d)(3) of the 1934 Act). For purposes of this
definition, the term "Unrelated Person" shall mean and include any Person other
than the Company, a wholly-owned subsidiary of the Company, or an employee
benefit plan of the Company; provided however, a sale to underwriters in
connection with a public offering of the Company's securities pursuant to a firm
commitment shall not be a Change of Control.
(2) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(3) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least thirty (30%) percent of the combined voting power of the Company's then
outstanding securities. For purposes of this definition, the term "Beneficial
Owner" shall have the same meaning as given to that term in Rule 13d-3
promulgated under the 1934 Act, provided that any pledgee of voting securities
is not deemed to be the Beneficial Owner thereof prior to its acquisition of
voting rights with respect to such securities.
(4) Any consolidation or merger of the Company with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the beneficial owners of securities of the surviving
corporation representing at least fifty (50%) percent of the combined voting
power of the surviving corporation's then outstanding securities.
(5) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
(6) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the 1934 Act, or any successor regulation of similar
importance, regardless of whether the Company is subject to such reporting
requirement.
2.5 "CODE" means the Internal Revenue Code of 1986, as amended.
2.6 "COMMITTEE" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of Directors. The
Committee shall be comprised solely of at least two members who are both
Disinterested Persons and Outside Directors or by the Board of Directors in its
entirety.
2.7 "COMPANY" means Berens Industries, Inc.
2.8 "CONSULTANT" means any person, including an advisor, engaged by
the Company or Affiliate to render services and who is compensated for such
services.
2.9 "DISINTERESTED PERSON" means a "disinterested person" as that term
is defined in Rule 16b-3 under the 1934 Act.
2.10 "ELIGIBLE PERSONS" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are (i) key personnel
(including officers and directors) of the Company or Affiliate, or (ii)
Consultants or independent contractors who provide valuable services to the
Company or Affiliate as determined by the Committee.
2.11 "EMPLOYEE" means a person employed by the Company or any
Affiliate to whom an Award is granted.
A-2
<PAGE>
2.12 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the NASDAQ National Market
System; or (c) if the Stock is not listed on the NASDAQ National Market System,
the average of the high and low bid quotations for the Stock on that date as
reported by the National Quotation Bureau Incorporated; or (d) if none of the
foregoing is applicable, an amount at the election of the Committee equal to
(x), the average between the closing bid and ask prices per share of Stock on
the last preceding date on which those prices were reported or (y) that amount
as determined by the Committee in good faith.
2.13 "INCENTIVE OPTION" means an option to purchase Stock granted
under this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.
2.14 "NONQUALIFIED OPTION" means an option to purchase Stock granted
under this Plan other than an Incentive Option.
2.15 "OPTION" means both an Incentive Option and a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.16 "OPTION AGREEMENT" means the written agreement by and between the
Company and an Eligible Person which sets out the terms of an Option.
2.17 "OUTSIDE DIRECTOR" means a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.
2.18 "PLAN" means the Berens Industries, Inc. 2000 Stock Option Plan,
as set out in this document and as it may be amended from time to time.
2.19 "PLAN YEAR" means the Company's fiscal year.
2.20 "PERFORMANCE STOCK AWARD" means an award of shares of Stock to be
issued to an Eligible Person if specified predetermined performance goals are
satisfied as described in Article VI.
2.21 "RESTRICTED STOCK" means Stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with (i)
all rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.
2.22 "RESTRICTED STOCK AGREEMENT" means an agreement between the
Company or any Affiliate and the Eligible Person pursuant to which the Eligible
Person receives a Restricted Stock Award subject to Article VI.
2.23 "RESTRICTED STOCK AWARD" means an Award of Restricted Stock.
2.24 "RESTRICTED STOCK PURCHASE PRICE" means the purchase price, if
any, per share of Restricted Stock subject to an Award. The Restricted Stock
Purchase Price shall be determined by the Committee. It may be greater than or
less than the Fair Market Value of the Stock on the date of the Stock Award.
2.25 "STOCK" means the common stock of the Company, $.001 par value
or, in the event that the outstanding shares of common stock are later changed
into or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
A-3
<PAGE>
2.26 "STOCK APPRECIATION RIGHT" and "SAR" means the right to receive
the difference between the Fair Market Value of a share of Stock on the grant
date and the Fair Market Value of the share of Stock on the exercise date.
2.27 "10% STOCKHOLDER" means an individual who, at the time the Option
is granted, owns Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Affiliate. An individual
shall be considered as owning the Stock owned, directly or indirectly, by or for
his brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants; and Stock owned, directly or indirectly, by
or for a corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its stockholders, partners, or
beneficiaries.
ARTICLE III - ELIGIBILITY
The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee shall
determine from time to time. However, no member of the Committee shall be
eligible to receive any Award or to receive Stock, Options, Stock Appreciation
Rights or any Performance Stock Award under any other plan of the Company or any
of its Affiliates, if to do so would cause the individual not to be a
Disinterested Person or Outside Director. The Board of Directors of Directors
may designate one or more individuals who shall not be eligible to receive any
Award under this Plan or under other similar plans of the Company.
ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
4.1 AUTHORITY TO GRANT AWARDS. The Committee may grant to those
----------------------------
Eligible Persons of the Company or any of its Affiliates as it shall from time
to time determine, Awards under the terms and conditions of this Plan. Subject
only to any applicable limitations set out in this Plan, the number of shares of
Stock to be covered by any Award to be granted to an Eligible Person shall be
determined by the Committee.
4.2 DEDICATED SHARES. The total number of shares of Stock with
-----------------
respect to which Awards may be granted under the Plan shall be 2,000,000 shares.
The shares may be treasury shares or authorized but unissued shares. The
maximum number of shares subject to options or stock appreciation rights which
may be issued to any eligible person under the plan during each plan year shall
be determined by the compensation committee. The maximum number of shares
subject to restricted stock awards which may be granted to any eligible person
under the plan during each plan year shall be determined by the compensation
committee. The maximum number of shares subject to performance stock awards
which may be granted to any eligible person during each plan year shall be
determined by the compensation committee. The number of shares stated in this
Section 4.2 shall be subject to adjustment in accordance with the provisions of
Section 4.5. In the event that any outstanding Award shall expire or terminate
for any reason or any Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award under the
Plan.
4.3 NON-TRANSFERABILITY. Awards shall not be transferable by the
-------------------
Eligible Person otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during the Eligible Person's lifetime,
only by him. Restricted Stock shall be purchased by and/or become vested under a
Restricted Stock Agreement during the Eligible Person's lifetime, only by him.
Any attempt to transfer an Award other than under the terms of the Plan and the
Agreement shall terminate the Award and all rights of the Eligible Person to
that Award.
A-4
<PAGE>
4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or
-------------------
issue any Stock under any Award if issuing that Stock would constitute or result
in a violation by the Eligible Person or the Company of any provision of any
law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
-----------------------------------------------
(1) The existence of outstanding Options or Awards shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money,
services or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options under this Plan shall be appropriately
adjusted in such a manner as to entitle an Eligible Person to receive upon
exercise of an Option, for the same aggregate cash consideration, the equivalent
total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of shares of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class of shares
of Stock then reserved, that number and class of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class of Stock as the result of the event requiring the adjustment.
(2) If the Company is merged or consolidated with another
corporation and the Company is not the surviving corporation, or if the Company
is liquidated or sells or otherwise disposes of substantially all its assets
while unexercised Options remain outstanding under this Plan:
(1) subject to the provisions of clause (c) below, after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of the Option, to receive, in lieu of shares of Stock,
the number and class or classes of shares of stock or other securities or
property to which the holder would have been entitled if, immediately prior to
the merger, consolidation, liquidation, sale or other disposition, the holder
had been the holder of record of a number of shares of Stock equal to the number
of shares as to which the Option shall be so exercised;
(2) the Board of Directors may waive any limitations set out
in or imposed under this Plan so that all Options, from and after a date prior
to the effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Board of Directors, shall be
exercisable in full; and
A-5
<PAGE>
(3) all outstanding Options may be canceled by the Board of
Directors as of the effective date of any merger, consolidation, liquidation,
sale or other disposition, if (i) notice of cancellation shall be given to each
holder of an Option and (ii) each holder of an Option shall have the right to
exercise that Option in full (without regard to any limitations set out in or
imposed under this Plan or the Option Agreement granting that Option) during a
period set by the Board of Directors preceding the effective date of the merger,
consolidation, liquidation, sale or other disposition and, if in the event all
outstanding Options may not be exercised in full under applicable securities
laws without registration of the shares of Stock issuable on exercise of the
Options, the Board of Directors may limit the exercise of the Options to the
number of shares of Stock, if any, as may be issued without registration. The
method of choosing which Options may be exercised, and the number of shares of
Stock for which Options may be exercised, shall be solely within the discretion
of the Board of Directors.
(3) After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Eligible Person shall be
entitled to have his Restricted Stock and shares earned under a Performance
Stock Award appropriately adjusted based on the manner the Stock was adjusted
under the terms of the agreement of merger or consolidation.
(4) In each situation described in this Section 4.5, the Committee
will make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.
(5) The issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe for them, or upon conversion of shares or
obligations of the Company convertible into shares or other securities, shall
not affect, and no adjustment by reason of such issuance shall be made with
respect to, the number, class, or price of shares of Stock then subject to
outstanding Awards.
4.6 ELECTION UNDER SECTION 83(B) OF THE CODE. No Employee shall
----------------------------------------------
exercise the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Awards
issued to him under this Plan.
ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 TYPE OF OPTION. The Committee shall specify at the time of grant
----------------
whether a given Option shall constitute an Incentive Option or a Nonqualified
Option. Incentive Stock Options may only be granted to Employees.
5.2 OPTION PRICE. The price at which Stock may be purchased under an
-------------
Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased under an Incentive Option shall be more than 100% of Fair
Market Value. In the case of any 10% Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110% of
the Fair Market Value of the Stock on the date the Incentive Option is granted.
The price at which shares of Stock may be purchased under a Nonqualified Option
shall be such price as shall be determined by the Committee in its sole
discretion but in no event lower than the par value of the shares of Stock on
the date the Option is granted.
5.3 DURATION OF OPTIONS AND SARS. No Option or SAR shall be
--------------------------------
exercisable after the expiration of ten (10) years from the date the Option or
SAR is granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.
A-6
<PAGE>
5.4 AMOUNT EXERCISABLE -- INCENTIVE OPTIONS. Each Option may be
-------------------------------------------
exercised from time to time, in whole or in part, in the manner and subject to
the conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding, and further provided
that no Option may be exercisable within six (6) months of the date of grant,
unless otherwise stated in the Option Agreement. To the extent that the
aggregate Fair Market Value (determined as of the time an Incentive Option is
granted) of the Stock with respect to which Incentive Options first become
exercisable by the optionee during any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company or any Affiliate) exceeds
$100,000, the portion in excess of $100,000 of the Incentive Option shall be
treated as a Nonqualified Option. In making this determination, Incentive
Options shall be taken into account in the order in which they were granted.
5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by the
---------------------
delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:
(1) cash, certified check, bank draft, or postal or express money
order payable to the order of the Company for an amount equal to the option
price of the shares,
(2) Stock at its Fair Market Value on the date of exercise, (if
approved in advance by the Committee),
(3) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Committee),
(4) an election to have shares of Stock, which otherwise would be
issued on exercise, withheld in payment of the exercise price (if approved in
advance by the Committee), and/or
(5) any other form of payment which is acceptable to the
Committee, including without limitation, payment in the form of a promissory
note, and specifying the address to which the certificates for the shares are to
be mailed.
As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or
less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when
a stock transfer agent of the Company shall have deposited the certificates in
the United States mail, addressed to the Eligible Person, at the address
specified by the Eligible Person.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Eligible Person, the Eligible Person shall deliver to the Company certificates
registered in the name of the Eligible Person representing a number of shares of
Stock legally and beneficially owned by the Eligible Person, free of all liens,
claims, and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by a commercial bank or trust company or
by a brokerage firm having a membership on a registered national stock
exchange). The delivery of certificates upon the exercise of Options is subject
to the condition that the person exercising the Option provide the Company with
the information the Company might reasonably request pertaining to exercise,
sale or other disposition.
5.6 STOCK APPRECIATION RIGHTS. All Eligible Persons shall be eligible
--------------------------
to receive Stock Appreciation Rights. The Committee shall determine the SAR to
be awarded from time to time to any Eligible Person. The grant of an SAR to be
awarded from time to time shall neither entitle such person to, nor disqualify
such person, from participation in any other grant of awards by the Company,
whether under this Plan or any other plan of the Company. If granted as a
stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
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<PAGE>
5.7 STOCK APPRECIATION RIGHTS IN TANDEM WITH OPTIONS. Stock
------------------------------------------------------
Appreciation Rights may, at the discretion of the Committee, be included in each
Option granted under the Plan to permit the holder of an Option to surrender
that Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. The payment may be
made in shares of Stock valued at Fair Market Value, in cash, or partly in cash
and partly in shares of Stock, as the Committee shall decide in its sole
discretion. Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Stock covered by the Option surrendered exceeds the exercise
price of the Stock. In the event of the surrender of an Option, or a portion of
it, to exercise the Stock Appreciation Rights, the shares represented by the
Option or that part of it which is surrendered, shall not be available for
reissuance under the Plan. Each Stock Appreciation Right issued in tandem with
an Option (a) will expire not later than the expiration of the underlying
Option, (b) may be for no more than 100% of the difference between the exercise
price of the underlying Option and the Fair Market Value of a share of Stock at
the time the Stock Appreciation Right is exercised, (c) is transferable only
when the underlying Option is transferable, and under the same conditions, and
(d) may be exercised only when the underlying Option is eligible to be
exercised.
5.8 CONDITIONS OF STOCK APPRECIATION RIGHTS. All Stock Appreciation
------------------------------------------
Rights shall be subject to such terms, conditions, restrictions or limitations
as the Committee deems appropriate, including by way of illustration but not by
way of limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company or
payment of any applicable employment or withholding taxes.
5.9 PAYMENT OF STOCK APPRECIATION RIGHTS. The amount of payment to
----------------------------------------
which the Eligible Person who reserves an SAR shall be entitled upon the
exercise of each SAR shall be equal to the amount, if any by which the Fair
Market Value of the specified shares of Stock on the exercise date exceeds the
Fair Market Value of the specified shares of Stock on the date of grant of the
SAR. The SAR shall be paid in either cash or Stock, as determined in the
discretion of the Committee as set forth in the SAR agreement. If the payment
is in Stock, the number of shares to be paid shall be determined by dividing the
amount of such payment by the Fair Market Value of Stock on the exercise date of
such SAR.
5.10 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is expressly
-----------------------------------------
provided otherwise in the Option or SAR agreement, Options and SAR granted to
Employees shall terminate one day less than three months after severance of
employment of the Employee from the Company and all Affiliates for any reason,
with or without cause, other than death, retirement under the then established
rules of the Company, or severance for disability. Whether authorized leave of
absence or absence on military or government service shall constitute severance
of the employment of the Employee shall be determined by the Committee at that
time.
5.11 DEATH. If, before the expiration of an Option or SAR, the
-----
Eligible Person, whether in the employ of the Company or after he has retired or
was severed for disability, or otherwise dies, the Option or SAR shall continue
until the earlier of the Option's or SAR's expiration date or one year following
the date of his death, unless it is expressly provided otherwise in the Option
or SAR agreement. After the death of the Eligible Person, his executors,
administrators or any persons to whom his Option or SAR may be transferred by
will or by the laws of descent and distribution shall have the right, at any
time prior to the Option's or SAR's expiration or termination, whichever is
earlier, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in the
Option or SAR's agreement.
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<PAGE>
5.12 RETIREMENT. Unless it is expressly provided otherwise in the
----------
Option Agreement, before the expiration of an Incentive Option, the Employee
shall be retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after his
retirement; provided, if an Incentive Option is not exercised within specified
time limits prescribed by the Code, it will become a Nonqualified Option by
operation of law. Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on the
earlier of the Nonqualified Option's expiration date or one day less than one
year after his retirement. In the event of retirement, the Employee shall have
the right prior to the termination of the Nonqualified Option to exercise the
Nonqualified Option, to the extent to which he was entitled to exercise it
immediately prior to his retirement, unless it is expressly provided otherwise
in the Option Agreement. Upon retirement, an SAR shall continue to be
exercisable for the remainder of the term of the SAR agreement.
5.13 DISABILITY. If, before the expiration of an Option or SAR, the
----------
Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's expiration
date or one day less than one year after the date he was severed because of
disability, unless it is expressly provided otherwise in the Option or SAR
agreement. In the event that the Employee shall be severed from the employ of
the Company for disability, the Employee shall have the right prior to the
termination of the Option or SAR to exercise the Option, to the extent to which
he was entitled to exercise it immediately prior to his retirement or severance
of employment for disability, unless it is expressly provided otherwise in the
Option Agreement.
5.14 SUBSTITUTION OPTIONS. Options may be granted under this Plan from
--------------------
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and
conditions of the substitute Options granted may vary from the terms and
conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
5.15 RELOAD OPTIONS. Without in any way limiting the authority of the
---------------
Board of Directors or Committee to make or not to make grants of Options
hereunder, the Board of Directors or Committee shall have the authority (but not
an obligation) to include as part of any Option Agreement a provision entitling
the Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Stock in accordance with this Plan
and the terms and conditions of the Option Agreement. Any such Reload Option
(a) shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (b) shall have an expiration
date which is the greater of (i) the same expiration date of the Option the
exercise of which gave rise to such Reload Option or (ii) one year from the date
of grant of the Reload Option; and (c) shall have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Reload Option which is an Incentive Option and
which is granted to a 10% Stockholder, shall have an exercise price which is
equal to one hundred ten percent (110%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified Option,
as the Board of Directors or Committee may designate at the time of the grant of
the original Option; provided, however, that the designation of any Reload
Option as an Incentive Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock Options
described in the Plan and in Section 422(d) of the Code. There shall be no
Reload Options on a Reload Option. Any such Reload Option shall be subject to
the availability of sufficient shares under Section 4.2 herein and shall be
subject to such other terms and conditions as the Board of Directors or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
5.16 NO RIGHTS AS STOCKHOLDER. No Eligible Person shall have any
---------------------------
rights as a stockholder with respect to Stock covered by his Option until the
date a stock certificate is issued for the Stock.
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ARTICLE VI - RESTRICTED STOCK AWARDS
6.1 RESTRICTED STOCK AWARDS. The Committee may issue shares of Stock
------------------------
to an Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Restricted Stock Award, and the other terms and provisions which are included
in a Restricted Stock Agreement.
6.2 RESTRICTIONS. Restricted Stock shall be subject to the terms and
------------
conditions as determined by the Committee, including without limitation, any or
all of the following:
(1) a prohibition against the sale, transfer, alienation, pledge
or other encumbrance of the shares of Restricted Stock, such prohibition to
lapse (i) at such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);
(2) a requirement that the holder of shares of Restricted Stock
forfeit, or in the case of shares sold to an Eligible Person, resell back to the
Company at his cost, all or a part of such shares in the event of termination
of the Eligible Person's employment during any period in which the shares
remain subject to restrictions;
(3) a prohibition against employment of the holder of Restricted
Stock by any competitor of the Company or its Affiliates, or against such
holder's dissemination of any secret or confidential information belonging to
the Company or an Affiliate;
(4) unless stated otherwise in the Restricted Stock Agreement,
(1) if restrictions remain at the time of severance of
employment with the Company and all Affiliates, other than for reason of
disability or death, the Restricted Stock shall be forfeited; and
(2) if severance of employment is by reason of disability or
death, the restrictions on the shares shall lapse and the Eligible Person or his
heirs or estate shall be 100% vested in the shares subject to the Restricted
Stock Agreement.
6.3 STOCK CERTIFICATE. Shares of Restricted Stock shall be registered
-----------------
in the name of the Eligible Person receiving the Restricted Stock Award and
deposited, together with a stock power endorsed in blank, with the Company. Each
such certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Stock represented by
it is restricted by and subject to the terms and conditions (including
conditions of forfeiture) contained in the Berens Industries, Inc. 2000 Stock
Option Plan, and an agreement entered into between the registered owner and the
Company. A copy of the Plan and agreement is on file in the office of the
Secretary of the Company.
6.4 RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of the
---------------------
Plan, each Eligible Person receiving a certificate for Restricted Stock shall
have all the rights of a stockholder with respect to the shares of Stock
included in the Restricted Stock Award during any period in which such shares
are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to
shares of Restricted Stock in cash or property other than Stock in the Company
or rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock in
the Company shall be added to and become a part of the Restricted Stock.
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<PAGE>
6.5 LAPSE OF RESTRICTIONS. At the end of the time period during which
---------------------
any shares of Restricted Stock are subject to forfeiture and restrictions on
sale, transfer, alienation, pledge, or other encumbrance, such shares shall vest
and will be delivered in a certificate, free of all restrictions, to the
Eligible Person or to the Eligible Person's legal representative, beneficiary or
heir; provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.
6.6 RESTRICTION PERIOD. No Restricted Stock Award may provide for
-------------------
restrictions continuing beyond ten (10) years from the date of grant.
ARTICLE VII - PERFORMANCE STOCK AWARDS
7.1 AWARD OF PERFORMANCE STOCK. The Committee may award shares of
-----------------------------
Stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Committee are satisfied. The
terms and provisions herein relating to these performance based awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific Performance
Stock Award shall be made by the Committee in writing prior to the beginning of
the period for which the performance is measured (or within such period as
permitted by IRS regulations). The Committee shall establish the maximum number
of shares of Stock to be issued to a designated Employee if the performance goal
or goals are met. The Committee reserves the right to make downward adjustments
in the maximum amount of an Award if in its discretion unforeseen events make
such adjustment appropriate.
7.2 PERFORMANCE GOALS. Performance goals determined by the Committee
-----------------
may be based on specified increases in cash flow, net profits, Stock price,
Company, segment or Affiliate sales, market share, earnings per share, return on
assets, and/or return on stockholders' equity.
7.3 ELIGIBILITY. The employees eligible for Performance Stock Awards
-----------
are the senior officers (i.e., chief executive officer, president, vice
presidents, secretary, treasurer, and similar positions) of the Company and its
Affiliates, and such other employees of the Company and its Affiliates as may be
designated by the Committee.
7.4 CERTIFICATE OF PERFORMANCE. The Committee must certify in
----------------------------
writing that a performance goal has been attained prior to issuance of any
certificate for a Performance Stock Award to any Employee. If the Committee
certifies the entitlement of an Employee to the Performance Stock Award, the
certificate will be issued to the Employee as soon as administratively
practicable, and subject to other applicable provisions of the Plan, including
but not limited to, all legal requirements and tax withholding. However,
payment may be made in shares of Stock, in cash, or partly in cash and partly in
shares of Stock, as the Committee shall decide in its sole discretion. If a
cash payment is made in lieu of shares of Stock, the number of shares
represented by such payment shall not be available for subsequent issuance under
this Plan.
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<PAGE>
ARTICLE VIII - ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(1) determine the Eligible Persons to whom and the time or times
at which Options or Awards will be made,
(2) determine the number of shares and the purchase price of Stock
covered in each Option or Award, subject to the terms of the Plan,
(3) determine the terms, provisions and conditions of each Option
and Award, which need not be identical,
(4) accelerate the time at which any outstanding Option or SAR
may be exercised, or Restricted Stock Award will vest,
(5) define the effect, if any, on an Option or Award of the
death, disability, retirement, or termination of employment of the Employee,
(6) prescribe, amend and rescind rules and regulations relating to
administration of the Plan, and
(7) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper administration of
this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend this
Plan at any time, in its sole and absolute discretion; provided, however, that
to the extent required to qualify this Plan under Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, no amendment that
would (a) materially increase the number of shares of Stock that may be issued
under this Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
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<PAGE>
ARTICLE X - MISCELLANEOUS
10.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside
---------------------------------
nor shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.
10.2 NO EMPLOYMENT OBLIGATION. The granting of any Option or Award
--------------------------
shall not constitute an employment contract, express or implied, nor impose upon
the Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.
10.3 FORFEITURE. Notwithstanding any other provisions of this Plan, if
----------
the Committee finds by a majority vote after full consideration of the facts
that an Eligible Person, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the
Company or Affiliate, or disclosed trade secrets of the Company or an Affiliate,
or (b) participated, engaged in or had a material, financial or other interest,
whether as an employee, officer, director, consultant, contractor, stockholder,
owner, or otherwise, in any commercial endeavor in the United States which is
competitive with the business of the Company or an Affiliate without the written
consent of the Company or Affiliate, the Eligible Person shall forfeit all
outstanding Options and all outstanding Awards, and including all exercised
Options and other situations pursuant to which the Company has not yet delivered
a stock certificate. Clause (b) shall not be deemed to have been violated
solely by reason of the Eligible Person's ownership of stock or securities of
any publicly owned corporation, if that ownership does not result in effective
control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
10.4 TAX WITHHOLDING. The Company or any Affiliate shall be entitled to
---------------
deduct from other compensation payable to each Eligible Person any sums required
by federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or SAR, lapse of restrictions on Restricted Stock, or
award of Performance Stock. In the alternative, the Company may require the
Eligible Person (or other person exercising the Option, SAR or receiving the
Stock) to pay the sum directly to the employer corporation. If the Eligible
Person (or other person exercising the Option or SAR or receiving the Stock) is
required to pay the sum directly, payment in cash or by check of such sums for
taxes shall be delivered within 10 days after the date of exercise or lapse of
restrictions. The Company shall have no obligation upon exercise of any Option
or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.
10.5 WRITTEN AGREEMENT. Each Option and Award shall be embodied in a
------------------
written agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Eligible Person and by a member of the Committee
on behalf of the Committee and the Company or an executive officer of the
Company, other than the Eligible Person, on behalf of the Company. The
agreement may contain any other provisions that the Committee in its discretion
shall deem advisable which are not inconsistent with the terms of this Plan.
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<PAGE>
10.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
-------------------------------------------------------------
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
10.7 GENDER. If the context requires, words of one gender when used in
------
this Plan shall include the others and words used in the singular or plural
shall include the other.
10.8 HEADINGS. Headings of Articles and Sections are included for
--------
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
10.9 OTHER COMPENSATION PLANS. The adoption of this Plan shall not
--------------------------
affect any other stock option, incentive or other compensation or benefit plans
in effect for the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
10.10 OTHER OPTIONS OR AWARDS. The grant of an Option or Award shall
--------------------------
not confer upon the Eligible Person the right to receive any future or other
Options or Awards under this Plan, whether or not Options or Awards may be
granted to similarly situated Eligible Persons, or the right to receive future
Options or Awards upon the same terms or conditions as previously granted.
10.11 GOVERNING LAW. The provisions of this Plan shall be construed,
---------------
administered, and governed under the laws of the State of Texas.
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