As filed with the Securities and Exchange Commission on December 14, 1999
Registration No. 333-___________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
IRT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2720096
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
6230 Fairview Road, Suite 102, Identification no.)
Charlotte, North Carolina 28210
(Address of Principal Executive Offices) (Zip Code)
Consultant Agreements
(Full title of the plan)
Dale K. Chapman, President
IRT Industries, Inc.
6230 Fairview Road, Suite 102, Charlotte, North Carolina 28210
(Name and address of agent for service)
(704) 364-2066
(Telephone number, including area code, of agent for service)
with a copy to:
Melvin Weinberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
(212) 704-6418
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
EACH CLASS AMOUNT OF OFFERING AGGREGATE AMOUNT OF
OF SECURITIES SHARES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE (2) PRICE (2) FEE (3)
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<S> <C> <C> <C> <C>
Common stock, par value $0.0001 per share 1,110,000 (2) $35,100 $9
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</TABLE>
(1) Pursuant to Rule 416(b), all additional securities resulting from
anti-dilution adjustments, if any, under the Consultant Services Agreement
(the "Plan") shall also be deemed covered.
(2) Pursuant to Rule 457(h), the maximum aggregate offering price (estimated
solely for the purpose of calculating the registration fee): $35,100, made
up of the following:
(i) 300,000 shares underlying an option with an exercise price of $0.0001
per share;
(ii) 700,000 shares underlying options with an exercise price of $0.25 per
share;
(iii) 60,000 shares valued at $ 0.375 per share;
(iv) 50,000 shares valued at $ 0.25 per share;
(3) Calculated by multiplying the aggregate offering amount by a factor of
.000264.
<PAGE>
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed by us with the Securities and
Exchange Commission (File No. 001-12765) pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "1934 Act") are incorporated by reference:
(a) Our annual report on Form 10-KSB for the fiscal year
ended June 30, 1999, as amended; and
(b) Our quarterly report on Form 10-QSB for the fiscal
quarter ended September 30, 1999 and our current report
on Form 8-K dated August 18, 1999 (date of earliest
event reported);
All documents filed by us after the date of this registration statement
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act and before the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this registration statement and to
be a part of this registration statement from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement.
ITEM 4. DESCRIPTION OF SECURITIES.
We are registering up to 1,100,000 shares of our common stock, par
value of $0.0001 per share. Each holder of our common stock is entitled to one
vote per share of common stock standing in such holder's name on our records on
each matter submitted to a vote of our stockholders, except as otherwise
required by law. Holders of our common stock do not have cumulative voting
rights so that the holders of more than 50% of the combined shares of our common
stock voting for the election of directors may elect all of the directors if
they choose to do so and, in that event, the holders of the remaining shares of
our common stock will not be able to elect any members to our board of
directors.
Holders of our common stock are entitled to equal dividends and
distributions, per share, when, as and if declared by our board of directors
from funds legally available. Holders of our common stock do not have
pre-emptive rights to subscribe for any of our securities nor are any shares of
our common stock redeemable or convertible into any of our other securities. If
we liquidate, dissolve or wind up our business or affairs, our assets will be
divided up pro-rata on a share-for-share basis among the holders of our common
stock after creditors and preferred shareholders, if any, are paid.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.014 of the Florida General Corporation Act provides
generally that a corporation incorporated under the laws of the State of
Florida, such as our company, may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than a derivative action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
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<PAGE>
request of the corporation as a director, officer, employee or agent of another
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
Article XII of our articles of incorporation, as amended, provides that
our company has the power, in its by-laws or in any resolution of our
stockholders or directors to undertake to indemnify our officers and directors
against any contingency or peril as may be determined to be in our best
interests, and in conjunction therewith, to procure at our expense policies of
insurance.
We maintain directors and officers liability insurance coverage with
National Union Fire Insurance Company of Pittsburgh, Pa. The insurance policy
has a $ 1,000,000 limit of liability and expires on November 10, 2000.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
4.1 Articles of Incorporation, as amended. (1)
4.2 By-Laws, as amended. (1)
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP. (2)
10.1 Consultant Agreement dated as of October 21, 1999 by IRT Industries, Inc. and Stephen A. Krause. (2)
10.2 Consultant Agreement dated as of October 15, 1999 by IRT Industries, Inc. and Scott A. Neil. (2)
10.3 Consultant Agreement dated as of September 30, 1999 by IRT Industries, Inc. and Jason M. Baker. (2)
10.4 Consultant Agreement dated as of October 15, 1999 by IRT Industries, Inc. and Jahnihah Wrede. (2)
23.1 Consent of Dohan and Company, Certified Public Accountants, a Professional Association. (2)
23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in Exhibit 5.1).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
24.1 Powers of Attorney of Directors and Certain Officers of the Registrant.(3).
99.1 Form of Stock Option Agreement (2)
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
(1) Incorporated by reference from our registration statement as filed with the Securities and
Exchange Commission ("SEC"), SEC File No. 33-10001-A.
(2) Filed herewith.
(3) Filed herewith as part of the signature page to this registration statement.
</TABLE>
ITEM 9. UNDERTAKINGS.
We undertake to do the following:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this registration statement
or any material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
-------- -------
apply if the registration statement is on Form S-3, Form S-8, Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports that we file pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
by such registration statement, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
We undertake that, for purposes of determining any liability
under the Securities Act of 1933, as amended, each filing of our annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended, that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to the
securities offered in such registration statement, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering.
Regarding whether indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to our directors,
officers and controlling persons pursuant to the provisions described under Item
6 above, or otherwise, we have been advised that in the opinion of the
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<PAGE>
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than our payment of expenses incurred or paid by one of our directors, officers
or controlling persons in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933, as
amended, and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements for filing on Form S-8 and have duly caused this registration
statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 13th day of
December, 1999.
IRT Industries, Inc.
By: /s/ Dale K. Chapman
-----------------------------------
Name: Dale K. Chapman
Title: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dale K. Chapman with the power of
substitution, as his attorney-in-fact, in all capacities, to sign any amendments
to this registration statement (including post-effective amendments) and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitute may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 13th day of December, 1999.
Signature Title
--------- -----
/s/ Dale K. Chapman
- -----------------------------
Name: Dale K.Chapman President, Chief Executive Officer, Secretary,
Treasurer and Director
/s/ Eric F. Heintschel
- -----------------------------
Name: Eric F. Heintschel Director
/s/ James H. Feeney
- -----------------------------
Name: James H. Feeney Director
-6-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
4.1 Articles of Incorporation, as amended. (1)
4.2 By-Laws, as amended. (1)
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP. (2)
10.1 Consultant Agreement dated as of October 21, 1999 by IRT Industries, Inc. and Stephen A. Krause. (2)
10.2 Consultant Agreement dated as of October 15, 1999 by IRT Industries, Inc. and Scott A. Neil. (2)
10.3 Consultant Agreement dated as of September 30, 1999 by IRT Industries, Inc. and Jason M. Baker. (2)
10.4 Consultant Agreement dated as of October 15, 1999 by IRT Industries, Inc. and Jahnihah Wrede. (2)
23.1 Consent of Dohan and Company, Certified Public Accountants, a Professional Association. (2)
23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in Exhibit 5.1).
24.1 Powers of Attorney of Directors and Certain Officers of the Registrant.(3).
99.1 Form of Stock Option Agreement (2)
- --------------
(1) Incorporated by reference from our registration statement as filed with the Securities and
Exchange Commission ("SEC"), SEC File No. 33-10001-A.
(2) Filed herewith.
(3) Filed herewith as part of the signature page to this registration statement.
</TABLE>
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EXHIBIT 5.1
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[PARKER CHAPIN FLATTAU & KLIMPL, LLP LETTERHEAD]
December 13, 1999
IRT Industries, Inc.
6230 Fairview Road, Suite 102
Charlotte, North Carolina
RE: IRT INDUSTRIES, INC./REGISTRATION STATEMENT ON FORM S-8
-------------------------------------------------------
Dear Ladies and Gentlemen:
We have acted as counsel to IRT Industries, Inc., a Florida corporation
(the "Company"), in connection with its Registration Statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission relating to the offering of up to 1,100,000 shares of common stock,
par value $0.0001 per share, (the "Common Stock"), to consultants to the Company
under certain Consultant Agreements (collectively, the "Plan"), and such
additional indeterminate number of shares of the Company's common stock as may
be issued under the anti-dilution provisions of the Plan.
In rendering this opinion expressed below, we have examined the
Company's Articles of Incorporation, as amended, the Company's By-laws, as
amended, and written consents of the Company's directors relating to the Plan.
In addition, we have examined and relied upon such matters of law, certificates
and examinations of public officials as we have deemed relevant to the rendering
of this opinion. We have not examined each award agreement in respect of options
granted or common stock issued under the Plan. We have, however, examined the
form of stock option agreement which the Company has advised us is the form of
agreement used by it under the Plan. We have also been informed by the Company
that stock option agreement between the Company and the option holders is
substantially in the form of the stock option agreement that we have examined.
In all of our examinations, we have assumed the accuracy of all information
furnished to us, the genuineness of all documents, the conformity to originals
of all documents submitted to us as certified, conformed, facsimile or
photostatic copies thereof, as well as the genuineness of all signatures on all
such documents.
Our opinion is limited to the date hereof and we do not in any event
undertake to advise you of any facts or circumstances occurring or coming to our
attention subsequent to the date hereof.
Finally, we are counsel admitted to practice only in the State of New
York, and we express no opinions as to the applicable laws of any jurisdiction
other than those of the State of New York and the United States of America.
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<PAGE>
Based upon and subject to the foregoing, we are of the opinion that the
shares of the Company's common stock issued pursuant to the Plan or issuable
upon the exercise of options granted or to be granted under the Plan, when
issued pursuant to the provisions of the Plan and (as relevant) the terms of the
option to be granted thereunder, will be legally issued, fully paid and
non-assessable.
We consent to the filing of a copy of this opinion as an exhibit to the
Company's Registration Statement with respect to the Plan.
Very truly yours,
/s/ Parker Chapin Flattau & Klimpl, LLP
PARKER CHAPIN FLATTAU & KLIMPL, LLP
-9-
EXHIBIT 10.1
------------
CONSULTANT AGREEMENT
THIS CONSULTANT SERVICES AGREEMENT ("Agreement") is made effective on
this the 21st day of October, 1999, by IRT INDUSTRIES, INC., a Florida
corporation ("IRT"), and Stephen A. Krause ("Consultant"), for consulting as
designated by the Board of Directors of IRT, in relation to the License
Agreement with Commerce Capital Group a South Carolina Limited Liability Company
"CCG".
WHEREAS the Consultant shall be responsible for all communications
between CCG and IRT, and for project management and programming oversight with
CCG in the development and timely implementation of the Internet software
application referenced in a license agreement between IRT and CCG.
R E C I T A L S:
The Company wishes to grant the Consultant, and Consultant wishes to
receive, as full compensation for such consultation services to the Company,
options to purchase 300,000 Shares of the common stock of the Company ("Common
Stock"), all pursuant to the provisions set forth herein;
NOW, THEREFORE, in consideration of the sum of twenty ($20.00) Dollars,
and other good and valuable consideration, the premises, mutual promises,
covenants, terms and conditions herein, the receipt and sufficiency of which,
are hereby acknowledged by the parties, and the parties do hereby agree as
follows:
1. GRANT OF SHARES. The Company hereby grants to the Consultant options
---------------
redeemable for shares of Common Stock (the "Shares") in the Company.
2. SHARE DELIVERY. The Company shall deliver, subject to the terms and
---------------
conditions of this Agreement, to the Consultant, the Shares in the form
of options for common stock at an exercise price of .0001 per share.
The options will be made available to the consultant in two increments
of 150,000 shares each. The first option for 150,000 shares may be
exercised immediately upon execution of the agreement and
implementation of a stock plan for payment to consultants. The second
option for 150,000 shares may be exercised on September 30, 2000. Both
options will expire three (3) years after the completion of the
contract period.
3. EXPENSES. In addition to the Consultant's direct compensation, during
--------
the time period in which the Consultant is employed on a full-time
basis, the Company will reimburse the Consultants direct and indirect
expenses through the payment of a "per diem" expense allotment of one
hundred dollars ($100) per working day.
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<PAGE>
4. SERVICES. Consultant has been engaged by IRT and Consultant agrees
--------
that he will render IRT business consultation services as they relate
to implementation of the web based application and related interfaces
with IRT's contract with Commerce Capital Group LLC (CCG). Consultant
promises services until September 30, 2000. Such services shall
include coordinating software development between IRT and CCG
including implementation, supervision and support of the related
websites and their integration with CCG's applications. Consultant
will work on a full-time basis until the full estate planning
application is implemented. After the full estate planning application
is implemented, the Consultant will work on a part-time basis. While
working part-time the Consultant will be on-call to support resolution
of system issues, and will make himself available to supply such
assistance for up to 15 hours per week. Should business requirements
dictate that the consultant work on a full-time basis beyond February
28th, 2000, the Consultant shall have the option to attain additional
consideration/compensation. Such compensation must be agreed upon by
both the Consultant and IRT and will be effective March 1, 2000.
Should the Consultant and IRT be unable to agree upon terms for an
extension of full-time service beyond February 28th, 2000 the
Consultant will retain full ownership of the stock options already
vested, but will waive rights on options scheduled to be vested at the
end of the contract.
5. COMPENSATION. The Consultant is not entitled to receive cash
------------
compensation from any party in connection herewith, other than the
reimbursement of expenses as noted in "Paragraph 3" above. Also in
connection herewith, Consultant acknowledges that due to the
appearance of potential conflicts of interest and/or undue influence
that no outside compensation will be paid to Consultant for services
rendered in relation to this agreement, including CCG, or any related
person or entity. All Compensation shall be made in the form of
"Common Stock" of IRT Industries, Inc., as listed on the NASDAQ OTC-BB
symbol "IRTG" and the receipt of the shares as referenced herein shall
constitute full compensation. Consultant agrees that such sole
compensation shall be the Shares as identified in "Paragraph 2" above.
IRT shall incur no direct or indirect liabilities for expenses that
Consultant may incur or cause CCG to incur. The Consultant also
acknowledges that his employment with IRT shall be as an "independent
contractor" within the meaning of such as defined by the Internal
Revenue Code, and consultant further acknowledges that he will be
solely responsible for all taxes resulting from his compensation in
connection herewith.
6. REGISTRATION OR EXEMPTION. Notwithstanding anything to the contrary
--------------------------- contained herein, the Shares may not be
issued upon exercise of the option, unless the Shares are registered
pursuant to the Securities Act of 1933, as amended ("Act"), or an
exemption from such registration is available.
7. COMPANY'S RIGHTS. The existence of the Shares and/or this Plan shall
----------------
not affect in any way the rights of IRT to conduct its normal or any
legal business of IRT.
8. AMENDMENTS. This Agreement may not be amended unless by the written
----------
consent of the Board of IRT and Consultant.
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<PAGE>
9. EXCLUSIVE. The Consultant agrees that during the period from the
---------
beginning of this Agreement until September 30, 2000, Consultant will
not engage any outside commitments, which will render him unable to
comply fully as anticipated herein with his duties and obligations to
IRT.
10. GOOD FAITH AND FAIR DEALING. The Consultant will use every reasonable
---------------------------
precaution to ensure that no material facts, representations or
promises are made without reasonable ability of any party to comply
with such. Consultant shall at all times use every precaution to
ensure that a high level of integrity and security is maintained in
carrying out his duties in connection herewith, with the understanding
that Consultant and IRT may be liable to CCG for unwarranted
disclosure or loss.
11. HOLD HARMLESS. The Consultant agrees to hold IRT and CCG harmless for
-------------
any and all liabilities, direct or indirect, hereafter that may arise
from the action(s), or lack thereof, of the Consultant.
12. GOVERNING LAW. This Agreement shall be governed entirely by the laws
-------------
of the State of North Carolina. The sole venue for any action arising
hereunder shall be Mecklenburg County, North Carolina. Consultant
hereby consents to and waives jurisdiction in any other forum.
13. BINDING EFFECT. This Agreement shall be binding upon and for the
--------------
benefit of the parties hereto and their respective heirs, permitted
successors, assigns and/or delegates.
14. CAPTIONS. The captions herein are for convenience and shall not
--------
control the interpretation of this Agreement.
15. COOPERATION. The parties agree to execute such reasonable necessary
-----------
documents in order to carry out the intent and purpose of this
Agreement as set forth herein.
16. GENDER AND NUMBER. Unless the context otherwise requires, references
-----------------
in this Agreement in any gender shall be construed to include all
other genders, references in the singular shall be construed to
include the plural, and references in the plural shall be construed to
include the singular.
17. SEVERABILITY. In the event anyone or more of the provisions of this
------------
Agreement shall be deemed unenforceable by any court of competent
jurisdiction for any reason whatsoever, this Agreement shall be
construed as if such unenforceable provision was never contained
herein.
18. ENTIRE AGREEMENT. This Agreement supersedes, circumvents and replaces
----------------
any and all other agreements that may have been reached, and it shall
replace such other agreements whether written or oral, in their
entirety, except as otherwise provided herein.
19. MULTIPLE COUNTERPARTS. This Agreement may be made and executed in
---------------------
multiple counterparts each being considered an Original, the validity
of which may not be contested.
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<PAGE>
20. COLLABORATION WITH COMMERCE CAPITAL GROUP LLC. CCG has agreed to
---------------------------------------------
confidentially make available to IRT's Consultant all "Information"
necessary to perform his services hereunder. CCG shall provide to
Consultant access to programmers, software, code, resources and
programming theory, etc., as necessary to fulfill such requirements.
Consultant agrees that he will not personally for his own use or
benefit, or allow or cause another to use such information for his
personal benefit or that of another including IRT, except as expressly
set forth in the license agreement in relation hereto. Such
Information, in its entirety, including any derivatives thereof, shall
be considered the intellectual property of CCG and/or its licensors,
and such shall remain the sole and absolute work product, property and
intellectual property of CCG. Additionally, CCG may require, by
separate agreement, and Consultant hereby agrees and consents to the
execution of any other agreement including but not limited to a
confidentiality agreement necessary to ensure such confidentiality,
prior to the termination of this Agreement.
NOW WHEREAS, in consideration of the foregoing, the parties having
read, and understanding the same, or having had the opportunity to seek advice
on same, the parties do hereby sign, and affix their seals and agree to be bound
by the terms, conditions and provisions hereof, on this the day same bears date.
IRT Industries, Inc. Consultant
By:/s/ Dale K. Chapman By: /s/ Stephen A. Krause
- -------------------------------- -----------------------------
Dale K. Chapman, President, IRT Industries, Inc. Stephen A. Krause, Consultant
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EXHIBIT 10.2
CONSULTANT AGREEMENT
--------------------
This Agreement is made and entered into as of the 15th day of
October, 1999, between IRT Industries, Inc., a Florida corporation (the
"Company") and Scott A. Neil ("Consultant").
In consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Purpose. The Company hereby employed the Consultant during the
-------
Term (as defined below) to render consulting advice and services to the Company
in connection with the identification of suitable candidates for purchaseand/or
sales agreements, including introduction, negotiation and successful conclusion
negotiations, upon the terms and conditions set forth herein.
2. Term. This Agreement shall be effective for a period of one
----
year (the "Term") commencing on the date hereof and shall be terminate by the
Company at its will at any time upon five business days' written notice.
3. Duties of Consultant. During the term of this Agreement, the
--------------------
Consultant shall provide the Company with such regular and customary advisory
services as is reasonably requested by the Company, provided that the
Consultant shall not be required to undertake duties not reasonably within
the scope of the services contemplated by this Agreement. In performance of
these duties, the Consultant shall provide the Company with the benefits of
Consultant's best judgment and efforts. It is understood and acknowledged by
the parties that the value of the Consultant's advice is not measurable in
any quantitive manner, and the Consultant shall be obligated to render
advice, upon the request of the Company, in good faith, but shall not be
obligated to spend any specific amount of time in doing so. The Consultant's
duties may include at the Company's request, but will not necessarily be limited
to:
a. Identifying candidate companies for acquisition and/or sales
agreements for product distribution;.
b. Introducing the Company to candidate companies;
c. Negotiating contracts with candidate companies.
Notwithstanding the foregoing, it is understood and
acknowledged by the parties that the Consultant shall not render advice and/or
services to the Company in any manner directly or indirectly, that is in
connection with the offer or sale of securities in a capital raising transaction
or that could result in market making.
4. Compensation. For services to be rendered by the Consultant
------------
hereunder, on the date hereof the Consultant shall receive options to purchase
a total of 700,000 shares of the Company's common stock, for a strike price
equal to the par value $0.0001 per share (the
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<PAGE>
"Shares"). The value of the Shares at the time of this Agreement is $ 0.25 per
share. The first option for 450,000 shares may be exercised immediately upon
execution of this Agreement. The second option for 250,000 shares may be
exercised on March 1, 2000. Both options expire three (3) years after the
completion of the contract period. The Consultant represents to the Company that
(a) he is not a registered broker-dealer; (b) he is not affiliated with any
registered broker-dealers; and (c) he does not purchase or sell securities or
structure the purchase or sale of securities for third parties as his business.
5. Further Agreements. Because of the nature of the services being
-------------------
provided by Consultant hereunder, Consultant acknowledges that he may receive
access to Confidential Information (as defined in Section 6 hereof) and that, as
a consultant to the Company, he will attempt to provide advice that serves the
best interests of the Company. Because of the uniqueness of this relationship,
the Consultant covenants and agrees that, with respect to the Shares that he
receives, Consultant shall, at all times that he is the beneficial owner of such
Shares, vote such shares on all matters coming before him as a stockholder of
the Company in the same manner as the majority of the Board of Directors of the
Company shall recommend.
6. Confidentiality. Consultant acknowledges that as a consequence
---------------
of his relationship with the Company, he may be given access to confidential
information which may include the following types of information: financial
statements and related financial information with respect to the Company and its
subsidiaries (the "Confidential Financial Information"), trade secrets,
products, product development, product packaging, future marketing materials,
business plans, certain methods of operations, procedures, improvements,
systems, customer lists, supplier lists and specifications, and other private
and confidential materials concerning the Company's business (collectively,
"Confidential Information").
Consultant covenants and agrees to hold such Confidential
Information strictly confidential and shall only use such information solely to
perform his duties under this Agreement, and Consultant shall refrain from
allowing such information to be used in any way for his own private or
commercial purposes. Consultant shall also refrain from disclosing any such
Confidential Information to any third parties. Consultant further agrees that
upon termination or expiration of this Agreement, he will return all
Confidential Information and copies thereof to the Company and will destroy all
notes, reports and other material prepared by or for him containing Confidential
Information. Consultant understands and agrees that the Company might be
irreparably harmed by violation of this Agreement and that monetary damages may
be inadequate to compensate the Company. Accordingly, the Consultant agrees
that, in addition to any other remedies available to it at law or in equity, the
Company shall be entitled to injunctive relief to enforce the terms of this
Agreement.
Notwithstanding the foregoing, nothing herein shall be
construed as prohibiting Consultant from disclosing any Confidential Information
(a) which at the time of disclosure, Consultant can demonstrate either was in
the public domain and generally available to the public or thereafter becomes a
part of the public domain and is generally available to the public by
publication or otherwise through no act of the Consultant; (b) which Consultant
can establish was independently developed by a third party who developed it
without the use of the Confidential Information and who did not acquire it
directly or indirectly from Consultant under
-15-
<PAGE>
an obligation of confidence; (c) which Consultant can show was received by him
after the termination of this Agreement from a third party who did not acquire
it directly or indirectly from the Company under an obligation of confidence; or
(d) to the extent that the Consultant can reasonably demonstrate such disclosure
is required by law or in any legal proceeding, governmental investigation, or
other similar proceeding.
7. Severability. If any provision of this Agreement shall be
------------
held or made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to be severable.
8. Governing Law; Venue; Jurisdiction. This Agreement shall be
-------------
construed and enforced in accordance with and governed by the laws of the State
of Florida, without reference to principles of conflicts or choice of law
thereof. Each of the parties consents to the jurisdiction of the U.S. District
Court sitting in the 11th District of the State of Florida or the state courts
of the State of Florida sitting in Dade County in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
----- --- ----------
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trial by jury.
9. Miscellaneous.
-------------
a. Any notice or other communication between
parties hereto shall be sufficiently given if sent by certified
or registered mail, postage prepaid, if to the Company, addressed
to it at IRT Industries, Inc., 6230 Fairview Road, Suite 102,
Charlotte, NC 28210, Attention: Dale K. Chapman, President,
telephone number (704) 364-2066, facsimile number: (704)
364-7172, or if to the Consultant, addressed to him at 2545 South
Atlantic Avenue, Daytona Beach, FL 32118, or to such address as
may hereafter be designated in writing by one party to the other.
Any notice or other communication hereunder shall be deemed given
three days after deposit in the mail if mailed by certified mail,
return receipt requested, or on the day after deposit with an
overnight courier service for next day delivery, or on the date
delivered by hand or by facsimile with accurate confirmation
generated by the transmitting facsimile machine, at the address
or number designated above (if delivered on a business day during
normal business hours where such notice is to be received), or
the first business day following such delivery (if delivered
other than on a business day during normal business hours where
such notice is to be received).
-16-
<PAGE>
b. This Agreement embodies the entire Agreement
and understanding between the Company and the Consultant and
supersedes any and all negotiations, prior discussions and
preliminary and prior arrangements and understandings related to
the central subject matter hereof.
c. This Agreement has been duly authorized,
executed and delivered by and on behalf of the Company and the
Consultant.
d. This Agreement and all rights, liabilities and
obligations hereunder shall be binding upon and inure to the
benefit of each party's successors but may not be assigned
without the prior written approval of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereof.
IRT INDUSTRIES, INC.
By: /s/ Dale K. Chapman
-----------------------
Dale K. Chapman, President
By: /s/ Scott A. Neil
-----------------------
Scott A. Neil, Consultant
-17-
EXHIBIT 10.3
------------
CONSULTANT AGREEMENT
THIS CONSULTANT SERVICES AGREEMENT ("Agreement") is made effective on
this the 30th day of September, 1999, by IRT INDUSTRIES, INC., a Florida
corporation (the "Company"), and Jason M. Baker ("Consultant").
WHEREAS, the Consultant is responsible for providing advice and
services to the Company.
R E C I T A L S:
The Company wishes to grant the Consultant, and Consultant wishes to
receive, as full compensation for such consultation services to the Company, a
total of 60,000 Shares of the common stock of the Company ("Common Stock"), all
pursuant to the provisions set forth herein;
NOW, THEREFORE, in consideration of the sum of twenty ($20.00) Dollars,
and other good and valuable consideration, the premises, mutual promises,
covenants, terms and conditions herein, the receipt and sufficiency of which,
are hereby acknowledged by the parties, and the parties do hereby agree as
follows:
1. GRANT OF SHARES. The Company hereby grants to the Consultant shares of
Common Stock (the "Shares") in the Company.
2. SHARE DELIVERY. Upon execution this agreement the Company shall deliver, as
--------------
soon as practicable, a Certificate representing the Shares as payable. The
Consultant agrees to be bound by the terms and conditions hereof and any
Consultant Services Plan filed with the Securities Exchange Commission "SEC" in
relation hereto.
3. SERVICES. Consultant has been engaged by the Company, and Consultant agrees
--------
that he will render the Company business consultation services as they relate to
the identification and acquisition of suitable candidates for the Company's
Board of Directors, and for providing other advice and services as needed by the
Company.
4. COMPENSATION. The Consultant is not entitled to receive cash compensation
------------
from any party in connection herewith. All Compensation shall be made in the
form of "Common Stock" of the Company, as listed on the NASDAQ OTC-BB symbol
"IRTG" and the receipt of the shares as referenced herein shall constitute full
compensation. The parties agree that the Shares shall be valued at the last
trade at the close of business on the day same bears date, or $.375 each. The
Consultant also acknowledges that his employment with the Company shall be as an
"independent contractor" within the meaning of such as defined by the Internal
Revenue Code, and consultant further acknowledges that he will be solely
responsible for all taxes resulting from his compensation in connection
herewith.
5. REGISTRATION OR EXEMPTION. Notwithstanding anything to the contrary contained
-------------------------
-18-
<PAGE>
herein, the Shares may not be issued unless the Shares are registered pursuant
to the Securities Act of 1933, as amended ("Act").
6. COMPANY'S RIGHTS. The existence of the Shares shall not affect in any way the
----------------
rights of IRT to conduct its normal or any legal business of the Company.
7. AMENDMENTS. This Agreement may not be amended unless by the written consent
----------
of the Board of the Company and Consultant.
8. EXCLUSIVE. The Consultant agrees that he will not engage any outside
---------
commitments, which will render him unable to comply fully as anticipated herein
with his duties and obligations to IRT.
9. GOOD FAITH AND FAIR DEALING. The Consultant will use every reasonable
------------------------------
precaution to ensure that no material facts, representations or promises are
made without reasonable ability of any party to comply with such. Consultant
shall at all times use every precaution to ensure that a high level of integrity
and security is maintained in carrying out his duties in connection herewith.
10. HOLD HARMLESS. The Consultant agrees to hold the Company harmless for any
-------------
and all liabilities, direct or indirect, hereafter that may arise from the
action(s) or lack thereof, of the Consultant.
11. GOVERNING LAW. This Agreement shall be governed entirely by the laws of the
-------------
State of North Carolina. The sole venue for any action arising hereunder shall
be Mecklenburg County, North Carolina. Consultant hereby consents to and waives
jurisdiction in any other forum.
12. BINDING EFFECT. This Agreement shall be binding upon and for the benefit of
--------------
the parties hereto and their respective heirs, permitted successors, assigns
and/or delegates.
13. CAPTIONS. The captions herein are for convenience and shall not control the
--------
interpretation of this Agreement.
14. COOPERATION. The parties agree to execute such reasonable necessary
-----------
documents in order to carry out the intent and purpose of this Agreement as set
forth herein.
15. GENDER AND NUMBER. Unless the context otherwise requires, references in this
-----------------
Agreement in any gender shall be construed to include all other genders,
references in the singular shall be construed to include the plural, and
references in the plural shall be construed to include the singular.
16. SEVERABILITY. In the event anyone or more of the provisions of this
------------
Agreement shall be deemed unenforceable by any court of competent jurisdiction
for any reason whatsoever, this Agreement shall be construed as if such
unenforceable provision was never contained herein.
17. ENTIRE AGREEMENT. This Agreement supersedes, circumvents and replaces any
----------------
-19-
<PAGE>
and all other agreements that may have been reached, and it shall replace such
other agreements whether written or oral, in their entirety, except as otherwise
provided herein.
18. MULTIPLE COUNTERPARTS. This Agreement may be made and executed in multiple
----------------------
counterparts each being considered an Original, the validity of which may not be
contested.
19. COLLABORATION. The Company has agreed to confidentially make available to
-------------
the Consultant all "information" necessary to perform the duties set forth
herein. Consultant agrees that he will not personal for his own use or benefit
allow or cause another to use such information for his personal benefit or that
of another
NOW WHEREAS, in consideration of the foregoing, the parties having
read, and understanding the same, or having had the opportunity to seek advice
on same, the parties do hereby sign, and affix their seals and agree to be bound
by the terms, conditions and provisions hereof, on this the day same bears date.
IRT Industries, Inc.
/s/ Dale K. Chapman /s/ Jason M. Baker
- ----------------------------------- ------------------------------------
Dale K. Chapman, President/CEO Jason M. Baker, Consultant
-20-
EXHIBIT 10.4
------------
CONSULTANT AGREEMENT
--------------------
This Agreement is made and entered into as of the 15th day of
October, 1999, between IRT Industries, Inc., a Florida corporation (the
"Company") and Jahnihah Wrede ("Consultant").
In consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Purpose. The Company hereby employs the Consultant during
-------
the Term (as defined below) to render consulting advice and services to the
Company as it relates to the creation and ongoing maintenance of the Company's
website.
2. Term. This Agreement shall be effective for a period of one
----
year (the "Term") commencing on the date hereof and shall be terminable by the
Company at its will at any time upon five business days' written notice.
3. Duties of Consultant. During the term of this Agreement, the
--------------------
Consultant shall provide the Company with such regular and customary advisory
services as is reasonably requested by the Company, provided that the Consultant
shall not be required to undertake duties not reasonably within the scope of the
services contemplated by this Agreement. In performance of these duties, the
Consultant shall provide the Company with the benefits of Consultant's best
judgment and efforts. It is understood and acknowledged by the parties that the
value of the Consultant's advise is not measurable in any quantitive manner, and
the Consultant shall be obligated to render advice, upon the request of the
Company, in good faith, but shall not be obligated to spend any specific amount
of time in doing so. The Consultant's duties may include at the Company's
request, but will not necessarily be limited to:
a. Creation and installation of the Company's website;
b. Reasonable adjustments and changes to the Company's website;
c. Assisting in website related issues.
The Company anticipates that its website needs will most likely increase over
the course of this contract, but will limit the commitment covered by this
contract to no more than 15 website pages. Additional contracts and compensation
will be negotiated if the companies needs exceed the website pages covered by
this contract.
4. Compensation. For services to be rendered by the Consultant
------------
hereunder, on the date hereof the Consultant shall receive a total of 50,000
shares of the Company's common stock, par value $.0001 per share, valued at
$0.25 per share (the "Shares) as soon as is reasonable upon the signing of this
contract. The Consultant also represents to the Company that (a) he is not a
-21-
<PAGE>
registered broker-dealer; (b) he is not affiliated with any registered
broker-dealers; and (c) he does not purchase or sell securities or structure the
purchase or sale of securities for third parties as his business.
5. Further Agreements. Because of the nature of the services
-------------------
being provided by Consultant hereunder, Consultant acknowledges that he may
receive access to Confidential Information (as defined in Section 7 hereof) and
that, as a consultant to the Company, he will attempt to provide advice that
serves the best interests of the Company.
6. Confidentiality. Consultant acknowledges that as a
---------------
consequence of his relationship with the Company, he may be given access to
confidential information which may include the following types of information:
financial statements and related financial information with respect to the
Company and its subsidiaries (the "Confidential Financial Information"), trade
secrets, products, product development, product packaging, future marketing
materials, business plans, certain methods of operations, procedures,
improvements, systems, customer lists, supplier lists and specifications, and
other private and confidential materials concerning the Company's business
(collectively, "Confidential Information").
Consultant covenants and agrees to hold such Confidential
Information strictly confidential and shall only use such information solely to
perform his duties under this Agreement, and Consultant shall refrain from
allowing such information to be used in any way for his own private or
commercial purposes. Consultant shall also refrain from disclosing any such
Confidential Information to any third parties. Consultant further agrees that
upon termination or expiration of this Agreement, he will return all
Confidential Information and copies thereof to the Company and will destroy all
notes, reports and other material prepared by or for him containing Confidential
Information. Consultant understands and agrees that the Company might be
irreparably harmed by violation of this Agreement and that monetary damages may
be inadequate to compensate the Company. Accordingly, the Consultant agrees
that, in addition to any other remedies available to it at law or in equity, the
Company shall be entitled to injunctive relief to enforce the terms of this
Agreement.
Notwithstanding the foregoing, nothing herein shall be
construed as prohibiting Consultant from disclosing any Confidential Information
(a) which at the time of disclosure, Consultant can demonstrate either was in
the public domain and generally available to the public or thereafter becomes a
part of the public domain and is generally available to the public by
publication or otherwise through no act of the Consultant; (b) which Consultant
can establish was independently developed by a third party who developed it
without the use of the Confidential Information and who did not acquire it
directly or indirectly from Consultant under an obligation of confidence; (c)
which Consultant can show was received by him after the termination of this
Agreement from a third party who did not acquire it directly or indirectly from
the Company under an obligation of confidence; or (d) to the extent that the
Consultant can reasonably demonstrate such disclosure is required by law or in
any legal proceeding, governmental investigation, or other similar proceeding.
-22-
<PAGE>
7. Severability. If any provision of this Agreement shall
------------
be held or made invalid by a statute, rule, regulation, decision of a tribunal
or otherwise, the remainder of this Agreement shall not be affected thereby and,
to this extent, the provisions of this Agreement shall be deemed to be
severable.
8. Good Faith and Fair Dealing. It is agreed between the
---------------------------
parties that good faith and fair dealing are presumed and that this agreement is
for the mutually beneficial interest of both parties. Neither party is operating
with the intent of self dealing.
9. Resolution of Disputes. This Agreement and its terms shall
----------------------
be construed by and between the parties involved and enforced primarily by (1)
mediation, and if no satisfactory resolution is determined; then by (2)
arbitration by a disinterested and competent third party agreeable to both
parties. The company does not waive its right to seek adjudication in the State
of North Carolina, provided mediation and arbitration are unable to resolve
disputes.
10. Miscellaneous.
-------------
a. Any notice or other communication between
parties hereto shall be sufficiently given if sent by
certified or registered mail, postage prepaid, if to
the Company, addressed to it at IRT Industries, Inc.,
6230 Fairview Road, Suite 102, Charlotte, NC 28210,
Attention: Dale K. Chapman, President, telephone
number (704) 364-2066, facsimile number: (704)
364-7172, or if to the Consultant, addressed to him
at 785 South River Rd, Number 185, St. George, Utah
84770, or to such address as may hereafter be
designated in writing by one party to the other. Any
notice or other communication hereunder shall be
deemed given, three days after deposit in the mail if
mailed by certified mail, return receipt requested,
or on the day after deposit with an overnight courier
service for next day delivery, or on the date
delivered by hand or by facsimile with accurate
confirmation generated by the transmitting facsimile
machine, at the address or number designated above
(if delivered on a business day during normal
business hours where such notice is to be received),
or the first business day following such delivery (if
delivered other than on a business day during normal
business hours where such notice is to be received).
b. This Agreement embodies the entire Agreement
and understanding between the Company and the Consultant and supersedes any and
all negotiations, prior discussions and preliminary and prior arrangements and
understandings related to the central subject matter hereof.
c. This Agreement has been duly authorized,
executed and delivered by and on behalf of the Company and the Consultant.
-23-
<PAGE>
d. This Agreement and all rights, liabilities
and obligations hereunder shall be binding upon and inure to the benefit of each
party's successors but may not be assigned without the prior written approval of
the other party.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereof.
IRT INDUSTRIES, INC.
By: /s/ Dale K. Chapman
-------------------------------
Dale K. Chapman, President
By: /s/ Jahnihah Wrede
-------------------------------
Jahnihah Wrede, Consultant
-24-
EXHIBIT 23.1
-------------
[LETTERHEAD OF 7700 North Kendall Drive, Suite 204
DOHAN AND COMPANY Miami, Florida 33156-7578
CERTIFIED PUBLIC Telephone (305) 274-1366
ACCOUNTANTS Facsimile (305) 274-1368
A FROFESSIONAL E-MAIL [email protected]
ASSOCIATION] --------------
INTERNET WWW.USCPA.COM
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report on the financial statements of IRT
Industries, Inc. dated October 12, 1999, which appears on page F-2 of the annual
report on Form 10-KSB/A of IRT Industries, Inc. for the year ended June 30,
1999.
/s/ Dohan and Company, CPA's
7700 North Kendall Drive, Suite 204
Miami, Florida 33156-7578
December 13, 1999
-25-
Exhibit 99.1
FORM OF STOCK OPTION AGREEMENT
------------------------------
THIS STOCK OPTION AGREEMENT is made and entered into as of __________
by and between IRT Industries, Inc., a Florida corporation (the "Company") and
___________, an individual ("Optionee").
RECITALS
--------
WHEREAS, the Company wishes to grant to Optionee the option and right
to purchase ____________shares of common stock of the Company, par value of $
0.0001 per share (the "Shares"); and
WHEREAS, Optionee wishes to receive from the Company the option and
right to purchase the Shares.
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, the parties agree as follows:
AGREEMENT
---------
1. Grant of Option. The Company hereby grants to the Optionee the right,
----------------
privilege and option (the "Option") to purchase _________ shares of the Company
at a purchase price of $________ per share (an aggregate purchase price of
$_______) (the "Exercise Price").
2. Term of Option. Subject to the terms and conditions set forth herein, the
--------------
Option shall be exercisable, in whole or in part, during the term commencing on
the date of this Agreement and ending at _______P.M., __________Time, on
________, ______, and shall be void thereafter.
3. Payment of Exercise Price. Payment of the Exercise Price shall be made by
--------------------------
Optionee, upon any exercise of the Option, in cash and in full.
4. Method of Exercise. The Option may be exercised by Optionee by delivery of
-------------------
the Notice of Exercise annexed hereto duly completed and executed, setting forth
the number of Shares for which the Option is being exercised. The Notice of
Exercise must be accompanied by the payment of the Exercise Price, as provided
in Paragraphs 3 and 4 above, and the Company may thereupon request, and receive,
such other reasonable documents the Company may reasonably require in order to
assure compliance with Paragraph 5 below. The Option shall be deemed to have
been exercised immediately prior to the close of business on the date of its
exercise as provided above, and Optionee shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
Optionee a certificate or certificates for the number of shares issuable upon
such exercise. In the event that the Option is exercised in part, the Company at
-26-
<PAGE>
its expense will execute and deliver a new Agreement or document of like tenor
exercisable for the number of Shares that this Agreement may then be exercised.
5. Registration or Exemption. Notwithstanding anything to the contrary contained
-------------------------
herein, the Option may not be exercised unless the Shares issuable upon exercise
are registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities laws, or for such Shares
not so registered, the Company has reasonably determined that such issuance
would be exempt from the registration requirements of the Securities Act and
applicable state securities laws.
6. Company's and Optionee's Rights. The existence of the Option shall not affect
-------------------------------
in any way the rights of the Company to conduct its business, nor shall the
Optionee have any rights as a shareholder of the Company solely due to the
ownership of the Option.
7. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Merger, Sale of Assets, etc. If at any time while the Option or any
---------------------------
portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the Optionee shall thereafter be entitled to receive upon
exercise of the Option, during the period specified herein and upon payment of
the Exercise Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that the Optionee, upon
exercise of the Option, would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if the Option had been
exercised immediately before such reorganization, merger, sale or transfer, all
subject to further adjustment as provided in this Paragraph 7. The foregoing
provisions of this Paragraph 7(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of the Option. If the per-share consideration payable to the Optionee
hereof for Shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of the Option with
respect to the rights and interests of the Optionee after the transaction, to
the end that the provisions of the Option shall be applicable after that event,
as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of the Option.
-27-
<PAGE>
(b) Reclassification, etc. If the Company, at any time while the
----------------------
Option, or any portion hereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which the purchase rights under the Option exist into the same or a
different number of securities of any other class or classes, the Option shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under the Option immediately
prior to such reclassification or other change and the Exercise Price thereof
shall be appropriately adjusted, all subject to further adjustment as provided
in this Paragraph 7.
(c) Split, Subdivision or Combination of Shares. If the Company at any
--------------------------------------------
time while the Option, or any portion thereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under the Option exist, into a different number of securities of the same class,
the Exercise Price for such securities shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Certificate as to Adjustments. Upon the occurrence of each
--------------------------------
adjustment or readjustment pursuant to this Paragraph 7, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Optionee a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment is based. The Company shall, upon the written request, at any time,
of Optionee, furnish or cause to be furnished to the Optionee a like certificate
setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price
at the time in effect; and (iii) the number of shares and the amount, if any, of
other property that at the time would be received upon the exercise of the
Option.
(e) No Impairment. The Company will not, by any voluntary action, avoid
--------------
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Paragraph 7 and
in the taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Optionee against impairment.
8. Transfer to Comply with the Securities Act. This Option has not been
------------------------------------------------
registered under the Securities Act of 1933 and has been issued to the Optionee
for investment and not with a view to the distribution of either the Option or
the Shares issued or issuable upon exercise of this Option. Neither this Option
nor any of the Shares issued or issuable upon exercise of this Option or any
other security issued or issuable upon exercise of this Option may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Option, the Shares issued or issuable upon exercise of
this Option and any other security issued or issuable upon exercise of this
Option shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
-28-
<PAGE>
9. Miscellaneous.
-------------
(a) Waiver. No waiver is enforceable unless in writing and signed by
------
such waiving party, and any waiver shall not be construed as a waiver by any
other party.
(b) Amendments. This agreement may not be amended unless by the mutual
----------
consent of all of the parties hereto in writing.
-29-
