UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1997
Commission File Number 1-10310
SETECH, INC.
[Exact name of registrant as specified in its charter.)
Delaware 11-2809189
[State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
903 Industrial Drive, Murfreesboro, Tennessee 37129
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(615) 890-1700
905 Industrial Drive, Murfreesboro, Tennessee 37129
(Former Address of principal executive offices) (Zip Code)
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $.01 Par Value - 5,669,003 shares as of September 30, 1997.
Indicate Transitional Small Business Disclosure Format
YES [ ] NO [X]
<PAGE>
As of February 12, 1998, the Board of Directors of SETECH, Inc. (the
"Company") and a majority of the Company's shareholders had approved the
SETECH, Inc. Nonemployee Directors' Stock Option Plan (the "Plan"). The Plan's
effective date is July 1, 1997. Accordingly, the Company is filing this
amendment to its Form 10-QSB for the quarter ending September 30, 1997 (the
"9/30/97 10-QSB"), to add the Plan as Exhibit 10.8.
Part II, Item 6 of the Company's 9/30/97 10-QSB should be amended to add
Exhibit 10.8 as indicated below.
Item 6. Exhibits and Reports on Form 8-K
(a) The Company hereby incorporates by reference the Exhibits and
the Exhibit table provided in Item 13 of its Form 10-KSB for the
fiscal year ended June 30, 1997. The Company also hereby includes
the following with its Exhibits and Exhibit table in this Form 10-
QSB:
EX-10.8 The SETECH, Inc. Nonemployee Directors' Stock Option Plan
(effective July 1, 1997)
(b) Reports on Form 8-K. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SETECH, INC.
Date: February 19, 1998 By: /s/ Thomas N. Eisenman
Thomas N. Eisenman, President
Date: February 19, 1998 By: /s/ Cindy L. Rollins
Cindy L. Rollins, Secretary-
Treasurer
SETECH, INC.
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
(EFFECTIVE AS OF JULY 1, 1997)
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1. Establishment of the Plan. SETECH, Inc., a Delaware corporation
("Company") hereby establishes a stock option plan as set forth in this
document, which plan as amended from time to time shall be known as the
"SETECH, Inc. Nonemployee Directors' Stock Option Plan" ("Plan").
1.2 Purpose. The purpose of the Plan is to build a proprietary interest
among the Company's Nonemployee Directors and thereby secure for the Company's
shareholders the benefits associated with common stock ownership by those who
will oversee the Company's future growth and success.
1.3 Applicability of the Plan. The provisions of this Plan are
applicable only to individuals who, on or after July 1, 1997, are Nonemployee
Directors.
1.4 Effective Date. This Plan shall be effective as of July 1, 1997,
subject to the approval of this Plan by the Board of Directors and the
Company's shareholders as provided in this Section 1.4. To become effective,
this Plan must be approved by the Board of Directors and by the affirmative
vote of the holders of a majority of the shares of Common Stock entitled to
vote at a meeting of the Company's stockholders called for such purpose.
Absent such approval prior to March 1, 1998, this Plan shall terminate and
cease to be of any further force or effect and all grants of Options hereunder
shall be null and void.
1.5 Natue of Options. The Options granted hereunder are not incentive
stock options as defined by Section 422 of the Code.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used as a capitalized term in the Plan, the
following terms shall have the respective meanings set forth below, unless
otherwise expressly provided:
(a) "Affiliate" means "affiliate" as defined in Rule 12b-2 under the
Exchange Act.
(b) "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 under the Exchange Act.
(c) "Board" or "Board of Directors" means the Board of Directors of
the Company.
(d) "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall
have been satisfied:
(1) As the result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the
foregoing (a "Transaction"), the persons who were members of
the Board before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any
successor to the Company or its assets; or
(2) If at any time (A) the Company shall consolidate with, or
merge with, any other Person and the Company shall not be the
continuing or surviving corporation, (B) any Person shall
consolidate with, or merge with, the Company, and the Company
shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Common
Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property,
(C) the Company shall be a party to a statutory share exchange
with any other Person after which the Company is a Subsidiary
of any other Person, or (D) the Company shall sell or otherwise
transfer 50 percent or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any
Person or Persons.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and
the regulations issued thereunder, as the same may be amended from
time to time.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means SETECH, Inc., or any successor thereto.
(h) "Disability" means a condition that, in the judgment of the
Board, has rendered a grantee completely and presumably permanently
unable to perform any and every duty of his regular occupation, and
the term "Disabled" has the corresponding meaning.
(i) "Effective Date" means July 1, 1997, subject to the approvals as
described in Section 1.4.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(k) "Fair Market Value" on a specified day means:
(i) If the Stock of the Company is actively traded on any
national securities exchange or is reported by NASDAQ on a basis
which lists closing prices, fair market value shall be the closing
price per share of such Stock for the business day immediately
preceding the date of the grant of the option;
(ii) If the Stock of the Company is otherwise traded over the
counter, fair market value shall be determined as follows: for each
of the twenty (20) business days preceding the grant of the Option,
the Company shall determine the "Last Sale" price, or, in the event
no sale occurred on such date, the arithmetic mean of the "High Bid"
and "Low Offer" on such date, as reported by National Quotation
Bureau, LLC (the "Daily Price"); the Comany shall then total the
Daily Prices for each of the twenty (20) business days prior to the
grant of the Option and divide that total by twenty (20) (the
"Average Daily Price"); the fair market value shall be the Average
Daily Price as defined above;
(iii) If the Stock of the Company is not traded over the
counter and quoted by National Quotation Bureau, LLC, or some
comparable quotation service, fair market value shall be determined
by the Board which shall, in making such determination, consider,
where applicable, among other factors: the existence and extent of a
private market for the Stock and a public market for the
Corporation's securities of the same class, if any; the price at
which the Stock was acquired, if applicable, by the Corporation; the
estimated period of time, if any, during which the Stock will not be
freely marketable; the estimated amount of floating supply of such
Stock available; changes in the financial condition and prospects of
the Corporation; the existence of merger proposals or tender offers
affecting the Corporation; and any other factors affecting fair
market value; provided, however, that fair market value shall be
determined without regard to any restriction other than a
restriction which, by its terms, will never lapse.
(l) "Grant Date" means July 1 of each calendar year during the
period this Plan remains in effect. The first "Grant Date" under the
Plan is July 1, 1997.
(m) "Nonemployee Director" means an individual who is a member of
the Board and who is not an employee of the Company or any
Subsidiary or Affiliate thereof.
(n) "Option" means an option granted under this Plan to purchase a
share or shares of Common Stock.
(o) "Participant" means a Nonemployee Director to whom an Option has
been granted under this Plan.
(p) "Person" means "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d)(3) of the Exchange
Act.
(q) "Plan" means the "SETECH, Inc. Nonemployee Directors' Stock
Option Plan" as set forth in this document, and as the same may be
amended from time to time.
(r) "Subsidiary" means a corporation at least 50 percent of the
combined voting power of all classes of stock of which is owned by
the Company, either directly or through one or more of its
Subsidiaries.
(s) "Vesting Date" means, with respect to any Options granted as of
a particular Grant Date, the next July 1 following such Grant Date.
The first Vesting Date under the Plan is July 1, 1998.
2.2 Gender and Number; Headings. Except when otherwise indicated by the
context, any masculine terminology when used in this Plan shall also include
the feminine gender, and the definition of any term in the singular shall also
include the plural. Headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility; Participation. Each Nonemployee Director shall be
eligible to participate under this Plan and to receive a grant of an Option in
accordance with the provisions of this Plan.
3.2 Initial Grant of Stock Options. Each Nonemployee Director as of the
Effective Date shall automatically be granted an Option to purchase 4,400
shares of Common Stock, effective as of the Effective Date. Each individual who
first becomes a Nonemployee Director after the Effective Date shall
automatically be granted an Option to purchase 4,400 shares of Common Stock,
effective as of the Grant Date which is coincident with or next following the
date on which such individual becomes a Nonemployee Director. All Options
granted under this Section 3.2 shall be subject to the Common Stock
availability provisions of Section 4.1.
3.3 Subsequent Grants of Stock Options. Each Nonemployee Director who
has received an initial grant of an Option, as described in Section 3.2, shall
automatically be granted an Option to purchase an additional 4,400 shares of
Common Stock as of each Grant Date subsequent to the initial Grant Date
applicable to such Nonemployee Director and during the term of this Plan, with
each such subsequent grant being effective as of the applicable Grant Date. To
be eligible to receive such an Option grant with respect to any such Grant
Date, the Nonemployee Director must be a Nonemployee Director on such Grant
Date. All Options granted under this Section 3.3 shall be subject to the Common
Stock availability provisions of Section 4.1.
ARTICLE IV
COMMON STOCK AVAILABLE
4.1 In General. Subject to adjustment as provided in Section 4.2, an
aggregate of 200,000 shares of Common Stock shall be available for grant and
issuance pursuant to the provisions of this Plan. Such shares may be authorized
and unissued shares or may be shares issued and thereafter acquired by the
Company. If an Option shall expire or terminate for any reason without having
been exercised in whole or in part, the unpurchased shares of Common Stock
subject to such Option shall again be available for subsequent Option grants
under the Plan.
4.2 Adjustment in Event of Changes in Capitalization. In the event of a
stock dividend, stock split, or combination of shares, recapitalization or
other change in the Company's capitalization, or other distribution with
respect to holders of the Company's Common Stock other than normal cash
dividends, an automatic adjustment shall be made in the number and kind of
shares as to which outstanding Options or portions thereof then unexercised
shall be exercisable and in the available shares set forth in Section 4.1, to
the end that the proportionate interest of the Participant or eligible
Nonemployee Director shall be maintained as before the occurrence of such
event. Such adjustment in outstanding Options shall be made without change in
the total price applicable to the unexercised portion of such Options and with
a corresponding adjustment in the Option price per share. Automatic adjustment
shall also be made in the number and kind of shares subject to Options
subsequently granted under Article III of the Plan.
ARTICLE V
TERMS AND CONDITIONS OF STOCK OPTIONS
5.1 Exercise of Stock Options.
(a) Option Exercisability. Each Option granted as of a particular
Grant Date shall be exercisable on or after the Vesting Date with
respect to such Grant Date, subject to the provisions of Section 5.1
(b) and (c).
(b) Immediate Vesting For Death, Disability, and Change of Control.
Notwithstanding the provisions of Section 5.1(a), an Option granted
to any Participant shall become immediately exercisable in full upon
the first to occur of --
(1) The death of the Participant, in which case the Option may
be exercised by the Participant's executor or administrator, or
if not so exercised, by the legatees or distributees of his or
her estate or by such other person or persons to whom the
Participant's rights under the Option shall pass by will or by
the applicable laws of descent and distribution;
(2) Such time as the Participant ceases to be a member of the
Board by reason of his or her Disability and
(3) Change in Control.
(c) Holding Periods. Any Option may not be exercised for at least
six months after the grant thereof. Should this Section 5.1(c)
require modification or be unnecessary to comply with the
requirements of Section 16 of and Rule 16b-3 under the Exchange Act,
the Board may waive such provision and/or amend this Plan to add to
or modify the provisions hereof accordingly.
(d) Termination Other Than Death or Disability. In the event the
Participant ceases to be a Nonemployee Director of the Company for
any reason other than death or Disability when no Change of Control
has occurred, and such termination occurs prior to the time an
Option granted to such Participant has become exercisable, such
Option shall terminate with respect to the shares as to which the
Option is not then exercisable and all rights of the Participant to
such shares shall terminate without further obligation on the part
of the Company. As regards any Option which is exercisable by the
Participant at such time, such Participant must exercise such Option
within 90 days following the date the Participant so ceased to be a
Nonemployee Director, and, any such Option remaining unexercised as
of the close of such period shall expire.
5.2 Exercise Price. The exercise price of an Option for a share of
Common Stock shall be an amount determined by the Board in its discretion, but
in no event an amount less than 100 percent of the Fair Market Value of such
Common Stock on the Grant Date relating to such Option.
5.3 Expiration of Options.
(a) In General. An Option shall expire ten years from the Grant Date
relating to such Option, unless terminated earlier in accordance
with the Plan.
(b) Death of Participant. In the event a Participant ceases to be a
Nonemployee Director of the Company by reason of death, including
without limitation in the event that a Participant dies after
ceasing to be a member of the Board by reason of Disability, any
Option granted to such Participant hereunder that has not been fully
exercised at the time of the Participant's death may be exercised at
any time within the greater of
(1) one year after the date of death, or --
(2) the remainder of the period in which such Participant could
have exercised the Option had the Participant not died,
assuming the Nonemployee Director remained a Nonemployee
Director during the term of the Plan. In the event any Option
is exercised by the executors, administrators, legatees, or
distributees of the estate of a deceased Participant, the
Company shall be under no obligation to issue Common Stock
thereunder unless and until the Company is satisfied that the
person or persons exercising the Option are the duly appointed
legal representatives of the deceased optionee's estate or the
proper legatees or distributees thereof.
5.4 Exercise and Payment of Exercise Price.
(a) Number of Shares. Subject to the terms and conditions of the
Plan, an Option shall, to the extent then exercisable, be
exercisable in whole or in part by giving written notice to the
Company stating the number of shares with respect to which the
Option is being exercised, accompanied by payment in full for such
shares; provided, however, that there shall be no such exercise at
any one time as to fewer than 100 shares or all of the remaining
shares then purchasable by the person or persons exercising the
Option, if fewer than 100 shares.
(b) Payment Methods. An Option may be paid for by --
(1) delivery of cash or a check payable to the order of the
Company in an amount equal to the exercise price of such
Option, or
(2) by delivery to the Company of shares of Common Stock of the
Company already owned by the Participant for more than six
months and having a Fair Market Value equal in amount to the
exercise price of the Option being exercised, provided that
such method is consistent with applicable tax laws, or
(3) by any combination of such methods of payment.
5.5 Rights as a Shareholder. Except as specifically provided by the
Plan, the grant of an Option shall not give a Participant rights as a
shareholder; and the Participant will obtain such rights only upon actual
receipt of Common Stock.
5.6 Documentation of Option Grants. Option grants shall be evidenced by
written instruments prescribed by the Board from time to time. The instruments
may be in the form of agreements to be executed by both the Participant and the
Company or certificates, letters or similar instruments, which need not be
executed by the Participant, but acceptance of which will evidence agreement to
the terms of the grant.
5.7 Nontransferability of Options. No Option granted under the Plan
shall be assignable or transferable by the Participant to whom it is granted,
either voluntarily or by operation of law, except by will or the laws of
descent and distribution. Any such attempted assignment or transfer in
violation of this Section 5.7 shall be null and void. During the life of the
Participant, the Option shall be exercisable only by such person or, in the
event of incapacity, by the person or person properly appointed to act on his
or her behalf.
ARTICLE VI
REGULATORY COMPLIANCE
6.1 Issuance or Delivery of Shares. The issuance or delivery of any
shares of Common Stock subject to exercisable Options may be postponed by the
Board for such period as may be required to comply with any applicable
requirements under the Federal securities laws, any applicable listing
requirements of any national securities exchange, or any requirements under any
law or regulation applicable to the issuance or delivery of such shares. The
Company shall not be obligated to issue or deliver any such shares if the
issuance or delivery thereof would constitute a violation of any provision of
any law or of any regulation of any governmental authority or any national
securities exchange.
6.2 Amendments for Compliance. Sections 2.1(l), 2.1(n), 3.1, 3.2 and 3.3
shall not be amended more than once every six months, other than to comport
with changes in the Code or other applicable Federal or state law. Should any
provision of this Section 6.2 require modification or be unnecessary to comply
with the requirements of Section 16 of and Rule 16b-3 under the Exchange Act,
the Board may waive such provision and/or amend this Plan to add to or modify
the provision hereof accordingly.
ARTICLE VII
ADMINISTRATION
7.1 Plan Administration. The Plan shall be administered by the Board.
The Board shall have all the powers vested in it by the terms of the Plan, such
powers to include authority within the limitations described herein to
prescribe the form of the agreement embodying grants of Options. The Board
shall have the power to construe the Plan, to determine all questions arising
thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decision of the Board
in the administration of the Plan, as described herein, shall be final and
conclusive. The Board may from time to time delegate certain of its
administrative responsibilities under the Plan to Company personnel or to a
committee. The Board may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their number
or any officer of the Company to execute and deliver documents on behalf of the
Board. No member of the Board shall be liable for anything done or omitted to
be done other than by such member's own willful misconduct or as expressly
provided by statute.
7.2 Indemnification and Exculpation. The members of the Board, its
agents, and officers and employees of the Company shall be indemnified and held
harmless by the Company against and from any and all loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by them in connection
with or resulting from any claim, action, suit, or proceeding to which they may
be a party or in which they may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts paid by
them in settlement (with the Company's written approval) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding. The
foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person's gross negligence or willful
misconduct.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. Except as provided in Section 6.2, the Board shall have
the right to amend or modify the Plan in full or in part at any time and from
time to time; provided, however, that unless required by law, no such amendment
or modification shall --
(a) affect any right or obligation with respect to any Option grant
theretofore made,
(b) in any manner affect the restrictions set forth in Section 6.2,
or
(c) unless previously approved by the shareholders of the Company,
where such approval is necessary to satisfy then applicable
requirements of Federal securities laws, the Code, or rules of any
stock exchange on which the Company's Common Stock is listed --
(1) in any manner materially affect the eligibility
requirements set forth in Sections 3.1, 3.2 and 3.3,
(2) materially increase the number of shares of Common Stock
available for or subject to Options, or
(3) materially increase the benefits to Participants under the
Plan.
8.2 Termination.
(a) In General. The Board shall have the right to terminate the Plan
at any time; provided, however, that Options which are granted on or
before the termination date shall remain exercisable in accordance
with their respective terms after the termination of the Plan.
(b) Termination Date. Unless terminated earlier by the Board, the
Plan shall terminate on December 31, 2007; provided, however, that
Options which are granted on or before such date shall remain
exercisable in accordance with their respective terms after the
termination of the Plan.
ARTICLE IX
MISCELLANEOUS
9.1 Shareholder Approval. The effectiveness of the Plan and of the grant
of all Options under the Plan are subject to shareholder approval as provided
in Section 1.4. The Company's obligation to issue and deliver shares of Common
Stock under the Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance, or delivery of Common
Stock.
9.2 No Right to Reelection. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Nonemployee
Director for reelection by the Company's shareholders, nor confer upon any
Nonemployee Director the right to remain a member of the Board for any period
of time, or at any particular rate of compensation.
9.3 Withholding. It shall be a condition to the obligation of the
Company to issue shares of Common Stock upon exercise of an Option, that the
optionee (or any beneficiary or person entitled to act under Section 5.1(b))
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold Federal, state,
local, or foreign income or other taxes. Such amount may be paid by the
Participant by cash or check or by authorizing the Company to withhold shares
of Common Stock with a Fair Market Value equal to such Participant's
withholding obligation. If the amount requested is not paid, the Company may
refuse to issue shares of Common Stock.
9.4 Severability. In the event any provision of this Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of this Plan, but this Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and
the Company shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment as provided in this Plan.
9.5 Status Under ERISA. This Plan is not maintained as and is not
intended to be an "employee benefit plan" under the Employee Retirement Income
Security Act of 1974, as amended.
9.6 Applicable Law. The Plan shall be governed by, construed, and
administered in accordance with the laws of the State of Delaware, except to
the extent such laws are preempted by the laws of the United States.
IN WITNESS WHEREOF,
The duly authorized officer of the Company has caused this plan to be
executed as of the 12th day of February, 1998, pursuant to the authorization of
the Board of Directors and a majority of the shareholders of the Company.
SETECH, INC.
By: /s/ Thomas N. Eisenman
Thomas N. Eisenman
Title: President
