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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
Commission File No. 000-17746
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
(Formerly Safe Aid Products Incorporated)
----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 22-2824492
------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
249 Peruvian Avenue
Suite F2
Palm Beach, Florida 33480
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (561) 832-2700
--------------
* On February 9, 1998, Safe Aid Products Incorporated merged with and into
Intelligence Network International and was renamed Safe Technologies
International Incorporated.
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, $0.00001 Par Value - 705,477,200 shares as of
August 10, 1998.
<PAGE>
INDEX
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1998 (Unaudited) and November 30, 1998...............3
Consolidated Statements of Operations (Unaudited) -
Three Months Ended June 30, 1998 and June 30,1997.............4
Consolidated Statements of Operations (Unaudited) -
Six Months Ended June 30, 1998 and June 30,1997...............5
Consolidated Statements of Cash Flows (Unaudited) -
Three Months Ended June 30, 1998 and June 30,1997.............6
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 1998 and June 30,1997...............7
Notes to Unaudited Consolidated Financial Statements..........8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................10
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................14
Item 2. Changes in Securities........................................14
Item 3. Defaults Upon Senior Securities..............................14
Item 4. Submission of Matters to a Vote of Security Holders..........14
Item 5. Other Information............................................14
Item 6. Exhibits and Reports on Form 8-K.............................14
Signature.............................................................15
<PAGE>
<TABLE>
PART 1 - FINANCIAL STATEMENT PRESENTATION
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED BALANCE SHEETS
<CAPTION>
<S> <C> <C>
June 30, November 30,
1998 1997
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 119,075 $ 4,034
Accounts receivable - principally trade 110,140 0
Inventory 12,784 0
Income tax refund receivable 48,300 0
Notes receivable, stockholders 112,355 0
Prepaid expenses 2,494 0
Management Agreements, net 772,918 0
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TOTAL CURRENT ASSETS 1,178,066 4,034
MACHINERY AND EQUIPMENT
Net of accumulated depreciation 70,594 0
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TOTAL MACHINERY AND EQUIPMENT 70,594 0
OTHER ASSETS
Deposits 5,294 0
Goodwill, net 593,844 0
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TOTAL OTHER ASSETS 599,138 0
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TOTAL ASSETS $ 1,847,798 $ 4,034
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit, payable bank $ 16,140 $ 0
Payroll taxes 14,742 0
Accounts payable, trade 85,259 0
Accrued expenses 6,180 5,293
Accrued income taxes 68,012 0
Notes payable, related party 97,333 0
Deferred income taxes 4,800 0
Shareholder loans 0 13,500
-------------- -------------
TOTAL CURRENT LIABILITIES 292,466 18,293
STOCKHOLDERS' EQUITY
Common stock $.00001 par value
999,000,000 shares authorized; 705,477,200 issued and outstanding 7,055 7,030
Additional paid in capital 2,346,000 1,548,969
Deficit accumulated during development stage (1,570,758)
Accumulated deficit (797,723)
-------------- ------------
TOTAL STOCKHOLDERS' EQUITY 1,555,332 (14,759)
-------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,847,798 $ 4,034
============= ============
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Three For Three
Months Ended Months Ended
June 30, June 30,
1998 1997
REVENUES $ 203,096 $ 0
COST OF REVENUE $ 96,626 $ 0
------------ ------------
GROSS PROFIT $ 106,470 $ 0
EXPENSES
Promotion 10,239 0
Bank charges 1,695 0
Interest 1,082 0
Depreciation 143,927 0
Equipment lease 9,012 0
Insurance 4,771 0
Office expenses 30,191 0
Officers' salary 33,638 0
Wages 10,837 0
Payroll taxes 3,514 0
Commissions paid 925 0
Subcontract labor 1,540 0
Legal & professional fees 78,015 21,643
Travel 5,225 0
------------ ------------
TOTAL EXPENSES $ 334,611 $ 21,643
------------ ------------
OTHER INCOME
Interest on Deposit 1,432 0
Income Before Income Taxes ( 226,709) (21,643)
Provision For Income Taxes 0 0
NET LOSS $ ( 226,709) $ (21,643)
LOSS PER SHARE:
Net loss per share NIL NIL
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 705,477,200
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Six For Six
Months Ended Months Ended
June 30, June 30,
1998 1997
REVENUES $ 549,817 $ 0
COST OF REVENUE $ 307,499 $ 0
------------ ------------
GROSS PROFIT $ 242,318 $ 0
EXPENSES
Promotion 19,788 0
Bank charges 4,021 0
Interest 1,489 0
Depreciation 299,879 0
Equipment lease 18,504 0
Insurance 10,770 0
Office expenses 73,389 0
Officers' salary 88,246 0
Wages 15,517 0
Payroll taxes 5,209 0
Commissions paid 2,590 0
Subcontract labor 14,845 0
Legal & professional fees 142,937 50,930
Travel 11,129 0
Merger Expense 122,774 0
------------ ------------
TOTAL EXPENSES $ 831,087 $ 50,930
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OTHER INCOME
Interest on Deposit 2,469 0
Income Before Income Taxes ( 586,300) (50,930)
Provision For Income Taxes 0 0
NET LOSS $ ( 586,300) $ (50,930)
LOSS PER SHARE:
Net loss per share NIL NIL
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 705,477,200
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Three For Three
Months Ended Months Ended
June 30, June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $( 226,709) $ (21,643)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 143,927 0
Changes in account balances:
Accounts receivable 20,911 0
Inventory 1,367 0
Deposits 0 0
Accounts payable 3,744 0
Accrued expenses 0 0
Payroll taxes payable (2,066) 0
Sales taxes payable (4) 0
--------- ---------
TOTAL ADJUSTMENTS 167,879 (21,643)
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NET CASH USED BY OPERATING ACTIVITIES (58,830) (21,643)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (9,024) 0
Note receivable from stockholders (1,471)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (10,495) 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on line of credit - bank 294 0
--------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES 294 0
INCREASE (DECREASE) IN CASH (69,031) (21,643)
BEGINNING CASH BALANCE 188,106 38,415
--------- ---------
ENDING CASH BALANCE $ 119,075 $ 16,772
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest $ 418
</TABLE>
<PAGE>
<TABLE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
<S> <C> <C>
For Six For Six
Months Ended Months Ended
June 30, June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (586,300) $ (50,930)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 299,879 0
Changes in account balances:
Accounts receivable (1,320) 0
Inventory 1,367 0
Deposits 214,802 0
Accounts payable 22,508 0
Accrued expenses 0 0
Payroll taxes payable (896) 0
Sales taxes payable 0 0
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TOTAL ADJUSTMENTS 536,340 (50,930)
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NET CASH USED BY OPERATING ACTIVITIES (49,960) 0
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (9,024) 0
Note receivable from stockholders (1,471)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (10,495) 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on line of credit - bank 14 0
Issuance of common stock 122,774 9,725
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 122,788 9,725
INCREASE (DECREASE) IN CASH (62,333) (50,930)
BEGINNING CASH BALANCE 56,742 57,977
--------- ---------
ENDING CASH BALANCE $ 119,075 $ 16,772
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest $ 826
</TABLE>
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Safe Technologies International, Inc., and its wholly owned
subsidiaries (collectively, 'the Company'). All significant inter-
company transactions and accounts have been eliminated.
The statements have been prepared in accordance with generally accepted
accounting principles for interim financial information, with the
instructions to Form 10-QSB. The Company's financial statements have been
prepared on a going concern basis which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal
course of business. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of consolidated results of operation, consolidated financial
position and consolidated cash flows at the dates and for the periods
indicated, have been included in these financial statements .
These financial statements give effect to the February 9, 1998 reverse
acquisition whereby Safe Aid Products, Inc. acquired all of the
outstanding common stock of Intelligence Network International, Inc.; as
if the transaction occurred on January 1, 1997.
For the three months ended June 30, 1998, the Company incurred a loss of
$226,709, and has a deficit accumulated of $797,723 and cash of $119,075.
Operating results for the quarter, ending June 30, 1998, are not
necessarily indicative of the results that may be expected for the year
end December 31, 1998.
NOTE 2. COMMON STOCK TRANSACTIONS
During the first quarter of 1998, Safe Aid Products affected a one for
ten reverse stock split. All share and per share amounts presented herein
account for this action as of the first day of the first period
presented. Further, the 634,929,480 shares issued to effect the
recapitalization, as discussed below, are also presented as issued and
outstanding as of the first day of the first period presented.
On February 9, 1998, Safe Aid Products issued 585,819,936 shares of newly
issued, restricted unregistered common stock, to the former shareholders
of Intelligence Network International, Inc. in relation with the merger
with Intelligence Network International, Inc. On February 9, 1998, Safe
Aid Products also issued 49,109,544 shares of newly issued, restricted
unregistered common stock, to certain broker, finders and consultants for
services rendered in the reverse merger transaction.
<PAGE>
SAFE TECHNOLOGIES INTERNATIONAL INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 3. CLASSIFICATION OF EXPENSES
Cost of revenues includes the costs associated with the hardware,
software, materials, etc., for the Company's customers, and other costs
are classified as operating expenses.
NOTE 4. NET LOSS PER COMMON SHARE
Net loss per average common and common equivalent share has been computed
on the basis of the weighted average number of common shares and
equivalents outstanding during the respective period. The effects on loss
per share resulting from the potential exercise of issuance of the
assumed exercise of warrants in the period presented are antidilutive
and, therefore, not included in the calculations. At June 30, 1998, there
were 14,727,280 warrants outstanding to purchase at prices ranging from
$0.20 to $0.50. per share.
NOTE 5. NOTES RECEIVABLE
The Company holds various note receivables from Stockholders totaling
$110.885. These notes earn interest at 8.5% and are due upon demand.
NOTE 6. NOTES PAYABLE
Notes payable consists of the following:
Notes payable to former Safe Aid Products, Inc., Officer and Stockholder
in the amount of $19,000
Notes payable to two Company Directors in the amount of $38,583
Notes payable to Subsidiary Stockholders in the amount of $39,750
NOTE 7. AMORTIZATION OF MANAGEMENT AGREEMENTS AND GOODWILL
Amortization of management agreements and Goodwill Expenses for the
second quarter ended June 30, 1998 were $143,927, and for the first
quarter ended May 31, 1997 was $0.00. $143,927 of the Amortization
expense relates to the purchases of Precision Imaging (GMG, Inc.) and
Total Micro Computers, Inc. The Management Agreements with these
Subsidiaries were valued at $1,050,000 amortized over a period of two
years. Goodwill for these companies was valued at $614,149 amortized over
10 years.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Safe Technologies International, Inc., formerly known as Safe Aid
Products, Inc. (the "Company"), continued, during the Second Quarter, to
concentrate and address administrative functions, analyze several
potential acquisition candidates, address the Capital requirements of the
Company, and further attention to establishment of day to day procedures
as part of the transition from the previous company operations, Safe Aid
Products, Inc., and its reverse merger which the Company consummated on
February 9, 1998.
An important achievement, during the Second Quarter, was the execution of
multiple Stockholders' Agreements among the five major SFAD Stockholders
who presently own over Seventy Eight (78%) of the Company's Outstanding
and Issued Common Stock. These Agreements represent a second year
significant restriction in terms of how much stock can be sold during
each quarter by those particular Stockholders.
A comprehensive Incentive Stock Plan was established and adopted by the
board of directors on April 1,1998 for select employees, officers,
directors and key consultants to the Company and its subsidiaries,
intended to advance the best interest of the Company by providing
personnel who have substantial responsibility for the management and
growth of the Company and its subsidiaries with additional incentive by
increasing their proprietary interest in the success of the Company,
thereby encouraging them to remain in the employ of the Company or any of
its subsidiaries.
The total number of shares of Common Stock available under the Plan shall
not exceed in the aggregate 60,000,000 shares, consisting of a maximum of
30,000,000 Stock Options, 15,000,000 Restricted Stock Grants and
15,000,000 Stock Awards.
During the quarter, the Company entered into three Letters of Intent for
acquisitions of businesses which fit into the profile of the company's
targeted industries. Currently, the Company is performing Due Diligence,
and Certified Audits on those businesses are underway. Contingent upon
Due Diligence and Certified Audits reports, the Company will enter into
final Acquisition Contracts to acquire those businesses in a Stock for
Stock transaction. Closing are expected to occur during the Third
Quarter, 1998.
The Company received written notice from Franklin L. Frank, on June 15,
1998, that he resigned as a Director for the Company. Anthony Diaz and
Gerarldo Toquica had both resigned their positions in TMC as of June 4,
1998
<PAGE>
As of June 30, 1998, the Company has three Florida subsidiaries: Total
Micro Computers, Inc. ("TMC"), Internet Commerce, Inc., (ICI) and GMG
Computer Consultants, Inc. d.b.a Precision Imaging ("GMG"). The Company
incorporated the new Florida corporation, Internet Commerce, Inc., which
provides a subsidiary business entity for further development of the
Company's Internet related activities and provides an autonomous entity
for the Company's Internet assets: Real Estate 2001 Software, the
copyrights for PII, a global real estate information and database
service, the PII.net web site, the copyrights for the IN CyberMall and
the IN CyberMall.com web site.
Unless the context otherwise requires, the term "Company" as used herein
refers to the Company and its three subsidiaries, TMC, ICI, and GMG.
Three Months ended June 30, 1998 ("second quarter of 1998") compared to
three months ended June 30, 1997("second quarter of 1997")
Financial Statements and Change in Fiscal Year End
Prior to the reverse merger, the Company's fiscal year end was November
30. After the reverse merger was completed, the new management of the
Company changed the Company's fiscal year end to December 31.
Results of Operations
Revenues were $203,096 for the second quarter of 1998 and were $0 for the
second quarter of 1997, representing an increase of 100%.
Approximately, $85,855 or 42% of these revenues were from GMG, $108,088
or 53% of these revenues were from TMC, and $0 or 0% of these revenues
were from ICI.
Revenues for GMG during the first quarter of 1998 were slightly higher
than the first quarter of 1997. Activities for GMG during the second
quarter of 1998 continued with regular Client jobs, such as the
prestigious Boca Raton, Florida monthly magazine and several new
assignments which were generated from the Company subsidiaries.
<PAGE>
Revenues for TMC were reduced in the second quarter of 1998 compared to
the second quarter of 1997 due to continuing problems of lack of working
capital which emanated from a burglary at TMC's premises in Tampa,
Florida on September 5, 1997, and State Farm's, the insuring company,
continued refusal to address the issue of paying TMC's Insurance claim.
In the burglary, a significant amount of TMC's computer products and
parts inventory were stolen from TMC's inventory room. Although, TMC was
insured by State Farm Insurance Company, State Farm has delayed paying
the insurance claim during its ten month investigation of the burglary.
Pending resolution of the insurance claim, TMC has focused on building up
the retail side of TMC's operation, but the falling margins in the sale
of new computer systems and a highly competitive Tampa, Florida market
have proven difficult operating conditions for TMC. TMC's Management,
the two former TMC stockholders, impacted by these events, have abandoned
and resigned their respective positions as President and Vice President
of TMC. Both having resigned their positions in TMC as of June 4, 1998.
Since the end of June, 1998, the Company is addressing TMC's problems and
is considering its options for dealing with the subsidiary's problems.
Cost of revenues were $96,626 for the second quarter of 1998 and were $0
for the first quarter of 1997, representing an increase of 100%.
GMG's cost of revenues remained relatively constant, slightly increased
from $9,874 in the second quarter of 1997 to $14,206 in the second
quarter of 1998. TMC's cost of revenues were lower than expected for
parts and peripherals, decreasing from $427,045 in the second quarter of
1997 to $82,420 in the second quarter of 1998.
Selling, general and administrative expenses were $334,611 for the second
quarter of 1998 compared to $21,643 for the second quarter of 1997,
representing more than an 1500% increase. This increase is attributable
to the Company's new operating status, versus the former Development
Company status. Additionally, many one time administrative and merger
expenses are still coming in to the Company from expenses authorized by
the former Development Company's Management.
<PAGE>
GMG's selling, general and administrative expenses were $70,849 for the
second quarter of 1998 compared to $47,118 for the second quarter of
1997, representing an increase of 50%. TMC 's selling, general and
administrative expenses were $44,562 for the second quarter of 1998
compared to $65,669 for the second quarter of 1997, representing an
decrease of 39%. This decrease is primarily due to reduced revenues and
cost cutting measures.
As a result of the foregoing, the Company's operating loss for the second
quarter of 1998 was $226,709 compared to $21,643 for the second quarter
of 1997. TMC's net loss for the second quarter of 1998 was $10,756
compared to net income of $1,889 for the second quarter of 1997. GMG's
net income for the second quarter of 1998 was $800 compared to $1,495 for
the second quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had working capital of $1,555,332
compared with a pre-merger working deficit of $100,240 on June 30, 1997.
Net cash used in operating activities was $58,830 during the second
quarter of 1998 compared to $21,643 for the second quarter of 1997. The
Company used $10,495 in investing activities in the second quarters of
1998 and $0 the second quarter 1997. Net cash used in financing
activities was $194 during the second quarter of 1998 compared with $0 in
the second quarter of 1997. As of June 30, 1998, the Company did not
have any material commitments for capital expenditures.
The Company is in process of securing additional capital, and expects to
close on a funding deal in the next quarter. The Company believes that
it has adequate resources for operations until such funding becomes
available.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) (i) Exhibit 10.1 - 1998 Stock Incentive Plan(filed herewith
electronically)
(ii) Exhibit 27 - Financial Data Schedule (filed herewith
electronically)
(b) Reports on Form 8-K
The Company filed two reports on Form 8-K during the
three months ended June 30, 1998.
(i) The Company filed a report on Form 8-K dated May 27,
1998 which reported information under Item 5 - Other
Information.
(ii) The Company filed a report on Form 8-K dated June 23,
1998 which reported information under Item 5 - Other
Information.
<PAGE>
Safe Technologies International, Inc.
In accordance with the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Safe Technologies International, Inc., Registrant
Date: August 14, 1998 By: /s/Barbara Tolley
- --------------------- ---------------------
Date President
Exhibit 10.1
SAFE TECHNOLOGIES INTERNATIONAL, INC.
1998 INCENTIVE STOCK PLAN
1. Purpose. This 1998 Incentive Stock Plan (the
"Plan") of Safe Technologies International, Inc. (the
"Company") for selected employees, officers, directors and
key consultants to the Company and its subsidiaries, is
intended to advance the best interests of the Company by
providing personnel who have substantial responsibility for
the management and growth of the Company and its
subsidiaries with additional incentive by increasing their
proprietary interest in the success of the Company, thereby
encouraging them to remain in the employ of the Company or
any of its subsidiaries.
2. Administration. The Plan shall be administered
by a committee (the "Committee") consisting of not less
than two members of the Board of Directors of the Company
(the "Board"). All of the members of the Committee shall
be "Non-Employee Directors" as defined in Rule 16b-3 of the
Rules and Regulations promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act") or any similar or
successor rule. The Board shall have the power to add or
remove members of the Committee from time to time, and to
fill vacancies thereon arising by resignation, death,
removal, or otherwise. The Committee shall designate a
chairman from among its members, who shall preside at all
of its meetings, and shall designate a secretary, without
regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all
records, documents, and data pertaining to its
administration of the Plan. Meetings shall be held at such
times and places as shall be determined by the Committee.
A majority of the members of the Committee shall constitute
<PAGE>
a quorum for the transaction of business, and the vote of a
majority of those members present at any meeting shall
decide any question brought before that meeting. In
addition, the Committee may take any action otherwise
proper under the Plan by the affirmative vote, taken
without a meeting, of a majority of its members. Any
decision or determination reduced to writing and signed by
a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly
called and held. All questions of interpretation and
application of the Plan, including those involving non-
qualified stock options (the "Options"), restricted stock
("Restricted Stock"), or awards of stock ("Stock Awards")
shall be subject to the determination of the Committee.
The actions of the Committee in exercising all of the
rights, powers and authorities set out in this Plan, when
performed in good faith and in its sole judgment, shall be
final, conclusive, and binding on the parties.
3. Shares Available Under the Plan. The stock
subject to Options, Restricted Stock Grants and Stock
Awards shall be shares of the Company's Common Stock,
.00001 par value (the "Common Stock"). The total number of
shares of Common Stock available under the Plan shall not
exceed in the aggregate 60,000,000 shares, consisting of a
maximum of 30,000,000 Options, 15,000,000 Restricted Stock
Grants and 15,000,000 Stock Awards; provided, that the class
and aggregate number of shares which may be subject to grant
hereunder shall be subject to adjustment in accordance with
the provisions of Paragraph 16 hereof. Such shares may be
treasury shares or authorized but unissued shares.
In the event that any outstanding Option, Restricted Stock
Grant or Stock Award shall expire or terminate by reason of
the death or severance of employment of the optionee or
grantee, the shares of Common Stock allocable to the
unexercised portion of that Option or the forfeited
Restricted Stock or Stock Award may again be available under
the Plan. If Common Stock is used by an employee pursuant
to Section 8 of this Plan to pay the exercise price of an
Option, only the net number of shares of Common Stock
issued by the Company shall be considered utilized under
this Plan. If shares of Stock are withheld by the Company
to pay tax withholding due from the optionee or grantee, the
number of such shares withheld shall not be considered
utilized under this Plan.
4. Authority to Grant Options, Restricted Stock Grants and
Stock Awards. The Committee in its discretion and subject
to the provisions of the Plan, may grant the following from
time to time to eligible individuals of the Company or any
of its subsidiaries:
<PAGE>
(a) Options. The Committee may grant to an eligible
individual an Option or Options to buy a stated number of
shares of Common Stock under the terms and conditions of the
Plan, which Option or Options do not constitute "incentive
stock options" within the meaning of Section 422 of the Code
("Non-Qualified Stock Option" or "Option").
(b) Restricted Stock Grant. The Committee may grant
to an eligible individual shares of Common Stock subject to
specified restrictions on transferability and vesting as
provided in the Plan ("Restricted Stock Grant").
(c) Stock Award. The Committee may award and issue
shares of Common Stock under the Plan to an eligible
individual ("Stock Award"). Stock Awards may be made in
lieu of cash compensation or as additional compensation.
Stock Awards may also be made pursuant to performance based
goals established by the Committee.
Subject only to any applicable limitations set forth in the
Plan, the number of shares of Common Stock covered by any
Option, Restricted Stock Grant, and Stock Award, shall be
determined by the Committee.
5. Eligibility. The individuals who shall be eligible to
participate in the Plan shall be any officer, director,
employee, consultant or other person providing key services
to the Company or any of its subsidiaries, and any person to
whom an offer of employment has been made by the Company or
any of its subsidiaries (hereinafter such persons may
sometimes be referred to as the "Eligible Individuals.").
<PAGE>
6. Option Price. The price at which shares may be
purchased pursuant to an Option shall not be less than the
fair market value of the shares of Common Stock on the date
the Option is granted. However, the Committee in its
discretion may provide that the price at which shares may be
purchased shall be more than the fair market value of the
shares of Common Stock on the date the Option is granted.
The Option price determined under this Paragraph 6 shall be
referred to herein as the "Option Price."
For all purposes of this Plan, the "fair market value" of a
share of Common Stock as of any particular date shall mean
the average of the high and low sales price of a share of
Common Stock on that date as reported by the principal
national securities exchange on which the Common Stock is
then listed, if the Common Stock is then listed on a
national securities exchange, or the average of the bid and
asked price of a share of Common Stock on that date as
reported in the NASDAQ listing, if the Common Stock is not
then listed on a national securities exchange, provided that
if no closing price or quotes are reported on that date or,
if in the discretion of the Committee, another means of
determining the fair market value of a share of Common Stock
at that date shall be necessary or advisable, the
Committee may provide for another means of determining fair
market value.
7. Duration of Options. No Option shall be exercisable
after the expiration of ten (10) years from the date the
Option is granted; and the Committee in its discretion may
provide that the Option shall be exercisable throughout the
ten-year period or during any lesser period of time
commencing on or after the date of grant and ending on or
before the expiration of the ten-year period.
8. Exercise of Options. An optionee may exercise an
Option by delivering to the Company a written notice stating
(i) that the optionee wishes to exercise the Option on the
date notice is delivered, (ii) the number of shares of
Common Stock with respect to which the Option is to be
exercised, (iii) the address to which the certificate
representing the shares of Common Stock should be mailed,
and (iv) the social security number of the optionee. In
order to be effective, the written notice shall be
accompanied by (i) payment of the Option Price of
the shares of Common Stock and (ii) payment of an amount of
money necessary to satisfy the withholding tax liability, if
any, that may result from the exercise of the Option. Each
payment shall be made by cash or by check drawn on a
national banking association and payable to the order of the
Company in United States dollars.
<PAGE>
At the time of receipt by the Company of written notice of
exercise, the optionee may deliver to the Company, to the
extent permitted by law, in payment of the Option Price of
the shares of Common Stock with respect to which the Option
is exercised, (x) certificates registered in the name of the
optionee that represent a number of shares of Common Stock
legally and beneficially owned by the optionee (free of all
liens, claims and encumbrances of every kind) and having a
fair market value on the date of receipt by the Company of
written notice that is not greater than the Option Price of
the shares of Common Stock with respect to which the Option
is to be exercised, the certificates to be accompanied by
stock powers duly endorsed in blank by the record holder of
the shares of Common Stock represented by certificates (or
in lieu of such certificates, other arrangements for the
transfer of shares to the Company which are satisfactory
to the Company), and cash or a check for the balance and (y)
if the Option Price of the shares of Common Stock with respect
to which such Option is to be exercised exceeds the fair
market value, a check drawn on a national banking
association and payable to the order of the Company in an
amount, in United States dollars, equal to the amount of the
excess plus (z) the amount of money, in a form acceptable to
the Committee, necessary to satisfy the withholding tax
liability, if any, that may result from the exercise of the
Option.
Notwithstanding the provisions of the immediately preceding
sentence, the Committee, in its sole discretion, may refuse
to accept shares of Common Stock in payment of the Option
Price of the shares of Common Stock with respect to which
the Option is to be exercised and, in that event, any
certificates representing shares of Common Stock that were
received by the Company with written notice shall be
returned to the optionee, together with notice by the
Company to the optionee of the refusal of the Committee to
accept the shares of Common Stock. The Company, upon
approval of the Committee and in its sole discretion,
following the request of the optionee, may retain shares of
<PAGE>
Common Stock which would otherwise be issued upon exercise
of an Option to satisfy the withholding tax liability that
may result from the exercise of an Option. In this case, the
retained shares shall be valued at their then fair market
value. If, at the expiration of seven business days after
the delivery to optionee of written notice from the Company
that it will not accept shares of Common Stock in payment of
the exercise price, the optionee shall not have delivered to
the Company a check or money order drawn on a national
banking association and payable to the order of the Company
in an amount, in United States dollars, equal to the Option
Price of the shares of Common Stock with respect to which
such Option is to be exercised, the written notice from the
optionee to the Company shall be ineffective to exercise the
Option.
The Committee may permit an optionee to elect to pay the
exercise price upon exercise of an Option by authorizing a
third party (broker) to sell all (or a portion) of the
shares of Stock acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale
proceeds to pay the exercise price and any applicable tax
withholding resulting from such exercise.
As promptly as practicable after the receipt by the Company
of (i) the written notice from the optionee, (ii) payment,
in the form required by the foregoing provisions of this
Paragraph of the Option Price of the shares of Common Stock
with respect to which the Option is to be exercised, and
(iii) payment, in the form required by the foregoing
provisions of this Paragraph of an amount of money necessary
to satisfy any withholding tax liability that may result
from the exercise of the Option, the Company shall deliver
to the optionee a certificate representing
the number of shares of Common Stock with respect to which the
Option has been exercised, reduced to the extent applicable by
the number of shares retained by the Company as provided above to
pay any required withholding tax liability, the certificate to be
registered in the name of the optionee, provided that delivery
shall be considered to have been made when the certificate shall
have been mailed, postage prepaid, to the optionee at the address
specified for that purpose in written notice from the optionee to
the Company.
<PAGE>
9. Restricted Stock Grants. The Committee may issue
shares of Common Stock to an Eligible Individual subject to the
terms of a Restricted Stock Grant. The shares may be issued for
no payment by the individual or for a payment at or below the
fair market value on the date of grant. Restricted Stock shall be
subject to restrictions as to sale or other transfer and
generally will be subject to vesting over a period of time
specified in the Restricted Stock Grant. The Committee shall
determine the number of shares and the price, if any, at which
shares of Restricted Stock will be granted.
Restricted Stock shall be subject to the following terms and
conditions as determined by the Committee, including without
limitation any or all of the following:
(a) a prohibition against the sale, transfer, pledge
or other encumbrance of the shares of Restricted Stock, such
prohibition to lapse (i) at such time or times as the Committee
shall determine (whether in annual or more frequent installments,
at the time of the death, disability or retirement of the holder
of such shares, or otherwise);
(b) a requirement that the holder of shares of
Restricted Stock forfeit, or in the case of shares sold to a
Participant, resell back to the Company at his cost, all or a
part of such shares in the event of termination of the holder's
employment during any period in which the shares remain subject
to restrictions;
(c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its
affiliates, or against such holder's dissemination of any secret
or confidential information belonging to the Company or a
subsidiary of the Company;
(d) unless stated otherwise in the Restricted Stock
Grant, if restrictions remain at the time of severance of
employment with the Company or a parent or subsidiary
corporation, the Restricted Stock shall be forfeited; provided
however, if severance of employment is by reason of disability or
death, the restrictions on the shares shall lapse and the grantee
or his heirs or estate shall be 100% vested in the shares subject
to the Restricted Stock Grant.
<PAGE>
No holder of Restricted Stock shall exercise the election
authorized by Section 83(b) of the Code without the express
written consent of the Committee to this election. Any grantee
of Restricted Stock making this election without the consent of
the Committee shall forfeit all shares of Restricted Stock
granted to him.
Shares of Restricted Stock shall be registered in the name
of the grantee and deposited, together with a stock power
endorsed in blank, with the Company. Each such certificate shall
bear a legend in substantially the following form:
The transferability of this certificate and the shares
of Common Stock represented by it are subject to the
terms and conditions (including conditions of
forfeiture) contained in Safe Technologies
International, Inc. 1998 Incentive Stock Plan, and an
agreement entered into between the registered owner and
the Company. A copy of the Plan and agreement is on
file in the office of the Secretary of the Company.
At the end of any time period during which the shares of
Restricted Stock are subject to forfeiture and restrictions on
transfer, the shares will be delivered free of all restrictions
to the grantee or to the grantee's legal representative,
beneficiary or heir; provided the certificate shall bear such
legend, if any, as the Committee determines is reasonably
required by applicable law.
Subject to the terms and conditions of the Plan, each
grantee receiving Restricted Stock shall have all the rights of a
stockholder with respect to the shares of Common Stock during any
period in which such shares are subject to forfeiture and
restrictions on transfer, including without limitation, the right
to vote such shares. By accepting a Restricted Stock Grant, the
grantee agrees to remit when due any federal and state income and
employment taxes required to be withheld. Dividends paid in cash
or property other than stock with respect to shares of Restricted
Stock shall be paid to the grantee currently.
<PAGE>
10. Stock Awards.
(a) The Committee may grant Common Stock to an
Eligible Individual under the Plan, without any payment by the
individual, in lieu of certain cash compensation or as additional
compensation. The Stock Award is subject to appropriate tax
withholding. After compliance with the tax withholding
requirements, a stock certificate shall be issued to the
individual recipient of the Stock Award. The certificate shall
bear such legend, if any, as the Committee determines is
reasonably required by applicable law. Prior to receipt of a
Stock Award, the individual must comply with appropriate requests
of the Committee to assure compliance with all relevant laws.
(b) The Committee may award shares of Common Stock,
without any payment for such shares, to designated individuals if
specified performance goals established by the Committee are
satisfied. The terms and provisions herein relating to
performance based Stock Awards are intended to satisfy Section
162(m) of the Code and regulations issued thereunder. The
designation of an employee eligible for a specific performance
based Stock Award shall be made by the Committee in writing prior
to the beginning of the 12-month period for which the performance
is measured. The Committee shall establish the number of shares
to be issued to a designated employee if the performance goal is
met; provided the maximum number of shares which may be issued to
any one employee per year under this Paragraph 10 is
shares. The Committee must certify in writing that a performance
goal has been met prior to issuance of any certificate for a
performance based Stock Award to any employee. If the Committee
certifies the entitlement of an employee to the performance based
Stock Award, the certificate shall be issued to the employee as
soon as administratively practicable, and subject to other
applicable provisions of the Plan, including but not limited to,
all legal requirements and tax withholding.
Performance goals determined by the Committee may be based
on specified increases in net profits, stock price, Company or
segment sales, market share, earnings per share, and/or return on
equity.
The employees eligible for a performance based Stock Award
are the senior officers (i.e., President Vice President,
Secretary, Treasurer, and above) of the Company and its
subsidiaries.
<PAGE>
11. Transferability of Options to Permitted Transferees.
(a) The Committee may, in its discretion, permit an
individual to transfer all or any portion of a Non-Qualified
Stock Option, or authorize all or a portion of any Non-Qualified
Stock Option to be granted to an individual to be on terms which
permit transfer by such individual, to (i) his spouse, children
or grandchildren ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family
Members, or (iii) a partnership in which such Immediate Family
Members are the only partners (collectively, "Permitted
Transferees"); provided that (x) there may be no consideration
for any such transfer and (y) subsequent transfers of Options
transferred as provided above shall be prohibited except
subsequent transfers back to the original individual-holder of
the Non-Qualified Stock Option and transfers to other Permitted
Transferees of the original individual-holder. Options evidencing
Non-Qualified Stock Options with respect to which such
transferability is authorized at the time of grant must be
approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Subsection
11(a).
(b) Other Transfers. Except as expressly permitted by
subsection ll(a), Options requiring exercise shall not be
transferable other than by will or the laws of descent and
distribution or pursuant to domestic relations orders.
<PAGE>
(c) Effect of Transfer. Following the transfer of any
Non-Qualified Stock Option as contemplated by Subsection ll(a)
and ll(b), (i) such Option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to
transfer, provided that the term "individual" shall be deemed to
refer to the Permitted Transferee or the estate or heirs of a
deceased individual, as applicable, to the extent appropriate to
enable the holder to exercise the transferred Option in
accordance with the terms of the Plan and applicable law and (ii)
the provisions of the Plan shall continue to be applied with
respect to the original individual and, following the occurrence
of any such events described therein the Options shall be
exercisable by the Permitted Transferee or the estate or heirs of
a deceased holder, as applicable, only to the extent and for the
periods specified.
(d) Procedures and Restrictions. Any individual
desiring to transfer a Non-Qualified Stock Option as permitted
under Subsection 11(a) shall make application therefor to the
Committee and shall comply with such other requirements as the
Committee may require to assure compliance with all applicable
securities laws. The Committee shall not give permission for
such a transfer if (i) it would give rise to short-swing
liability under Section 16(b) of the Exchange Act, or (ii) it may
not be made in compliance with all applicable federal, state and
foreign securities laws.
(e) Registration. To the extent the issuance to any
Permitted Transferee of any shares of Stock issuable pursuant to
Non-Qualified Stock Options transferred as permitted in this
Section is not registered pursuant to the effective registration
statement of the Company generally covering the shares to be
issued pursuant to the Plan to initial holders of Options, the
Company shall not have any obligation to register the issuance of
any such shares of stock to any such transferee.
12. Termination of Employment or Death of Optionee. Except
as may be otherwise expressly provided herein, each Option, to
the extent it shall not previously have been exercised, shall
terminate on the earlier of the date of the expiration of the
Option or one day less than three months after the date of the
severance of the employment relationship between the Company and
the optionee, whether with or without cause, for any reason other
than the death or disability of the optionee, during which period
the optionee shall be entitled to exercise the Option in respect
<PAGE>
of the number of shares that the optionee would have been
entitled to purchase had the optionee exercised the Option on the
date of severance of employment. Whether authorized leave of
absence, or absence on military or government service, shall
constitute severance of the employment relationship between the
Company and the optionee shall be determined by the Committee at
the time thereof.
In the event of severance because of the disability of the
holder of any Option while in the employ of the Company and
before the date of expiration of the Option, the Option shall
terminate on the earlier of the date of expiration or one day
less than one year following the date of severance because of
disability, during which period the optionee shall be entitled to
exercise the Option in respect of the number of shares that the
optionee would have been entitled to purchase had the optionee
exercised the Option on the date of severance because of
disability.
In the event of the death of the holder of any Option while
in the employ of the Company and before the date of expiration of
the Option, the Option shall terminate on the earlier of the date
of expiration or one day less than one year following the date of
death. After the death of the optionee, the executors,
administrators or any person or persons to whom the Option was
transferred by will or by the laws of descent and distribution,
shall have the right, at any time prior to the expiration of an
Option, to exercise the option in whole or in part, without
regard to any limitation the optionee would have been subject to
had he exercised the option on the day of his death while in
employment.
<PAGE>
13. Requirements of Law. The Company shall not be required
to sell or issue any shares under any Option, Restricted Stock
Grant or Stock Award if the issuance of those shares would
constitute a violation by the optionee, recipient, or the Company
of any provisions of any law or regulation of any governmental
authority. Each Option, Restricted Stock Grant and Stock Award
granted under the Plan shall be subject to the requirements that,
if at any time the Board or the Committee shall determine that
the listing, registration or qualification of the shares subject
thereto upon any securities exchange or under any state or
federal law of the United States or of any other country or
governmental subdivision thereof, or the consent or approval of
any governmental regulatory body, or investment or other
representations, are necessary or desirable in connection with
the issue or purchase of shares subject thereto, no Option may be
exercised in whole or in part, or Restricted Stock Grant or Stock
Award issued, unless the listing, registration, qualification,
consent, approval or representations shall have been effected or
obtained free of any conditions not acceptable to the Board. If
required at any time by the Board or the Committee, an Option may
not be exercised or a Stock Award issued until the optionee or
recipient has delivered an investment letter to the Company. In
addition, specifically in connection with the Securities Act of
1933 (as now in effect or hereafter amended) (the "1933 Act"),
upon exercise of any Option or entitlement to a Restricted Stock
Grant or Stock Award, the Company shall not be required to issue
the underlying shares unless the Committee has received evidence
satisfactory to it to the effect that the holder of the Option,
Restricted Stock Grant or Stock Award will not transfer the
shares except pursuant to a registration statement in effect
under the 1933 Act or unless an opinion of counsel satisfactory
to the Committee has been received by the Company to the effect
that registration is not required. Any determination in this
connection by the Committee shall be final, binding and
conclusive. In the event the shares issuable on exercise of an
Option or pursuant to a Restricted Stock Grant or Stock Award are
not registered under the 1933 Act, the Company may imprint on the
certificate for the shares the following legend or any other
legend which counsel for the Company considers necessary or
advisable to comply with the 1933 Act:
<PAGE>
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933 or under the securities laws of any state and may
not be sold or transferred except upon such
registration or upon receipt by the Corporation of an
opinion of counsel satisfactory to the Corporation, in
form and substance satisfactory to the Corporation,
that registration is not required for such sale or
transfer.
The Company may, but shall not be obligated to, register any
securities covered hereby pursuant to the 1933 Act (as now in
effect or as hereafter amended) and, in the event any shares are
registered, the Company may remove any legend on certificates
representing these shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise
of an Option or the issuance of shares pursuant thereto or
pursuant to a Restricted Stock Grant or Stock Award to comply
with any law or regulation of any governmental authority.
14. No Rights as Shareholder. No optionee shall have
rights as a shareholder with respect to shares covered by an
Option until the date of issuance of a stock certificate for the
shares; and, except as otherwise provided in Paragraph 16 hereof,
no adjustment for dividends, or otherwise, shall be made if the
record date therefor is prior to the date of issuance of the
certificate.
15. Employment Obligation. The granting of any Option,
Restricted Stock Grant, or Stock Award shall not impose upon the
Company any obligation to employ or continue to employ any
optionee or grantee; and the right of the Company to terminate
the employment of any officer or other employee shall not be
diminished or affected by reason of the fact that an Option,
Restricted Stock Grant or Stock Award, has been granted to him.
16. Changes in the Company's Capital Structure. The
existence of outstanding Options, Restricted Stock Grants, and
Stock Awards shall not affect in any way the right or power of
the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes
in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character
or otherwise.
<PAGE>
If the Company shall effect a subdivision or consolidation
of shares or other capital readjustment, the payment of a
dividend in capital stock or other equity securities of the
Company on, its Common Stock, or other increase or reduction of
the number of shares of the Common Stock outstanding, without
receiving consideration therefor in money, services, or property,
or the reclassification of its Common Stock, in whole or in part,
into other equity securities of the Company, then (a) the number,
class and per share price of shares of Common Stock subject to
outstanding Options, Restricted Stock Grants, and Stock Awards
hereunder shall be appropriately adjusted (or in the case of the
issuance of other equity securities as a dividend on, or in a
reclassification of, the Common Stock, the Options, Restricted
Stock Grants, and Stock Awards shall extend to such other
securities) in a manner so as to entitle an optionee or a grantee
to receive, upon exercise of an Option, for the same aggregate
cash consideration, and for the vesting of Restricted Stock, and
award of pending performance based Stock Awards, the same total
number and class or classes of shares (or in the case of a
dividend of, or reclassification into, other equity securities,
those other securities) he would have held after adjustment if he
had exercised his Option, or the Restricted Stock was vested in
full, or the Stock Award was earned, immediately prior to the
event requiring the adjustment, or, if applicable, the record
date for determining shareholders to be affected by the
adjustment; and (b) the number and class of shares then reserved
for issuance under the Plan (or in the case of a dividend of, or
reclassification into, other equity securities, those other
securities) shall be adjusted by substituting for the total
number and class of shares of stock then reserved, the number and
class or classes of shares of stock (or in the case of a dividend
of, or reclassification into, other equity securities, those
other securities) that would have been received by the owner of
an equal number of outstanding shares of Common Stock as a result
of the event requiring the adjustment. Comparable rights shall
accrue to each optionee or employee in the event of successive
subdivisions, consolidations, capital adjustments, dividends or
reclassifications of the character described above.
<PAGE>
After a merger of one or more corporations into the Company,
after any consolidation of the Company and any one or more
corporations, or after any other corporate transaction described
in Section 424(a) of the Code in which the Company shall be the
surviving corporation, each optionee, at no additional cost,
shall be entitled to receive (subject to any required action by
stockholders), upon any exercise of his Option, in lieu of the
number of shares as to which the Option shall then be
exercisable, the number and class of shares of stock or other
securities to which the holder would have been entitled pursuant
to the terms of the agreement of merger or consolidation, if,
immediately prior to such merger or consolidation such holder had
been the holder of a number of shares of Common Stock equal to
the number of shares as to which the Option shall then be
exercised and, if as a result of the merger, consolidation or
other transaction, the holders of Common Stock are not entitled
to receive any shares of Common Stock pursuant to the terms
thereof, each optionee, at no additional cost, shall be entitled
to receive, upon exercise of his Option, other assets and
property, including cash, to which he would have been entitled if
at the time of such merger, consolidation or other transaction he
had been the holder of the number of shares of Common Stock equal
to the number of shares as to which the Option shall then be
exercised. Comparable rights shall accrue to each optionee in the
event of successive mergers or consolidations of the character
described above. Appropriate adjustments shall also be made to
shares of Restricted Stock and to pending Stock Awards.
<PAGE>
If the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the
surviving corporation, or if the Company is liquidated, or sells
or otherwise disposes of substantially all its assets to another
corporation while unexercised Options remain outstanding under
the Plan, (i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation or sale,
as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of such Option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities
as the holders of shares of Common Stock received pursuant to the
terms of the merger, consolidation or sale; (ii) the Board may
waive any vesting requirements set forth in any Option so that
all Options from and after a date prior to the effective date of
such merger, consolidation, liquidation or sale, as the case may
be, specified by the Board shall be exercisable in full; or (iii)
all outstanding Options may be canceled by the Board as of the
effective date of any such merger, consolidation, liquidation or
sale provided that (x) notice of such cancellation shall be given
to each holder of an Option and (y) each holder of an Option
shall have the right to exercise such Option in full (subject to
any vesting requirements, unless waived) during a 30-day period
preceding the effective date of such merger, consolidation,
liquidation, sale or acquisition.
Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock then
subject to outstanding Options, Restricted Stock Grants, or Stock
Awards.
<PAGE>
17. Amendment or Termination of Plan. The Board may at any
time alter, suspend or terminate the Plan, but except in
accordance with the provisions of Paragraph 16 hereof, no change
shall be made which will have a material adverse effect upon any
Option, Restricted Stock Grant or Stock Award previously granted
unless the consent of such grantee is obtained.
18. Forfeitures. Notwithstanding any other provisions of
this Plan, if the Committee finds by a majority vote after full
consideration of the facts that the employee, before or after
termination of his employment with the Company or its
subsidiaries for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty
in the course of his employment by the Company or its
subsidiaries, which conduct damaged the Company or its
subsidiaries, or disclosed trade secrets of the Company or its
subsidiaries, or (b) participated, engaged in or had a financial
or other interest, whether as an employee, officer, director,
consultant, contractor, shareholder, owner, or otherwise, in any
commercial endeavor in the United States which is competitive
with the business of the Company or its subsidiaries without the
written consent of the Company or its subsidiaries, the employee
shall forfeit all outstanding Options, Restricted Stock and Stock
Awards which are not fully vested, including all rights related
to such matters, and including all unexercised Options, exercised
Options, and any performance based Stock Awards to which he may
be entitled, and other elections pursuant to which the Company
has not yet delivered a stock certificate. Clause (b) shall not
be deemed to have been violated solely by reason of the
employee's ownership of stock or securities of any publicly owned
corporation, if that ownership does not result in effective
control of the corporation.
<PAGE>
The decision of the Committee as to the cause of the
employee's discharge, the damage done to the Company or its
subsidiaries, and the extent of the employee's competitive
activity shall be final. No decision of the Committee, however,
shall affect the finality of the discharge of the employee by the
Company or its subsidiaries in any manner. To provide the
Company with an opportunity to enforce this Section, no
certificate for Stock may be issued under this Plan without the
certification by the Committee that no action forbidden by this
provision has been raised for their determination.
19. Tax Withholding. The Company or any of its
subsidiaries shall be entitled to deduct from other compensation
payable to each employee any sums required by federal, state, or
local tax law to be withheld with respect to the grant, exercise,
or vesting, as appropriate, of an Option, Restricted Stock Grant,
or Stock Award. In the alternative, the Company may require the
employee (or other person exercising the Option, or receiving the
Restricted Stock or Stock Award) to pay the sum directly to the
employer corporation. If the employee (or other person) is
required to pay the sum directly, payment in cash or by check of
such sums for taxes shall be delivered within five (5) days after
the date of exercise. The Company shall have no obligation upon
exercise of any Option, vesting of Restricted Stock or issuance
of a Stock Award until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to
the date of exercise is sufficient to cover all sums due with
respect to that exercise or vesting. The Company shall not be
obligated to advise an employee of the existence of the tax or
the amount which the employer corporation will be required to
withhold.
<PAGE>
20. Written Agreement. Each Option, Restricted Stock
Grant, and Stock Award granted hereunder shall be embodied in a
written agreement, which shall be subject to the terms and
conditions prescribed herein, and shall be signed by the optionee
or grantee and by an appropriate officer of the Company for and
in the name and on behalf of the Company. Each agreement shall
contain other provisions which the Committee in its discretion
shall deem advisable.
21. Governing Law and Interpretation. This Plan shall be
governed by the laws of the state of Florida. Headings contained
in this Plan are for convenience only and shall in no manner be
construed as part of this Plan. It is the intent of the Company
that the Plan comply in all respects with Rule 16b-3 promulgated
under the Exchange Act, any ambiguities or inconsistencies in
construction of the Plan shall be interpreted to give effect to
such intention, and if any provision of the Plan is found not to
be in compliance with Rule 16b-3, such provision shall be deemed
null and void to the extent required to permit the Plan to comply
with Rule 16b-3. The Board and the Committee each may from time
to time adopt rules and regulations under, and amend, the Plan in
furtherance of the intent of the foregoing.
22. Effective Date of Plan. The Plan shall become
effective as of April 1, 1998 (the "Effective Date") and shall
terminate on the 10th anniversary of the Effective Date. No
Option, Restricted Stock Grant, or Stock Award shall be granted
pursuant to the Plan after April 1, 2008.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10QSB - CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 AND
CONSOLIDATED STATEMENT OF EARNINGS (LOSS) FOR THE THREE MONTH PERIOD
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 119,075
<SECURITIES> 0
<RECEIVABLES> 110,140
<ALLOWANCES> 0
<INVENTORY> 12,784
<CURRENT-ASSETS> 1,178,066
<PP&E> 70,594
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,847,798
<CURRENT-LIABILITIES> 292,466
<BONDS> 0
<COMMON> 7,055
0
0
<OTHER-SE> 1,555,332
<TOTAL-LIABILITY-AND-EQUITY> 1,847,798
<SALES> 203,096
<TOTAL-REVENUES> 204,528
<CGS> 96,626
<TOTAL-COSTS> 96,626
<OTHER-EXPENSES> 334,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,082
<INCOME-PRETAX> (226,709)
<INCOME-TAX> 0
<INCOME-CONTINUING> (226,709)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226,709)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
