UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)
John B. Sanfilippo & Son, Inc.
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(Name of issuer)
Common Stock, par value $.01
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(Title of class of securities)
800422 10 7
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CUSIP number)
Timothy R. Donovan
Jenner & Block, One IBM Plaza, Chicago, IL 60611
(312) 222-9350
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(Name, Address and telephone number of person authorized to receive notices and
communications)
Not applicable, voluntary filing.
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
SCHEDULE 13D
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CUSIP No. 800422 10 7 | | |
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1 |NAME OF REPORTING PERSON |
|S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
|Jasper B. Sanfilippo |
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2 |CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] |
| (b) [ ] |
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3 |SEC USE ONLY |
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4 |SOURCE OF FUNDS* |
|Not applicable. |
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5 |CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS|
|2(d) or 2(e) [ ] |
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6 |CITIZENSHIP OR PLACE OF ORGANIZATION |
|United States of America |
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NUMBER OF | 7 |SOLE VOTING POWER |
SHARES | | 1,554,776 (includes (a) 1,360,731 shares of Class A |
BENEFICIALLY | |Common Stock, $.01 par value per share, held directly by|
OWNED BY | |Mr. Sanfilippo,(b) 163,045 shares of such Class A Common|
EACH | |Stock held by Mr. Sanfilippo as trustee, and (c) 31,000 |
REPORTING | |shares of Common Stock held directly by Mr. Sanfilippo. |
PERSON | |The Class A Common Stock may be converted into an equal |
WITH | |number of shares of Common Stock at any time either |
| |(i) automatically upon the occurrence of certain |
| |events, or (ii) upon the holder's election. |
|--------------------------------------------------------------|
| 8 |SHARED VOTING POWER |
| | -0- |
|--------------------------------------------------------------|
| 9 |SOLE DISPOSITIVE POWER |
| | 1,554,776 |
|--------------------------------------------------------------|
| 10 |SHARED DISPOSITIVE POWER |
| | -0- |
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11|AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| 1,554,776 |
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12|CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]|
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13|PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| 17.2% |
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14|TYPE OF REPORTING PERSON* |
| IN |
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
This Amendment No. 4 to Schedule 13D (this "Amendment No. 4") is not required
to be filed pursuant to Rule 13d-2. Rather this Amendment No. 4 is being filed
voluntarily by Mr. Jasper B. Sanfilippo ("Mr. Sanfilippo") to, as more fully
disclosed in Items 4, 5 and 6 below, as applicable, (i) report the sale by Mr.
Sanfilippo of 25,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), of John B. Sanfilippo & Son, Inc. ("JBSS") on November 9, 1995,
(ii) report the sale by Mr. Sanfilippo of 25,000 shares of Common Stock of JBSS
on May 9, 1996, (iii) report the transfer by Mr. Sanfilippo of 24,500 shares of
Class A Common Stock, par value $.01 per share (the "Class A Common Stock") to
his wife, Mrs. Sanfilippo, on August 15, 1996, and (iv) report certain changes
in the terms of certain loans made to, and previously reported by, Mr.
Sanfilippo in respect of which certain of the shares of Common Stock (including
shares of Class A Common Stock) reported as beneficially owned by Mr.
Sanfilippo have been pledged as collateral security.
Item 1. Security and Issuer
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This statement relates to the Common Stock of JBSS, whose principal
executive offices are located at 2299 Busse Road, Elk Grove Village,
Illinois 60007.
Item 2. Identity and Background
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Mr. Sanfilippo's principal occupation is that of Chairman of the Board
and Chief Executive Officer of JBSS. He is a citizen of the United States, and
his business address and the address where his principal occupation is carried
on is c/o John B. Sanfilippo & Son, Inc., 2299 Busse Road, Elk Grove Village,
Illinois 60007.
During the last five years, Mr. Sanfilippo has neither (i) been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor (ii) been a party to a civil proceeding or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration
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Not applicable.
Item 4. Purpose of Transaction
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Except as described in this Amendment No. 4, Mr. Sanfilippo
has no plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities
of JBSS, or the disposition of securities of JBSS;
however,
(i) On December 10, 1991, JBSS underwent a
recapitalization pursuant to a Restated
Certificate of Incorporation (the "Restated
Certificate"). Pursuant to the Restated
Certificate, JBSS was recapitalized so that
each previously outstanding share of JBSS's
Class A Common Stock and Class B Common
Stock was split on a 407.61 for 1 basis and
converted into either Common Stock or Class
A Common Stock as follows: (A) each share
of Class A Common and Class B Common
Stock held by stockholders listed on pages 2
and 3 of the Restated Certificate was
automatically converted into one share of
Class A Common Stock; and (B) each share
of Class B Common Stock owned by
stockholders other than the stockholders listed
on pages 2 and 3 of the Restated Certificate
was automatically converted into one share of the
Common Stock. Pursuant to the Restated
Certificate and the recapitalization provided for
therein, Mr. Sanfilippo, at that time, acquired
1,628,526 shares of Class A Common Stock,
including 163,045 shares of Class A Common
Stock held by Mr. Sanfilippo as trustee of
certain trusts (the Trusts ), the
beneficiaries of which are his children. The
Trust Agreements were filed as Exhibits 2
through 6 inclusive with the original Schedule
13D filed by Mr. Sanfilippo and are
incorporated herein by reference. Mr.
Sanfilippo currently holds 1,554,776 shares of
Common Stock. The 1,554,776 shares of
Common Stock held by Mr. Sanfilippo include
(A) 1,360,731 shares of Class A Common
Stock held directly by Mr. Sanfilippo, (B)
163,045 shares of Class A Common Stock
held by Mr. Sanfilippo as trustee of the Trusts,
the beneficiaries of which are his children, and
(C) 31,000 shares of Common Stock held
directly by Mr. Sanfilippo. Mr. Sanfilippo is not
a beneficiary of any of the Trusts. Each record
holder of Class A Common Stock is entitled at any
time to convert any or all of the shares of such
holder's Class A Common Stock into an equal number
of shares of Common Stock. Because the shares of
Class A Common Stock may be converted into Common
Stock at any time, Mr. Sanfilippo is deemed to be
the beneficial owner of 1,554,776 shares of Common
Stock.
(ii) In May 1995, JBSS adopted the 1995 Equity
Incentive Plan (the "Equity Incentive Plan"),
effective as of March 1, 1995. The Equity
Incentive Plan is administered by a Stock
Option Plan Committee composed of Mr.
Sanfilippo and Mathias A. Valentine, who are
not participants in the Equity Incentive Plan.
Options may be granted to any key employee
of JBSS or any member of JBSS's Board of
Directors who is not a member of the Stock
Option Plan Committee. The aggregate
maximum number of shares of Common Stock
available for awards under the Equity Incentive
Plan is 200,000 shares, subject to
adjustments reflecting changes in JBSS's
capitalization. The Equity Incentive Plan is
filed as Exhibit B herewith and is incorporated
herein by reference.
(iii) Mr. Sanfilippo has pledged a total of 1,346,231
shares of Class A Common Stock to American
National Bank and Trust Company of Chicago
("ANB") and to Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"). Mr.
Sanfilippo has, as of the date hereof, pledged
a total of 1,277,481 shares of Class A
Common Stock to ANB pursuant to (A) a loan
commitment dated October 12, 1993 by ANB
to Mr. Sanfilippo (the Loan Commitment )
and (B) an Installment Note dated September
6, 1995 (the Second Installment Note ),
which together constitute a loan arrangement
between Mr. Sanfilippo and ANB (the "ANB
Loan Agreement"). The Second Installment
Note replaces an installment note executed
shortly after the Loan Commitment by Mr.
Sanfilippo in favor of ANB. ANB is entitled,
upon a default by Mr. Sanfilippo under the
ANB Loan Agreement, to sell the shares of
Class A Common Stock pledged to it by Mr.
Sanfilippo in order to satisfy Mr. Sanfilippo's
loan obligations. In addition, Mr. Sanfilippo,
and his wife, Mrs. Sanfilippo, on or around
December 11, 1992, have entered into a
Customer Agreement (the "DLJ Customer
Agreement") in connection with a joint margin
account established at that time by Mr.
Sanfilippo and Mrs. Sanfilippo with DLJ. Mr.
Sanfilippo initially pledged a total of 58,750
shares of Class A Common Stock to DLJ. As
of the date hereof, Mr. Sanfilippo has pledged
a total of 68,750 shares of Class A Common
Stock to DLJ. DLJ is entitled, upon a default
by Mr. Sanfilippo or Mrs. Sanfilippo under the
DLJ Customer Agreement or associated joint
margin account, to sell the shares of Class A
Common Stock pledged to it by Mr. Sanfilippo
in order to satisfy their obligations.
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving JBSS
or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
JBSS or any of its subsidiaries;
(d) Any change in the present board of directors or
management of JBSS, including any plans or proposals
to change the number of terms of directors or to fill any
existing vacancies on the board; however, effective
August 1, 1996, Mr. Larry D. Ray resigned from the
Board of Directors (and as an officer) of JBSS in order
to accept employment with another company. The Board of
Directors of JBSS has not decided on how to proceed with
respect to the vacancy.
(e) Any material change in the present capitalization or
dividend policy of JBSS;
(f) Any other material change in JBSS's business or
corporate structure;
(g) Changes in JBSS's charter, bylaws or instruments
corresponding thereto or other actions which may
impede the acquisition of control of JBSS by any
person;
(h) Causing a class of securities of JBSS to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation
system of a registered national securities association;
(i) A class of equity securities of JBSS becoming eligible
for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
The possible activities of Mr. Sanfilippo are subject to change at any
time, and there can be no assurance that Mr. Sanfilippo will actually convert
his Class A Common Stock of JBSS to Common Stock of JBSS pursuant to the
Restated Certificate or otherwise take or refrain from taking any other actions.
Mr. Sanfilippo reserves the right to, among other things, purchase or dispose
of shares of Class A Common Stock or Common Stock and/or other securities of
JBSS.
The summaries contained herein of the Restated Certificate, the
respective Trust Agreements and the Equity Incentive Plan are qualified in their
entirety by the provisions of such documents as filed with the Securities and
Exchange Commission and are incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
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(a) Mr. Sanfilippo is the beneficial owner (as that term is
defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of 1,554,776 shares of Common Stock,
which constitute approximately 17.2% percent of the
outstanding shares of Common Stock, based on the
number of shares outstanding (not including treasury
shares) as of March 15, 1996 as reported in JBSS's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995. The 1,554,776 shares of
Common Stock reported above include (A) 1,360,731
shares of Class A Common Stock held directly by Mr.
Sanfilippo, (B) 163,045 shares of Class A Common
Stock held by Mr. Sanfilippo as trustee of the Trusts,
the beneficiaries of which are his children (Mr. Sanfilippo
is not a beneficiary of any of the Trusts.), and (C)
31,000 shares of Common Stock held directly by Mr.
Sanfilippo.
The beneficial ownership of Mr. Sanfilippo, described
in the immediately preceding paragraph, excludes
922,872 shares of Common Stock that Mr. Sanfilippo's
wife, Mrs. Sanfilippo, beneficially owns, of which Mr.
Sanfilippo disclaims beneficial ownership. The 922,872
shares of Common Stock held by Mrs. Sanfilippo include
(A) 24,500 shares of Class A Common Stock held directly by Mrs.
Sanfilippo, (B) 890,220 shares of Class A Common
Stock held by Mrs. Sanfilippo as trustee of certain trusts,
the beneficiaries of which are her children (Mrs.
Sanfilippo is not a beneficiary of any of the trusts), and
(C) 8,152 shares of Common Stock held directly by
Mrs. Sanfilippo.
(b) Mr. Sanfilippo has the sole power to vote or direct the
vote and to dispose or direct the disposition of the
1,554,776 shares of Common Stock of which he is the
beneficial owner.
(c) Mr. Sanfilippo has sold 50,000 shares of Common
Stock on the Nasdaq National Market System since the
date of his Amendment No. 3 to Schedule 13D. The
following table sets forth the date of each sale, the
number of shares sold and the price per share.
Date Number of Shares Price Per Share
------- ---------------- ---------------
11/9/95 25,000 $9.75
5/9/96 25,000 $7.00
In addition, on August 15, 1996, Mr. Sanfilippo transferred,
by gift, 24,500 shares of Class A Common Stock to his wife,
Mrs. Sanfilippo.
(d) Pursuant to the Trusts referred to in Item 4, of which
Mr. Sanfilippo is trustee, the beneficiaries of the
respective Trusts may receive dividends from, or the
proceeds from the sale of, that portion of the securities
reported herein which are property of the respective
Trusts.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
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(a) Pursuant to the Restated Certificate, among other things:
(i) With respect to all matters other than the
election of directors or matters for which class
voting is required by law, the holders of
Common Stock and the holders of Class A
Common Stock will vote together as a single
class and the holders of Common Stock will be
entitled to one vote per share of Common
Stock and the holders of Class A Common
Stock will be entitled to ten votes per share of
Class A Common Stock
(ii) Each record holder of Class A Common Stock
is entitled at any time to convert any or all of
the shares of such Class A Common Stock
into an equal number of shares of Common
Stock;
(iii) Upon the sale, assignment, pledge or other
transfer of any shares or any interest in shares
of Class A Common Stock, other than a
"Permitted Transfer" as described in Part 4(b)
of Subdivision II of the Restated Certificate, all
such transferred shares of Class A Common
Stock will be automatically converted into an
equal number of shares of Common Stock;
(iv) All outstanding shares of Class A Common
Stock will be automatically converted into an
equal number of shares of Common Stock
upon the date on which the number of
outstanding shares of Class A Common Stock
constitutes less than 12.5% of the total number
of outstanding shares of Common Equity.
(b) Mr. Sanfilippo, as trustee of each of the five Trusts,
has the authority to vote, or to direct the vote, and to
dispose, or to direct the disposition, of the 163,045
shares of Class A Common Stock held in aggregate by
the Trusts. The following table more specifically
describes each Trust by identifying the name of the
Trust, the grantor and the beneficiary of the Trust
(which, with respect to a particular Trust, are the same
person), and the number of shares of Class A Common
Stock held by each Trust. Mr. Sanfilippo is the father
of the beneficiary under each Trust.
Number
Trust Grantor and Beneficiary of Shares
----------------------------------- ----------------------- ---------
James J. Sanfilippo Trust James J. Sanfilippo 32,609
Agreement, dated September 26, 1991
Jasper B. Sanfilippo Trust Jasper B. Sanfilippo 32,609
Agreement, dated September 23, 1991
Lisa Ann Sanfilippo Trust Lisa Ann Sanfilippo 32,609
Agreement, dated October 4, 1991
Jeffrey T. Sanfilippo Trust Jeffrey T. Sanfilippo 32,609
Agreement, dated October 7, 1991
John E. Sanfilippo Trust John E. Sanfilippo 32,609
Agreement, dated October 2, 1991
The beneficiary under each Trust is paid the income of
the Trust, including that derived from shares of Class A
Common Stock, and so much of the principal of the Trust,
including shares of Class A Common Stock, as Mr. Sanfilippo,
as trustee, determines to be required or advisable, based on
certain criteria. The beneficiary under each Trust has the right
to receive the shares of JBSS held in trust under certain
circumstances as provided in the respective Trust Agreements.
Currently, the percentage of the shares of JBSS held in trust
for the respective beneficiaries does not exceed five percent
of the total number of outstanding shares of Common Stock.
(c) On September 6, 1995, the original installment note
under the ANB Loan Agreement was repaid and
replaced by the Second Installment Note. Mr.
Sanfilippo borrowed $5,026,000.01 under the terms of
the Second Installment Note, repayable in two
payments of $66,000.00 (due on October 15, 1995 and
January 15, 1996) and two payments of $135,000.00
(due on April 15, 1996 and July 15, 1996), with a final
installment of the remaining balance due on July 31,
1996. Mr. Sanfilippo is current with his payments. The
lender has agreed to refinance the remaining balance with a
replacement installment note. Mr. Sanfilippo is currently
waiting for the lender to forward to him the necessary paperwork.
Interest on the Second Installment Note is equal to ANB's prime
rate plus one percent, computed on the basis of a 360-day year
and actual days elapsed. The collateral under the Second
Installment Note consisted of 1,277,481 shares of Class A Common
Stock pledged by Mr. Sanfilippo. Collateral pledged under
the Second Installment Note secures, pursuant to the
terms thereof, prompt payment and performance of
Mr. Sanfilippo under the Second Installment Note and
under any other agreement, instrument or document
previously, contemporaneously or subsequently
delivered by Mr. Sanfilippo to ANB.
The foregoing brief summary of the Restated Certificate, the respective
Trust Agreements, and the Second Installment Note does not purport to be
complete and it is qualified in its entirety by the terms and conditions set
forth in the Restated Certificate, the respective Trust Agreements, and the
Second Installment Note which are filed as Exhibits with the Securities and
Exchange Commission and are incorporated herein by reference.
Item 7. Material to Be Filed as Exhibits
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(A) Installment Note, dated September 6, 1995, payable to
ANB, made by Mr. Sanfilippo in the principal face
amount of $5,026,000.01.
(B) The John B. Sanfilippo & Son, Inc. 1995 Equity
Incentive Plan.
Signature
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
September 13, 1996 /s/ Jasper B. Sanfilippo
------------------ ------------------------
Date Jasper B. Sanfilippo
INSTALLMENT NOTE
$5,026,000.01 Chicago, Illinois 9/06/95 Due 7/31/96
FOR VALUE RECEIVED, the undersigned, (jointly and severally if more than one)
( Borrower ), promises to pay to the order of
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
("Bank") at its principal place of business in Chicago, Illinois or such
other place as Bank may designate from time to time hereafter, the principal
sum of Five Million Twenty Six Thousand and 01/100 Dollars in 4 successive
installments as follows: quarterly installments of (i) principal plus interest
as hereafter provided. The amount of each installment shall be $ See Above.
with a final installment of $Balance. The first installment shall be due on
the 15th day of October, 1995 and successive installments shall be paid on the
same day of each (a) month, or (b) quarter, thereafter until paid. Borrower's
obligation and liabilities to Bank under this Note, and all other obligations
and liabilities of Borrower to Bank (including without limitation all debts,
claims and indebtedness) whether primary, secondary direct, contingent, fixed
or otherwise heretofore now and/or from time to time hereafter owing due or
payable, however evidenced, created incurred, acquired or owing and however
arising, whether under this Note, any agreement, instrument or document
heretofore, now or from time to time hereafter executed and delivered to Bank
by or on behalf of Borrower, or by oral agreement or operation of law or
otherwise, shall be defined and referred to herein as "Borrower's
Liabilities".
The unpaid principal balance of Borrower s Liabilities due hereunder
shall bear interest from the date hereof until paid, computed as follows: at a
daily rate equal to the daily rate equivalent of 1% per annum (computed on the
basis of a 360-day year and actual days elapsed) in excess of the rate of
interest announced or published publicly from time to time by Bank as its
corporate base rate or equivalent rate of interest (the "Corporate Base
Rate").
If the rate of interest to be charged by Bank to Borrower hereunder is
that specified in clause (ii), such rate shall fluctuate hereafter from time
to time concurrently with, and in an amount equal to, each increase or
decrease in the Corporate Base Rate, whichever is applicable.
Interest shall be payable by Borrower to Bank with each principal
installment of Borrower's Liabilities due hereunder, or as billed by Bank to
Borrower, at Bank's principal place of business, or at such other place as
Bank may designate from time to time hereafter.
To secure the prompt payment to Bank of Borrower's Liabilities and the
prompt, full and faithful performance by Borrower of all of the provisions to
be kept, observed or performed by Borrower under this Note and/or any other
agreement, instrument or document heretofore, now and/or from time to time
hereafter delivered by or on behalf of Borrower to Bank, Borrower grants to
Bank a security interest in and to the following property: (a) all of
Borrower's now existing and/or owned and hereafter arising or acquired monies,
reserves, deposits, deposit accounts and interest or dividends thereon,
securities, cash, cash equivalents and other property now or at any time or
times hereafter in the possession or under the control of Bank or its bailee
for any purpose; (b) Marketable Securities: 1,277,481 shares of John B.
Sanfilippo & Son, Inc. Publicly traded on NASDAQ (JBSS).
(INSERT DESCRIPTION OF ADDITIONAL COLLATERAL IF ANY)
and (c) all substitutions, renewals, improvements, accessions or additions
thereto, replacements, products and proceeds thereof, including without
limitation proceeds of insurance policies insuring the foregoing collateral
(all of the foregoing property is referred to herein individually and
collectively as "Collateral").
Regardless of the adequacy of the Collateral, any deposits or other sums
at any time credited by or payable or due from Bank to Borrower, or any
monies, cash, cash equivalents, securities, instruments, documents or other
assets of Borrower in the possession or control of Bank or its Bailee for any
purpose may at any time be reduced to cash and applied by Bank to or setoff by
Bank against Borrower's Liabilities.
Borrower agrees to deliver to Bank forthwith upon Bank's demand
therefor, such additional collateral as Bank may request from time to time
should the value of the Collateral (in Bank's sole and exclusive opinion)
decline, deteriorate, depreciate, or become impaired, or should Bank deem
itself insecure for any reason whatsoever, including without limitation a
change in the financial condition of Borrower, or any party liable with
respect to Borrower's Liabilities, and does hereby grant to Bank a continuing
security interest in such other collateral, which shall be deemed to be a part
of the Collateral. Borrower shall execute and deliver to bank, at any time
upon Bank's demand therefor, all agreements, instruments, documents and other
written matter that the Bank may request, in form and substance acceptable to
Bank, to perfect and maintain perfected Bank's security interest in the
Collateral or any additional collateral.
Bank may take, and Borrower hereby waives notice of, any action from
time to time that Bank may deem necessary or appropriate to maintain or
protect the Collateral, and Bank s security interest therein, and in
particular Bank may at any time (i) transfer the whole or any part of the
Collateral into the name of the Bank or its nominee, (ii) collect any amounts
due or Collateral directly from persons obligated thereon, (iii) take control
of any proceeds and products of Collateral, and/or (iv) sue or make any
compromise or settlement with respect to any Collateral. Borrower hereby
releases Bank from any and all causes of action or claims which Borrower may
now or hereafter have for any asserted loss or damage to Borrower claimed to
be caused by or arising from: (a) Bank s taking any action permitted by this
paragraph; (b) any failure of Bank to protect, enforce or collect in whole or
in part any of the Collateral; and/or (c) any other act or omission to act on
the part of the Bank, its officers, agents or employees, except for willful
misconduct.
The occurrence of any of one of the following events shall constitute a
default by the Borrower ("Event of Default") under this Note: (a) if Borrower
fails to pay any of Borrower s Liabilities when due and payable or declared
due and payable; (b) if Borrower fails to perform, keep or observe any term,
provision, condition, covenant, warranty or representation contained in this
Note which is required to be performed, kept or observed by Borrower; (c)
occurrence of a default or an event of default under any agreement, instrument
or document heretofore, now or at any time hereafter delivered by or on behalf
of Borrower to Bank; (d) occurrence of a default or an event of default under
any agreement, instrument or document heretofore, now or at any time hereafter
delivered to Bank by any guarantor of Borrower's Liabilities; (e) if the
Collateral or any of Borrower s assets are attached, seized, subjected to a
writ of distress warrant, or any levied upon or become subject to any lien or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors; or (f) if a petition under any section chapter of
the Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by
or against Borrower, if Borrower shall make an assignment for the benefit of
creditors, if any case or proceeding is filed by or against Borrower for its
dissolution or liquidation, or upon the death or incompetency of Borrower, or
the appointment of a conservator for all or any portion of Borrowers assets of
the Collateral.
Upon the occurrence of an event of Default, without notice by Bank to or
demand By Bank of Borrower: (i) all of Borrower's Liabilities shall be due and
payable forthwith; (ii) Bank may exercise any one or more of the rights and
remedies accruing to a secured party under the Uniform Commercial Code of the
relevant jurisdiction and any other applicable law upon default by a debtor;
(iii) Bank may enter, without process of law and without breach of the peace,
any premises where the Collateral is or may be located, and may seize or
remove the Collateral from said premises and/or remain upon said premises and
use the same for purpose of collecting, preparing and disposing of the
Collateral; and/or (iv) Bank may sell or otherwise dispose of the Collateral
at public or private sale for cash or credit, provided, however, that Borrower
shall be credited with the net proceeds of any such sale only when the same
are actually received by Bank.
Upon an event of Default, Borrower, immediately upon demand by Bank
shall assemble the Collateral and make it available to Bank at a place or
places to be designated by Bank which is reasonably convenient to Bank and
Borrower.
All of Bank's rights and remedies under this note are cumulative and
non-exclusive. The acceptance by Bank of any partial payment made hereunder
after the time when any of Borrower s Liabilities become due and payable will
not establish a custom, or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure to require strict performance by Borrower of any
provision of this Note shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance and performance therewith. Any waiver
of an Event of Default hereunder shall not suspend, waive or affect any other
Event of Default hereunder. Borrower and every endorser waive presentment,
demand and protest and notice of presentment, protest, default, non-payment,
maturity, release, compromise, settlement, extension, or renewal of this Note
and hereby ratify and confirm whatever Bank may do this regard. Borrower
further waives any and all notice or demand to which Borrower might be
entitled with respect to this Note by virtue of any applicable statute or law
(to the extent permitted by law).
Borrower agrees to pay, upon Bank's demand therefor, any and all costs,
fees and expenses (including attorney's fees, costs and expenses) incurred in
enforcing any of Bank s rights hereunder, and to the extent not paid the same
shall become part of Borrower's Liabilities hereunder.
This Note is submitted by Borrower to Bank at Bank's principal place of
business and shall be deemed to have been made thereat. This Note shall be
governed and controlled by the laws of the State of Illinois as to
interpretation, enforcement, validity, construction, effect, choice of law and
in all other respects.
To induce Bank to accept this Note, Borrower, irrevocably, agrees that,
subject to Bank's sole and absolute election, all actions or proceedings in
any way, manner or respect, arising out of or from or related to this Note
shall be litigated in courts having situs within the City of Chicago, State of
Illinois. Borrower hereby consents and submits to the jurisdiction of any
local state or federal court located within said city and state.
789 Plum Tree Road The undersigned acknowledges receipt of a copy
- --------------------------- of this note and the disclosure
Barrington Hills, IL 60010 -----------------------------------------------
- --------------------------- /s/Jasper B. Sanfilippo
Address -----------------------------------------------
Jasper B. Sanfilippo
-----------------------------------------------
- --------------------------------------------------------------------------------
|NEW | RE- | ASSIGN.| OFFICER#| OBLIGOR | FED. CODE | OBLIGATION | TAKE |
| | NEWAL| UNIT | | TYPE | | TYPE | DOWN |
| | | | | | | | NUMBER|
- --------------------------------------------------------------------------------
| | X | 00527 | 18634 | | 599 | 400 | 190 |
- --------------------------------------------------------------------------------
| TAX | FOR L&D ONLY | OBLIGOR NUMBER |
|EXEMPT | OBLIGATION NO. | |
- ---------------------------------------------
| | | 018024055734 |
- ---------------------------------------------
- --------------------------------------------------------------------------------
BASIS (CHECK ONE)
/ / 30/360(1)
/ X/ ACTUAL DAYS/360 (4)
/ / ACTUAL DAYS/365 (5)
/ / ACTUAL DAYS/ACTUAL DAYS (6)
- --------------------------------------------------------------------------------
METHOD OF COLLECTION (CHECK ONE)
/ / SEND BILL TO OFFICER (03)
/ X / MAIL BILL (11)
/ / CHARGE DDA#
--------------------------------------------------(31)
/ / OTHER, SPECIFY
---------------------------------------------------
- --------------------------------------------------------------------------------
BILLING PERIOD (CHECK ONE)
/ / MONTHLY (4) BEGINNING
---------------------------
/ X / QUARTERLY (5) BEGINNING 10/15/95
-------------------------
/ / SEMI-ANNUALLY (6) BEGINNING
----------------------
/ / ANNUALLY (7) BEGINNING
---------------------------
/ / AT MATURITY (8)
----------------------------------
/ / OTHER SPECIFY
------------------------------------
- -------------------------------------------------------------------------------
PLEASE FILL IN FOR FLOATING INTEREST RATE
DAY RATE CHANGES
---------------------------------------
FLOOR RATE
---------------------------------------------
CEILING RATE
-------------------------------------------
% ABOVE PRIME 1% O.P.
-----------------------------------------
WHOSE PRIME? ANB
-------------------------------------------
|--------------------|------------|
|FOR L & D APPROVAL | OFFICER S |
|DISCOUNT AMOUNT | APPROVAL |
|--------------------|------------|
| | |
|--------------------|------------|
|---------------------------------|
| COMMERCIAL ACCOUNT NUMBER |
|---------------------------------|
| |
|---------------------------------|
|----------------------------|-----------------|
| SPECIAL INFORMATION | TELLER |
|----------------------------|-----------------|
|----------------------------|-----------------|
|----------------------------|-----------------|
|----------------------------|-----------------|
|----------------------------|-----------------|
|----------------------------|-----------------|
- -------------------------------------------------------------------------------
FEDERAL TRUTH-IN-LENDING DISCLOSURE STATEMENT
- -------------------------------------------------------------------------------|
ANNUAL | FINANCE | Amount | Total of |SECURITY: YOU ARE GIVING |
PERCENTAGE | CHARGE* | Financed | Payments |THE BANK A SECURITY |
RATE* | THE DOLLAR | THE AMOUNT | THE AMOUNT |INTEREST IN: |
THE COST OF| AMOUNT THE | OF CREDIT | YOU WILL |/ / the goods or property |
YOUR CREDIT| CREDIT WILL| PROVIDED TO| HAVE PAID |being purchased. |
AS A YEARLY| COST YOU. | YOU ON YOUR| AFTER YOU |/ / |
RATE. | | BEHALF. | HAVE MADE | --------------------- |
| | | |/X/ any moneys, credits or|
__________%| $__________| $__________| ALL PAYMENTS |other property of yours in|
| | | AS |the possession of the |
| | | SCHEDULED. |bank, on deposit or |
| | | $__________ |otherwise. |
| | | | |
| | | |PREPAYMENT: If you pay off|
| | | |early, you will not have |
| | | |to pay a penalty. See the|
| | | |Note and/or Security |
| | | |Agreement for any |
| | | |additional information |
| | | |about non-payment, |
| | | |default, any required |
| | | |repayment in full before |
| | | |the scheduled date, |
| | | |prepayment refunds and |
| | | |penalties and further |
| | | |information about security|
| | | |interests. |
| | | | |
- ----------------------------------------------------|---------------------|----|
YOUR PAMENT SCHEDULE WILL BE | | |
- ----------------------------------------------------|---------------------|----|
- ----------|-----------|---------------|----------------------------------------|
NUMBER OF | AMOUNT OF |WHEN PAYMENTS | ITEMIZATION OF THE AMOUNT FINANCED OF |
PAYMENTS | PAYMENTS |ARE DUE | $ |
- ----------|-----------|---------------| ------------ |
2 |$66,000.00 |10/15/96 & | $ |
| | 1/15/96 | ------------ AMOUNT GIVEN TO YOU |
- ----------|-----------|---------------| DIRECTLY |
2 |$135,000.00|Quarterly | $ |
| |4/15/96 & | ------------ AMOUNT PAID ON YOUR |
| |7/15/96 | ACCOUNT |
- ----------|-----------|---------------| AMOUNTS PAID TO OTHERS ON YOUR BEHALF. |
| $ |
| ------------- TO Public Officials |
| $ |
| ------------- TO CREDIT BUREAU |
| $ |
| ------------- TO APPRAISER |
| $ |
| ------------- TO |
| ----------------- |
| (OTHER) |
| $ |
| ------------- TO |
| ----------------- |
| (NAME OF OTHER CREDITOR)|
| $ |
| ------------ TO PREPAID FINANCE CHARGE|
| |
| *INDICATES AN AMOUNT THAT MAY CHANGE |
| "E" MEANS AN ESTIMATE |
| |
- --------------------------------------------------------------------------------
/ / FIXED RATE %
--------------
VARIABLE RATE: The Annual Percentage Rate may increase or decrease during the
term of this transaction whenever
/X/ the Bank changes its "Corporate Base Rate". The term Corporate Base Rate
means the corporate base rate of interest announced by the American National
Bank and Trust Company of Chicago from time to time. Any increase or decrease
is at the discretion of the Bank, will become effective on the date of change
and will result in an increase or decrease in the amount of interest payable
with each scheduled payment of principal succeeding the change in annual
percentage rate.
/ / the discount rate established by the Federal Reserve Bank of Chicago
increases or decreases. Any increase or decrease will become effective on the
date of change and will result in an increase or decrease in the amount of
interest payable with each scheduled payment of principal succeeding the
change in annual percentage rate.
EXAMPLE: on a $5,000 loan made for one year on June 1 of any given year payable
in 12 equal monthly installments beginning on July 1 and continuing thereafter
on the first day of each succeeding month until maturity at an initial Annual
Percentage Rate of 15%, a one percentage point increase in your Annual
Percentage Rate of 16% on the date of the July 1 installment will require you
to pay $3.95 additional interest on August 1, and additional interest with each
succeeding installment computed on the unpaid principal balance on the date of
payment.
THE JOHN B. SANFILIPPO & SON, INC.
1995 EQUITY INCENTIVE PLAN
John B. Sanfilippo & Son, Inc. (the "Company") hereby
establishes The John B. Sanfilippo & Son, Inc. 1995 Equity Incentive Plan (the
"Plan"), to become effective March 1, 1995 (the "Effective Date"), subject to
approval by the holders of a majority of the combined voting power of the
Common Stock, $.01 par value, of the Company ("Common Stock") and Class
A Common Stock, $.01 par value, of the Company ("Class A Stock") present,
or represented, and entitled to vote at a meeting duly called and held. Grants
may be made hereunder prior to such stockholder approval, provided that any such
grants shall be subject to such stockholder approval.
1. Definitions.
-----------
In this Plan, except where the context otherwise indicates, the
following definitions apply:
1.1. "Agreement" means a written agreement implementing a grant
of an Option.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Change in Control" shall have the meaning set forth in
Subsection 15.1 hereof.
1.4. "Class A Stock" means the Class A Common Stock, $.01 par
value per share, of the Company.
1.5. "Code" means the Internal Revenue Code of 1986, as amended.
1.6. "Committee" means the committee of the Board meeting the
standards of Rule 16b-3(c)(2)(i) under the Exchange Act, or any similar
successor rule and Prop. Treas. Reg. Section 1.162-27(e)(3) or any similar
successor rule, appointed by the Board to administer the Plan. Unless
otherwise determined by the Board, the Stock Option Committee of the Board
shall be the Committee.
1.7. "Common Stock" means the Common Stock, par value $.01
per share, of the Company.
1.8. "Company" means John B. Sanfilippo & Son, Inc.
1.9. "Current Grant" shall have the meaning set forth in Subsection
6.4(e) hereof.
1.10. "Date of Exercise" means the date on which the Company
receives notice of the exercise of an Option in accordance with the terms of
Section 8 hereof.
1.11. "Date of Grant" means the date on which an Option is granted
by the Committee (or such later date as specified in advance by the Committee)
or, in the case of a Nonstatutory Stock Option granted to an Outside Director,
the date on which such Nonstatutory Stock Option is granted pursuant to and in
accordance with the provisions of Section 10 hereof.
1.12. "Effective Date" means March 1, 1995, subject to approval by
the holders of the combined voting power of the Common Stock and Class A
Stock present, or represented, and entitled to vote at a meeting duly called
and held.
1.13. "Employee" means any person determined by the Committee
to be an employee of the Company or any Subsidiary.
1.14. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
1.15. "Fair Market Value" of a Share means:
(a) If on the applicable date the Common Stock is listed for
trading on a national or regional securities exchange or authorized for
quotation on the Nasdaq National Market, the closing price of the
Common Stock on such exchange or Nasdaq National Market, as the
case may be, on the applicable date, or if no sales of Common Stock
shall have occurred on such exchange or Nasdaq National Market, as
the case may be, on the applicable date, the closing price of the
Common Stock on the next preceding date on which there were such
sales;
(b) If on the applicable date the Common Stock is not listed
for trading on a national or regional securities exchange or authorized
for quotation on the Nasdaq National Market, the mean between the
closing bid price and the closing ask price of the Common Stock as
otherwise reported by the Nasdaq Stock Market, Inc. with respect to the
applicable date or, if closing bid and ask prices for the Common Stock
shall not have been so reported with respect to the applicable date, on
the next preceding date with respect to which such bid and ask prices
were so reported; or
(c) If on the applicable date the Common Stock is not listed
for trading on a national or regional securities exchange or is not
authorized for quotation on the Nasdaq National Market or otherwise
reported by the Nasdaq Stock Market, Inc., the fair market value of a
Share as determined by the Committee pursuant to a reasonable method
adopted in good faith for such purpose.
Such Fair Market Value shall be subject to adjustment as provided in Section 23
hereof.
1.16. "For Cause" shall have the meaning set forth in
Subsection 14.2 hereof.
1.17. "Incentive Stock Option" means an Option granted under the
Plan that qualifies as an incentive stock option under Section 422 of the Code
and that the Company designates as such in the Agreement granting the Option.
1.18. "Nonstatutory Stock Option" means an Option granted under
the Plan that is not an Incentive Stock Option.
1.19. "Option" means an option to purchase Shares granted under the
Plan in accordance with the terms of either Section 6 or Section 10 hereof.
1.20. "Optionee" means an Outside Director or an Employee to whom
an Option has been granted.
1.21. "Option Period" means the period during which an Option may
be exercised.
1.22. "Option Price" means the price per Share at which an Option
may be exercised. The Option Price shall be determined by the Committee,
except that, in the case of Nonstatutory Stock Options granted to Outside
Directors pursuant to the provisions of Section 10, in no event shall the Option
Price be less than 100% of the Fair Market Value per Share determined as of the
Date of Grant.
1.23. "Other Plans" shall have the meaning set forth in Subsection
6.4(d) hereof.
1.24. "Outside Director" means any person who is a director of the
Company and who is not also an employee of either the Company, any Subsidiary
or any of their affiliates.
1.25. "Permanent Disability" means a mental or physical condition
which, in the opinion of the Committee, renders an Optionee unable or
incompetent to carry out the job responsibilities which such Optionee held or
tasks to which such Optionee was assigned at the time the disability was
incurred and which is expected to be permanent or for an indefinite period.
1.26. "Plan" means The John B. Sanfilippo & Son, Inc. 1995 Equity
Incentive Plan.
1.27. "Prior Grants" shall have the meaning set forth in Subsection
6.4(e) hereof.
1.28. "Reload Option" means a new Option granted to an Optionee
pursuant to and in accordance with Subsections 4.2(d)(v) and 8.2 hereof, upon
the surrender of Shares to pay the Option Price of a previously granted Option.
1.29. "Share" means a share of Common Stock.
1.30. "Share Withholding" shall have the meaning set forth in
Subsection 13.1 hereof.
1.31. "Subsidiary" means a corporation at least 50% of the total
combined voting power of all classes of stock of which is owned by the Company
either directly or through one or more Subsidiaries.
1.32. "Ten Percent Owner" shall have the meaning set forth in
Subsection 6.4(a) hereof.
1.33. "Termination of Employment" shall have the meaning set forth
in Subsection 14.1 hereof.
1.34. "$100,000 Limit" shall have the meaning set forth in Subsection
6.4(d) hereof.
2. Purpose.
--------
The purpose of the Plan is to advance the interests of the
Company, the Subsidiaries and their affiliates by encouraging and facilitating
the acquisition of a larger personal financial interest in the Company by
Outside Directors and those Employees upon whose judgment and interest the
Company, the Subsidiaries and their affiliates are largely dependent for the
successful conduct of their operations, and by making executive positions in
the Company, the Subsidiaries and their affiliates more attractive. It is
anticipated that the acquisition of such financial interest will stimulate the
efforts of such Employees and Outside Directors on behalf of the Company, the
Subsidiaries and their affiliates and strengthen their desire to continue in the
service of the Company, the Subsidiaries or their affiliates. It is also
anticipated that the opportunity to obtain such a financial interest will
prove attractive to promising executive talent and will assist the Company, the
Subsidiaries and their affiliates in attracting such persons.
3. Scope of the Plan.
------------------
3.1. SHARES AVAILABLE. An aggregate of 200,000 Shares is hereby
authorized and made available and shall be reserved for issuance under the Plan
with respect to the exercise of Options. Such number of Shares shall be reduced
by the aggregate number of Shares acquired from time to time to be held as
treasury Shares reserved for use under the Plan. The aggregate number of Shares
available under this Plan shall be subject to adjustment upon the occurrence of
any of the events and in the manner set forth in Section 23 hereof.
3.2. SHARES SUBJECT TO TERMINATED OPTIONS. If, and to the extent,
an Option shall expire or terminate for any reason without having been exercised
in full, the Shares subject thereto which have not become outstanding shall
(unless the Plan shall have terminated) become available under the Plan for
other grants.
3.3. AUTHORITY TO PURCHASE SHARES. The Board, such committee of
the Board that the Board shall specifically authorize or direct on its behalf,
or the Committee shall have the authority to cause the Company to purchase from
time to time, in such amounts and at such prices as the Board, in its
discretion, shall deem advisable or appropriate, Shares to be held as treasury
Shares and reserved and used solely for or in connection with grants under the
Plan, at the discretion of the Committee.
4. Administration.
---------------
4.1. THE COMMITTEE. The Plan shall be administered by the
Committee. Members of the Committee shall not participate in the Plan or
receive grants of equity securities under any other plan of the Company or any
of its affiliates except as provided in Section 10, and then only if (as
provided in Section 10) such member is an Outside Director.
4.2. AUTHORITY OF THE COMMITTEE. The Committee shall have full
and final authority, in its discretion, but subject to the express provisions of
the Plan, as follows:
(a) to grant Options;
(b) subject to Sections 6 and 10, to determine (a) the Option
Price of the Shares subject to each Option, (b) the Employees and
Outside Directors to whom, and the time or times at which, Options
shall be granted, and (c) subject to Section 3, the number of Shares
subject to an Option to be granted to each Optionee thereof;
(c) to determine all other terms and provisions of each
Agreement (which may, but need not be, identical), other than the
exercisability of Options which is governed by Subsection 6.2 hereof,
and, with the consent of the Optionee, to modify any Agreement;
(d) without limiting the foregoing, to provide, in its
discretion, in any Agreement:
(i) for an agreement by the Optionee to render
services to the Company or a Subsidiary upon such terms and
conditions as may be specified in the Agreement, provided that
the Committee shall not have the power to commit the Company
or a Subsidiary to employ or otherwise retain any Optionee;
(ii) for restrictions on the transfer, sale or other
disposition of Shares issued to the Optionee upon the exercise
of an Option;
(iii) for an agreement by the Optionee to resell to the
Company, under specified conditions, Shares issued upon the
exercise of an Option;
(iv) for the payment of the Option Price upon the
exercise of an Option otherwise than in cash, including without
limitation by delivery of Shares valued at Fair Market Value on
the Date of Exercise of the Option in accordance with the terms
of Subsection 8.1 hereof, or a combination of cash and Shares,
or for the payment in part of the Option Price with a promissory
note in accordance with the terms of Subsection 8.3 hereof;
(v) for the automatic issuance of a Reload Option
covering a number of Shares equal to the number of any Shares
used to pay the Option Price in accordance with the terms of
Subsection 8.2 hereof; or
(vi) for the right of the Optionee to surrender to the
Company an Option (or a portion thereof) that has become
exercisable and to receive upon such surrender, without any
payment to the Company or a Subsidiary (other than required
tax withholding amounts) that number of Shares (equal to the
highest whole number of Shares) having an aggregate Fair
Market Value as of the date of surrender equal to that number
of Shares subject to the Option (or portion thereof) being
surrendered multiplied by an amount equal to the excess of (i)
the Fair Market Value of a Share on the date of surrender, over
(ii) the Option Price, plus an amount of cash equal to the Fair
Market Value of any fractional Share to which the Optionee
might be entitled. Any such surrender shall be treated as the
exercise of the Option (or portion thereof);
(e) to construe and interpret the Plan and Agreements;
(f) to prescribe, amend and rescind rules and regulations
relating to the Plan, including, without limitation and subject to
Section 14 hereof, the rules with respect to the exercisability of
Options;
(g) to require, whether or not provided for in the pertinent
Agreement, of any person exercising an Option, at the time of such
exercise, the making of any representations or agreements which the
Committee may deem necessary or advisable in order to comply with
the securities laws of the United States of America or of any state;
(h) to prescribe the method by which grants of Options shall
be evidenced;
(i) to cancel, with the consent of the Optionee thereof,
outstanding Options and to grant new Options in substitution therefor;
(j) to require withholding from or payment by an Optionee
of any federal, state or other governmental taxes;
(k) to prohibit the election described in Section 11 hereof;
(l) to make all other determinations deemed necessary or
advisable for the administration of the Plan; and
(m) to impose such additional conditions, restrictions and
limitations upon the exercise, vesting or retention of Options as the
Committee may, prior to or concurrently with the grant or award
thereof, deem appropriate, including, but not limited to, limiting the
percentage of Options which may from time to time be exercised by an
Optionee.
4.3. FINALITY OF COMMITTEE DETERMINATIONS; LIABILITY OF MEMBERS.
The determination of the Committee on all matters relating to the Plan or any
Agreement shall be conclusive and final. No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan, any Agreement or any grant thereunder.
4.4. PERIODIC COMMITTEE REVIEW AND MEETINGS WITH MANAGEMENT.
The Committee shall from time to time review the implementation and results of
the Plan to determine the extent to which the Plan's purpose is being
accomplished. In addition, the Committee shall periodically meet with senior
management of the Company to review their suggestions regarding grants under
the Plan, including the individuals who are proposed to receive grants and the
amount and terms of such grants; provided, however, that all such grants shall
be determined solely by the Committee in its discretion.
4.5. INDEMNIFICATION OF COMMITTEE. In addition to such other rights
of indemnification as they may have as directors of the Company or as members
of the Committee, the members of the Committee shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees, actually
and reasonably incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted hereunder, and against all
amounts reasonably paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
members acted in good faith and in a manner which they believed to be in, and
not opposed to, the best interests of the Company.
5. Eligibility.
------------
Options may be granted only to Outside Directors and Employees, except
that Outside Directors are eligible only to receive Options pursuant to Section
10 and members of the Committee who are Employees are not eligible for any
Option grants during any period of service on the Committee. Subject to the
provisions of Section 3 and Subsection 6.5 hereof, an Employee or Outside
Director who has been granted an Option may be granted additional Options;
provided, however, that grants of Nonstatutory Stock Options to Outside
Directors are subject to the limitations set forth in Section 10. In selecting
the individuals to whom Options shall be granted as well as in determining the
number of Shares subject to each Option to be granted, the Committee shall take
into consideration such factors as it deems relevant in connection with
promoting the purposes of the Plan.
6. Conditions to Grants and Awards.
--------------------------------
6.1. GENERAL. Subject to the provisions of Sections 5 and 10 hereof,
the Committee is hereby authorized to grant Nonstatutory Stock Options to
Outside Directors and Employees and Incentive Stock Options to Employees. All
Agreements granting Options shall contain a statement that the Option is
intended to be either (a) a Nonstatutory Stock Option, or (b) an Incentive Stock
Option, and all Options designated as Incentive Stock Options shall be, in
addition to the other provisions of this Plan, subject to the terms and
conditions of Subsection 6.4 below. Subject to the provisions of Section 3
hereof, an individual who has been granted an Option may, if such individual is
otherwise eligible, be granted additional Options if the Committee shall so
determine. Subject to the other provisions of this Plan, the Committee may
grant Options with terms and conditions which differ among the Optionees
thereof.
6.2. OPTION PERIOD AND EXERCISABILITY. Subject to the terms of
Section 10 hereof, the Option Period shall be determined by the Committee and
specifically set forth in the Agreement; provided, however, that the Option
Period shall not be for a period of more than ten (10) years from the Date of
Grant, and shall be subject to earlier termination as herein provided. Each
Option granted under this Plan shall provide that the Option shall become
exercisable in equal installments of 25% of the total number of Shares subject
to being purchased thereunder on each of the first, second, third and fourth
anniversaries of the Option's Date of Grant; provided, however, that the
Optionee remains an Employee (or a director of the Company in the case of a
Nonstatutory Stock Option granted to an Outside Director pursuant to Section 10
hereof) on each such anniversary of the Date of Grant. To the extent not set
forth in the Plan, the terms and conditions of each grant shall be set forth in
an Agreement.
6.3. GRANTS OF OPTIONS AND OPTION PRICE. Before the grant of any
Option, the Committee shall determine the Option Price of the Shares subject to
such Option; provided that, except as provided in Subsection 6.4 below with
respect to Incentive Stock Options, the Option Price shall not be less than
fifty percent (50%) of the Fair Market Value of a Share on the Date of Grant.
6.4. GRANTS OF INCENTIVE STOCK OPTIONS. Any Option designated
as an Incentive Stock Option may be granted only to an Employee and shall:
(a) have an Option Price of (i) not less than 100% of the Fair
Market Value of a Share on the Date of Grant, or (ii) in the case of an
Employee who owns stock (including stock treated as owned under
Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
of its Subsidiaries (a "Ten Percent Owner"), not less than 110% of
the Fair Market Value of a Share on the Date of Grant;
(b) have an Option Period of not more than ten (10) years
(five (5) years, in the case of a Ten Percent Owner) from the Date of
Grant, and shall be subject to earlier termination as herein provided;
(c) notwithstanding the provisions relating to termination of
employment set forth in Section 14 hereof, not be exercisable more than
three (3) months (or one (1) year, in the case of an Optionee who is
disabled within the meaning of Section 22(e)(3) of the Code) after
termination of employment;
(d) not have an aggregate Fair Market Value of Shares
(determined for each Incentive Stock Option at the time it is granted)
with respect to which Incentive Stock Options are exercisable for the
first time by such Optionee during any calendar year (under this Plan
and any other employee stock option plan of the Optionee's employer
or any parent or 50%-or-more owned subsidiary thereof ("Other
Plans")), determined in accordance with the provisions of Section 422
of the Code, which exceeds $100,000 (the "$100,000 Limit"); and
(e) if the aggregate Fair Market Value of Shares (determined
on the Date of Grant) with respect to all Incentive Stock Options
previously granted under this Plan and the Other Plans ("Prior
Grants") and any Incentive Stock Options under such grant (the
"Current Grant") which are exercisable for the first time during any
calendar year would exceed the $100,000 Limit, be exercisable as
follows:
(i) the portion of the Current Grant exercisable for
the first time by the Optionee during any calendar year which
would be, when added to any portions of any Prior Grants
exercisable for the first time by the Optionee during any such
calendar year with respect to Shares which would have an
aggregate Fair Market Value (determined at the time of each
such grant) in excess of the $100,000 Limit shall,
notwithstanding the terms of the Current Grant, be exercisable
for the first time by the Optionee in the first subsequent calendar
year or years in which it could be exercisable for the first time
by the Optionee when added to all Prior Grants without
exceeding the $100,000 Limit;
(ii) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
provisions of the immediately preceding sentence during any
calendar year commencing with the calendar year in which it is
first exercisable through and including the last calendar year in
which it may by its terms be exercised, such portion of the
Current Grant shall not be an Incentive Stock Option, but shall
be exercisable as a separate Option at such date or dates as are
provided in the Current Grant;
(iii) be granted within ten (10) years from the earlier
of the date the Plan is adopted or the date the Plan is approved
by the stockholders of the Company; and
(iv) require the Optionee to notify the Committee of
any disposition of any Shares issued pursuant to the exercise of
the Incentive Stock Option under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying
dispositions), within ten (10) days of such disposition.
6.5. CODE SECTION 162(m) COMPLIANCE FOR OPTION GRANTS. The
maximum number of Shares subject to Options which may be awarded to any
Optionee in any one calendar year shall not exceed 50,000 Shares. In all
events, determinations under the preceding sentence shall be made in a manner
which is consistent with Code Section 162 and the regulations promulgated
thereunder.
7. Non-transferability.
--------------------
Each Option granted hereunder shall by its terms not be
assignable or transferable other than by will or the laws of descent and
distribution and Options may be exercised, during the Optionee's lifetime, only
by the Optionee.
8. Exercise of Options.
--------------------
8.1. MANNER OF EXERCISE AND PAYMENT. Subject to the provisions
hereof and the provisions of the Agreement under which it was granted, each
Option shall be exercised by delivery to the Company's treasurer of written
notice of intent to purchase a specific whole number of Shares subject to the
Option. The Option Price of any Shares as to which an Option is exercised shall
be paid in full at the time of the exercise, unless and to the extent that the
Committee agreed in the Agreement in which the Option was granted to accept a
promissory note as provided in Subsection 8.3 below. Payment may, at the
election of the Optionee, be made in (i) cash, (ii) Shares valued at their Fair
Market Value on the Date of Exercise, (iii) surrender of an exercisable Option
covering Shares with an aggregate Fair Market Value as of the date of exercise
in excess of the aggregate dollar amount of the Option Prices of such Shares
under such Option equal to the Option Price of the Options sought to be
exercised, (iv) through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount in cash equal to the Option Price,
(v) any combination of the foregoing, or (vi) in accordance with the terms of
the Agreement under which the Options sought to be exercised were granted. In
certain circumstances, payment may also be made in accordance with Subsection
8.3 below.
8.2. RELOAD OPTION. Pursuant to Subsection 4.2(d)(v) hereof, the
Committee may, in its sole discretion, award Reload Options in an amount equal
to the number of Shares that could be delivered in payment of the Option Price
(as set forth in Subsection 8.1 above) in connection with the exercise of an
Option. To the extent required by applicable law, the number of Reload Options
available to each Optionee shall be set forth in each grant. The Option Price
for any Reload Option shall be the Fair Market Value of a Share on the date that
Shares are surrendered in payment of the Option Price. Other terms of the
Reload Option shall be the same as the terms contained in the Agreement relating
to the Option being exercised, provided that if a Reload Option is granted in
connection with the use of Shares to pay the exercise price of an Incentive
Stock Option, the Reload Option shall be a Nonstatutory Stock Option.
8.3. DEFERRED PAYMENT OF OPTION PRICE. To the extent permitted
by applicable law, the Committee may agree in the Agreement in which an Option
is granted to accept as partial payment for the Shares a promissory note of the
Optionee evidencing his or her obligation to make future cash payment therefor;
provided, however, that in no event may the Committee accept a promissory note
for an amount in excess of the difference between the aggregate Option Price and
the par value of the Shares purchased pursuant to the Option. Promissory notes
made pursuant to this Subsection 8.3 shall be payable as determined by the
Committee, shall be secured by a pledge of the Shares in respect of the purchase
of which the promissory is being delivered and shall bear interest at a rate
fixed by the Committee (which rate shall not be lower than a reasonable
commercial rate).
9. Accelerated Exercise.
---------------------
Notwithstanding any other provisions of the Plan, all unexercised
Options may be exercised or disposed of commencing on the date of a Change
of Control, as defined in Section 15 hereof; provided, however, that the Company
may cancel all such Options under the Plan as of the date of a Change of Control
by giving notice to each Optionee thereof of its intention to do so and by
permitting the purchase during the thirty-day period next preceding such
effective date of all of the Shares subject to such outstanding Options.
10. Grant of Stock Options to Outside Directors.
--------------------------------------------
Each Outside Director shall be eligible to be granted
Nonstatutory Stock Options and all such grants shall only be made under and in
accordance with the provisions this Section 10.
10.1. GRANT TO OUTSIDE DIRECTORS. Each person who becomes an
Outside Director shall be granted on each date such person first becomes elected
as an Outside Director or is re-elected as an Outside Director, which shall be
the Date of Grant, a Nonstatutory Stock Option to purchase 1,000 Shares at an
Option Price equal to the Fair Market Value of such Shares on the Date of Grant.
Each such Nonstatutory Stock Option shall provide that it may be exercised no
later than ten (10) years following the Date of Grant and that the Nonstatutory
Stock Option shall become exercisable in equal installments of 250 Shares on
each of the first, second, third and fourth anniversaries of the Date of Grant,
provided, however, that the Optionee remains a director of the Company on each
such anniversary of the Date of Grant.
10.2. INSUFFICIENT SHARES AVAILABLE. If on any date on which
Nonstatutory Stock Options are to be granted pursuant to Subsection 10.1 above
there is an insufficient number of Shares available pursuant to Section 3 hereof
for such grant, the number of Shares subject to each Option granted pursuant to
Subsection 10.1 on such date shall equal the number of Shares that otherwise
would be subject to such Nonstatutory Stock Options but for such limitation
multiplied by a fraction, the numerator of which shall be the total number of
Shares then available pursuant to Section 3 for the grant of Nonstatutory Stock
Options, and the denominator of which shall be the aggregate number of Shares
that otherwise would be granted pursuant to Subsection 10.1, such product to be
rounded down to the nearest whole number.
10.3. AMENDMENTS TO SECTION. Notwithstanding Section 24 hereof,
the provisions in this Section 10 may not be amended more than once every six
(6) months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder.
11. Notification under Section 83(b).
---------------------------------
Provided that the Committee has not prohibited such Optionee
from making the following election, if an Optionee shall, in connection with the
exercise of any Option, make the election permitted under Section 83(b) of the
Code (i.e., an election to include in such Optionee's gross income in the year
of transfer the amounts specified in Section 83(b) of the Code), such Optionee
shall notify the Committee of such election within ten (10) days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.
12. Withholding Taxes.
------------------
12.1. REMITTANCE OF TAX AS CONDITION OF DELIVERY. The Company
shall be entitled to require as a condition of delivery of Shares hereunder that
the Optionee remit an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto.
12.2. MANDATORY WITHHOLDING ON OFFICERS, DIRECTORS AND 10% STOCKHOLDERS.
In the case of an Optionee who is an officer, director or 10% stockholder of the
Company (for purposes of Section 16 of the Exchange Act), whenever under the
Plan, Shares are to be delivered, the Company shall withhold an amount
sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto.
13. Elective Share Withholding.
---------------------------
13.1. An Optionee, other than an officer, director or 10% stockholder
of the Company (for purposes of Section 16 of the Exchange Act), may, subject
to Committee approval, elect the withholding ("Share Withholding") by the
Company of a portion of the Shares otherwise deliverable to such Optionee upon
his or her exercise of an Option having a Fair Market Value equal to either
(a) the amount necessary to satisfy such Optionee's or Grantee's required
federal, state or other governmental withholding tax liability with respect
thereto, or (b) a greater amount, not to exceed the estimated total amount of
such Optionee's tax liability with respect thereto.
13.2. SHARE WITHHOLDING IS SUBJECT TO COMMITTEE APPROVAL. Share
Withholding is subject to Committee approval and each Share Withholding
election by an Optionee shall also be subject to the following restrictions:
(a) the election must be made prior to the date on which the
amount of tax to be withheld is determined; and
(b) the election shall be irrevocable.
14. Termination of Employment.
--------------------------
14.1. FORFEITURE. Subject to the provisions of Subsection 6.4 hereof
with respect to Incentive Stock Options, an unexercised Option shall terminate
and/or be forfeited upon the date on which the Optionee thereof is no longer an
Employee ("Termination of Employment") if the Termination of Employment
was the result of the resignation of the Optionee or the Optionee was terminated
For Cause (as defined in Subsection 14.2 below) or otherwise, except that:
(a) DEATH. If the Optionee's Termination of Employment is
by reason of his or her death, unexercised Options to the extent
exercisable on the date of the Optionee's death, may be exercised, in
whole or in part, at any time within one (1) year after the date of death
by the Optionee's personal representative or by the person to whom the
Options are transferred by will or the applicable laws of descent and
distribution.
(b) RETIREMENT. If the Optionee's employment is terminated
as a result of retirement under the provisions of a retirement plan of the
Company, a Subsidiary or any of their affiliates applicable to the
Optionee (or on or after age 60 if no retirement plan of the Company,
a Subsidiary or any of their affiliates are applicable to the Optionee),
any unexercised Option, to the extent exercisable at the date of such
Termination of Employment, may be exercised, in whole or in part, at
any time within ninety (90) days after the date of such Termination of
Employment; provided that, if the Optionee dies after such Termination
of Employment and before the expiration of such 90-day period,
unexercised Options held by such deceased Optionee may be exercised
by his or her personal representative or by the person to whom the
Option is transferred by will or the applicable laws of descent and
distribution within one (1) year after the Optionee's Termination of
Employment.
(c) PERMANENT DISABILITY. If the Optionee's employment is
terminated as a result of his or her Permanent Disability, any
unexercised Option, to the extent exercisable at the date of such
Termination of Employment, may be exercised, in whole or in part, at
any time within one (1) year after the date of such Termination of
Employment; provided that, if an Optionee dies after such Termination
of Employment and before the expiration of such one (1) year period,
the unexercised Options may be exercised by the deceased Optionee's
personal representative or by the person to whom the unexercised
Options are transferred by will or the applicable laws of descent and
distribution within one (1) year after the Optionee's Termination of
Employment, or, if later, within 180 days after the Optionee's death.
(d) OTHER REASONS FOR TERMINATION. If the Optionee has
a Termination of Employment for any reason other than by death,
retirement, Permanent Disability, resignation or For Cause, any
unexercised Option to the extent exercisable on the date of such
Termination of Employment, may be exercised, in whole or in part, at
any time within three (3) months from the date of such Termination of
Employment.
14.2. "FOR CAUSE". A Termination of Employment "For Cause"
shall mean a Termination of Employment that, in the judgment of the Committee,
is the result of (i) the breach by the Employee of any employment agreement,
employment arrangement or any other agreement with the Company, (ii) the
Employee engaging in a business that competes with the Company, (iii) the
Employee disclosing business secrets, trade secrets or confidential
information of the Company to any party, (iv) dishonesty, misconduct, fraud or
disloyalty by the Employee, or (v) such other conduct by the Employee of an
incompetent, insubordinate, immoral or criminal nature as to have rendered the
continued employment of the Employee incompatible with the best interests of the
Company.
14.3. OPTION TERM. Any of the provisions herein to the contrary
notwithstanding, no Option shall be exercisable beyond the term specified in the
related Agreement thereof.
15. Change of Control.
------------------
15.1. DEFINITION OF "CHANGE OF CONTROL". A "Change of Control"
occurs if, and as of the first date on which, no shares of Class A Stock remain
outstanding.
15.2. NOTICE OF CHANGE OF CONTROL. The Company shall notify all
Optionees of the occurrence of a Change of Control promptly after its
occurrence, but any failure of the Company to notify shall not deprive the
Optionees of any rights accruing hereunder by virtue of a Change of Control.
16. Substituted Options.
--------------------
If the Committee cancels, with the consent of an Optionee, any
Option granted under the Plan, and a new Option is substituted therefor, then
the Committee may, in its discretion, provide that the Date of Grant of the
canceled Option shall be the date used to determine the earliest date or dates
for exercising the new substituted Option under Subsection 6.2 hereof so that
the Optionee may exercise or dispose of the substituted Option at the same time
as if the Optionee had held the substituted Option since the Date of Grant of
the canceled Option; provided, however, that no Optionee who for purposes of
Section 16 of the Exchange Act is treated as an officer, director or 10%
stockholder of the Company may dispose of a substituted Option, within less than
six months after the Date of Grant (calculated without reference to this
Section 16).
17. Securities Law Matters.
-----------------------
17.1. INVESTMENT INTENT REPRESENTATION; RESTRICTIVE LEGEND. Where
an investment intent representation or restrictive legend is deemed necessary to
comply with the Securities Act of 1933, as amended, the Committee may require
a written representation to that effect by the Optionee, or may require that
such legend be affixed to certificates for Shares at the time the Option is
exercised.
17.2. COMPANY'S RIGHT TO POSTPONE EXERCISE. If based upon the
opinion of counsel to the Company, the Committee determines that the exercise
of any Options would violate any applicable provision of (i) state or federal
securities law, (ii) the listing requirements of any securities exchange
registered under the Exchange Act on which are listed any of the Company's
equity securities, (iii) the listing requirements of the Nasdaq National Market
if any of the Company's equity securities are listed thereon, or (iv) the
listing requirements of The Nasdaq Small Cap Market if any of the Company's
equity securities are listed thereon, then the Committee may postpone any such
exercise; provided, however, that the Company shall use its best efforts to
cause such exercise to comply with all such provisions at the earliest
practicable date; and provided further, that the Committee's authority under
this Subsection 17.2 shall expire from and after the date of any Change of
Control.
17.3. RULE 16b-3 COMPLIANCE. With respect to officers, directors and
10% stockholders of the Company subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Board or the Committee fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Board and the Committee.
18. Funding.
--------
Benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for payment of, benefits under the Plan.
19. No Employment Rights.
---------------------
Neither the establishment of the Plan, nor the granting of any
rights under the Plan shall be construed to (a) give any Optionee the right to
remain employed by the Company, any Subsidiary or any of their affiliates or to
any benefits not specifically provided by the Plan, or (b) in any manner modify
the right of the Company, any Subsidiary or any of their affiliates to modify,
amend or terminate any of its employee benefit plans.
20. Stockholder Rights.
-------------------
An Optionee shall not, by reason of any right granted hereunder,
have any right as a stockholder of the Company with respect to the Shares which
may be deliverable upon exercise of such Option until such Shares have been
delivered to him or her.
21. Nature of Payments.
-------------------
Any and all grants or deliveries of Shares hereunder shall
constitute special incentive payments to the Optionee and shall not be taken
into account in computing the amount of salary or compensation of the Optionee
for the purposes of determining any pension, retirement, death or other benefits
under (a) any pension, retirement, profit-sharing, bonus, life insurance or
other employee benefit plan of the Company, any Subsidiary or any of their
affiliates, or (b) any agreement between the Company, any Subsidiary or any
of their subsidiaries, on the one hand, and the Optionee, on the other hand,
except as such plan or agreement shall otherwise expressly provide.
22. Non-Uniform Determinations.
---------------------------
Neither the Committee's nor the Board's determinations under
the Plan need be uniform and may be made by the Committee or the Board
selectively among persons who receive, or are eligible to receive, grants under
the Plan (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be entitled, among
other things, to make non-uniform and selective determinations, and to enter
into non-uniform and selective Option agreements as to (a) the persons to
receive grants under the Plan, (b) the terms and provisions of grants under the
Plan, and (c) the treatment, under Section 14 hereof, of leaves of absence.
23. Adjustments.
------------
Any Option entered into hereunder may contain such provisions
as the Committee shall determine for equitable adjustment of (a) the number of
Shares covered thereby, (b) the Option Price, or (c) otherwise, to reflect a
stock dividend, stock split, reverse stock split, Share combination,
recapitalization, merger, consolidation, asset spin-off, reorganization or
similar event, of or by the Company. In any such event, regardless of whether
specified in an Agreement, the aggregate number of Shares available under the
Plan shall be appropriately adjusted to equitably reflect such event.
24. Amendment of the Plan.
----------------------
24.1. BOARD'S AUTHORITY TO MODIFY. Subject to Subsection 10.3
hereof, the Board may make such modifications of the Plan as it shall deem
advisable; provided, however, no modifications shall be made which would impair
the rights of any Optionee theretofore granted without his or her consent; and
provided further, the Board may not, without further approval of the
stockholders of the Company, except as provided in Section 23 above, either:
(a) materially increase the number of Shares reserved for
issuance under the Plan;
(b) materially increase the benefits accruing to participants
under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan; or
(d) extend the date of termination of the Plan.
24.2. DEFINITION OF MATERIAL. For purposes of this Section 24, the
term "material" shall be construed in accordance with the Commission's
interpretive views, as modified from time to time, regarding stockholder
approval for amendments to employee benefit plans intended to comply with
Rule 16b-3 under Section 16 of the Exchange Act.
25. Termination of the Plan.
------------------------
The Plan shall terminate on the tenth (10th) anniversary of the Effective
Date or at such earlier time as the Board may determine. Any termination,
whether in whole or in part, shall not affect any rights then outstanding under
the Plan.
26. Controlling Law.
----------------
The Plan shall be governed, construed and administered in accordance with
the laws of the State of Delaware, except its laws with respect to choice of
law.
27. Action by the Company.
----------------------
Any action required by the Company under the Plan shall be by resolution
of the Board.
