SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-ll(c) or Section 240.14a-12
INTERNATIONAL FAST FOOD CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION 1000
Lincoln Road, Suite 200, Miami Beach, Florida 33139
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on December 15, 1999
----------------------
To the Shareholders of International Fast Food Corporation:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders
(the "Annual Meeting") of International Fast Food Corporation, a Florida
corporation (the "Company" or "IFFC"), will be held at 9:00 a.m., local time, on
Wednesday, December 15, 1999, at the Cheeca Lodge, 81801 Overseas Highway,
Islamorada, Florida 33036, for the following purposes:
(1) To elect four members to the Company's Board of Directors to hold
office until the Company's 2000 Annual Meeting of Shareholders or
until their successors are duly elected and qualified;
(2) To consider and act upon a proposal to approve an increase in the
number of shares which may be granted under the Company's 1993 Stock
Option Plan from 2,000,000 shares to 4,000,000 shares; and
(3) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on November 12,
1999 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournment(s) or postponement(s)
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
MITCHELL RUBINSON
Chairman of the Board and
Chief Executive Officer
Miami Beach, Florida
November 17, 1999
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE>
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
INTERNATIONAL FAST FOOD CORPORATION
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of International Fast Food Corporation, a Florida
corporation (the "Company" or "IFFC"), of proxies from the holders of the
Company's common stock, par value $.01 per share (the "Common Stock"), for use
at the 1999 Annual Meeting of Shareholders of the Company to be held at 9:00
a.m., local time, on Wednesday, December 15, 1999, at the Cheeca Lodge, 81801
Overseas Highway, Islamorada, Florida 33036, or at any adjournment(s) or
postponement(s) thereof (the "Annual Meeting"), pursuant to the foregoing Notice
of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are being mailed to shareholders is November 17, 1999. Shareholders should
review the information provided herein in conjunction with the Company's 1998
Annual Report on Form 10-KSB, which accompanies this Proxy Statement. The
Company's principal executive offices are located at 1000 Lincoln Road, Suite
200, Miami Beach, Florida 33139, and its telephone number is (305) 531-5800.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy will be borne by
the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of four members to the Company's Board of Directors to
serve until the Company's 2000 Annual Meeting of Shareholders or
until their successors are duly elected and qualified;
<PAGE>
(2) To consider and act upon a proposal to approve an increase in the
number of shares which may be granted under the Company's 1993 Stock
Option Plan from 2,000,000 shares to 4,000,000 shares; and
(3) Such other business as may properly come before the Annual Meeting,
including any adjournment(s) or postponement(s) thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted for the election of the four nominees for director named below and
for the proposal to increase the number of shares which may be granted under the
Company's 1993 Stock Option Plan. In the event a shareholder specifies a
different choice by means of the enclosed proxy, his or her shares will be voted
in accordance with the specification so made thereon.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board has set the close of business on November 12, 1999 as the
record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 45,324,131 shares of Common Stock issued and outstanding. Only the
holders of issued and outstanding shares of Common Stock are entitled to vote at
the Annual Meeting. Shareholders are entitled to one vote for each share held
and do not have the right to cumulate their votes.
The Company's Bylaws provide that the attendance, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Under the Florida Business Corporation Act (the "Act"), directors will be
elected by a plurality of the votes cast by the shares of Common Stock
represented in person or by proxy at the Annual Meeting. The affirmative vote of
a majority of the shares of Common Stock represented in person or by proxy at
the Annual Meeting is required for the approval of the increase in the number of
shares available under the 1993 Stock Option Plan. If less than a majority of
outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions are
considered as shares present and entitled to vote but are not counted as votes
cast in the affirmative on a given matter. A broker or nominee holding shares
registered in its name, or in the names of its nominee, which are beneficially
owned by another person and for which it has not received instructions as to
voting from the beneficial owner, has, in the opinion of the Company, the
discretion to vote the beneficial owner's shares with respect to each of the
matters presented at the Annual Meeting (absent contrary instructions from the
beneficial owner). If a matter has been included in the proxy to which a broker
or nominee does not have discretionary voting power, any broker or nominee
"non-votes" will not be considered as shares entitled to vote on that subject
matter and, therefore, will not be considered by the inspector when counting
votes cast on the matter.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information as of the Record
Date, concerning the beneficial ownership of the Common Stock by: (a) each
person known by the Company to own beneficially more than 5% of its Common
Stock, (b) each director and nominee for director of the Company, (c) the Named
Executive Officer and (d) all directors and executive officers of the Company as
a group. Except as otherwise indicted, the Company believes that all beneficial
owners named below have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF AMOUNT AND NATURE OF OUTSTANDING
BENEFICIAL OWNER(1)(2) BENEFICIAL OWNERSHIP SHARES OWNED
---------------------- -------------------- ------------
DIRECTORS AND EXECUTIVE OFFICERS:
<S> <C> <C>
Mitchell Rubinson.................................. 30,559,211(3) 67.2%
Mark Rabinowitz.................................... 130,197(4) *
James F. Martin.................................... 1,006,000(5) 2.2%
Larry H. Schatz.................................... 50,000(6) *
All directors and executive officers as a group
(four persons).................................. 68.2%
OTHER 5% OWNERS:
Joel Hirschhorn.................................... 2,370,000(7) 5.2%
Edda Rubinson...................................... 25,409,211(8) 56.1%
Marilyn Rubinson................................... 4,218,863(9) 9.3%
Northstar Investment Management Corp.
Two Pickwick Plaza
Greenwich, Conn. 06830.......................... 23,959,696(10) 35.6%
Legg Mason High Yield Portfolio
c/o Western Asset Management Company
117 E. Colorado Blvd.
Pasadena, CA 91105.............................. 8,891,164(11) 16.4%
BankAmerica Investment Corporation
233 S. Wacker Drive, Suite 2800
Chicago, Ill. 60606............................. 3,554,390(11) 7.3%
Burger King Corporation.
17777 Old Cutler Road
Miami, Florida 33157............................ 4,000,000(12) 8.1%
<FN>
- --------------------
* Less than 1%
(1) Unless otherwise indicated, the address of each of the listed beneficial
owners identified is c/o 1000 Lincoln Road, Suite 200, Miami Beach,
Florida 33139.
(2) Unless otherwise indicated, under Rule 13d-3 of the Securities Exchange Act
of 1934 (the "Exchange Act"), certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share
the power to vote or the power to dispose of the shares). In addition,
shares are deemed to be beneficially owned by a person if the person has
the right to acquire the shares (for example, upon exercise of an option)
within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by
such person (and only such person) by reason of these acquisition rights.
As a result, the percentage of outstanding shares of any person as shown in
this table does not necessarily reflect the person's actual ownership or
voting power with respect to the number of shares of Common Stock actually
outstanding as of the Record Date.
(3) Includes 30,409,211 shares held jointly with his wife, Edda Rubinson, and
options to purchase 150,000 shares of Common Stock granted to Mr. Rubinson
pursuant to the Company's 1993 Stock Option Plan that are immediately
exercisable at an exercise price of $.40 per share.
3
<PAGE>
(4) Includes options to purchase 50,000 shares of Common Stock granted to Dr.
Rabinowitz that are immediately exercisable at an exercise price of $.40
per share.
(5) Includes options to purchase 100,000 shares of Common Stock granted to Mr.
Martin that vest over a three year period beginning in July 1998 at an
exercise price of $.40 per share, options to purchase 100,000 shares of
Common Stock granted to Mr. Martin that vest over a three year period
beginning in July 1998 at an exercise price of $.81 per share and options
to purchase 800,000 shares of Common Stock granted to Mr. Martin that vest
over a three year period beginning in November 1999 at an exercise price of
$.66 per share.
(6) Reflects options to purchase 50,000 shares of Common Stock granted to Mr.
Schatz that are immediately exercisable at an exercise price of $.40 per
share.
(7) Reflects 2,000,000 shares held by Mr. Hirschhorn, individually, and 370,000
shares held by Mr. Hirschhorn, as trustee for the Joel Hirschhorn, P.A.
Trust u/a January 1, 1996 401(k) profit sharing plan.
(8) These shares are held jointly with Edda Rubinson's husband, Mitchell
Rubinson.
(9) Includes 37,666 shares of Common Stock that would be acquired upon the
conversion of 1,130 shares of Series A Convertible Preferred Stock. Marilyn
Rubinson is Mitchell Rubinson's mother; however, Mitchell Rubinson
disclaims beneficial ownership of all shares of common and preferred stock
owned by her.
(10) Includes 23,959,696 shares of Common Stock which would be acquired upon the
conversion of the shares of Series B Preferred Stock held by Northstar
Investment Management Corp. Northstar Investment Management Corp. is the
parent company of Northstar Balance Sheet Opportunities Fund, Northstar
High Total Return Fund and Northstar High Total Return Fund II which are
the record holders of the Series B Preferred Stock.
(11) Includes shares of Common Stock which would be acquired upon the conversion
of 11% Convertible Senior Subordinated Discount Notes held by such entities
based on the accreted value of the Notes as of November 13, 1999.
(12) Reflects shares which would be acquired upon the exercise of a warrant to
acquire 4,000,000 shares of Common Stock at an exercise price of $2.00 per
share, which warrant expires on October 21, 2004.
</FN>
</TABLE>
4
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Bylaws provide that the number of directors shall be
fixed from time to time by resolution of the Board within limits specified by
the Company's Articles of Incorporation. Each director elected at the Annual
Meeting will serve for a term expiring at the Company's 2000 Annual Meeting of
Shareholders or until his successor has been duly elected and qualified.
The Company has nominated the following four persons to be elected at
the Annual Meeting as directors of the Company:
Mitchell Rubinson
James F. Martin
Larry H. Schatz
Mark Rabinowitz
Each such nominee currently serves as a director of the Company. The
Board has no reason to believe that any nominee will refuse or be unable to
accept election; however, in the event that one or more nominees are unable to
accept election or if any other unforeseen contingencies should arise, each
proxy that does not direct otherwise will be voted for the remaining nominees,
if any, and for such other persons as may be designated by the Board of
Directors.
Under the terms of the Company's 11% Convertible Senior Subordinated
Discount Notes (the "Notes"), the Company is required to nominate one individual
designated by the holders of the Notes to serve as a director of the Company. In
addition, under the terms of the Notes, Mr. Rubinson has agreed to vote his
shares in favor of such nominee. The note holders have advised the Company that
they are waiving their right to nominate an individual to serve as a director at
the Annual Meeting.
Biographical information relating to the nominees for director
positions appears below on page 6 of this Proxy Statement under the heading
"Directors and Executive Officers."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE FOUR DIRECTOR NOMINEES.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Mitchell Rubinson(1)(2)(3)............. 52 Chairman of the Board and
Chief Executive Officer
James F. Martin........................ 39 President, Chief Operating
Officer, Chief Financial
Officer and Director
Mark Rabinowitz(1)(2)(3)............... 52 Director
Larry H. Schatz(1)(2)(3)............... 54 Vice Chairman of the Board
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Stock Option Committee.
(3) Member of the Nomination Committee.
MITCHELL RUBINSON has served as the Chairman of the Board and Chief
Executive Officer of the Company since its incorporation in December 1991 and
served as President from December 1991 to June 1998. Mr. Rubinson has served as
the Chairman of the Board, Chief Executive Officer and President of Capital
Brands from March 1988 to April 1996, and was the Treasurer of Capital Brands
from March 1992 to April 1993. Mr. Rubinson served as the Chairman of the Board,
Chief Executive Officer and President of QPQ Corporation (now known as Regenesis
Holdings, Inc.) from July 1993 to May 1997.
JAMES F. MARTIN has served as President, Chief Operating Officer and
Chief Financial Officer of the Company since November 1999 and a Director of the
Company since May 1997. Mr. Martin has served as Vice President, Chief Financial
Officer and Treasurer from May 1997 to October 1999, and as Director of Finance
for the Company's Polish subsidiaries from November 1993 through February 1995.
Mr. Martin served as Chief Financial Officer of QPQ Corporation (now known as
Regenesis Holdings, Inc.) from October 1996 to May 1997. From May 1995 through
September 1996, Mr. Martin was a 50% owner in an information systems and
software consulting company located in South Florida. Additionally, Mr. Martin
has nine years of commercial banking experience and is a Certified Public
Accountant.
MARK RABINOWITZ has served as a director of the Company since January
1996. Since 1983, Dr. Rabinowitz's principal occupations have been serving as a
medical doctor for, and the Vice President of, Jose E. Gilbert and Mark
Rabinowitz M.D.S., P.A. and serving as a medical doctor and the President of
Women's Centre for Health, Inc. Dr. Rabinowitz served as a director of QPQ
Corporation (now known as Regenesis Holdings, Inc.) from January 1996 to May
1997.
LARRY H. SCHATZ has served as Vice Chairman of the Board of the Company
since July 1997. Mr. Schatz has served as "of counsel" for the law firm of
Grubman Indursky & Schindler P.C. since January 1996. From 1991 through December
1995 Mr. Schatz worked as an attorney in private practice.
COMPENSATION OF DIRECTORS
The Company does not pay directors' fees, but reimburses all directors
for their expenses in connection with their activities as directors of the
Company. Directors of the Company who are also employees of the Company do not
receive additional compensation for their services as directors. Mr. Schatz
receives $25,000 per annum for serving as Vice Chairman of the Board. The
Company is the beneficiary of a $22 million key man life insurance policy on the
life of Mr. Rubinson.
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended December 31, 1998, the Company's
Board took action two times by unanimous written consent and had one meeting.
All directors attended at least 75% of the meetings of the Board of Directors.
Mitchell Rubinson, Mark Rabinowitz and Larry Schatz currently
constitute the members of the Board of Director's Audit, Stock Option and
Nomination Committees, which were formed in 1998. The Audit Committee reviews
the records and affairs of the Company and their financial condition, reviews
with management and the independent auditors the systems of internal control,
and monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles. The Stock Option Committee is
responsible for the grant of options under the Company's 1993 Stock Option Plan
and 1993 Directors Stock Option Plan. The Nomination Committee is charged with
making recommendations to the full Board for the selection of director nominees.
There is no formal procedure for the submission of shareholder recommendations.
These committees did not hold any meetings during the year ended December 31,
1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's outstanding Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, its officers, directors and holders of more than 10% of
the Company's Common Stock complied with all applicable Section 16(a) filing
requirements, except Marilyn Rubinson filed late in connection with a
transaction involving the sale of 200,000 shares of Common Stock.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended December 31,
1996, 1997 and 1998, the aggregate compensation paid by the Company to Mitchell
Rubinson, the Company's Chairman of the Board and Chief Executive Officer (the
"Named Executive Officer"). None of the Company's other executive officers'
total annual salary and bonus for the year ended December 31, 1998 was $100,000
or more.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG TERM COMPENSATION
----------------------- ----------------------
AWARDS PAYOUTS
------ -------
OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY COMPENSATION OPTIONS/SARS (#) COMPENSATION
--------------------------- ----------- ------ ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
Mitchell Rubinson.............. 1998 $212,928 $20,865(3) 0 0
Chairman of the Board and 1997 $192,163 $14,216(4) 0 0
Chief Executive Officer 1996 $181,093 $12,993(5) 0 0
<FN>
- -----------------------
(1) The columns for "Bonus," "Restricted Stock Awards" and "LTIP Payouts" have
been omitted because there is no compensation required to be reported in
such columns.
(2) See "Aggregated Fiscal Year-End Options Value Table" for additional
information concerning outstanding options. The Company has not granted any
stock appreciation rights ("SARs").
(3) Represents an automobile allowance of $12,000 and medical insurance
premiums of $8,865.
(4) Represents an automobile allowance of $12,000 and medical insurance
premiums of $2,216.
(5) Represents an automobile allowance of $12,000 and medical insurance
premiums of $993.
</FN>
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no grants of stock options or stock appreciation rights
("SARs") made during the year ended December 31, 1998 to the Named Executive
Officer.
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officer as of December 31,
1998. No stock options were exercised by the Named Executive Officer during the
year ended December 31, 1998. No SARs were granted or are outstanding.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
DECEMBER 31, 1998(#) DECEMBER 31, 1998($)(1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mitchell Rubinson....................... 150,000 0 $64,500 $0
<FN>
- ---------------
(1) The closing bid quotation for the Company's Common Stock as reported by the
National Association of Securities Dealers on December 31, 1998 was $.83.
</FN>
</TABLE>
8
<PAGE>
EMPLOYMENT AGREEMENTS
On November 7, 1996, IFFC amended its employment agreement with Mr.
Rubinson, Chairman of the Board and Chief Executive Officer of the Company,
extending his employment term until December 31, 1999. The amended agreement
also provides for a minimum annual salary of $183,012.50 during the first year,
subject to a 10% annual increase for each of the remaining two years.
Additionally, Mr. Rubinson is entitled to receive an annual incentive bonus in
the amount of 2.5% of IFFC's net income, after tax. Pursuant to his employment
agreement, Mr. Rubinson is required to devote such portion of his business time
to IFFC as may be reasonably required by IFFC's Board of Directors. Mr. Rubinson
is entitled to four weeks of paid vacation during the first year of the initial
term and six weeks of paid vacation during any subsequent year of his employment
with IFFC. For each day of vacation that Mr. Rubinson elects not to take,
pursuant to the employment agreement, IFFC will pay him an amount of money equal
to the quotient of his then annual salary divided by 260. Mr. Rubinson's
employment agreement requires that he not compete or engage in any business
competitive with IFFC's business for the term of the agreement and for one year
thereafter. Mr. Rubinson is also entitled to certain fringe benefits, including
an automobile allowance. Mr. Rubinson's employment agreement provides for
certain payments in the event his employment is terminated by reason of his
death or disability and a severance payment of twice the minimum annual salary
then in effect plus the incentive bonus paid in the prior year, in the event his
employment is terminated by IFFC without cause. Mr. Rubinson's employment
agreement does not provide for a severance payment in the event his employment
is terminated for cause.
IFFC's employment agreement with James F. Martin, effective November 1,
1999, provides that he will serve as President, Chief Operating Officer and
Chief Financial Officer of IFFC, for an initial term of three years. His annual
salary is $160,000 during the first year, subject to a 10% annual increase for
the remaining two years if certain criteria are met. Mr. Martin is also eligible
for an annual bonus equal to 3% of net earnings of the Polish subsidiaries, if
certain criteria are met. Pursuant to his employment agreement, Mr. Martin is
required to devote his full business time, attention and best efforts to the
performance of his duties under the employment agreement. Mr. Martin is entitled
to three weeks of paid vacation during any year of employment and the use of an
automobile plus related expenses, including, without limitation, insurance, gas
and repairs. Mr. Martin is eligible to receive stock option grants under IFFC's
stock option plans in the discretion of IFFC's Board of Directors or Stock
Option Committee. IFFC has granted Mr. Martin stock options to acquire 800,000
shares of IFFC's Common Stock at an exercise price of $.66 per share, such
options to be exercisable in whole or in part and cumulatively as follows
(provided in each case that Mr. Martin is an employee of IFFC on the date of
exercise): (i) 20% one year after the effective date of the employment
agreement; (ii) 60% two years after the effective date of the employment
agreement; and (iii) 100% three years after the effective date of the employment
agreement. Mr. Martin has 200,000 additional stock options which he receive
pursuant to a previous employment agreement and which are subject to a similar
vesting schedule. Mr. Martin's employment agreement provides for a payment of
$25,000 in the event his employment is terminated by reason of his death or
disability and a severance payment of $50,000 in the event Mr. Martin's
employment is terminated without cause. Mr. Martin's employment agreement does
not provide for a severance payment in the event his employment is terminated
for cause. Mr. Martin's employment agreement requires that he not compete or
engage in any business competitive with IFFC's business for the term of the
agreement and for a period of two years thereafter.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1999, International Fast Food Polska, a wholly owned
subsidiary of the Company ("IFFP"), entered into a credit agreement with
Citibank (Poland) S.A. pursuant to which Citibank granted IFFP a line of credit
in the amount of $5,000,000 (the "Line of Credit"). The Line of Credit is
guaranteed by Burger King Corporation ("BKC") and the Company granted BKC a
security interest in the outstanding shares of IFFP. As a condition to the
guarantee, BKC required that IFFC, IFFP and Mitchell Rubinson enter into a
general release in favor of BKC for any and all matters occurring prior to the
date of the guarantee. In order for IFFP to enter into the Line of Credit,
holders of the outstanding Notes were required to waive certain provisions of
the Note Indenture. As compensation for such waiver, the Noteholders were issued
an aggregate of 204,585 shares of Common Stock at a value of $.56 per share.
9
<PAGE>
Additionally, in connection with such transaction, Mitchell Rubinson
entered into a purchase agreement with BKC which provides that (i) if IFFP and
IFFC default on the Line of Credit and BKC takes possession of the IFFP shares
and (ii) IFFC is unable to repurchase the shares of IFFP from BKC, Mr. Rubinson
is required to purchase the IFFP shares from BKC for an amount equal to all
amounts paid out by BKC plus costs and expenses incurred by BKC in connection
with the enforcement of its rights under a reimbursement agreement with IFFC and
IFFP. In connection with such purchase agreement, the Company paid Mitchell
Rubinson a fee of $150,000.
In October 1999, IFFP increased the amount of the Line of Credit to
$8,000,000. Additionally, the Line of Credit may be increased to a maximum to
$10 million if IFFP meets certain specified criteria. All of the prior
transaction documents were re-executed, including the purchase agreement and the
release. Additionally, as security of the Line of Credit, BKC required that
Mitchell Rubinson enter into a personal guaranty with BKC and pledge 5,000,000
shares of the common stock of IFFC owned by him. In connection with such
matters, the Company entered into a reimbursement and fee agreement whereby it
agreed to reimburse Mr. Rubinson for all amounts paid by him pursuant to his
personal guaranty and to pay him a fee equal to 3% annually of the amount being
guaranteed. As of the date hereof, Mr. Rubinson has not been paid under this
agreement.
In order for IFFP to increase the Line of Credit, holders of the
outstanding Notes were required to waive certain provisions of the Note
Indenture. In addition, the Note holders agreed that the Notes would be amended
to provide that interest earned on the Notes from October 31, 2000 to October
31, 2003 will be paid in kind. Interest payable thereafter will be payable in
cash.
All of the foregoing transactions were authorized by the disinterested
directors of IFFC.
10
<PAGE>
PROPOSAL TO APPROVE THE INCREASE OF THE NUMBER OF SHARES
AUTHORIZED TO BE ISSUED UNDER THE 1993 STOCK OPTION PLAN
TO 4,000,000 SHARES FROM 2,000,000 SHARES
(Proposal No. 2)
In order to continue to offer incentive compensation in the form of
stock ownership in the Company and for the Company to be able to continue to
issue stock options and other forms of stock-based incentive compensation under
its 1993 Stock Option Plan (the "Plan"), the Stock Option Committee and the
Board of Directors have deemed it advisable to amend the Plan to increase the
number of shares authorized to be issued under the Plan to 4,000,000 shares from
2,000,000 shares. As of the Record Date, 530,000 shares of Common Stock were
available for issuance under the Plan.
In the opinion of the Stock Option Committee and the Board, the
authorization to issue additional shares would provide an additional incentive
to attract and retain qualified and competent persons who provide management
services or upon whose efforts and judgment the success of the Company and its
subsidiaries is largely dependent, through the encouragement of stock ownership
in the Company by such persons. The affirmative vote of the holders of a
majority of shares of the Company's Common Stock voting at the Annual Meeting is
necessary to approve the increase in the number of shares available under the
Plan.
SUMMARY OF THE PLAN. The Plan is administered by the Stock Option
Committee of the Company's Board of Directors, which consists of not less than
two directors. The Stock Option Committee interprets the Plan and is authorized,
in its discretion, to grant options thereunder to all eligible employees of the
Company, including officers and directors, whether or not employees of the
Company. The Plan provides for the granting of incentive stock options (as
defined in Section 422(a) of Internal Revenue Code (the "Code")) and
non-statutory options.
Options can be granted under the Plan on such terms and at such prices
as determined by the Committee, except that in no event shall the exercise price
per share of any incentive stock option be less than the fair market value of
the shares underlying such option on the date the option is granted.
Additionally, any person owning directly or indirectly at the date of grant,
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, cannot be granted incentive stock options under the
Plan unless the option price of such option is at least 110% of the fair market
value of the shares subject to such option on the date the option is granted.
Options otherwise qualifying as incentive stock options will not be treated as
incentive stock options to the extent that the aggregate fair market value
(determined at the time the option is granted) of the shares, with respect to
which options meeting the requirements of Section 422(b) of the Code are
exercisable for the first time by any individual during any calendar year,
exceeds $100,000.
The term of options granted under the Plan is determined by the Stock
Option Committee but may not exceed ten years from the date of grant. Unless
otherwise provided in the option agreement, the unexercised portion of any
option granted under the Plan shall automatically be terminated (a) three months
after the date on which the optionee's employment is terminated, other than for
(i) mental or physical disability, or (ii) death; (b) immediately upon the
termination of the optionee's employment for Cause (as defined in the Plan); (c)
twelve months after the date on which the optionee's employment is terminated by
reason of mental or physical disability; (d) twelve months after the date on
which the optionee's employment is terminated by reason of optionee's death, or
if later, one year after the date of optionee's death if death occurs during the
one year period following the termination of the optionee's employment by reason
of mental or physical disability or (e) for non-employee directors, immediately
upon termination of service as a director.
11
<PAGE>
To prevent dilution of the rights of a holder of an option, the Plan
provides for appropriate adjustment of the number of shares for which options
may be granted, the number of shares subject to outstanding options and the
exercise price of outstanding options, in the event of any increase or decrease
in the number of issued and outstanding shares of the Company's capital stock
resulting from a stock dividend, a recapitalization or other capital adjustment
of the Company. The Stock Option Committee has discretion to make appropriate
antidilution adjustments to outstanding options in the event of a merger,
consolidation or other reorganization of the Company or a sale or other
disposition of substantially all of the Company's assets.
Except as otherwise provided in the option agreements, each outstanding
option shall become immediately fully exercisable: (a) if there occurs any
transaction that has the result that the shareholders of the Company immediately
before such transaction cease to own at least 51% of the voting stock of the
Company or of any entity that results from the participation of the Company in
are organization, consolidation, merger, liquidation or any other form of
corporate transaction; (b) if the shareholders of the Company shall approve a
plan of merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved transaction is
subsequently abandoned); or (c) if the shareholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Company (unless such plan is
subsequently abandoned). The Stock Option Committee may, in its sole discretion,
accelerate the date on which any option may be exercised and may accelerate the
vesting of any shares subject to any option. Stock options granted under the
Plan are non-transferable other than by will or by laws of descent and
distribution.
The Stock Option Committee or the Board may amend, suspend or terminate
the Plan or any option at any time, provided that such amendment shall be
subject to the approval of the Company's shareholders if it involves increasing
the number of shares reserved for option grants, changes the class of persons
eligible to receive options pursuant to the Plan or if such shareholder approval
is required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or to comply with Section 162(m) of the Internal Revenue
Code) or the rules of any stock exchange or automated quotation system on which
the Common Stock may then be listed or granted. In addition, no amendment,
suspension or termination shall substantially impair the rights or benefits of
any optionee, pursuant to any option previously granted, without the consent of
the optionee.
PRIOR GRANTS OF OPTIONS. The following table sets forth the options
which have been previously granted under the Plan.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SUBJECT
NAME TO OPTION TERMS OF OPTION
---- --------- ---------------
<S> <C> <C>
Mitchell Rubinson............ 150,000 immediately exercisable at an exercise price
of $.40 per share
Mark Rabinowitz.............. 50,000 immediately exercisable at an exercise price
of $.40 per share
James Martin................. 100,000 vest over a three-year period beginning in
July 1998 at an exercise price of $.40
12
<PAGE>
SHARES OF
COMMON STOCK SUBJECT
NAME TO OPTION TERMS OF OPTION
---- --------- ---------------
100,000 vest over a three year period beginning
in July 1998 at an exercise price of
$.81 per share
800,000 vest over a three year period
beginning in November 1999 at an
exercise price of $.66 per share
Larry H. Schatz.............. 50,000 immediately exercisable at an exercise price
of $.40
All other employees as
a group........... 220,000 various terms
</TABLE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a brief
summary of certain federal income tax consequences of option grants and
exercises under the Plan based upon the federal income tax laws in effect on the
date hereof. This summary is not intended to be exhaustive and does not describe
state or local tax consequences.
The grant of incentive stock options to an employee does not result in
any income tax consequences. The exercise of an incentive stock option does not
result in any income tax consequences to the employee if the incentive stock
option is exercised by the employee during his employment with the Company, or
within a specified period after termination of employment due to death or
retirement for age or disability under then established rules of the Company.
However, the excess of the fair market value of the shares of stock as of the
date of exercise over the option price is a tax preference item for purposes of
determining an employee's alternative minimum tax.
An employee who sells shares acquired pursuant to the exercise of an
incentive stock option after the expiration of (i) two years from the date of
grant of the incentive stock option, and (ii) one year after the transfer of the
shares to him (the "Waiting Period") will generally recognize long term capital
gain or loss on the sale. An employee who disposes of his incentive stock option
shares prior to the expiration of the Waiting Period (an "Early Disposition")
generally will recognize ordinary income in the year of sale in an amount equal
to the excess ,if any, of (a) the lesser of (i) the fair market value of the
shares as of the date of exercise or (ii) the amount realized on the sale, over
(b) the option price. Any additional amount realized on an Early Disposition
should be treated as capital gain to the employee, short or long term, depending
on the employee's holding period for the shares. If the shares are sold for less
than the option price, the employee will not recognize any ordinary income but
will recognize a capital loss, short or long term, depending on the holding
period.
The Company will not be entitled to a deduction as a result of the
grant of an incentive stock option, the exercise of an incentive stock option,
or the sale of incentive stock option shares after the Waiting Period. If an
employee disposes of his incentive stock option shares in an Early Disposition,
the Company will be entitled to deduct the amount or ordinary income recognized
by the employee.
13
<PAGE>
The grant of non-qualified stock options under the Plan will not result
in the recognition of any taxable income by the participants. A participant will
recognize income on the date of exercise of the non-qualified stock option equal
to the difference between (i) the fair market value on that date of the shares
acquired, and (ii) the exercise price. The tax basis of these shares for purpose
of a subsequent sale includes the option price paid and the ordinary income
reported on exercise of the option. The income reportable on exercise of the
option by an employee is subject to federal and state income and employment tax
withholding.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the participant on the exercise of a non-qualified stock
option.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF INCREASING THE NUMBER OF SHARES
RESERVED FOR ISSUANCE UNDER THE COMPANY'S 1993 STOCK OPTION PLAN
14
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
In January 1998, the Board appointed Arthur Andersen LLP as the
independent public accountants of the Company for the fiscal year ended December
31, 1997 and selected such firm as the Company's accountants for the fiscal year
ending December 31, 1998. Representatives of Arthur Andersen LLP are not
expected to be present at the Annual Meeting.
In January 1998, the Company, upon recommendation of the Board of
Directors, advised Moore Stephens Lovelace, P.L. ("Moore Stephens") that it
would not be appointed as the Company's auditors for the year ended December 31,
1997. During the most recent fiscal year and subsequent interim period through
January 5, 1998, there were no disagreements with Moore Stephens on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events. Moore Stephens' report on
the Company's financial statements for the most recent fiscal year did not
contain an adverse opinion or a disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principles.
Representatives of Moore Stephens are not expected to attend the Annual Meeting.
OTHER BUSINESS
The Board knows of no business to be brought before the Annual Meeting
other than the matters described in this Proxy Statement. If, however, any other
business should properly come before the Annual Meeting, the persons named in
the accompanying proxy will vote proxies as in their discretion they may deem
appropriate, unless they are directed by a proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A shareholder intending to present a proposal at the Company's 2000
Annual Meeting of Shareholders must deliver such proposal in writing to the
Company's principal executive offices no later than July 20, 2000 for inclusion
in the Company's proxy statement relating to such meeting, subject to applicable
rules and regulations.
By Order Of The Board of Directors
MITCHELL RUBINSON
Chairman of the Board and
Chief Executive Officer
Miami Beach, Florida
November 17, 1999
15
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned, a holder of Common Stock of International Fast Food
Corporation, a Florida corporation (the "Company"), hereby appoints Mitchell
Rubinson and Larry H. Schatz, and each of them, as proxies for the undersigned,
each with full power of substitution, for and in the name of the undersigned to
act for the undersigned and to vote, as designated below, all of the shares of
stock of the Company that the undersigned is entitled to vote at the 1999 Annual
Meeting of Shareholders of the Company, to be held on Wednesday, December 15,
1999, at 9:00 a.m., local time, at the Cheeca Lodge, 81801 Overseas Highway,
Islamorada, Florida 33036, and at any adjournment(s) or postponement(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND THE
OTHER PROPOSAL SET FORTH IN THE ACCOMPANYING PROXY STATEMENT.
(1) ELECTION OF Mitchell Rubinson, James F. Martin, Larry H. Schatz and
Mark Rabinowitz as directors.
[ ] VOTE FOR all nominees listed above, except vote withheld from
the following nominees (if any):______________________
[ ] VOTE WITHHELD from all nominees listed above.
(2) PROPOSAL to increase in the number of shares which may be granted under the
Company's 1993 Stock Option Plan from 2,000,000 shares to 4,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon such other matters as may properly come before the Annual Meeting
and any adjournments thereof. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before
the Annual Meeting, and any adjournment(s) or postponement(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED 'FOR' ALL OF THE PROPOSALS.
Dated: _____________________, 1999
----------------------------------
(Signature)
----------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENVELOPE PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
INTERNATIONAL FAST FOOD CORPORATION
------------------------------------
Stock Option Plan
(Amended)
------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
INTERNATIONAL FAST FOOD CORORATION, a Florida corporation (the "Company"), and
its Subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide management services or upon whose
efforts and judgment the success of the Company and its Subsidiaries is largely
dependent, through the encouragement of stock ownership in the Company by such
persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Company's Board of Directors.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the stock option committee appointed by
the Board pursuant to Section 13 hereof or, if not appointed, the Board.
(d) "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
(e) "Company" shall refer to International Fast Food Corporation, a
Florida corporation.
(f) "Director" shall mean a member of the Board.
(g) "Fair Market Value" of the Common Stock on any date of
reference shall be the Closing Price on the business day immediately preceding
such date of the Common Stock, unless the Committee in its sole discretion shall
determine otherwise in a fair and uniform manner. For this purpose, the Closing
Price of the Common Stock on any business day shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of the Common Stock
on such exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar system of
automated dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of the
Common Stock on such system, or (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the National Quotation Bureau, Incorporated if at
least two securities dealers have inserted both bid and asked quotations for the
Common Stock on at least 5 of the 10 preceding days.
1
<PAGE>
(h) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422A of the Code.
(i) "Nonstatutory Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(j) "Option Agreement" means the agreement between the Company and
the Optionee to evidence the grant of an option.
(k) "Option" (when capitalized) shall mean any stock option
granted under this Plan.
(l) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(m) "Parent" means a "parent corporation" as defined in Section
425(e) and (g) of the Code.
(n) "Plan" shall mean this Stock Option Plan for the Company.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
(p) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company, if, at the
time of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to Section 10 of this Plan, the Company
may grant to Optionees from time to time Options to purchase an aggregate of up
to 2,000,00 Shares from authorized and unissued Shares. If any Option granted
under the Plan shall terminate, expire, or be cancelled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares. An Option
granted hereunder shall be either an Incentive Stock Option or a Nonstatutory
Stock Option as determined by the Committee at the time of grant of such Option
and shall clearly state whether it is an Incentive Stock Option or Nonstatutory
Stock Option.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the Shares, with respect to which Options meeting the requirements
of Section 422(b) of the Code are exercisable for the first time by any
individual during any calendar year (under all plans of the Company and its
Parent and Subsidiary corporations), exceeds $100,000.
2
<PAGE>
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Upon the grant of each Option, the Company and the Optionee
shall enter into an Option Agreement, which shall specify the grant date and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other provisions consistent with this Plan as the Committee
may determine. Optionees shall be those persons selected by the Committee from
the class of all regular employees of the Company and all Directors, whether or
not the employees; provided, however, that no Incentive Stock Option shall be
granted to a Director who is not also an employee of the Company or a
Subsidiary.
(b) In granting Options, the Committee shall take into consideration
the contribution the person made to the success of the Company or its
Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) prescribing the date or dates on which the Option becomes exercisable, (ii)
providing that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both, or (iii)
relating an Option to the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more favorable
to an Optionee than those expressly permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither the Plan nor
any Option granted under the Plan shall confer upon any person any right to
employment or continuance of employment by the Company or its Subsidiaries.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be
any price determined by the Committee; provided, however, that in no event shall
the exercise price per Share of any Incentive Stock Option be less than the Fair
Market Value of the Shares underlying such Option on the date such Option is
granted.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
3
<PAGE>
applicable Federal or state tax withholding requirements. Unless further limited
by the Committee in any Option, the exercise price of any Shares purchased shall
be paid in cash, by certified or official bank check or personal check, by money
order, with Shares or by a combination of the above. If the exercise price is
paid in whole or in part with Shares, the value of the Shares surrendered shall
be their Fair Market Value on the date the Option is exercised. The Company in
its sole discretion may, on an individual basis or pursuant to a general program
established in connection with the Plan, lend money to an Optionee, guarantee a
loan to an Optionee, or otherwise assist an Optionee to obtain the cash
necessary to exercise all or a portion of an Option granted hereunder or to pay
any tax liability of the Optionee attributable to such exercise. If the exercise
price is paid in whole or part with Optionee's promissory note, such note shall,
at the Committee's option, (i) provide for full recourse to the maker, (ii) be
collateralized by the pledge of the Shares that the Optionee purchases upon
exercise of such Option, (iii) bear interest at the prime rate of the Company's
principal lender or such other rate as the Committee shall determine, and (iv)
contain such other terms as the Board in its sole discretion shall reasonably
require. No Optionee shall be deemed to be a holder of any Shares subject to an
Option unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option becomes exercisable in such
amounts, at such intervals and upon such terms as the Committee shall provide in
the Option Agreement, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date of grant of the Option.
(b) Unless otherwise provided in any Option, each outstanding Option
shall become immediately fully exercisable.
(i) if there occurs any transaction (which shall include a series
of transactions occurring within 60 days or occurring pursuant to a
plan), that has the result that shareholders of the Company
immediately before such transaction cease to own at least 51 percent
of the voting stock of the Company or of any entity that results
from the participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of corporate
transaction;
(ii) if the shareholders of the Company shall approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is
subsequently abandoned); or
(iii) if the shareholders of the Company shall approve a plan for
the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless
such plan is subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option.
4
<PAGE>
9. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated (or, in the case of a non-employee
Director, the date on which the Optionee ceases to be a Director)
for any reason other than by reason of (A) Cause, which, for
purposes of this Plan, shall mean the termination of the Optionee's
employment (or, in the case of a nonemployee Director, the removal
of the Optionee as a Director) by reason of the Optionee's willful
misconduct or gross negligence, (B) a mental or physical disability
as determined by a medical doctor satisfactory to the Committee, or
(C) death;
(ii) immediately upon the termination of the Optionee's
employment (or, in the case of a nonemployee Director, the removal
of the Optionee as a Director) for Cause;
(iii) one year after the date on which the Optionee's employment
is terminated (or, in the case of a nonemployee Director, the date
the Optionee is removed as a Director) by reason of a mental or
physical disability (within the meaning of Section 22(e) of the
Code) as determined by a medical doctor satisfactory to the
Committee;
(iv) (A) one year after the date of termination of the Optionee's
employment (or, in the case of a nonemployee Director, the date the
Optionee ceases to be a Director) by reason of death of the
Optionee, or (B) one year after the date on which the Optionee shall
die if such death shall occur during the 1-year period specified in
Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may, by giving written
notice ("Cancellation Notice"), cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections 8(b)(ii) or
(iii) hereof, any Option that remains unexercised on such date. Cancellation
Notice shall be given a reasonable period of time prior to the proposed date of
such cancellation and may be given either before or after shareholder approval
of such corporate transaction.
10.ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under the Plan, so that the same
percentage of the Company's issued and outstanding Shares shall
continue to be the subject to being so optioned; and
5
<PAGE>
(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's
issued and outstanding Shares shall remain subject to purchase at
the same aggregate exercise price.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
exercise price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
a direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon the 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 exercise price of the
Shares then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the Company,
at the time any Option is exercised, that he is acquiring the Shares
to be issued to him for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and
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(ii) a representation, warranty and/or agreement to be bound by
any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law
deemed by the Committee to be applicable to the issuance of the
Shares and are endorsed upon the Share certificates.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a Committee of the Board,
which shall consist of not less than two Directors. The Committee shall have all
of the powers of the Board with respect to the Plan. Any member of the Committee
may be removed at any time, with or without cause, by resolution of the Board
and any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board. The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan.
(b) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written consent of the
members of the Committee.
14. OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other provisions
of the Plan to the contrary, an Incentive Stock Option shall not be granted to
any person owning directly or indirectly (through attribution under Section
424(d) of the Code) at the date of grant, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company (or of its
Parent or Subsidiary at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of 5 years from the date such Option is
granted.
15. INTERPRETATION. The Plan shall be administered and interpreted so
that all Incentive Stock Options granted under the Plan will qualify as
Incentive Stock Options under Section 422A of the Code. If any provision of the
Plan should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. If any provision of the Plan
should be held invalid or illegal for any reason, such determination shall not
affect the remaining provisions hereof, but instead the Plan shall be construed
and enforced as if such provision had never been included in the Plan. The
determinations and the interpretation and construction of any provision of this
Plan by the Committee shall be final and conclusive. 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 the Plan. Any
reference to the masculine, feminine, or neuter gender shall be a reference to
such other gender as is appropriate.
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16. TERM OF PLAN: AMENDMENT AND TERMINATION OF THE PLAN.
(a) This Plan shall become effective upon its adoption by the Board,
and shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
No Option shall be granted after 10 years from the date of the Board's adoption
of the Plan.
(b) The Plan shall be adopted by the Board and shall be presented to
the Company's shareholders for their approval by vote of a majority of such
shareholders present or represented at a meeting duly held, such approval to be
given within 12 months after the date of the Board's adoption. Options may be
granted prior to shareholder approval of the Plan, but such Options shall be
contingent upon such approval being obtained and may not be exercised prior to
such approval.
(c) The Board may from time to time amend the Plan or any Option;
provided, however, that, except to the extent provided in Section 10, no such
amendment may (i) without approval by the Company's shareholders, increase the
number of Shares reserved for Options or change the class of persons eligible to
receive Options, or involve any other change or modification requiring
shareholder approval under Rule 16b-3 of the Securities Act of 1933, as amended,
(ii) permit the granting of Options that expire beyond the maximum 10-year
period described in Subsection 8(a), or (iii) extend the termination date of the
Plan as set forth in Section 16(a); and provided, further, that, except to the
extent specifically provided otherwise in Section 9, no amendment or suspension
of the Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
(d) The Board, without further approval of the Company's
shareholders, may at any time terminate or suspend this Plan. Any such
termination or suspension of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if the Plan had not
been terminated or suspended. No Option may be granted while the Plan is
suspended or after it is terminated. The rights and obligations under any Option
granted to any Optionee while the Plan is in effect shall not be altered or
impaired by the suspension or termination of the Plan without the consent of
such Optionee.
17. RESERVATION OF SHARES. The Company, during the term of the Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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