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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
COMMISSION FILE NUMBER 0-20866
WILSHIRE TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 33-0433823
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5861 EDISON PLACE
CARLSBAD, CALIFORNIA 92008
(Address of principal executive offices)
(760) 929-7200
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the registrant's only class of
Common Stock, no par value, was 12,943,385 on March 31, 1999.
Transitional Small Business Disclosure Format. Yes No X
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WILSHIRE TECHNOLOGIES, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PART 1 - FINANCIAL INFORMATION PAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of 3
February 28, 1999 and November 30, 1998
Condensed Consolidated Statements of Operations 4
for the Three Months Ended February 28, 1999 and
February 28, 1998
Condensed Consolidated Statements of Cash Flows 5
for the Three Months Ended February 28, 1999 and
February 28, 1998
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 8
or Plan of Operation
- --------------------------------------------------------------------------------
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, November 30,
1999 1998
------------ ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash ................................................. $ 163,000 $ 42,000
Accounts receivable trade, less allowance for doubtful
accounts of $6,000 at February 28, 1999
and $5,000 at November 30, 1998, respectively ..... 304,000 310,000
Inventories (Note 2) ................................. 1,283,000 1,228,000
Note receivable (Note 3) ............................. 96,000 127,000
Other current assets ................................. 300,000 246,000
------------ ------------
Total current assets ..................................... 2,146,000 1,953,000
Property and equipment, less accumulated depreciation .... 3,655,000 3,565,000
Goodwill, less accumulated amortization of $375,000
and $365,000 at February 28, 1999 and November 30,
1998, respectively ................................... 367,000 377,000
Patents and trademarks, net .............................. 118,000 116,000
------------ ------------
$ 6,286,000 $ 6,011,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable ..................................... $ 394,000 $ 412,000
Accrued expenses ..................................... 541,000 416,000
Interest payable ..................................... 831,000 578,000
Line of credit (Note 4) .............................. 9,438,000 8,407,000
------------ ------------
Total current liabilities ................................ 11,204,000 9,813,000
Shareholders' equity (net capital deficiency)
Preferred stock, no par value, 2,000,000
shares authorized and none issued and outstanding . -- --
Common stock, no par value, 50,000,000 shares
authorized; 12,943,385 shares issued and
outstanding at February 28, 1999 and
November 30, 1998 ................................. 25,907,000 25,907,000
Common stock warrants ................................ 387,000 370,000
Accumulated deficit .................................. (31,212,000) (30,079,000)
------------ ------------
Total shareholders' equity (net capital deficiency) ...... (4,918,000) (3,802,000)
------------ ------------
$ 6,286,000 $ 6,011,000
============ ============
</TABLE>
Note: The condensed consolidated balance sheet at November 30, 1998 has been
derived from the audited financial statements at that date but does
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Quarters Ended February 28,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net sales ................................ $ 631,000 $ 1,053,000
Cost of sales ............................ 764,000 959,000
------------ ------------
Gross profit (loss) ...................... (133,000) 94,000
Operating expenses:
Marketing and selling ................ 156,000 130,000
General and administrative ........... 492,000 372,000
Research and development ............. 66,000 74,000
------------ ------------
Total operating expenses ................. 714,000 576,000
------------ ------------
Loss from operations ..................... (847,000) (482,000)
Other income ............................. 2,000 1,000
Interest income (expense), net ........... (287,000) (122,000)
------------ ------------
Loss before provision
for state income taxes ............... (1,132,000) (603,000)
Provision for state income taxes - current 1,000 1,000
------------ ------------
Net loss ................................. $ (1,133,000) $ (604,000)
============ ============
Weighted average shares outstanding ...... 12,943,000 12,943,000
============ ============
Basic and diluted loss per share ......... $ (0.09) $ (0.05)
============ ============
</TABLE>
See accompanying notes.
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WILSHIRE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Quarters Ended February 28,
--------------------------------
1999 1998
----------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ............................................................... $(1,133,000) $ (604,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................................ 191,000 59,000
Provision for loss on accounts receivable .................... 1,000 --
Net change in operating assets and liabilities:
(Increase) decrease in accounts receivable ................ 5,000 (155,000)
Increase in inventories ................................... (55,000) (190,000)
Increase in other current assets .......................... (54,000) (10,000)
Increase (decrease) in accounts payable and
accrued expenses ......................................... 107,000 885,000
Increase in interest payable .............................. 253,000 127,000
----------- -----------
Net cash provided by (used in) operating activities .................... (685,000) 112,000
----------- -----------
INVESTING ACTIVITIES
Purchase of equipment .................................................. (253,000) (947,000)
Decrease in note receivable from sale of
discontinued operations ................................................ 31,000 44,000
Increase in other assets ............................................... (3,000) (5,000)
----------- -----------
Net cash used in investing activities .................................. (225,000) (908,000)
----------- -----------
FINANCING ACTIVITIES
Proceeds from line of credit ........................................... 1,031,000 750,000
----------- -----------
Net cash provided by financing activities .............................. 1,031,000 750,000
----------- -----------
NET INCREASE (DECREASE) IN CASH ........................................ 121,000 (46,000)
CASH - BEGINNING OF PERIOD ............................................. 42,000 137,000
----------- -----------
CASH - END OF PERIOD ................................................... $ 163,000 $ 91,000
=========== ===========
</TABLE>
See accompanying notes.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Wilshire Technologies, Inc. (the "Company") develops, manufactures and markets
engineered polymer products for industrial clean room use. The Company, based in
Carlsbad, California, markets products through its Wilshire Contamination
Control Division, and manufactures certain of its products in its wholly-owned
Mexican subsidiary, Wilshire International de Mexico S.A. de C.V. During 1996,
the Company divested its Medical Products and Transdermal Products divisions and
has since focused primarily on products used in industrial clean rooms, such as
gloves and contamination control products.
BASIS OF PRESENTATION
The accompanying condensed consolidated unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB for quarterly
reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the quarter and three months ended February 28, 1999 are
not necessarily indicative of the results that may be expected for the fiscal
year ending November 30, 1999. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB for the fiscal year ended November 30, 1998.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary. Significant intercompany amounts and transactions
have been eliminated.
2. FINANCIAL STATEMENT INFORMATION
Inventories consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1999 1998
------------ ------------
<S> <C> <C>
Raw materials ...................... $ 716,000 $ 604,000
Work in process .................... 357,000 239,000
Finished goods ..................... 210,000 385,000
---------- ----------
$1,283,000 $1,228,000
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</TABLE>
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3. NOTE RECEIVABLE
In June 1996, the Company sold its Medical Products division to Acacia
Laboratories of Texas, Inc.. Pursuant to the sale, the Company received a
$540,000 secured note, payable over 36 months, and bearing interest at a rate of
5% per annum.
4. LINE OF CREDIT
On January 5, 1996, the Company and Trilon Dominion entered into a Credit
Agreement (the "Agreement") for a credit line of $1,000,000 secured by the
Company's assets. Under the terms of the Agreement, the principal was due on
June 30, 1996 and the interest was payable monthly at a rate of prime plus
3.75%. In connection with the loan, the Company issued Trilon Dominion a
five-year warrant that entitles Trilon Dominion to purchase 100,000 shares of
the Company's authorized but unissued common stock at an exercise price of $0.75
per share, subject to adjustment to protect against dilution. The warrant is
exercisable immediately and expires on January 5, 2001. Also, under the terms of
the Agreement, the Company issued Trilon Dominion a second five-year warrant
which became exercisable when the Company and Trilon Dominion amended the
Agreement to extend the termination date of the Agreement to December 31, 1996.
The second warrant entitles Trilon Dominion to purchase 25,000 shares of the
Company's authorized but unissued common stock at an exercise price of $1.75 per
share and it expires on January 5, 2001. The holder of each of such five-year
warrants may, without payment to the Company, convert the warrant in whole or in
part into shares of the Company's common stock having a market value equal to
the difference between (x) the market value per share of common stock multiplied
by the number of warrants that are converted and (y) the warrant exercise price,
multiplied by the number of warrants that are converted.
The Agreement was amended further on September 30, 1996, April 15, 1997, and
September 19, 1997. Each amendment increased the credit line by $1,000,000, up
to a total of $4,000,000, and extended the termination date, to June 30, 1998.
Trilon Dominion received a warrant to purchase 100,000 shares at the market
price with each credit line increase, and a warrant to purchase 25,000 shares at
the market price with each termination date extension. Warrants for 225,000
shares were issued in each of fiscal years 1996 and 1997 and warrants for 50,000
shares were issued in fiscal year 1998. The Company recorded the estimated fair
value of the warrants issued in fiscal year 1997 and fiscal year 1998 at $0.07
per underlying common share with a corresponding charge to earnings of $16,000
in fiscal 1997 and $3,500 in fiscal year 1998.
On January 7, 1998, February 17, 1998 and March 10, 1998, the Company and Trilon
Dominion completed Demand Notes, each for $250,000 at an interest rate of
12.25%, to fund the Company's ongoing operations until a new credit facility
could be completed.
On March 31, 1998 the Company and Trilon Dominion completed an Amended and
Restated Credit Agreement and Revolving Line of Credit (the "Amended
Agreement":) which included the principal of $4,000,000 from the previous
Agreement and Amendments, the principal of $750,000 from the three Demand Notes,
the accrued interest and management fees of $543,297 on the Agreement and Notes,
and a new credit line commitment of $2,200,000. Under the terms of the Amended
Agreement, the principal of $7,493,297 was due on December 31, 1998, and the
interest was payable quarterly at an annual rate of 11.5%. In connection with
the Amendment Agreement, the Company paid Trilon $100,000 for debt issuance
costs and issued Trilon Dominion a five-year warrant that entitles Trilon
Dominion to purchase 650,000 shares of the Company's authorized but unissued
common stock at an exercise price of $0.41 per share, subject to adjustment to
protect against dilution. The warrant is exercisable immediately and expires on
March 31, 2003. The Company recorded the estimated fair value of the warrant to
purchase 650,000 shares as a debt issuance cost in the second quarter of fiscal
year 1998 at $0.07 per underlying common share. On December 31, 1998, under the
terms of the Amended Agreement, the Company issued Trilon Dominion a second
five-year warrant which became
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exercisable when the Company and Trilon Dominion agreed to extend the due date
of the principal and interest from December 31, 1998 to January 31, 2000. The
second warrant entitles Trilon Dominion to purchase 250,000 shares of the
Company's authorized but unissued common stock at an exercise price of $0.42 per
underlying common share and expires on March 31, 2003. On December 31, 1998, the
Company recorded the estimated fair value of the warrants at $0.07 per
underlying common share with a corresponding charge to earnings of $17,500.
On August 5, 1998, September 1, 1998, October 1, 1998, November 2, 1998,
December 1, 1998, January 4, 1999, February 1, 1999, February 23, 1999 and April
1, 1999 the Company and Trilon Dominion completed Demand Notes at an interest
rate of 11.5% to fund the Company's ongoing operations. The August and September
notes each were in the amount of $220,000, the October, January, both February
notes and the April notes each were in the amount of $250,000, the November note
was in the amount of $240,000 and the December note was in the amount of
$260,000.
5. COMMITMENTS AND CONTINGENCIES
BREAST IMPLANT LITIGATION
During the first three months of 1999, there have been no significant
developments in the Breast Implant Litigation. For information regarding legal
proceedings, refer to the information contained in the Company's Annual Report
on Form 10-KSB for the fiscal year ended November 30, 1998, under Note 6 to the
financial statements included therein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During the first quarter of 1999, the Company focused upon completing the
start-up phase of the its new glove production line in the Company's leased
plant facility in Tijuana, Mexico. Consequently, management expects to begin
production of the Company's DuraCLEAN(R) polyurethane gloves mid-second quarter
of fiscal year 1999.
The Company also implemented product improvement projects and expanded its sales
organization during the first quarter ended February 28, 1999. Management
focused the product improvement projects to meet and exceed present demands of
the semi-conductor and disk drive marketplace. The Company expanded its sales
organization by forming a national sales organization of technical field
specialists and forming partnerships with key distributors. In February 1999,
the Company entered into an exclusive distribution agreement with VWR Scientific
Corporation, granting VWR exclusive U.S. distribution of the Company's
UltraSOLV(R) polyurethane chamber cleaning products.
From time to time the Company may report, through its press releases and/or
Securities and Exchange Commission filings, certain forward-looking statements
that are subject to risks and uncertainties. Important factors that could cause
actual results to differ materially from those projected by such forward-looking
statements are set forth in Exhibit 99 to the Company's Annual Report on Form
10-KSB for the fiscal year ended November 30, 1996. These include operating
losses, liquidity, reliance on major distributors, new product development,
competition, technological change, patents, trade secrets, product liability,
dependence on key suppliers, and dependence on key personnel.
8
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RESULTS OF OPERATIONS
NET SALES
The Company markets its products directly to end users through an internal sales
force utilizing outside distributors. Revenue for all sales is recognized when
title transfers, generally when products are shipped.
Net sales deceased by $422,000 (40.0%) to $631,000 in the first quarter of 1999
as compared to $1,053,000 in the first quarter of 1998. The decease in sales was
attributable to the loss of the Company's largest consumer of UltraSOLV(TM)
wipers due to price erosion during the second quarter of fiscal year 1998.
Consequently, the Company has continuously focused on cost reduction programs to
improve its price position in the market.
GROSS PROFIT (DEFICIT)
The Company recorded a gross loss of $133,000 as compared to gross profit of
$94,000 in the same period of 1998. Although the Company recognized gross
profits on the sale of its contamination control products, the loss was
attributable to the significant start-up costs associated with the new glove
manufacturing plant located in Tijuana, Mexico.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses include additional costs related to
the Company's marketing activities and administrative costs (such as executive
and office salaries, related payroll expenses, investor relations, professional
fees, supplies and utilities).
General and administrative expenses increased $120,000 (32%) to $492,000 in the
first quarter of 1999 from $372,000 in the first quarter of 1998. The increase
in expense was due primarily to an accrual of a severance reserve of $50,000 for
Mr. Van Egmond, additions in headcount in executive management, and costs
associated with the start-up of the glove's manufacturing operation in Tijuana,
Mexico. In the first three months of 1999, marketing and selling expenses
increased by $26,000 (20%) to $156,000 from $130,000 in the same period of 1998.
The increase was primarily due to additional personnel expenses, increased
travel, and the implementation of a sales commissions plan for the Company's
technical field specialists.
RESEARCH AND DEVELOPMENT
Research and development expenses decreased $8,000 (11%) to $66,000 in the first
quarter of 1999 as compared to $74,000 in the first quarter of 1998. The decline
was primarily due to decreased project expenses.
INTEREST INCOME (EXPENSE), NET
The Company reported higher interest expense in the first quarter versus the
same period of 1998 due to increased debt outstanding. The interest expense was
related primarily to the line of credit due to Trilon Dominion Partners, LLC.
(see Note 4).
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INCOME TAXES
For the quarters ended February 28, 1999 and February 28, 1998, the Company
sustained losses for both financial reporting and income tax purposes. A tax
provision of $1,000 related to state income taxes was recorded in the financial
statements for 1998 and 1999.
LIQUIDITY AND CAPITAL RESOURCES
Management assesses the Company's liquidity by its ability to generate cash to
fund its operations. Significant factors in the management of liquidity are:
funds generated by operations; levels of accounts receivable, inventories,
accounts payable and capital expenditures; adequate lines of credit; and
financial flexibility to attract long-term capital on satisfactory terms.
During 1998 and the first three months of 1999, the Company has not generated
sufficient cash from operations to fund its working capital and equipment
purchase requirements. Net cash used in operating activities was $685,000 in the
first three months of 1999 versus net cash of $112,000 provided by operating
activities in the first quarter of 1998. The increase in the cash used in
operating activities was primarily due to higher interest expense and start-up
costs of the Company's glove manufacturing plant.
Net cash used in investing activities was $225,000 in the first three months of
1999, versus net cash used by investing activities of $908,000 in the first
three months of 1998. The higher investing activities in the first quarter of
the prior year was due to major purchases of glove production equipment that
occurred in the first part of fiscal 1998.
Net cash provided by financing activities was $1,031,000 in the first three
months of 1999 versus $750,000 in the first three months of 1998. The debt
financing in both years was obtained from Trilon Dominion Partners, LLC.
On January 5, 1996, the Company and Trilon Dominion entered into an Agreement
for a credit line of $1,000,000 secured by the Company's assets. Under the terms
of the Agreement, the principal was due on June 30, 1996 and the interest was
payable monthly at a rate of prime plus 3.75%. The Agreement was amended on June
30, 1996, September 30, 1996, April 15, 1997, and September 19, 1997 to a total
credit line of $4 million and a termination date of June 30, 1998. See Note 4 to
the financial statements for details of the Agreement and Amendments.
On January 7, 1998, February 17, 1998, and March 10, 1998 the Company and Trilon
Dominion completed Demand Notes, each for $250,000 at an interest rate of
12.25%, to fund the Company's ongoing operations until a new credit facility
could be completed.
On March 31, 1998 the Company and Trilon Dominion completed an Amended and
Restated Credit Agreement and Revolving Line of Credit (the "Amended Agreement")
which included the principal of $4,000,000 from the previous Agreement and
Amendments, the principal of $750,000 from the three Demand Notes, the accrued
interest and management fees of $543,297 on the Agreement and Notes, and a new
credit line commitment of $2,200,000. Under the terms of the Amended Agreement,
the principal of $7,493,297 is due on December 31, 1998, and the interest is
payable quarterly at an annual rate of 11.5%. In connection with the Amended
Agreement, the Company paid Trilon Dominion $100,000 for debt issuance costs and
issued Trilon Dominion a five-year warrant that entitles Trilon Dominion to
purchase 650,000 shares of the Company's authorized but unissued common stock at
an exercise price of $0.41 per share, subject to adjustment to protect against
dilution. The warrant is exercisable immediately and expires on March 31, 2003.
The Company recorded the estimated fair value of the warrant to purchase
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650,000 shares as a debt issuance cost in the first quarter of fiscal year 1998
at $0.07 per underlying common share. Also, under the terms of the Amended
Agreement, the Company issued Trilon Dominion a first five-year warrant which
became exercisable when the Company did not pay the principal and interest due
on December 31, 1998 and expires on March 31, 2003. The first warrant entitles
Trilon Dominion to purchase 250,000 shares of the Company's authorized but
unissued common stock at an exercise price equal to the market price on December
31, 1998. On December 31, 1998, the Company recorded the estimated fair value of
the warrants at $0.07 per underlying common share with a corresponding charge to
earnings of $17,500.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
For information regarding legal proceedings, refer to the information
contained in the Company's annual report on Form 10-KSB for the fiscal
year ended November 30, 1998 under the heading, "Legal Proceedings" and
Note 6 to the financial statements therein.
ITEM 2. CHANGES IN SECURITIES:
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
ITEM 5. OTHER INFORMATION:
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.133 Demand Note dated February 23, 1999 between the Registrant
and Trilon Dominion Partners, L.L.C.
10.134 Employment Agreement dated February 8, 1999 between the
Registrant and Ms. Kathleen Terry.
10.135 Demand Note dated April 1, 1999 between the Registrant and
Trilon Dominion Partners, L.L.C.
10.136 Form of stock option granted on May 18, 1998 to Mr. Paul
Fennell.
10.137 Form of stock option granted on August 17, 1998 to Mr. Kevin
Mulvihill.
10.138 Form of stock option granted on February 8, 1999 to Ms.
Kathleen Terry.
(b) REPORTS ON FORM 8-K:
None
11
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SIGNATURES
In accordance with requirements of the Securities Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WILSHIRE TECHNOLOGIES, INC.
Dated: April 13, 1999 By: /s/ Kathleen E. Terry
--------------------------
Kathleen E. Terry
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
12
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EXHIBIT 10.133
DEMAND NOTE
$250,000.00 New York, New York
February 23, 1999
FOR VALUE RECEIVED, the undersigned, Wilshire Technologies, Inc. a
California corporation (hereinafter referred to as "Borrower"), hereby
unconditionally PROMISES TO PAY to the order to TRILON DOMINION PARTNERS, LLC, a
Delaware limited liability company ("Lender"), at 245 Park Avenue, 28th Floor,
New York, NY 10167, or at such other place as the holder of this Demand Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of Two Hundred
Fifty Thousand and 00/100, DOLLARS ($250,000.00), together with interest on the
unpaid principal amount of this Demand Note outstanding from time to time from
the date hereof, at a rate per annum equal to the Prime rate of interest of 8.5%
plus 3.0%, or the highest rate permitted by law, whichever shall be less.
The principal amount of the indebtedness evidenced hereby shall be
payable on demand. Interest thereon shall be paid when principal is paid from
the date hereof until such principal amount is paid in full at such interest
rate as specified above. Following failure to pay on demand, Borrower agrees to
pay interest on any overdue payment of principal at a rate per annum equal to
the stated interest rate plus 5%, or the highest rate permitted by law,
whichever shall be less. All interest calculations shall be computed on the
basis of a 360 day year.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
Borrower shall have no right to make any off-set against or deduct from
any payment due under this Demand Note.
Principal and interest may be prepaid at any time without penalty.
This Demand Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of such change is
sought.
All covenants of Borrower in this Demand Note and all rights of the
holder under this Demand Note shall bind Borrower and its successors and
assigns, and all such covenants and rights shall inure to the benefit of the
holder of this Demand Note and its successors and assigns.
This Demand Note has been delivered and accepted at New York, New York
and shall be interpreted, governed by, and construed in accordance with, the
laws of the State of New York.
Wilshire Technologies, Inc.
By: /s/ Kathleen E. Terry
----------------------
Name: Kathleen E. Terry
Title: Chief Financial Officer
<PAGE> 1
EXHIBIT 10.134
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of February 8, 1999 (the "Agreement") by
and between Wilshire Technologies, Inc., a California corporation (the
"Company") and Kathleen Terry, an individual residing at San Diego, California
("Executive").
The Company and Executive desire to set forth the terms and conditions
on which (i) the Company shall employ Executive as Vice President and Chief
Financial Officer (ii) Executive shall render services to the Company, and (iii)
the Company shall compensate Executive for such services.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. Employment.
The Company hereby employs Executive and Executive hereby accepts such
employment to perform executive services as hereinafter provided for the period
from February 8, 1999 through February 7, 2000. Commencing February 8, 2000, the
period of employment shall be automatically extended from year to year for
additional periods of one year each unless the Company or Executive at least
three months prior to the time the Agreement would otherwise have expired shall
give the other party written notice of intention not to extend the employment.
The original one-year period of this Agreement and any extensions thereof are
hereinafter referred to as the "Term".
2. Duties and Responsibilities.
2.1 During the Term Executive shall devote her full
attention and expend her best efforts, energies, and skills, on a full-time
basis, to the business of the Company and any corporation controlled by the
Company (each a "Subsidiary"). For purposes of this Agreement, the term the
"Company" shall mean the Company and all Subsidiaries.
2.2 During the Term Executive shall serve as the Vice
President and Chief Financial Officer of the Company. In the performance of her
responsibilities hereunder, Executive shall be subject to all of the Company's
policies, rules and regulations applicable to its executives of comparable
status, shall report directly to the President and Chief Executive Officer of
the Company (the "CEO") and shall be subject to the direction and control of the
CEO.
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2.3 Executive's services shall be rendered principally in or
from an office located in the Carlsbad, California, area. Nevertheless,
Executive agrees to make such trips out of the area, for limited periods, as are
reasonably incident to the performance of her duties.
2.4 Without first obtaining the written permission of the
CEO in each instance, Executive will not authorize or permit the Company to
engage the services of, or engage in any business activity with, or provide any
financial or other benefit to, any affiliate of Executive. The phrase "affiliate
of Executive" as used in this Section shall mean and include Executive's family
by blood or marriage (including, without limitation, parents, spouse, siblings,
children and in-laws), and any business or business entity which is directly or
indirectly owned or controlled by Executive or any member of Executive's family
or in which Executive or any member of Executive's family has any direct or
indirect financial interest whatsoever.
2.5 In order to induce the Company to enter into this
Agreement, Executive represents and warrants to the Company that (a) Executive
is not a party or subject to any employment agreement or arrangement with any
other person, firm, company, corporation or other business entity, (b) Executive
is subject to no restraint, limitation or restriction by virtue of any agreement
or arrangement, or by virtue of any law or otherwise which would impair
Executive's right or ability to remain in the employ of the Company, or to
perform fully her duties and obligations pursuant to this Agreement, and (c) to
the best of Executive's knowledge, no material litigation is pending or
threatened against any business or business entity owned or controlled or
formerly owned or controlled by Executive.
3. Compensation.
3.1 During the Term the Company shall pay Executive a salary
at an annual rate of $115,000, subject to review after one year, payable in
installments in accordance with the Company's regular practice, but not less
often than monthly.
3.2 The Company hereby grants Executive a ten-year
Non-Qualified Stock Option under the Company's 1995 Stock Option Plan to
purchase 50,000 shares of the common stock of the Company at the option exercise
price of $ 0.39 per share. The option shall vest immediately as to 16,666
shares, vests on February 8, 2000 as to an additional 16,666 shares, vests on
February 8, 2001 as to the remaining 16,667 shares, and has the other terms and
conditions set forth in the Non-Qualified Stock Option Agreement attached to
this Agreement, and incorporated herein by reference.
3.3 Executive shall be entitled to reasonable periods of
paid sick leave, three weeks paid vacation per year and holidays in accordance
with the Company's regular policy.
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3.4 Executive is authorized to incur reasonable expenses in
the performance of her duties hereunder. The Company shall reimburse Executive
for such expenses upon the presentation by Executive, not less frequently than
monthly, of signed, itemized accounts of such expenditures and vouchers, all in
accordance with the Company's procedures and policies as adopted and in effect
from time to time and applicable to its executives of comparable status.
3.5 The Company shall provide Executive, at the Company's
expense, participation in group medical, dental, accident, disability and life
insurance plans of the Company and other standard benefits as may be provided by
the Company from time to time to its executives of comparable status, subject
to, and to the extent that, Executive is eligible under such benefit plans in
accordance with their respective terms.
4. Termination.
4.1 The Company may terminate Executive's employment under
this Agreement at any time for Cause. "Cause" shall exist for such termination
if Executive (i) is adjudicated guilty of illegal activities by a court of
competent jurisdiction, (ii) commits any act of fraud or intentional
misrepresentation, (iii) has, in the reasonable judgment of the CEO, engaged in
serious misconduct, which misconduct has or would, if generally known,
materially adversely affect the good will or reputation of the Company and which
misconduct Executive has not cured or altered to the satisfaction of the CEO
within ten days following notice by the CEO to Executive regarding such
misconduct, (iv) refused to follow any lawful directive of the CEO to Executive
concerning material aspect of the Company's business, (v) has made any
misrepresentation to the Company under Section 2.5 hereof, or (vi) has been
incapable to perform her duties under this Agreement for at least three
consecutive months.
4.2 The Company may terminate Executive's employment under
this Agreement at any time without Cause.
4.3 If the Company terminates Executive's employment
pursuant to the provisions of Section 4.2 hereof, or if the Company does not
agree to extend Executive's employment pursuant to the provisions of Paragraph 1
hereof, Executive shall receive as her severance an amount equal to six months
of Executive's then salary, payable in six equal monthly installments. The first
payment shall be made on Executive's regular pay day immediately following the
date of termination.
4.4 If Executive does not agree to extend her employment
pursuant to the provisions of Paragraph 1 hereof, Executive shall receive no
severance pay.
4.5 Death of Executive. In the event Executive shall die at
any time during the Term, this Agreement shall terminate. In such event the
estate of Executive shall forthwith receive any salary accrued or unpaid to the
date of her death.
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5. Restrictive Covenants.
5.1 Executive acknowledges that (i) she has a major
responsibility for the administration, development and growth of the Company's
business, (ii) her work for the Company will bring her into close contact with
confidential information of the Company and its customers, and (iii) the
agreements and covenants contained in this Section 5 are essential to protect
the business interests of the Company and that the Company will not enter into
this Agreement but for such agreements and covenants. Accordingly, Executive
covenants and agrees as follows:
5.1.a Except as otherwise provided for in this Agreement,
during the Term Executive shall not, directly or indirectly, within any state,
province or other political subdivision of the United States or any other
country in which the Company is conducting business, compete with respect to any
services or products of the Company which are either offered or are being
developed by the Company (the "Company's Business"), or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as partner, shareholder, owner,
officer, director, employee, principal, agent, creditor, trustee, consultant,
co-venturer or otherwise), any individual, corporation, firm, association,
partnership, joint venture or other business entity, which competes with the
Company's Business; provided, however, that Executive may own, solely as an
investment, not more than one (1%) percent of any class of securities of any
publicly owned corporation.
5.1.b During, and for one year after, the Term, Executive
shall not, directly or indirectly, (i) induce or attempt to influence any
employee of the Company to leave its employ, (ii) aid or agree to aid any
competitor, customer or suppliers of the Company in any attempt to hire any
person who shall have been employed by the Company within the one year period
preceding such requested aid, or (iii) induce or attempt to influence any person
or business entity who was a customer or supplier of the Company during any
portion of said period to transact business with a competitor of the Company.
5.1.c During the Term and thereafter, Executive shall not
disclose to anyone any information about the affairs of the Company, including,
without limitation, trade secrets, trade "know-how", inventions, customer lists,
business plans, operational methods, pricing policies, marketing plans, sales
plans, identity of suppliers or customers, sales, profits or other financial
information, which is confidential to the Company or is not generally known in
the relevant trade, nor shall Executive make use of any such information for her
own benefit.
5.2 Executive acknowledges and agrees that in the event of a
violation or threatened violation of any of the provisions of Section 5.1 (the
"Restrictive Covenants") the Company shall have no adequate remedy at law and
shall therefore be entitled to enforce each such provision by temporary or
permanent injunctive or
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mandatory relief obtained in any court of competent jurisdiction without the
necessity of proving damages or posting any bond or other security, and without
prejudice to any other rights and remedies which may be available at law or in
equity.
5.3 If any of the Restrictive Covenants, or any part
thereof, is held to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid or unenforceable portions. Without limiting the
generality of the foregoing, if any of the Restrictive Covenants, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties hereto agree that the court making such
determination shall have the power to reduce the duration and/or scope and/or
area of such provision and, in its reduced form, such provision shall then be
enforceable.
5.4 The parties hereto intend to and hereby confer jurisdiction
to enforce the Restrictive Covenants upon the courts of any jurisdiction within
the geographical scope of such Restrictive Covenants. In the event that the
courts of any one or more of such jurisdictions shall hold such Restrictive
Covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other jurisdictions, within the geographical scope of such
Restrictive Covenants, as to breaches of such covenants in such other respective
jurisdictions, the above covenants as they relate to each jurisdiction being,
for this purpose, severable into diverse and independent covenants.
6. Insurance.
6.1 The Company may, from time to time, apply for and take
out, in its own name and at its own expense, life, health, accident, disability
or other insurance upon Executive in any sum or sums that it may deem necessary
to protect its interests, and Executive agrees to aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter into
this Agreement, Executive represents and warrants to the Company that to the
best of her knowledge Executive is insurable at standard (non-rated) premiums.
7. Miscellaneous.
7.1 This Agreement is a personal contract, and the rights
and interests of Executive hereunder may not be sold, transferred, assigned,
pledged or hypothecated except as otherwise expressly permitted by the
provisions of this Agreement. Executive shall not under any circumstances have
any option or right to require payment hereunder otherwise than in accordance
with the terms hereof. Except as otherwise expressly
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provided herein, Executive shall not have any power of anticipation, alienation
or assignment of payments contemplated hereunder, and all rights and benefits of
Executive shall be for the sole personal benefit of Executive, and no other
person shall acquire any right, title or interest hereunder by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
Executive, provided, however, that in the event of Executive's death,
Executive's estate, legal representatives or beneficiaries (as the case may be)
shall have the right to receive all of the benefits that accrued to Executive
pursuant to, and in accordance with, the terms of this Agreement.
7.2 The Company shall have the right to assign this
Agreement to any successor of substantially all of its business or assets which
assumes the Company's obligations hereunder.
7.3 Any notice required or permitted to be given pursuant to
this Agreement shall be in writing and shall be delivered personally, sent by
facsimile transmission, receipt requested, by nationally recognized overnight
courier for next business day delivery, or sent by registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below, or at such other addresses as such party shall
designate by notice to the other in the manner provided herein for giving
notice.
If to the Company: Wilshire Technologies, Inc.
5861 Edison Place
Carlsbad, California 92008
If to the Executive: Kathleen E. Terry
12450 Pathos Lane
San Diego, CA 92129
7.4 This Agreement may not be changed, amended, terminated
or superseded except by an agreement in writing, nor may any of the provisions
hereof be waived except by an instrument in writing, in any such case signed by
the party against whom enforcement of any change, amendment, termination,
waiver, modification, extension or discharge is sought.
7.5 Except as otherwise provided herein, this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of California, without giving any effect to the principles of
conflicts of laws.
7.6 All descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
7.7 If any provision of this Agreement, or part thereof, is
held to be unenforceable, the remainder of this Agreement or provision, as the
case may be, shall nevertheless remain in full force and effect.
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7.8 Each of the parties hereto shall at any time and from
time to time hereafter, upon the reasonable request of the other, take such
further action and execute, acknowledge and deliver all such instruments of
further assurance as may be necessary to carry out the provisions of this
Agreement.
7.9 This Agreement contains the entire agreement and
understanding between the Company and Executive with respect to the subject
matter hereof. No representations or warranties of any kind or nature relating
to the Company or its affiliates or their respective businesses, assets,
liabilities, operations, future plans or prospects have been made by or on
behalf of Company to Executive; nor have any representations or warranties of
any kind or nature been made by Executive to the Company, except as expressly
set forth in this Agreement.
8. Authorization by Board of Directors.
The execution and delivery of this Agreement by and on behalf of
the Company has been authorized by the Company's Board of Directors at a meeting
duly held on February 19, 1999.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereinabove written.
WILSHIRE TECHNOLOGIES, INC.
By: /s/ John Van Egmond
--------------------
Title: President and Chief Executive Officer
EXECUTIVE
/s/ Kathleen E. Terry
---------------------
Kathleen E. Terry
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EXHIBIT 10.135
DEMAND NOTE
$250,000.00 New York, New York
April 1, 1999
FOR VALUE RECEIVED, the undersigned, Wilshire Technologies, Inc. a
California corporation (hereinafter referred to as "Borrower"), hereby
unconditionally PROMISES TO PAY to the order to TRILON DOMINION PARTNERS, LLC, a
Delaware limited liability company ("Lender"), at 245 Park Avenue, 28th Floor,
New York, NY 10167, or at such other place as the holder of this Demand Note may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of Two Hundred
Fifty Thousand and 00/100, DOLLARS ($250,000.00), together with interest on the
unpaid principal amount of this Demand Note outstanding from time to time from
the date hereof, at a rate per annum equal to the Prime rate of interest of 8.5%
plus 3.0%, or the highest rate permitted by law, whichever shall be less.
The principal amount of the indebtedness evidenced hereby shall be
payable on demand. Interest thereon shall be paid when principal is paid from
the date hereof until such principal amount is paid in full at such interest
rate as specified above. Following failure to pay on demand, Borrower agrees to
pay interest on any overdue payment of principal at a rate per annum equal to
the stated interest rate plus 5%, or the highest rate permitted by law,
whichever shall be less. All interest calculations shall be computed on the
basis of a 360 day year.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
Borrower shall have no right to make any off-set against or deduct from
any payment due under this Demand Note.
Principal and interest may be prepaid at any time without penalty.
This Demand Note may not be changed orally, but only by an agreement in
writing and signed by the party against whom enforcement of such change is
sought.
All covenants of Borrower in this Demand Note and all rights of the
holder under this Demand Note shall bind Borrower and its successors and
assigns, and all such covenants and rights shall inure to the benefit of the
holder of this Demand Note and its successors and assigns.
This Demand Note has been delivered and accepted at New York, New York
and shall be interpreted, governed by, and construed in accordance with, the
laws of the State of New York.
Wilshire Technologies, Inc.
By: /s/ Kathleen E. Terry
---------------------------
Name: Kathleen E. Terry
Title: Chief Financial Officer
<PAGE> 1
EXHIBIT 10.136
WILSHIRE TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION
1995 STOCK OPTION PLAN
THIS IS TO CERTIFY that on MAY 18, 1998, WILSHIRE TECHNOLOGIES, INC., a
California corporation (the "Company") has granted to PAUL FENNELL (the
"Optionee") an option to purchase 50,000 shares of common stock of the Company,
no par value, at a price of $ 0.48 per share, upon the terms and conditions
hereinafter stated, to all of which the Optionee, by the acceptance hereof,
assents.
1. Option Period and Conditions on Exercise.
The option shall not be exercisable with respect to any of the shares
subject to the option after MAY 18, 2008 and the option shall not be
exercisable with respect to fractional shares.
This option vests as follows:
As to 16,666 shares on MAY 18, 1998; and
As to an additional 16,667 shares on MAY 18,1999;
As to an additional 16,667 shares on MAY 18, 2000.
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2. Effect of Termination of Employment/Effect of Death.
a. If the Optionee is an officer, employee or director of the Company and
ceases to be such for any reason other than death or termination for
cause, Optionee may exercise this option in accordance with its terms
only for a period of ninety days after such cessation (but not beyond
the Option Period). Any exercise of this option after such cessation may
be only to the extent of the full number of shares the Optionee was
entitled to purchase under this option on the date of such cessation,
plus a portion of the additional number of shares, if any, he would have
become entitled to purchase on the next anniversary date of the date of
grant of the option following such cessation, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which is the number of days from the
anniversary date of the date of grant preceding such cessation to the
date of such cessation and the denominator of which is 365. Such portion
shall be rounded, if necessary, to the nearest whole share.
b. If the termination of the Optionee's position as an officer or employee
of the Company is for cause (as determined in the sole judgment of the
Board of Directors), this option shall thereupon be cancelled and the
Optionee shall have no right to exercise any part of this option after
such termination.
c. If the Optionee dies, this option continues in effect and may be
exercised in accordance with its terms for twelve months from the date
of the Optionee's death
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<PAGE> 3
(but not beyond the Option Period) by the executor or administrator of
the estate, or in the event there is none, then by the person or persons
to whom the optionee's rights under this option shall pass by will or
the laws of descent and distribution. Any exercise of this option after
such death may be only to the extent of the full number of shares the
optionee was entitled to purchase under this option on the date of
death, plus a portion of the additional number of shares, if any, he
would have become entitled to purchase on the next anniversary date of
the date of grant of the option following such death, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which shall be the number of days from the
anniversary date of the date of grant preceding such death to the date
of death and the denominator of which shall be 365. Such portion shall
be rounded, if necessary, to the nearest whole share.
3. Manner of Exercise.
This option shall be exercised by giving written notice to the Company
addressed in the manner specified in paragraph 7, specifying the number
of shares to be purchased and accompanied by payment in full in cash, or
in whole or in part in Common Stock, as provided in paragraph 9, for the
shares purchased.
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4. Nontransferability of Option.
This option shall not be transferable except to the executor or
administrator of the Optionee's estate or to the Optionee's heirs or
legatees, and shall be exercisable during the Optionee's lifetime only
by the Optionee. This option may, however, be surrendered to the Company
for cancellation for such consideration and upon such terms as may be
mutually agreed upon by the Company and the Optionee.
5. Adjustment of Shares and Price Per Share.
The number of shares subject to this option shall be adjusted as
follows:
a. In the event the Company's outstanding common stock is changed by any
stock dividend, stock split, or combination of shares, the number of
shares subject to this option shall be proportionately adjusted, without
change in the aggregate purchase price.
b. Except as provided in subsection (d) hereof, in the event of any merger,
consolidation, or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable
basis, for each share of common stock then subject to this option, an
option for the number and kind of shares of stock or other securities to
which the holders of common stock of the Company will be entitled
pursuant to the transaction.
c. In the event of any other relevant change in the capitalization of the
Company, this option and the purchase price per share shall be equitably
adjusted.
d. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986 in
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which the Company is the surviving corporation, this option shall
terminate and thereupon become null and void but only if the controlling
corporation shall agree to exchange its options for this option; but the
Optionee shall have the right, immediately prior to such merger, to
exercise this option, without regard to any otherwise applicable
restriction as to time of exercise, other than expiration of the Option
Period.
e. Upon the dissolution of the Company, this option shall terminate and
thereafter become null and void; but the Optionee shall have the right,
immediately prior to such dissolution, to exercise this option without
regard to any otherwise applicable restriction as to time of exercise,
other than expiration of the Option Period.
6. Compliance with Applicable Law.
The exercise of this option is subject to the obtaining of any consent
or approval of any governmental or other regulatory body which the Board
of Directors, in its discretion, deems necessary or desirable.
7. Other Provisions.
a. The holder of this option shall not be entitled to any rights of a
shareholder of the Company with respect to any shares subject to this
option until such shares have been paid for in full and issued to him.
b. Nothing in this Certificate shall be construed as limiting any rights
which the Company or any parent or
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<PAGE> 6
subsidiary corporation of the Company may have to terminate at any time
the employment of the Optionee.
c. Notice to the Company hereunder shall be addressed to the attention of
its Secretary at its corporate office at 5861 Edison Place, Carlsbad,
California 92008.
8. Incorporation of Plan by Reference.
EXCEPT AS MODIFIED OR AMPLIFIED BY THE SPECIFIC TERMS OF THIS AGREEMENT,
ALL OF THE TERMS AND PROVISIONS OF THE WILSHIRE TECHNOLOGIES, INC. 1995
STOCK OPTION PLAN (THE "PLAN"), A COPY OF WHICH IS ATTACHED HERETO AS
EXHIBIT A, ARE INCORPORATED HEREIN AND MADE A PART HEREOF AS IF SET
FORTH AT LENGTH HEREIN.
9. Optional Form of Payment for Shares.
Payment for any number of shares of stock of the Company purchased
pursuant to the exercise of this option may, at the election of the
Optionee, be made by delivering to the Company a number of shares of the
Common Stock of the Company, which the Optionee has owned for at least
six months, with a Fair Market Value (as defined in the Plan), on the
date this option is exercised, equal to the option exercise price for
such shares.
WILSHIRE TECHNOLOGIES, INC.
By /s/ JOHN VAN EGMOND
---------------------------------------
President & Chief Executive Officer
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I hereby accept the foregoing stock option on the terms and conditions
hereinabove stated.
I understand that the shares issuable to me on exercise of this option
have not been registered under the Securities Act of 1933 and that the Company
has no intention of so registering such shares.
OPTIONEE,
Paul Fennell
-------------------------------
(Please print or type)
Date: May 23, 1998 Signature /s/ Paul Fennell
-------------------------------------
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EXERCISE OF OPTION
The undersigned hereby irrevocably elects to exercise the right
to purchase _______________ shares of Common Stock of Wilshire Technologies,
Inc. (the "Shares"), such right being represented by the Stock Option granted to
me on ______________ and herewith tenders payment for the Shares to the order of
Wilshire Technologies, Inc., in the amount of $________________ (equal to [the
number of shares] multiplied by $_________ [the exercise price stated in the
Stock Option]).
The undersigned requests that a certificate for the Shares be
registered in the name of, and delivered to, the undersigned at the following
address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
------------------------------------
(Please print or type)
Date:___________ Signature
-----------------------------------------
Social Security Number______-___-_______
8
<PAGE> 1
EXHIBIT 10.137
WILSHIRE TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION
1995 STOCK OPTION PLAN
THIS IS TO CERTIFY that on AUGUST 17, 1998, WILSHIRE TECHNOLOGIES, INC., a
California corporation (the "Company") has granted to KEVIN MULVIHILL (the
"Optionee") an option to purchase 500,000 shares of common stock of the Company,
no par value, at a price of $ 0.50 per share, upon the terms and conditions
hereinafter stated, to all of which the Optionee, by the acceptance hereof,
assents.
1. Option Period and Conditions on Exercise.
The option shall not be exercisable with respect to any of the shares
subject to the option after AUGUST 17, 2008 and the option shall not be
exercisable with respect to fractional shares.
This option vests as follows:
As to 125,000 shares on AUGUST 17, 1999; and
As to an additional 125,000 shares on AUGUST 17, 2000;
As to an additional 125,000 shares on AUGUST 17, 2001;
As to an additional 125,000 shares on AUGUST 17, 2002.
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2. Effect of Termination of Employment/Effect of Death.
a. If the Optionee is an officer, employee or director of the Company and
ceases to be such for any reason other than death or termination for
cause, Optionee may exercise this option in accordance with its terms
only for a period of ninety days after such cessation (but not beyond
the Option Period). Any exercise of this option after such cessation may
be only to the extent of the full number of shares the Optionee was
entitled to purchase under this option on the date of such cessation,
plus a portion of the additional number of shares, if any, he would have
become entitled to purchase on the next anniversary date of the date of
grant of the option following such cessation, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which is the number of days from the
anniversary date of the date of grant preceding such cessation to the
date of such cessation and the denominator of which is 365. Such portion
shall be rounded, if necessary, to the nearest whole share.
b. If the termination of the Optionee's position as an officer or employee
of the Company is for cause (as determined in the sole judgment of the
Board of Directors), this option shall thereupon be cancelled and the
Optionee shall have no right to exercise any part of this option after
such termination.
c. If the Optionee dies, this option continues in effect and may be
exercised in accordance with its terms for twelve months from the date
of the Optionee's death
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(but not beyond the Option Period) by the executor or administrator of
the estate, or in the event there is none, then by the person or persons
to whom the optionee's rights under this option shall pass by will or
the laws of descent and distribution. Any exercise of this option after
such death may be only to the extent of the full number of shares the
optionee was entitled to purchase under this option on the date of
death, plus a portion of the additional number of shares, if any, he
would have become entitled to purchase on the next anniversary date of
the date of grant of the option following such death, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which shall be the number of days from the
anniversary date of the date of grant preceding such death to the date
of death and the denominator of which shall be 365. Such portion shall
be rounded, if necessary, to the nearest whole share.
3. Manner of Exercise.
This option shall be exercised by giving written notice to the Company
addressed in the manner specified in paragraph 7, specifying the number
of shares to be purchased and accompanied by payment in full in cash, or
in whole or in part in Common Stock, as provided in paragraph 9, for the
shares purchased.
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4. Nontransferability of Option.
This option shall not be transferable except to the executor or
administrator of the Optionee's estate or to the Optionee's heirs or
legatees, and shall be exercisable during the Optionee's lifetime only
by the Optionee. This option may, however, be surrendered to the Company
for cancellation for such consideration and upon such terms as may be
mutually agreed upon by the Company and the Optionee.
5. Adjustment of Shares and Price Per Share.
The number of shares subject to this option shall be adjusted as
follows:
a. In the event the Company's outstanding common stock is changed by any
stock dividend, stock split, or combination of shares, the number of
shares subject to this option shall be proportionately adjusted, without
change in the aggregate purchase price.
b. Except as provided in subsection (d) hereof, in the event of any merger,
consolidation, or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable
basis, for each share of common stock then subject to this option, an
option for the number and kind of shares of stock or other securities to
which the holders of common stock of the Company will be entitled
pursuant to the transaction.
c. In the event of any other relevant change in the capitalization of the
Company, this option and the purchase price per share shall be equitably
adjusted.
d. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986 in
4
<PAGE> 5
which the Company is the surviving corporation, this option shall
terminate and thereupon become null and void but only if the controlling
corporation shall agree to exchange its options for this option; but the
Optionee shall have the right, immediately prior to such merger, to
exercise this option, without regard to any otherwise applicable
restriction as to time of exercise, other than expiration of the Option
Period.
e. Upon the dissolution of the Company, this option shall terminate and
thereafter become null and void; but the Optionee shall have the right,
immediately prior to such dissolution, to exercise this option without
regard to any otherwise applicable restriction as to time of exercise,
other than expiration of the Option Period.
6. Compliance with Applicable Law.
The exercise of this option is subject to the obtaining of any consent
or approval of any governmental or other regulatory body which the Board
of Directors, in its discretion, deems necessary or desirable.
7. Other Provisions.
a. The holder of this option shall not be entitled to any rights of a
shareholder of the Company with respect to any shares subject to this
option until such shares have been paid for in full and issued to him.
b. Nothing in this Certificate shall be construed as limiting any rights
which the Company or any parent or
5
<PAGE> 6
subsidiary corporation of the Company may have to terminate at any time
the employment of the Optionee.
c. Notice to the Company hereunder shall be addressed to the attention of
its Secretary at its corporate office at 5861 Edison Place, Carlsbad,
California 92008.
8. Incorporation of Plan by Reference.
EXCEPT AS MODIFIED OR AMPLIFIED BY THE SPECIFIC TERMS OF THIS AGREEMENT,
ALL OF THE TERMS AND PROVISIONS OF THE WILSHIRE TECHNOLOGIES, INC. 1995
STOCK OPTION PLAN (THE "PLAN"), A COPY OF WHICH IS ATTACHED HERETO AS
EXHIBIT A, ARE INCORPORATED HEREIN AND MADE A PART HEREOF AS IF SET
FORTH AT LENGTH HEREIN.
9. Optional Form of Payment for Shares.
Payment for any number of shares of stock of the Company purchased
pursuant to the exercise of this option may, at the election of the
Optionee, be made by delivering to the Company a number of shares of the
Common Stock of the Company, which the Optionee has owned for at least
six months, with a Fair Market Value (as defined in the Plan), on the
date this option is exercised, equal to the option exercise price for
such shares.
WILSHIRE TECHNOLOGIES, INC.
By /s/ JOHN VAN EGMOND
--------------------------------------
President & Chief Executive Officer
6
<PAGE> 7
I hereby accept the foregoing stock option on the terms and conditions
hereinabove stated.
I understand that the shares issuable to me on exercise of this option
have not been registered under the Securities Act of 1933 and that the Company
has no intention of so registering such shares.
OPTIONEE,
Kevin Mulvihill
------------------------------------
(Please print or type)
Date: August 26, 1998 Signature /s/ KEVIN MULVIHILL
-------------------------------
7
<PAGE> 8
EXERCISE OF OPTION
The undersigned hereby irrevocably elects to exercise the right
to purchase _______________ shares of Common Stock of Wilshire Technologies,
Inc. (the "Shares"), such right being represented by the Stock Option granted to
me on ______________ and herewith tenders payment for the Shares to the order of
Wilshire Technologies, Inc., in the amount of $________________ (equal to [the
number of shares] multiplied by $_________ [the exercise price stated in the
Stock Option]).
The undersigned requests that a certificate for the Shares be registered in
the name of, and delivered to, the undersigned at the following address: _______
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
------------------------------------
(Please print or type)
Date:___________ Signature
-------------------------------
Social Security Number______-___-_______
8
<PAGE> 1
EXHIBIT 10.138
WILSHIRE TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION
1995 STOCK OPTION PLAN
THIS IS TO CERTIFY that on FEBRUARY 8, 1999, WILSHIRE TECHNOLOGIES, INC., a
California corporation (the "Company") has granted to KATHLEEN TERRY (the
"Optionee") an option to purchase 50,000 shares of common stock of the Company,
no par value, at a price of $ 0.39 per share, upon the terms and conditions
hereinafter stated, to all of which the Optionee, by the acceptance hereof,
assents.
1. Option Period and Conditions on Exercise.
The option shall not be exercisable with respect to any of the shares
subject to the option after FEBRUARY 8, 2009 and the option shall not be
exercisable with respect to fractional shares.
This option vests as follows:
As to 16,666 shares on FEBRUARY 8, 1999; and
As to an additional 16,667 shares on FEBRUARY 8, 2000;
As to an additional 16,667 shares on FEBRUARY 8, 2001.
1
<PAGE> 2
2. Effect of Termination of Employment/Effect of Death.
a. If the Optionee is an officer, employee or director of the Company and
ceases to be such for any reason other than death or termination for
cause, Optionee may exercise this option in accordance with its terms
only for a period of ninety days after such cessation (but not beyond
the Option Period). Any exercise of this option after such cessation may
be only to the extent of the full number of shares the Optionee was
entitled to purchase under this option on the date of such cessation,
plus a portion of the additional number of shares, if any, he would have
become entitled to purchase on the next anniversary date of the date of
grant of the option following such cessation, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which is the number of days from the
anniversary date of the date of grant preceding such cessation to the
date of such cessation and the denominator of which is 365. Such portion
shall be rounded, if necessary, to the nearest whole share.
b. If the termination of the Optionee's position as an officer or employee
of the Company is for cause (as determined in the sole judgment of the
Board of Directors), this option shall thereupon be cancelled and the
Optionee shall have no right to exercise any part of this option after
such termination.
c. If the Optionee dies, this option continues in effect and may be
exercised in accordance with its terms for twelve months from the date
of the Optionee's death
2
<PAGE> 3
(but not beyond the Option Period) by the executor or administrator of
the estate, or in the event there is none, then by the person or persons
to whom the optionee's rights under this option shall pass by will or
the laws of descent and distribution. Any exercise of this option after
such death may be only to the extent of the full number of shares the
optionee was entitled to purchase under this option on the date of
death, plus a portion of the additional number of shares, if any, he
would have become entitled to purchase on the next anniversary date of
the date of grant of the option following such death, such portion to be
determined by multiplying such additional number of shares by a
fraction, the numerator of which shall be the number of days from the
anniversary date of the date of grant preceding such death to the date
of death and the denominator of which shall be 365. Such portion shall
be rounded, if necessary, to the nearest whole share.
3. Manner of Exercise.
This option shall be exercised by giving written notice to the Company
addressed in the manner specified in paragraph 7, specifying the number
of shares to be purchased and accompanied by payment in full in cash, or
in whole or in part in Common Stock, as provided in paragraph 9, for the
shares purchased.
3
<PAGE> 4
4. Nontransferability of Option.
This option shall not be transferable except to the executor or
administrator of the Optionee's estate or to the Optionee's heirs or
legatees, and shall be exercisable during the Optionee's lifetime only
by the Optionee. This option may, however, be surrendered to the Company
for cancellation for such consideration and upon such terms as may be
mutually agreed upon by the Company and the Optionee.
5. Adjustment of Shares and Price Per Share.
The number of shares subject to this option shall be adjusted as
follows:
a. In the event the Company's outstanding common stock is changed by any
stock dividend, stock split, or combination of shares, the number of
shares subject to this option shall be proportionately adjusted, without
change in the aggregate purchase price.
b. Except as provided in subsection (d) hereof, in the event of any merger,
consolidation, or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable
basis, for each share of common stock then subject to this option, an
option for the number and kind of shares of stock or other securities to
which the holders of common stock of the Company will be entitled
pursuant to the transaction.
c. In the event of any other relevant change in the capitalization of the
Company, this option and the purchase price per share shall be equitably
adjusted.
d. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986 in
4
<PAGE> 5
which the Company is the surviving corporation, this option shall
terminate and thereupon become null and void but only if the controlling
corporation shall agree to exchange its options for this option; but the
Optionee shall have the right, immediately prior to such merger, to
exercise this option, without regard to any otherwise applicable
restriction as to time of exercise, other than expiration of the Option
Period.
e. Upon the dissolution of the Company, this option shall terminate and
thereafter become null and void; but the Optionee shall have the right,
immediately prior to such dissolution, to exercise this option without
regard to any otherwise applicable restriction as to time of exercise,
other than expiration of the Option Period.
6. Compliance with Applicable Law.
The exercise of this option is subject to the obtaining of any consent
or approval of any governmental or other regulatory body which the Board
of Directors, in its discretion, deems necessary or desirable.
7. Other Provisions.
a. The holder of this option shall not be entitled to any rights of a
shareholder of the Company with respect to any shares subject to this
option until such shares have been paid for in full and issued to him.
b. Nothing in this Certificate shall be construed as limiting any rights
which the Company or any parent or
5
<PAGE> 6
subsidiary corporation of the Company may have to terminate at any time
the employment of the Optionee.
c. Notice to the Company hereunder shall be addressed to the attention of
its Secretary at its corporate office at 5861 Edison Place, Carlsbad,
California 92008.
8. Incorporation of Plan by Reference.
EXCEPT AS MODIFIED OR AMPLIFIED BY THE SPECIFIC TERMS OF THIS AGREEMENT,
ALL OF THE TERMS AND PROVISIONS OF THE WILSHIRE TECHNOLOGIES, INC. 1995
STOCK OPTION PLAN (THE "PLAN"), A COPY OF WHICH IS ATTACHED HERETO AS
EXHIBIT A, ARE INCORPORATED HEREIN AND MADE A PART HEREOF AS IF SET
FORTH AT LENGTH HEREIN.
9. Optional Form of Payment for Shares.
Payment for any number of shares of stock of the Company purchased
pursuant to the exercise of this option may, at the election of the
Optionee, be made by delivering to the Company a number of shares of the
Common Stock of the Company, which the Optionee has owned for at least
six months, with a Fair Market Value (as defined in the Plan), on the
date this option is exercised, equal to the option exercise price for
such shares.
WILSHIRE TECHNOLOGIES, INC.
By /s/ KEVIN T. MULVIHILL
--------------------------------------
President & Chief Executive Officer
6
<PAGE> 7
I hereby accept the foregoing stock option on the terms and conditions
hereinabove stated.
I understand that the shares issuable to me on exercise of this option
have not been registered under the Securities Act of 1933 and that the Company
has no intention of so registering such shares.
OPTIONEE,
KATHLEEN E. TERRY
------------------------------------
Please print or type)
Date: February 9, 1999 Signature /s/ KATHLEEN E. TERRY
--------------------------------------
7
<PAGE> 8
EXERCISE OF OPTION
The undersigned hereby irrevocably elects to exercise the right
to purchase _______________ shares of Common Stock of Wilshire Technologies,
Inc. (the "Shares"), such right being represented by the Stock Option granted to
me on ______________ and herewith tenders payment for the Shares to the order of
Wilshire Technologies, Inc., in the amount of $________________ (equal to [the
number of shares] multiplied by $_________ [the exercise price stated in the
Stock Option]).
The undersigned requests that a certificate for the Shares be
registered in the name of, and delivered to, the undersigned at the following
address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
------------------------------------
(Please print or type)
Date:___________ Signature_______________________________________
Social Security Number______-___-_______
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 163,000
<SECURITIES> 0
<RECEIVABLES> 304,000
<ALLOWANCES> 6,000
<INVENTORY> 1,283,000
<CURRENT-ASSETS> 2,146,000
<PP&E> 3,655,000
<DEPRECIATION> 1,121,000
<TOTAL-ASSETS> 6,286,000
<CURRENT-LIABILITIES> 11,204,000
<BONDS> 0
0
0
<COMMON> 25,907,000
<OTHER-SE> (30,825,000)
<TOTAL-LIABILITY-AND-EQUITY> 6,286,000
<SALES> 631,000
<TOTAL-REVENUES> 631,000
<CGS> 764,000
<TOTAL-COSTS> 764,000
<OTHER-EXPENSES> 714,000
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 287,000
<INCOME-PRETAX> (1,132,000)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (1,133,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,133,000)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
