<PAGE> 1
UNITED STATES
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 September 30, 1998
------------------
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- ---
For the transition period from _______ to _______
Commission file number __________________________
American Stone Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-3704099
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8705 Quarry Rd., Amherst, Ohio 44001
- --------------------------------------------------------------------------------
(Address of principal executive officer)
(440) 986-4501
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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. X YES NO
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
YES NO
- --- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,716,364
-------------------
<PAGE> 2
INDEX
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1998 and December 31, 1997........................................................1
Consolidated Statements of Income
Three Months Ended September 30, 1998 and 1997
Nine Months Ended September 30, 1998 and 1997...................................................2
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1997..................................................3
Notes to Consolidated Financial Statements...........................................................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................5 - 7
PART II. OTHER INFORMATION
- ----------------------------
Item 2. Changes in Securities and Use of Proceeds...................................................8
Item 6. Exhibits and Reports on Form 8-K............................................................8
Signatures ............................................................................................9
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
1998 1997
------------- ------------
Current Assets (Unaudited) (Audited)
- --------------
<S> <C> <C>
Cash $ 353,312 $ 144,443
Accounts receivable 652,491 462,703
Inventory 820,613 797,758
Prepaid expenses 15,249 37,112
---------- ----------
Total Current Assets 1,841,665 1,442,016
---------- ----------
Property. Plant and Equipment, Net - At Cost 2,486,667 2,107,823
- -------------------------------------------- ---------- ----------
Other Assets 250,360 211,450
- ------------ ---------- ----------
$4,578,692 $3,761,289
========== ==========
LIABILITIES
-----------
Current Liabilities
- -------------------
Notes payable, bank line of credit $ 450,000 $ 350,000
Current portion of notes payable 151,154 126,480
Accounts payable 416,524 441,372
Accrued liabilities 108,728 174,053
---------- ----------
Total Current Liabilities 1,126,406 1,091,905
---------- ----------
Long Term Liabilities 468,083 36,728
- --------------------- ---------- ----------
SHAREHOLDERS' EQUITY
--------------------
Common Stock, $.001 par value,
20 million shares authorized
1,716,364 and 1,631,364 issued and
outstanding at September 30, 1998
and December 31, 1997, respectively. 16,399 16,314
Additional capital 3,835,275 3,562,860
Retained earnings (deficit) (867,471) (946,518)
---------- ----------
2,984,203 2,632,656
---------- ----------
$4,578,692 $3,761,289
========== ==========
</TABLE>
Note: The balance sheet at December 31, 1997 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 notes to consolidated financial statements.
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<PAGE> 4
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 872,286 $ 567,877 $ 2,198,360 $ 1,604,023
- ---------
Cost of Sales 628,573 327,982 1,505,110 1,042,208
- ------------- ----------- ----------- ----------- -----------
Gross Profit 243,713 239,895 693,250 561,815
- -----------
Selling, General and Administrative
- -----------------------------------
Expenses 194,197 203,009 563,793 533,194
-------- ----------- ----------- ----------- -----------
Income From Operations 49,516 36,886 129,457 28,621
- ---------------------- ----------- ----------- ----------- -----------
Other Income (Expense)
- ----------------------
Gain on sale of property 5,753 - 5,753 -
Interest income 756 4,741 2,329 13,516
Interest expense (26,489) (10,079) (58,492) (20,841)
----------- ----------- ----------- -----------
(19,980) (5,338) (50,410) (7,325)
----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes 29,536 31,548 79,047 21,296
- ---------------------------------
Provision For Income Taxes - - - -
- -------------------------- ----------- ----------- ----------- -----------
Net Income $ 29,536 $ 31,548 $ 79,047 $ 21,296
- ---------- =========== =========== =========== ===========
Net Income Per Common Share
- ---------------------------
Basic $ .02 $ .02 $ .05 $ .01
=========== =========== =========== ===========
Diluted $ .02 $ .02 $ .05 $ .01
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 5
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flow From Operating Activities
- -----------------------------------
Net Income (Loss) $ 79,047 $ 21,296
Noncash items included in income
Gain on sale of property (5,753) -
Depreciation and amortization 140,946 84,905
Accounts receivable (189,788) (147,237)
Inventory (22,855) (295,427)
Prepaid expenses 21,863 36,713
Accounts payable - trade (24,848) (10,549)
Accrued expenses (65,325) (107,351)
---------- ---------
Total Adjustments (145,760) (438,946)
--------- ---------
Net Cash Used In Operating Activities (66,713) (417,650)
- -------------------------------------
Cash Flows From Investing Activities (552,947) 48,381
- ------------------------------------
Cash Flows From Financing Activities 828,529 105,609
- ------------------------------------ -------- ----------
Net Increase (Decrease) in Cash 208,869 (263,660)
- --------------------------------
Cash - Beginning of Period 144,443 983,713
- -------------------------- --------- ---------
Cash - End of Period $ 353,312 $ 720,053
- -------------------- ========= =========
Supplemental Disclosure of Cash Flows
- -------------------------------------
Information
-----------
Interest paid $ 58,500 $ 20,900
Income taxes paid $ -0- $ -0-
</TABLE>
See notes to consolidated financial statements.
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AMERICAN STONE INDUSTRIES, INC.
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1998
------------------
NOTE A - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of American
Stone Industries, Inc. and its Subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and item 310(b)
of Regulation S-B. 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 three-month and nine-month periods
ended September 30, 1998 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1998. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
American Stone Industries, Inc. Annual Report on Form 10-KSB for the year ended
December 31, 1997.
NOTE B - RECLASSIFICATION
- -------------------------
Certain accounts related to the prior year have been reclassified to
conform to the current year presentation.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the third quarter of 1998 were $872,286, up 54% when
compared to the third quarter of 1997. For the nine months ended September 30,
1998, net sales were $2,198,360, up 37% when compared to the same period in
1997. The 1998 increase was primarily due to strong sales of custom stone
fabrication in the Architectural and Restoration markets as well as growing
demand for slab and patio stone from the Company's distributors. The Company
records most of its sales in the second and third quarters of the year. Losses
are normally generated during the first quarter of the year and are primarily
the result of the cold weather in the Great Lakes market and its lower demands
for stone.
The gross profit percentage for the third quarter of 1998 was 28%,
compared to 42% for the same period for the prior year. The gross profit
percentage for the first nine months ended September 30, 1998 was 32%, compared
to 35% for the same period for the prior year. Production costs for the third
quarter continue to be high as the Company continues to use outmoded equipment
to fill increasing number of orders. As a result, the Company ordered three new
machines that are expected to be operational by the end of the first quarter of
1999.
Selling and administrative expenses have continued to decline as a
percentage of net sales due to nonrecurring legal, accounting and consulting
costs in 1997 as a result of the Company's initial filings with the Securities
and Exchange Commission.
Net other expenses for the third quarter of 1998 were $19,980, compared to
$5,338 for the third quarter of 1997. For the first nine months ended September
30, 1998, net other expenses were $50,410, compared to $7,325 for the same
period for 1997. This was due to an increase in interest expense as a result of
borrowings for the purchase of the new gang saw and for working capital.
The net income was $29,536 for the third quarter of 1998 and $31,548 for
the third quarter of 1997. For the nine months ended September 30, 1998 net
income was $79,047, compared to $21,296 for the same period of 1997.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's primary source of liquidity is the Company's line of credit
under an agreement between the Company and FirstMerit Bank, N.A. (The "Credit
Agreement"). The Credit Agreement provides for maximum borrowings of $750,000,
with interest payable monthly at a rate equivalent to the prime lending rate.
Borrowings under the Credit Agreement are secured by substantially all real
estate, inventory and equipment of the Company. The outstanding balance at
September 30, 1998 and December 31, 1997 was $450,000 and $350,000 respectively.
Management believes that the Company does not currently have, and is not
expected to have within the next twelve (12) calendar months, any cash flow or
liquidity problems. Management believes that the Company is not in default with
respect to any note, loan, lease or other indebtedness or financing agreement.
The Company is not subject to any unsatisfied judgments, liens or settlement
obligations.
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<PAGE> 8
FORWARD-LOOKING STATEMENTS
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
This Quarterly Report on Form 10-QSB includes forward-looking statements
relating to the business of the Company. Forward-looking statements contained
herein or in other statements made by the Company are made based on management's
expectations and beliefs concerning future events impacting the Company and are
subject to uncertainties and factors relating to the Company's operations and
business environment, all of which are difficult to predict and many of which
are beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed in or implied by
forward-looking statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual results of
the Company to differ materially from those expressed in or implied by
forward-looking statements made by or on behalf of the Company; (a) general
economic, business and market conditions; (b) competition; (c) the success of
advertising and promotional efforts; (d) trends within the building construction
industry; (e) the existence or absence of adverse publicity; (f) changes in
relationships with the Company's major customers or in the financial condition
of those customers; (g) the adequacy of the Company's financial resources and
the availability and terms of any additional capital; and (h) disruption to the
operations of the Company caused by Year 2000 issues.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issues - software, hardware or an embedded chip that does
not correctly process date information for years after 1999 - results from the
practice of storing date information with only the last two digits of the year.
The Year 2000 issue affects virtually all companies and organizations, including
government agencies, utilities and other basic service providers, which are
outside the Company's control. Like most business enterprises, the Company is
taking steps to identify and address the potential effects of the Year 2000
issue.
The Company has initiated an internal review of Year 2000 issues, which
addresses (i) internal information technology ("IT") systems such as any
hardware and software used to process daily operational data and information;
(ii) non-IT systems or embedded technology such as micro-controllers; and (iii)
the Year 2000 compliance of key service providers and customers.
The Company utilizes standard non-customized hardware and software in its
IT systems. To the extent such hardware or software is not Year 2000 compliant,
management believes that the disruption to the operations of the Company and the
cost of replacement of the hardware or software would be minimal. In addition,
the Company has evaluated the impact of the Year 2000 issue on the Company's
non-IT systems and believes the Company's operations will not be materially
adversely impacted by non-compliant non-IT systems.
The Company is in the process of evaluating the impact of Year 2000 issues
on key third parties. The Company has recently requested assurances from its
electrical power supplier and its largest customer that such parties are Year
2000 compliant. To the extent such parties are not Year 2000 compliant, the
Company's operations or business may be materially adversely impacted.
Substantial interruption of electrical power supplied to the Company's operating
quarries due to the electrical power supplier's failure to achieve Year 2000
compliance has been identified as having the greatest potential adverse impact.
In such an event, the Company would need to seek alternative sources of
electrical power to meet the demands of the quarry operations. Management
believes that to the extent other service providers are not Year 2000
compliant, such services may be obtained from other sources with minimal
disruption to the operations of the Company.
-6-
<PAGE> 9
YEAR 2000 READINESS DISCLOSURE (CONTINUED)
To date, the Company has spent approximately $5,000 in evaluating the
impact of Year 2000 on the operations of the Company and expects future costs to
be minimal.
Although the Company expects to be Year 2000 compliant, statements with
regard to such expectations are subject to various factors that may materially
affect the Company's Year 2000 compliance efforts. These factors include the
ability to detect, locate and correct system codes and the failure of key third
parties to achieve Year 2000 compliance. The Company has taken actions that it
believes are appropriate and reasonable to determine the readiness of third
parties; however, it must in part rely on representations made by such third
parties.
-7-
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Recent Sales of Unregistered Securities.
On August 4, 1998, the Company issued 25,000 shares of Common
Stock, par value $.001 per share (the "Common Stock"), to Suncrest
Management Services, S.A. ("Suncrest") pursuant to the exercise of an
option granted to Suncrest by the Company to purchase 25,000 shares of
Common Stock at a per share exercise price of $2.50. The aggregate
consideration received by the Company in connection with the exercise of
the option was $62,500. Registration under the Securities Act of 1933 was
not effected with respect to the transaction described above in reliance
upon the exemption from registration contained in Section 4(2) of the
Securities Act of 1933.
On September 30, 1998, the Company issued 60,000 shares of Common
Stock to Roulston Ventures Limited Partnership in a private placement
transaction for an aggregate purchase price of $210,000, or $3.50 per
share. The per share purchase price was based on the closing price of the
Common Stock on September 29, 1998 as reported on the Nasdaq Bulletin
Board. Registration under the Securities Act of 1933 was not effected with
respect to the transaction described above in reliance upon the exemption
from registration contained in Section 4(2) of the Securities Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.1 Certificate of Amendment to the Certificate of Incorporation of
American Stone Industries, Inc.
10.1 The American Stone Industries, Inc. 1998 Management Stock Option
Plan
10.2 The American Stone Industries, Inc. 1998 Non-Employee Director
Stock Option Plan
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed during the quarter
for which this report is filed.
-8-
<PAGE> 11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
American Stone Industries, Inc.
- --------------------------------------------------------------------------------
(Registrant)
Date: November 13, 1998 /s/ David Tyrrell
------------------------ ------------------------------------------
David Tyrrell, President
Date: November 13, 1998 /s/ Enzo Constantino
------------------------ ------------------------------------------
Enzo Constantino, Chief Financial Officer
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<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF AMERICAN STONE INDUSTRIES, INC.
AMERICAN STONE INDUSTRIES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the Delaware General Corporation
Law, DOES HEREBY CERTIFY:
FIRST: Article FOURTH of the Certificate of Incorporation of the
Corporation is hereby deleted in its entirety and amended to read as follows:
"FOURTH. The Corporation shall be authorized to issue the following
shares:
Class Number of Shares Par Value
----- ---------------- ---------
Common 20,000,000 $.001
At the close of business on the date on which the amendment containing
this Division 1 of Article Fourth, each outstanding share of Common
Stock of the Corporation shall be converted into one-tenth (1/10) of a
share of Common Stock, without any action by the holders of such
shares."
SECOND: That the Board of Directors of the Corporation, by written consent
dated as of April 15, 1998, adopted a resolution proposing and declaring
advisable the foregoing amendment to Article Fourth of the Certificate of
Incorporation of the Corporation.
THIRD: This Certificate of Amendment of the Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors of the
Corporation.
FOURTH: That at the Annual Meeting of Stockholders on June 24, 1998, held
upon notice in accordance with Sections 222 and 242 of the Delaware General
Corporation Law, the necessary number of shares as required by statute were
voted in favor of the adoption of amendment.
FIFTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this 24th day of June, 1998.
AMERICAN STONE INDUSTRIES, INC.
By: /s/ David Tyrrell
--------------------------------------
David Tyrrell, Chief Executive Officer
and President
ATTEST:
By: /s/ Michael J. Meier
---------------------------
Michael J. Meier, Secretary
<PAGE> 1
EXHIBIT 10.1
AMERICAN STONE INDUSTRIES, INC.
1998 MANAGEMENT STOCK OPTION PLAN
SECTION 1. PURPOSE
The American Stone Industries, Inc. 1998 Management Stock Option Plan,
as the same may be amended (the "Plan"), is designed to foster the long-term
growth and performance of the Company by: (a) enhancing the Company's ability to
attract and retain highly qualified management employees and (b) motivating
management employees to serve and promote the long-term interests of the Company
and its stockholders through stock ownership and performance-based incentives.
To achieve this purpose, the Plan provides authority for the grant of Stock
Options.
SECTION 2. DEFINITIONS
(a) "Acquisition Consideration" shall be as defined in Section 12
hereof.
(b) "Affiliate" shall have the meaning ascribed to that term in Rule
12b-2 promulgated under the Exchange Act.
(c) "Award" shall mean the grant of Stock Options under this Plan.
(d) "Award Agreement" shall mean any agreement between the Company and
a Participant that sets forth terms, conditions, and restrictions applicable to
an Award.
(e) "Board of Directors" shall mean the Board of Directors of the
Company.
(f) "Change in Control" shall include, but not be limited to: (i) the
first purchase of shares by a Third Party pursuant to a tender offer or exchange
(other than a tender offer or exchange by the Company) for all or part of the
Company's Common Stock of any class or any securities convertible into such
Common Stock; (ii) the receipt by the Company of a Schedule 13D or other advice
indicating that a Third Party is the "beneficial owner" (as that term is defined
in Rule 13d-3 promulgated under the Exchange Act) of 50 percent (50%) or more of
the Company's Common Stock calculated as provided in paragraph (d) of said Rule
13d-3; (iii) the date of approval by stockholders of the Company of an agreement
providing for any consolidation or merger of the Company in which the Company
will not be the continuing or surviving corporation or pursuant to which shares
of capital stock of any class, or any securities convertible into such capital
stock, of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of common
stock of all classes of the Company immediately prior to the merger would have
the same proportion of ownership of common stock of the surviving corporation
immediately after the merger; (iv) the date of the approval by stockholders of
the Company of any sale, lease, exchange, or other transfer (in one transaction
or a series of related transactions) of all or substantially all the assets of
the Company; (v) the adoption of any plan or proposal for the liquidation (but
not a partial liquidation) or dissolution of the Company; or (vi)
<PAGE> 2
such other event as the Committee shall in its sole and absolute discretion,
deem to be a "Change in Control" for purposes of this Plan or any Notice of
Award or Award Agreement entered into pursuant hereto. The manner of application
and interpretation of the foregoing provisions shall be determined by the
Committee in its sole and absolute discretion.
(g) "Code" shall mean the Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
(h) "Committee" shall mean the Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be constituted
in a manner that satisfies the "non-employee director" standard set forth in
Rule 16b-3.
(i) "Common Stock" shall mean shares of Common Stock, $.001 par value
per share, of American Stone Industries, Inc., including authorized and unissued
shares and treasury shares.
(j) "Company" shall mean American Stone Industries, Inc., a Delaware
corporation, and its direct and indirect subsidiaries.
(k) "Director" shall mean a director of American Stone Industries, Inc.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, and
any law that supersedes or replaces it, as amended from time to time.
(m) "Fair Market Value" of Common Stock shall mean the value of the
Common Stock determined by the Committee, or pursuant to rules established by
the Committee on a basis consistent with regulations under the Code.
(n) "Incentive Stock Option" shall mean a Stock Option that meets the
requirements of Section 422 of the Code.
(o) "Notice of Award" shall mean any notice by the Committee to a
Participant that advises the participant of the grant of an Award or sets forth
terms, conditions, and restrictions applicable to an Award.
(p) "Participant" shall mean any person to whom an Award has been
granted under this Plan.
(q) "Person" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a governmental authority.
(r) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act, or any rule that supersedes or replaces it, as amended from time to time.
-2-
<PAGE> 3
(s) "Stock Option" shall mean an Award granted pursuant to Section 6(b)
hereof.
(t) "Third Party" shall mean any person, group or entity other than
Roulston Ventures Limited Partnership or TMT Masonry, Ltd.
SECTION 3. ELIGIBILITY
All management employees of the Company and its Affiliates, are
eligible for the grant of Awards. The selection of any such persons to receive
Awards will be within the discretion of the Committee. More than one Award may
be granted to the same person.
Notwithstanding the foregoing, (i) no member of the Committee shall be
eligible to receive Awards under the Plan during the period of his or her
service thereon and (ii) any individual that renounces in writing any right that
he or she may have to receive Awards under the Plan shall not be eligible to
receive any Awards hereunder.
SECTION 4. SHARES OF COMMON STOCK AVAILABLE FOR AWARDS; ADJUSTMENT
(a) Number of Shares of Common Stock. The aggregate number of shares of
Common Stock that may be subject to Awards granted under this Plan during the
term of this Plan will be equal to 300,000 shares of Common Stock, subject to
any adjustments made in accordance with the terms of this Section 4.
The assumption of obligations in respect of awards granted by an
organization acquired by the Company, or the grant of Awards under this Plan in
substitution for any such awards, will not reduce the number of shares of Common
Stock available in any fiscal year for the grant of Awards under this Plan.
Shares of Common Stock subject to an Award that is forfeited,
terminated, or canceled without having been exercised will again be available
for grant under this Plan, without reducing the number of shares of Common Stock
available in any fiscal year for grant of Awards under this Plan, except to the
extent that the availability of those shares of Common Stock would cause this
Plan or any Awards granted under this Plan to fail to qualify for the exemption
provided by Rule 16b-3. In addition, any shares of Common Stock that are
retained to satisfy a Participant's withholding tax obligations or that are
transferred to the Company by a Participant to satisfy such obligations or to
pay all or any portion of the exercise price of the Award in accordance with the
terms of the Plan, the Award Agreement or the Notice of Award, may be made
available for reoffering under the Plan to any Participant, except to the extent
that the availability of those shares of Common Stock would cause this Plan or
any Awards granted under this Plan to fail to qualify for the exemption provided
by Rule 16b-3.
(b) No Fractional Shares. No fractional shares of Common Stock will be
issued, and the Committee will determine the manner in which the value of
fractional shares of Common Stock will be treated.
-3-
<PAGE> 4
(c) Adjustment. In the event of any change in the Common Stock by
reason of a merger, consolidation, reorganization, recapitalization, or similar
transaction, including any transaction described under Section 424(a) of the
Code, or in the event of a stock dividend, stock split, or distribution to
stockholders (other than normal cash dividends), the Committee will have
authority to adjust, in any manner that it deems equitable, the number and class
of shares of Common Stock subject to outstanding Awards, the exercise price
applicable to outstanding Awards, and the Fair Market Value of the shares of
Common Stock and other value determinations applicable to outstanding Awards,
including as may be allowed or required under Section 424(a) of the Code.
SECTION 5. ADMINISTRATION
(a) Committee. This Plan will be administered by the Committee. The
Committee will, subject to the terms of this Plan, have the authority to: (i)
select the eligible management employees who will receive Awards; (ii) grant
Awards; (iii) determine the number and types of Awards to be granted to eligible
management employees; (iv) determine the terms, conditions, vesting periods, and
restrictions applicable to Awards, including timing and price; (v) adopt, alter,
and repeal administrative rules and practices governing this Plan; (vi)
interpret the terms and provisions of this Plan and any Awards granted under
this Plan, including, where applicable, determining the method of valuing any
Award and certifying as to the satisfaction of such Awards; (vii) prescribe the
forms of any Notices of Award, Award Agreements, or other instruments relating
to Awards; and (viii) otherwise supervise the administration of this Plan.
(b) Delegation. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause this Plan or any Awards granted under this Plan to fail to qualify for
the exemption provided by Rule 16b-3.
(c) Decisions Final. All decisions by the Committee, and by any other
Person or Persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all Persons.
(d) No Liability. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
SECTION 6. AWARDS
(a) Grant of Awards. The Committee will determine the type or types of
Awards to be granted to each Participant and will set forth in the related
Notice of Award or Award Agreement the terms, conditions, vesting periods, and
restrictions applicable to each Award. Awards may be granted in replacement of,
or in substitution for, other awards granted by the Company, whether or not
granted under this Plan; without limiting the foregoing, if a Participant pays
all or part of the exercise price or taxes associated with an Award by the
transfer of shares of Common Stock, the Committee may, in its
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<PAGE> 5
discretion, grant a new Award to replace the shares of Common Stock that were
transferred. The Company may assume obligations in respect of awards granted by
any Person acquired by the Company or may grant Awards in replacement of, or in
substitution for, any such awards.
(b) Description of Awards. A Participant who is granted an Award shall
have the right to purchase a specified number of shares of Common Stock, during
a specified period, and at a specified exercise price, all as determined by the
Committee. A Stock Option may be an Incentive Stock Option or a Stock Option
that does not qualify as an Incentive Stock Option. In addition to the terms,
conditions, vesting periods, and restrictions established by the Committee,
Incentive Stock Options must comply with the requirements of Section 422 of the
Code. The exercise price of a Stock Option that does not qualify as an Incentive
Stock Option may be more or less than the Fair Market Value of the shares of
Common Stock on the date the Stock Option is granted.
(c) Termination of Awards. Any Award granted under this Plan shall
expire, and the Participant to whom such Award was granted shall have no further
rights with respect thereto, on the fifth anniversary of the date of grant of
such Award, or on such earlier date as may be established by the Committee and
provided in the Notice of Award or Award Agreement with respect to such Award.
SECTION 7. DEFERRAL OF PAYMENT
With the approval of the Committee, the delivery of the shares of
Common Stock subject to an Award may be deferred, either in the form of
installments or a single future delivery. The Committee may also permit selected
Participants to defer the receipt of some or all of their Awards, as well as
other compensation, in accordance with procedures established by the Committee
to assure that the recognition of taxable income is deferred under the Code.
SECTION 8. PAYMENT OF EXERCISE PRICE
The exercise price of a Stock Option may be paid in cash, by the
transfer of shares of Common Stock, or by a combination of these methods, as and
to the extent permitted by the Committee. The Committee may prescribe any other
method of paying the exercise price that it determines to be consistent with
applicable law and the purpose of this Plan.
SECTION 9. TAXES ASSOCIATED WITH AWARDS
Prior to the payment of an Award or upon the exercise or release
thereof, the Company may withhold, or require a Participant to remit to the
Company, an amount sufficient to pay any federal, state, and local taxes
associated with the Award. The Committee may, in its discretion and subject to
such rules as the Committee may adopt, permit a Participant to pay any or all
taxes associated with the Award in cash, by the transfer of shares of Common
Stock, or by a combination of these methods. The Committee may prescribe any
other method to pay taxes that it determines to be consistent with applicable
law and the purpose of this Plan.
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<PAGE> 6
SECTION 10. TERMINATION OF EMPLOYMENT
If the employment of a Participant terminates for any reason, all
unexercised, deferred, and unpaid Awards may be exercisable or paid only in
accordance with rules established by the Committee or as specified in the
particular Award Agreement or Notice of Award. Such rules may provide, as the
Committee deems appropriate, for the expiration, continuation, or acceleration
of the vesting of all or part of the Awards.
SECTION 11. TERMINATION OF AWARDS UNDER CERTAIN CONDITIONS
The Committee may cancel any unexpired, unpaid, or deferred Awards at
any time if the Participant is not in compliance with all applicable provisions
of this Plan or with any Notice of Award or Award Agreement or if the
Participant, without the prior written consent of the Company, engages in any of
the following activities:
(i) Renders services for an organization, or engages in a
business, that is, in the judgment of the Committee, in competition
with the Company.
(ii) Discloses to anyone outside of the Company, or uses for
any purpose other than the Company's business any confidential
information or material relating to the Company, whether acquired by
the Participant during or after employment with the Company, in a
fashion or with a result that the Committee, in its judgment, deems is
or may be injurious to the best interests of the Company.
The Committee may, in its discretion and as a condition to the exercise
of an Award, require a Participant to acknowledge in writing that he or she is
in compliance with all applicable provisions of this Plan and of any Notice of
Award or Award Agreement and has not engaged in any activities referred to in
clauses (i) and (ii) above.
SECTION 12. CHANGE IN CONTROL
In the event of a Change in Control of the Company, the Committee shall
have the right, in its sole discretion, to (i) accelerate the exercisability of
any Stock Options, notwithstanding any limitations set forth in the Plan; (ii)
cancel all outstanding Stock Options in exchange for the kind and amount of
shares of the surviving or new corporation, cash, securities, evidences of
indebtedness, other property or any combination thereof receivable in respect of
one share of Common Stock upon consummation of the transaction in question (the
"Acquisition Consideration") that the Participant would have received had the
Stock Option been exercised prior to such transaction, less the applicable
exercise price therefor; (iii) cause the Participant to have the right
thereafter and during the term of the Stock Option to receive upon exercise
thereof the Acquisition Consideration receivable upon the consummation of such
transaction by a holder of the number of shares of Common Stock that might have
been obtained upon exercise of all or any portion thereof; or (iv) take such
other action as it deems appropriate to preserve the value of the Award to the
Participant. Alternatively, the Committee shall also have the right to require
any purchaser of the Company's assets
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<PAGE> 7
or stock, as the case may be, to take any of the actions set forth in the
preceding sentence as such purchaser may determine to be appropriate or
desirable.
SECTION 13. AMENDMENT, SUSPENSION, OR TERMINATION OF THIS PLAN; AMENDMENT OF
OUTSTANDING AWARDS
(a) Amendment, Suspension, or Termination of this Plan. The Board of
Directors may amend, suspend, or terminate this Plan at any time; provided,
however, that in no event, without the approval of the Company's stockholders,
shall any action of the Committee or the Board of Directors result in:
(i) increasing, except as provided in Section 4(c) hereof, the
maximum number of shares of Common Stock that may be subject to Awards
granted under the Plan;
(ii) making any changes that would cause any option granted
under the Plan as an Incentive Stock Option not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code;
or
(iii) making any change that would eliminate the exemption
provided by Rule 16b-3 for this Plan and for Awards granted under this
Plan.
(b) Amendment of Outstanding Awards. The Committee may, in its
discretion, amend the terms of any Award, prospectively or retroactively, but no
such amendment may impair the rights of any Participant without his or her
consent. The Committee may, in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting of, any Award.
SECTION 14. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED STATES
To the extent that the Committee deems appropriate to comply with
foreign law or practice and to further the purpose of this Plan, the Committee
may, without amending this Plan, (i) establish special rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those established
under this Plan, and (ii) grant Awards to such Participants in accordance with
those rules.
SECTION 15. NONASSIGNABILITY
Unless otherwise determined by the Committee, (i) no Award granted
under the Plan may be transferred or assigned by the Participant to whom it is
granted other than by will, pursuant to the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code, and
(ii) an Award granted under this Plan may be exercised, during the Participant's
lifetime, only by the Participant or by the Participant's guardian or legal
representative. Notwithstanding the foregoing, no Incentive Stock Option may be
transferred or assigned pursuant to a qualified domestic relations order or
exercised, during the Participant's lifetime, by the Participant's guardian or
legal representative.
-7-
<PAGE> 8
SECTION 16. TERMS OF AWARDS AND RELATED AGREEMENTS NEED NOT BE IDENTICAL
The form and substance of Awards, Award Agreements and Notices of
Awards, whether granted at the same or different times, need not be identical.
Subject only to the terms of the Plan, the Committee shall have the authority to
prescribe the terms of any Awards and the provisions of any Award Agreements,
Notices of Award or other instruments entered into with respect to the same; it
being expressly understood that the Committee shall have the authority to
include in any such Award Agreements, Notices of Award or other instruments
relating to Awards, such representations, warranties, covenants and agreements
on behalf of the Company or the participant as it deems necessary or
appropriate, including, without limitation, covenants relating to
non-competition, non-solicitation and non-disclosure of confidential
information.
SECTION 17. GOVERNING LAW
The interpretation, validity, and enforcement of this Plan will, to the
extent not otherwise governed by the Code or the securities laws of the United
States, be governed by the laws of the State of Delaware.
SECTION 18. NO RIGHTS AS EMPLOYEES/STOCKHOLDERS
Nothing in the Plan or in any Award Agreement or Notice of Award shall
confer upon any Participant any right to continue in the employ of the Company
or an Affiliate, or to be entitled to receive any remuneration or benefits not
set forth in the Plan or such Award Agreement or Notice of Award, or to
interfere with or limit either the right of the Company or an Affiliate to
terminate the employment of such Participant at any time. Nothing contained in
the Plan or in any Award Agreement or Notice of Award shall be construed as
entitling any Participant to any rights of a stockholder as a result of the
grant of an Award until such time as shares of Common Stock are actually issued
to such Participant pursuant to the exercise of a Stock Option.
SECTION 19. EFFECTIVE AND TERMINATION DATES
(a) Effective Date. This Plan was approved by the Board of Directors on
April 22, 1998, and becomes effective on June 24, 1998, subject to stockholder
approval of the Plan at the Annual Meeting of Stockholders to be held on June
24, 1998.
(b) Termination Date. This Plan will continue in effect until midnight
on June 24, 2008; provided, however, that Awards granted on or before that date
may extend beyond that date and restrictions and other terms and conditions
imposed on any Award granted on or before that date may extend beyond such date.
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<PAGE> 1
EXHIBIT 10.2
AMERICAN STONE INDUSTRIES, INC.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1. PURPOSE
The American Stone Industries, Inc. 1998 Non-employee Director Stock
Option Plan, as the same may be amended (the "Plan"), is designed to attract and
retain persons of exceptional ability to serve as members of the Board of
Directors of American Stone Industries, Inc. (the "Company"), and to align the
interests of the Company's non-employee Directors with that of the stockholders
in enhancing the value of the Company's Common Stock.
SECTION 2. ELIGIBILITY
Directors of the Company who are not employees of the Company
("Eligible Directors") and who are Directors of the Company on or after the date
the Plan is approved by a majority of the stockholders of the Company shall be
eligible to participate in the Plan. Each Eligible Director to whom options are
granted shall be a participant ("Participant") under the Plan.
SECTION 3. SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN
(a) Number of Shares of Common Stock. The aggregate number of shares of
Common Stock, par value $.001 per share (the "Common Stock"), that may be
subject to options granted under the Plan during the term of the Plan will be
equal to 300,000 shares of Common Stock, subject to any adjustments made in
accordance with the terms of this Section 3.
The assumption of obligations in respect of awards granted by an
organization acquired by the Company, or the grant of options under the Plan in
substitution for any such awards, will not reduce the number of shares of Common
Stock available in any fiscal year for the grant of options under the Plan.
Shares of Common Stock subject to an option that is forfeited,
terminated, or canceled without having been exercised will again be available
for grant under the Plan, without reducing the number of shares of Common Stock
available in any fiscal year for grant of options under the Plan, except to the
extent that the availability of those shares of Common Stock would cause the
Plan or any options granted under the Plan to fail to qualify for the exemption
provided by Rule 16b-3. In addition, any shares of Common Stock that are
retained to satisfy a Participant's withholding tax obligations or that are
transferred to the Company by a Participant to satisfy such obligations in
accordance with the terms of the Plan may be made available for reoffering under
the Plan to any Participant, except to the extent that the availability of those
shares of Common Stock would cause the Plan or any options granted under the
Plan to fail to qualify for the exemption provided by Rule 16b-3.
(b) No Fractional Shares. No fractional shares of Common Stock will be
issued, and the Committee will determine the manner in which the value of
fractional shares of Common Stock will be treated.
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<PAGE> 2
(c) Adjustment. In the event of any change in the Common Stock by
reason of a merger, consolidation, reorganization, recapitalization, or similar
transaction, including any transaction described under Section 424(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), or in the event of a
stock dividend, stock split, or distribution to stockholders (other than normal
cash dividends), the Committee will have authority to adjust, in any manner that
it deems equitable, the number and class of shares of Common Stock subject to
outstanding options, the exercise price applicable to outstanding options, and
the Fair Market Value (as defined in Section 6.2 herein) of the shares of Common
Stock and other value determinations applicable to outstanding options,
including as may be allowed or required under Section 424(a) of the Code.
SECTION 4. ADMINISTRATION
(a) Committee. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company or such
successor committee of the Board of Directors that is designated by the Board of
Directors to administer the Plan. The Committee will constituted in a manner
that satisfies the "non-employee director" standard set forth in Rule 16b-3(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) Delegations. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause the Plan or any options granted under the Plan to fail to qualify for
the exemption provided by Rule 16b-3.
(c) Decisions Final. All decisions by the Committee, and by any other
person or persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all persons.
(d) No Liability. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
SECTION 5. OPTION GRANTS
5.1 Options granted pursuant to the Plan shall be nonqualified options
that are not intended to meet the requirements of Section 422 of the Code.
5.2 Eligible Directors shall automatically be granted nonqualified
stock options under the Plan as follows:
(a) Automatic Grant of Options. Immediately following the
annual meeting of the stockholders of the Company to be held on June 24, 1998
and at each successive annual meeting of stockholders thereafter, each Eligible
Director who is elected or reelected to serve as a Director at such annual
meeting shall receive an option to purchase 1,500 shares of Common Stock on the
date of the annual meeting. Notwithstanding the foregoing, the Chairman of the
2
<PAGE> 3
Board of Directors of the Company (the "Chairman") shall receive an option to
purchase 3,000 shares of Common Stock at each annual meeting of stockholders, in
lieu of the amount described in the preceding sentence.
(b) Option Grants for Meeting Attendance. Each Eligible
Director shall receive an option to purchase 150 shares of Common Stock for each
meeting of the Board of Directors and each meeting of any committee of the Board
of Directors that such Eligible Director attends, which option shall be granted
on the date of such meeting. Notwithstanding the foregoing, the Chairman shall
receive an option to purchase 300 shares of Common Stock at each meeting of the
Board of Directors and any committee of the Board of Directors, in lieu of the
amount described in the preceding sentence.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS
6.1 Exercise of Options.
(a) Each option granted under the Plan shall become
exercisable on the first anniversary of the date such option was granted,
subject to the provisions of Section 7 hereof.
(b) Notwithstanding the provisions of paragraph (a) above, an
option granted to any Participant shall become immediately exercisable in full
upon the first to occur of:
(i) the death of the Participant, in which case the
option may be exercised by the Participant's executor or
administrator, or if not so exercised, by the legatees or
distributees of his or her estate or by such other person or
persons to whom the Participant's rights under the option
shall pass by will or by the applicable laws of descent and
distribution;
(ii) such time as the Participant ceases to be a
Director of the Company by reason of his or her permanent
disability;
(iii) such time as the Participant ceases to be a
Director of the Company as a result of retirement from the
Board of Directors on or after attaining age 65; or
(iv) such time as a Participant ceases to be eligible
to participate in the Plan by reason of his or her becoming an
employee of the Company or any of its subsidiaries.
(c) In the event that a Participant ceases to be a Director of
the Company for any reason other than those specified in paragraph 6.1(b) prior
to the time the Participant's option becomes fully exercisable, the option will
terminate on the date the Participant ceases to be a Director of the Company
with respect to the shares as to which the option is not then exercisable
without further notice or action on the part of the Company.
3
<PAGE> 4
(d) Options granted under the Plan shall expire five years
from the date on which the option is granted, unless terminated earlier in
accordance with the Plan, subject to the following:
(i) in the event a Participant ceases to be a
Director of the Company by reason of an event described in
Section 6.1(b)(i), any option granted to such Participant
hereunder shall expire one year from the date of the death of
the Participant, but in no event later than the day preceding
the fifth anniversary of the date of the grant of such option;
and
(ii) In the event that a Participant ceases to be a
Director of the Company by any reason other than that
described in Section 6.1(b)(i), and his or her option has
become exercisable in whole or in part, such option shall
remain exercisable in whole or in part, as the case may be, in
accordance with the terms hereof for a period of 90 days from
the date the Participant ceases to be a Director, but in no
event later than the day preceding the fifth anniversary of
the date of grant of such option.
6.2 Exercise Price. The exercise price of each share of Common Stock
subject to an option shall be the "Fair Market Value" of a share of Common Stock
on the date such option is granted. "Fair Market Value" means the value
determined on the basis of the good faith determination of the Committee,
without regard to whether the Common Stock is restricted or represents a
minority interest, pursuant to the applicable method described below:
(a) If the Common Stock is listed on a national securities
exchange or quoted on The Nasdaq Stock Market ("NASDAQ"), the closing price of
the Common Stock on the relevant date, as reported by the principal national
exchange on which such shares are traded (in the case of an exchange) or by the
NASDAQ, as the case may be;
(b) If the Common Stock is not listed on a national securities
exchange or quoted on the NASDAQ but is actively traded in the over-the-counter
market, the average of the closing bid and asked prices for the Common Stock on
the relevant date, or the most recent preceding date for which such quotations
are reported; and
(c) If, on the relevant date, the Common Stock is not publicly
traded or reported as described in (a) or (b), the value determined in good
faith by the Committee.
6.3 Payment of Exercise Price; Tax Withholding.
(a) Subject to the terms and conditions of the Plan and the
documentation of the options pursuant to Section 6.5 hereof, an option granted
hereunder shall, to the extent then exercisable, be exercisable in whole or in
part by giving written notice to the Company's Secretary stating the number of
shares with respect to which the option is being exercised, accompanied by
payment in full for such shares. Payment in full or in part may also be made by
delivering Common Stock already owned by the Participant having a total Fair
Market Value on
4
<PAGE> 5
the date of such delivery equal to the exercise price or by any combination of
the foregoing. No shares of Common Stock will be issued until full payment
therefor has been made.
(b) The Participant shall pay the Company an amount sufficient
to cover withholding required by law for any federal, state, local or foreign
taxes, if any, in connection with the exercise of an option hereunder. A
Participant may elect in lieu of paying cash to deliver shares of Common Stock
or direct the Company that shares of Common Stock be withheld to satisfy
required tax withholding, and such shares shall be valued at the Fair Market
Value as of the exercise date and the Board shall determine the timing and other
terms and conditions in which the use of shares of Common Stock to satisfy tax
withholding may take place.
6.4 Rights as a Stockholder. No person will have any rights of a
stockholder as to shares of Common Stock subject to an option until, after
proper exercise of the option or other action required, such shares of Common
Stock have been recorded on the Company's official stockholder records as having
been issued or transferred. Upon exercise of the option or any portion thereof,
the Company will have thirty (30) days in which to issue the shares of Common
Stock, and the Participant will not be treated as a stockholder for any purpose
whatsoever prior to such issuance. No adjustment will be made for cash dividends
or other rights for which the record date is prior to the date such shares are
recorded as issued or transferred in the Company's official stockholder records,
except as provided herein or in an Stock Option Agreement (as defined below).
6.5 Documentation of Option Grants. Option grants shall be evidenced by
written instruments prescribed by the Board from time to time (each a "Stock
Option Agreement"). The instruments may be in the form of agreements to be
executed by both the Participant and the President or Secretary of the Company
or in the form of certificates, letters or similar instruments, which need not
be executed by the Participant but acceptance of which will evidence agreement
to the terms of the grant.
6.6 Nontransferability of Options. Unless otherwise determined by the
Committee, (i) no option granted under the Plan may be transferred or assigned
by the Participant to whom it is granted other than by will, pursuant to the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined in the Code, and (ii) an option granted under the Plan may be
exercised, during the Participant's lifetime, only by the Participant or by the
Participant's guardian or legal representative.
SECTION 7. CHANGE IN CONTROL
(a) In the event of a Change in Control (as defined below) of the
Company, the Committee shall have the right, in its sole discretion, to (i)
accelerate the exercisability of any options granted hereunder, notwithstanding
any limitations set forth in the Plan; (ii) cancel all outstanding options
granted hereunder in exchange for the kind and amount of shares of the surviving
or new corporation, cash, securities, evidences of indebtedness, other property
or any combination thereof receivable in respect of one share of Common Stock
upon consummation of the transaction in question (the "Acquisition
Consideration") that the Participant would have
5
<PAGE> 6
received had the option been exercised prior to such transaction, less the
applicable exercise price therefor; (iii) cause the Participant to have the
right thereafter and during the term of the option, to receive upon exercise
thereof the Acquisition Consideration receivable upon the consummation of such
transaction by a holder of the number of shares of Common Stock that might have
been obtained upon exercise of all or any portion thereof; or (iv) take such
other action as it deems appropriate to preserve the value of the option to the
Participant. Alternatively, the Committee shall also have the right to require
any purchaser of the Company's assets or stock, as the case may be, to take any
of the actions set forth in the preceding sentence as such purchaser may
determine to be appropriate or desirable.
(b) "Change in Control" shall include, but not be limited to:
(i) the first purchase of shares by any person, group or entity other than
Roulston Ventures Limited Partnership or TMT Masonry, Ltd. (a "Third Party")
pursuant to a tender offer or exchange (other than a tender offer or exchange by
the Company) for all or part of the Company's Common Stock of any class or any
securities convertible into such Common Stock; (ii) the receipt by the Company
of a Schedule 13D or other advice indicating that a Third Party is the
"beneficial owner" (as that term is defined in Rule 13d-3 promulgated under the
Exchange Act) of 50 percent (50%) or more of the Company's Common Stock
calculated as provided in paragraph (d) of said Rule 13d-3; (iii) the date of
approval by stockholders of the Company of an agreement providing for any
consolidation or merger of the Company in which the Company will not be the
continuing or surviving corporation or pursuant to which shares of capital stock
of any class, or any securities convertible into such capital stock, of the
Company would be converted into cash, securities, or other property, other than
a merger of the Company in which the holders of common stock of all classes of
the Company immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger; (iv) the date of the approval by stockholders of the Company of any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company; (v)
the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or (vi) such other event as the
Committee shall in its sole and absolute discretion, deem to be a "Change in
Control" for purposes of the Plan or any Stock Option Agreement entered into
pursuant hereto. The manner of application and interpretation of the foregoing
provisions shall be determined by the Committee in its sole and absolute
discretion.
SECTION 8. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN; AMENDMENT
OF OUTSTANDING OPTIONS
(a) Amendment, Suspension, or Termination of the Plan. The Board of
Directors may amend, suspend, or terminate the Plan at any time; provided,
however, that in no event, without the approval of the Company's stockholders,
shall any action of the Committee or the Board of Directors result in:
(i) increasing, except as provided in Section 3(c) hereof, the
maximum number of shares of Common Stock that may be subject to options
granted under the Plan; or
6
<PAGE> 7
(ii) making any change that would eliminate the exemption
provided by Rule 16b-3 for the Plan and for options granted under the
Plan.
(b) Amendment of Outstanding Options. The Committee may, in its
discretion, amend the terms of any option, prospectively or retroactively, but
no such amendment may impair the rights of any Participant without his or her
consent. The Committee may, in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting of, any option.
SECTION 9. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and permitted assigns of a
Participant, including but not limited to the estate of such Participant and the
executor, administrator or trustee of such estate, the guardian or legal
representative of the Participant.
SECTION 10. GOVERNING LAW
The interpretation, validity, and enforcement of the Plan will, to the
extent not otherwise governed by the Code or the securities laws of the United
States, be governed by the laws of the State of Delaware.
SECTION 11. NO RIGHT TO REELECTION
Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any Non-employee Director for reelection by the
Company's stockholders, nor confer upon any Non-employee Director the right to
remain a member of the Board for any period of time, or at any particular rate
of compensation.
SECTION 12. EFFECTIVE AND TERMINATION DATES
(a) Effective Date. The Plan was approved by the Board of Directors on
April 22, 1998, and becomes effective on June 24, 1998, subject to stockholder
approval of the Plan at the Annual Meeting of Stockholders to be held on June
24, 1998.
(b) Termination Date. The Plan will continue in effect until midnight
on June 24, 2008; provided, however, that Awards granted on or before that date
may extend beyond that date and restrictions and other terms and conditions
imposed on any Award granted on or before that date may extend beyond such date.
7
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<INTEREST-EXPENSE> 58,492
<INCOME-PRETAX> 79,047
<INCOME-TAX> 0
<INCOME-CONTINUING> 79,047
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,047
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
