SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as
permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE QUANTUM GROUP, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount of which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:<PAGE>
THE QUANTUM GROUP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 27, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of
The Quantum Group, Inc., a Nevada corporation, (the "Company") will be held
Friday, June 27, 1997, at 2:00 p.m., local time, at the executive offices
of the Company located at Park Irvine Business Center, 14771 Myford Road,
Building B, Tustin, California 92780, for the following purposes, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To elect the following directors to serve for the ensuing year and
until their successors are duly elected and qualified: Ehrenfried Liebich,
John F. Pope and Keith J. Fryer.
2. To approve of a one (1) for three (3) reverse split of the issued
and outstanding common shares of the Company.
3. To approve the 1997 Stock Option Plan of the Company.
4. To amend the Articles of Incorporation to create a class of
preferred Stock, to consist of 5,000,000 shares which may be issued in
series or classes and with such other designation of rights and preferences
as may be determined by the Board of Directors.
5. To transact such other business as may properly come before the
meeting, and, if necessary, to adjourn the meeting from time to time.
Shareholders entitled to notice of and to vote at the Annual Meeting
of Shareholders are shareholders of record at the close of business June 1,
1997, as fixed by action of the Board of Directors.
The Company's Proxy Statement is submitted herewith.
Dated: June 6, 1997
By Order of the Board of Directors
/s/ Ehrenfried Liebich
___________________________________
Ehrenfried Liebich, President<PAGE>
THE QUANTUM GROUP, INC.
Park Irvine Business Center
14771 Myford Road, Building B
Tustin, California 92780
PROXY STATEMENT FOR 1997
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited on behalf of The Quantum Group, Inc.
(the "Company") for use at the Annual Meeting of Shareholders to be held on
Friday, June 27, 1997, at 2:00 p.m., local time, and at any adjournment
thereof, for the purposes set forth herein and in the accompanying Notice
of Annual Meeting of Shareholders. The Annual Meeting will be held at the
Company's principal executive office at 14771 Myford Road, Building B,
Tustin, California 92780. The Company's telephone number at that address
is (714) 508-1470.
A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM 10-KSB WILL ACCOMPANY
THIS PROXY STATEMENT.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE
Shareholders of record at the close of business on June 1, 1997 (the
"Record Date") are entitled to notice of the meeting and to vote at the
meeting. As of the Record Date, 9,459,696 shares of the Company's Common
Stock were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary
of the Company a written notice of revocation or a duly executed proxy
bearing a later date or by attending the Annual Meeting and voting in
person.
VOTING AND SOLICITATION
Each shareholder is entitled to one vote for each share of Common
Stock on all matters presented at the meeting. There is no provision to
allow cumulative voting of shares for the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Inspector of Elections (the "Inspector") with the
assistance of the Company's transfer agent. The Inspector will also
determine whether or not a quorum is present. In general, the affirmative
vote of a majority of shares present in person or represented by proxy at a
duly held meeting at which a quorum is present is required under Nevada law
for approval of proposals presented to shareholders. The Bylaws provide
that a quorum of stockholders consists of one third (1/3) of the voting
power entitled to vote and present or represented by proxy at the meeting.
The Inspector will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but
will not treat abstentions as votes in favor of approving any matter
submitted to shareholders for a vote. Any proxy that is returned using the
form of proxy enclosed and that is not marked as to a particular item will
be in favor of each matter set forth in the Proxy and, as the proxy holders
deem advisable, on other matters that may come before the meeting, as the
case may be with respect to the item not marked.
<PAGE>
The cost of soliciting proxies will be borne by the Company. The
Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may also be solicited by
certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, telegram, letter or
facsimile.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The Company anticipates that the next Annual Meeting of Shareholders
will be held in June of 1998. Therefore, proposals of shareholders of the
Company which are intended to be presented by such shareholders at the
Company's 1998 Annual Meeting of Shareholders must be received by the
Company no later than February 1998, in order to be considered for
inclusion in the proxy statement and form of proxy relating to that
meeting.
PRINCIPAL SHARE OWNERSHIP
The following table sets forth the beneficial ownership of the
Company's Common Stock as of March 31, 1997, by each director, by all
directors and officers of the Company as a group, and by all persons known
to the Company to be the beneficial owners of more than 5% of the Company's
Common Stock:
<TABLE>
<CAPTION> Amount and
Nature of
Title of Name of Beneficial Percentage
Class Beneficial Owner Ownership of Class
- -------- -------------------------- ------------- -----------
<S> <C> <C> <C>
Common Ehrenfried Liebich 3,962,778 41.89%
14771 Myford Road
Building B
Tustin, California 90744
Common Keith J. Fryer 5,200 (1) .0005%
14771 Myford Road
Building B
Tustin, California 90744
Common John F. Pope 131,000 (2) .013%
14771 Myford Road
Building B
Tustin, California 90744
Common Mr. Herz Thomas Aguera 1,500,000 15.86%
331 Rio Grande Street, #B
Salt Lake City, Utah 84101
2<PAGE>
- -----------------------------------------------------------------------------
Common All Officers, Directors
as a Group: 4,098,978 43.33%
(3 persons)
- ------------------------------------------------------------------------------
</TABLE>
(1) These shares are owned by Keith Fryer Associates California, Inc. Mr.
Fryer is the owner operator of that business and is deemed to be the
beneficial owner of these shares because he holds the sole voting and
investment power regarding such shares.
(2) Mr. Pope's total shares include 106,000 shares held of record by
Parallex Capital Corporation which he may be deemed to be a beneficial
owner of the shares because he has shared investment power of the shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Directors and executive officers are required to comply with
section 16(a) of the Securities Exchange Act of 1934, which requires
generally that such persons file reports regarding ownership of and
transactions in securities of the Company on Forms 3, 4, and 5. A Form 3
is an initial statement of ownership of securities, which is to be filed by
the officers and directors owning shares in the Company within 10 days
after the effective date of the Company's filing on Form 10-SB. Form 4
is to report changes in beneficial ownership and is due on or before the
tenth day of the month following any month in which they engage in any
transaction in the Company's common stock. Form 5 covers annual statement
of changes in beneficial ownership which is due 90 days after the fiscal
year end of the Company. Messrs. Liebich, Pope and Fryer were
inadvertently late in filing reports on Form 3 and Form 5 for the year
ended December 31, 1995. And Mr. Fryer inadvertently was late in filing a
report on Form 4 regarding the sale of 4,800 common shares of the Company
in 1996.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information
concerning the compensation paid or accrued over each of the Registrant's
last three completed fiscal years to the Company's, or its principal
subsidiaries, chief executive officers during such period (as determined at
December 31, 1996 the end of the Registrant's last completed fiscal year).
<TABLE>
<CAPTION>
Summary Compensation Table
----------------------------
Annual Compensation
Name and Principal Other Annual
Position Year Salary Bonus Compensation
- --------------------- ----- ------- ------ --------------
<S> <C> <C> <C> <C>
Ehrenfried Liebich 1996 -0- -0- -0-
President/Director 1995 -0- -0- -0-
1994 -0- -0- -0-
Keith Fryer (1) 1996 65,321 -0- -0-
Vice President/Director 1995 77,950 -0- -0-
1994 60,000 -0- -0-
John F. Pope (2) 1996 45,500 -0- -0-
Vice President/Secretary 1995 46,850 -0- -0-
Treasurer/Director 1994 94,450 -0- -0-
Markus J. Lenger 1996 23,944 -0- -0-
President 1995 -0- -0- -0-
1994 -0- -0- -0-
- ------------------------------------------------------------------------------
<CAPTION>
All
Stock Options/ Other
Name and Year Awards SARs LTIP Payout
- ----------------- ------ -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
Ehrenfried Libech 1996 -0- -0- -0- -0-
1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-
Keith Fryer 1996 -0- -0- -0- 65,415
1995 -0- -0- -0- -0-
1994 -0- -0- -0- 80,000
John F. Pope 1996 -0- -0- -0- -0-
1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-
Markus J. Lenger 1996 -0- -0- -0- -0-
1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-
- ------------------------------------------------------------------------------
</TABLE>
(1) Keith Fryer provided consulting services to the Company through
Keith Fryer Associates California, Inc., his private consulting business.
The salary figures represent amounts paid by the Company to Keith Fryer
Associates California, Inc. These services were provided on terms at least
as favorable as could have been negotiated with an independent third party.
The "other compensation" paid to Keith Fryer was in the form of commissions
for license and equipment sales.
(2) John Pope provided consulting services to the Company through his
private consulting business, John F. Pope, Inc. The salary figures represent
amounts paid by the Company to John F. Pope, Inc. For Mr. Pope's services to
the Company as an officer and director overseeing the financial affairs of
the Company. These services were provided on terms at least as favorable as
could have been negotiated with an independent third party.
BONUSES AND DEFERRED COMPENSATION
The Company does not have any bonus, deferred compensation, employee
benefit, or retirement plan. Such plans may be adopted by the Company at
such time as deemed reasonable by the board of directors. The Company does
not have a compensation committee, all decisions regarding compensation are
determined by the board of directors.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT
There are no compensatory plans or arrangements, including payments to
be received from the Company, with respect to any person named in cash
compensation set out above which would in any way result in payments to any
such person because of his resignation, retirement, or other termination of
such person's employment with the company or its subsidiaries, or any change
in control of the Company, or a change in the person's responsibilities
following a changing in control of the Company.
- -----------------------------------------------------------------------------
PROPOSAL ONE:
ELECTION OF DIRECTORS
- ----------------------------------------------------------------------------
4 <PAGE>
A board of three (3) directors is to be elected at the Annual Meeting of
Shareholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's three nominees named below, all of
whom are presently directors of the Company. In the event that any nominee
of the Company is unable or declines to serve as a director at the time of
the Annual Meeting of Shareholders, the proxies will be voted for any nominee
who shall be designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline
to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until
a successor has been elected and qualified.
<TABLE>
<CAPTION>
Name Age Director Since Principal Occupation
- ------------------ ---- -------------- -------------------------
<S> <C> <C> <C>
Ehrenfried Liebich 54 March 1989 President of the Company
Keith J. Fryer 47 March 1995 Vice President of the Company
John F. Pope 53 March 1989 Certified Management Accountant
</TABLE>
Set forth below is certain biographical information regarding each of
the Company's nominees:
EHRENFRIED LIEBICH is the President and a Director of the Company. Mr.
Liebich first became involved with the Company in March 1989. Mr. Liebich
was born and educated in Germany. After his formal secondary education in
Germany he joined the Merchant Marine, which he left as a Ship's Officer with
the Court Line, London, U.K. Mr. Liebich immigrated to Canada in 1965 where
he started various businesses in the areas of real estate, investment,
chemical distribution and electronics. In March of 1989 he became the
President, a Director and controlling shareholder of the Company.
KEITH J. FRYER is a Vice President and a Director of the Company. Mr.
Fryer first became involved with the Company in August 1992. Mr. Fryer was
educated in England and graduated from the Cheshire College of Further
Education. He also studied at several UK colleges of management and became
a member of the Institute of Marketing London in 1974. Mr. Fryer became a
chartered member of the Institute in 1989. He has been a member of the
Marketing Society London since 1989. He is also a life member of the Wig &
Pen Club, The Strand, London. Mr. Fryer successfully operated Keith Fryer
Associates England, a business he formed in 1986, that provided marketing
consulting services in various business areas. In 1992, Mr. Fryer
established Keith Fryer Associates California, Inc., a marketing consulting
firm. Mr. Fryer became a Vice President and Director of the Company in March
1995.
JOHN F. POPE is the Secretary, Treasurer, a Vice President and a
Director of the Company. Mr. Pope first became involved with the Company in
March 1989. Mr. Pope received a B.S. degree in business administration from
Seton Hall University in 1963. He has also done post-graduate study at New
York University and University of Miami. Mr. Pope has been certified as a
Certified Management Accountant by the Institute of Management Accountants.
From November 1987 to the present, Mr. Pope has been self-employed as an
independent financial consultant to various public and private companies.
Mr. Pope became a Company Director in March 1989. He became the Secretary,
Treasurer and a Vice President of the Company in January 1991.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
5<PAGE>
- ----------------------------------------------------------------------------
PROPOSAL TWO:
REVERSE SPLIT
- ----------------------------------------------------------------------------
The Board of Directors of the Company has adopted a resolution to make
a one for three reverse split of the issued and outstanding shares of the
Company. There is currently a total of 9,459,696 shares issued and
outstanding in the Company. In addition, the Board of Directors has adopted
a 1997 Stock Option Plan which authorizes the issuance of 3,000,000 shares
pursuant to the Plan. If the reverse split of the shares, as proposed by the
Board of Directors is given effect, the outstanding shares of the Company
shall be reduced to 3,153,232 shares and the shares authorized for issuance
under the 1997 Stock Option Plan will be reduced to 1,000,000 shares. Under
the terms of the resolution as adopted by the Board of Directors, the
authorized common shares of the Company shall remain at 50,000,000 shares
with a par value of $.001 per share.
Although the laws of the State of Nevada authorize the Board of
Directors to effect a reverse split of the issued and outstanding shares
without approval of the shareholders, upon the advise of the Company's legal
counsel this matter is being submitted to a vote of the shareholders prior to
filing a certificate with the Secretary of State of Nevada to effect the
reverse split of the shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
- -----------------------------------------------------------------------------
PROPOSAL THREE:
STOCK OPTION PLAN
- ----------------------------------------------------------------------------
The Board of Directors has approved a Stock Option Plan designated as
The Quantum Group, Inc. 1997 Stock Option Plan (the "Plan").
The purpose of the Plan will be to enable the Company to offer to its
key employees, officers, directors, consultants and sales representatives an
opportunity to acquire a proprietary interest in the Company.
The Stock Option Plan will be administered by the Board of Directors of
the Company or a Committee as may be determined by the Board of Directors.
Pursuant to the Plan the Board of Directors or Committee will have authority
to grant stock options, stock appreciation rights, restricted stock awards,
deferred stock, stock reload options and/or other stock based awards.
The total number of shares of common stock reserved and available for
distribution under the plan shall be 3,000,000 shares. This number of shares
however, if the reverse split of the stock is approved by shareholders, will
be reduced to 1,000,000 shares.
6<PAGE>
The Plan provides that two types of stock options may be granted under
the Plan. The first in an Incentive Stock Option and the second is a
Non-qualified Stock Option. An Incentive Stock Option may be granted under the
Plan only within the ten-year period commencing from the effective date of
the Plan and may only be exercised within ten years of the date of the grant
or five years in the case of an Incentive Stock Option granted to a person
who at the time of the grant owns shares equal to 10% or more of the total
combined voting powers of all classes of stock of the Company.
Stock options granted under the Plan will be granted with exercise
prices of not less than 100% of the market value of the stock unless, the
Incentive Stock Option is granted to a 10% stockholder of the Company in
which case the exercise price shall not be less than 110% of the fair market
value of the stock at the time of the grant. In the case of an Incentive
Stock Option, the aggregate market value of the stock determined at the time
of the grant may not exceed $100,000 in any calendar year.
The Plan shall be effective as of the date on which the shareholders
approve the Plan. The Plan shall continue to remain effective until such
time no further awards may be granted and all of the awards granted under the
Plan are no longer outstanding.
The shares of stock to be distributed under the plan will not have been,
as of the effective date, registered under the Securities Act of 1933, as
amended, or any applicable state or foreign securities laws and the Company
has no obligation to any option holder or shareholder to register the stock
or to assist such person in obtaining an exemption from various registration
requirements.
Management of the Company believes that the shares underlying options
subject to the Plan may be registered on Form S-8 adopted by the Securities
and Exchange Commission and that such shares may also be issued based upon
exemptions from registration under the Securities Act pursuant to Section
4(2) and Regulation D promulgated by the Securities and Exchange Commission.
The Board of Directors has not granted any options or rights to acquire
shares pursuant to the Plan and no such grants will be made until after
approval of the Plan and the Board of Directors has determined that it is in
the best interest of the Company to issue options under the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
- -----------------------------------------------------------------------------
PROPOSAL FOUR:
PREFERRED STOCK
- ----------------------------------------------------------------------------
It is proposed that the Articles of Incorporation be amended to create
a class of preferred shares. Currently the Company is authorized to issue up
to 50,000,000, $.001 par value common shares. In the opinion of management
creation of a class of preferred shares of stock will create additional
options to the Company to obtain additional financing for the expansion and
growth of Company's operations. As proposed, the class of preferred shares
would authorize the Board of Directors to issue in series or classes and to
designate for each such series or class, the relative rights and preferences
of such series on a case by case basis.
7<PAGE>
Pursuant to laws of the State of Nevada and the Company's Articles of
Incorporation and Bylaws, the Board of Directors is authorized to issue all
capital shares of the Company without the approval of the shareholders.
Currently, the Board of Directors does not have any present intent to issue
any preferred shares of stock of the Company and is only proposing to create
such class of preferred stock to facilitate expansion and growth of the
Company in the future.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THIS PROPOSAL.
- ----------------------------------------------------------------------------
PROPOSAL FIVE:
OTHER MATTERS
- -----------------------------------------------------------------------------
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent as
the Company may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ehrenfried Liebich
Ehrenfried Liebich, President
June 16, 1997
8<PAGE>
THE QUANTUM GROUP, INC.
1997 STOCK OPTION PLAN
SECTION 1. PURPOSE; DEFINITIONS.
1.1 Purpose. The purpose of The Quantum Group, Inc. (the "Company")
1997 Stock Option Plan (the "Plan") is to enable the Company to offer to its
key employees, officers, directors, consultants and sales representatives
whose past, present and/or potential contributions to the Company and its
Subsidiaries have been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary interest in the Company.
The various types of long-term incentive awards which may be provided under
the Plan will enable the Company to respond to changes in compensation
practices, tax laws, accounting regulations and the size and diversity of its
business.
1.2 Definitions. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.
(d) "Committee" means the Stock Option Committee of the Board or
any other committee of the Board, which the Board may designate to administer
the Plan or any portion thereof. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, par
value $.001 per share.
(f) "Company" means The Quantum Group, Inc., a corporation
organized under the laws of the State of Nevada.
(g) "Deferred Stock" means Stock to be received, under an award
made pursuant to Section 9, below, at the end of a specified deferral period.
(h) "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 13.1,
below.
(j) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means,
as of any given date: (i) if the Common Stock is listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq
SmallCap Market, the last sale price of the Common Stock in the principal
trading market
1<PAGE>
for the Common Stock on the last trading day preceding the date of grant of
an award hereunder, as reported by the exchange or Nasdaq, as the case may
be; (ii) if the Common Stock is not listed on a national securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is
traded in the over-the-counter market, the closing bid price for the Common
Stock on the last trading day preceding the date of grant of an award
hereunder for which such quotations are reported by the OTC Bulletin Board or
the National Quotation Bureau, Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Committee
shall determine, in good faith.
(k) "Holder" means a person who has received an award under the
Plan.
(l) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section
422 of the Code.
(m) "Nonqualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 10,
below, that is valued in whole or in part be reference to, or is otherwise
based upon, Stock.
(p) "Parent" means any present or future parent corporation of the
Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means The Quantum Group, Inc. 1997 Stock Option Plan,
as hereinafter amended from time to time.
(r) "Restricted Stock"means Stock, received under an award made
pursuant to Section 8, below, that is subject to restrictions under said
Section 8.
(s) "SAR Value" means the excess of the Fair Market Value (on the
exercise date) of the number of shares for which the Stock Appreciation Right
is exercised over the exercise price that the participant would have
otherwise had to pay to exercise the related Stock Option and purchase the
relevant shares.
(t) "Stock" means the Common Stock of the Company, par value $.001
per share.
(u) "Stock Appreciation Right" means the right to receive from the
Company, on surrender of all or part of the related Stock Option, without a
cash payment to the Company, a number of shares of Common Stock equal to the
SAR Value divided by the exercise price of the Stock Option.
2<PAGE>
(v) "Stock Option" or "Option" means any option to purchase shares
of Stock which is granted pursuant to the Plan.
(w) "Stock Reload Option" means any option granted under Section
6.3, below, as a result of the payment of the exercise price of a Stock
Option and/or the withholding tax related thereto in the form of Stock owned
by the Holder or the withholding of Stock by the Company.
(x) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by the Board
or a Committee. Committee members shall serve for such terms as the Board
may in each case determine, and shall be subject to removal at any time by
the Board.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4, below, to award, pursuant to the terms of the Plan:
(i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock,
(iv) Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based
Awards. For purposes of illustration and not of limitation, the Committee
shall have the authority (subject to the express provisions of this Plan):
(a) to select the officers, key employees, directors, consultants
and sales representatives of the Company or any Subsidiary to whom Stock
Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Reload
Stock Options and/or Other Stock-Based Awards may from time to time be
awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations,
and any vesting, exchange, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions, as the Committee shall
determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with
or apart from other equity awarded under this Plan and cash awards made by
the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan
under such rules and procedures as the Committee may establish, including the
crediting of interest on deferred amounts denominated is cash and of dividend
equivalents on deferred amounts denominated in Stock;
3<PAGE>
(f) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new
awards of any other type for previously granted awards of the same type,
which previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 4 and 12, below, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any award issued under the Plan (and to determine
the form and substance of all Agreements relating thereto), to the otherwise
supervise the administration of the Plan. Subject to Section 12, below, all
decisions made by the Committee pursuant to the provisions of the Plan shall
be made in the Committee's sole discretion and shall be final and binding
upon all persons, including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options (including but limited to Stock Reload Options or Stock Appreciation
rights granted in conjunction with an Incentive Stock Option) or any
Agreement providing for Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be
so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive
Stock Option under such Section 422.
SECTION 3. STOCK SUBJECT TO PLAN.
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 3,000,000
shares. Share of Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares of Stock
that have been granted pursuant to a Stock Option cease to be subject to a
Stock Option, or if any shares of Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred Stock award, Reload Stock
Option or Other Stock-Based Award granted hereunder are forfeited or any such
award otherwise terminates without a payment being made to the Holder in the
form of Stock, such shares shall again be available for distribution in
connection with future grants and awards under the Plan. Only net shares
issued upon a stock-for-stock exercise (including stock used for withholding
taxes) shall be counted against the number of shares available under the
Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of
any merger, reorganization, consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under
the Plan, in the number and exercise price of shares subject to outstanding
Options, in
4<PAGE>
the number of shares and Stock Appreciation Right price relating to Stock
Appreciation Rights, and in the number of shares and Stock Appreciation Right
price relating to Stock Appreciation Rights, and in the number of shares
subject to, and in the related terms of, other outstanding awards (including
but not limited to awards of Restricted Stock, Deferred Stock, Reload Stock
Options and Other Stock-Based Awards) granted under the Plan as may be
determined to be appropriate by the Committee in order to prevent dilution or
enlargement of rights, provided that the number of shares subject to any
award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be made or granted to key employees, officers, directors,
consultants and sales representatives who are deemed to have rendered or to
be able to render significant services to the Company or its Subsidiaries and
who are deemed to have contributed or to have the potential to contribute to
the success of the Company. No Incentive Stock Option shall be granted to
any person who is not an employee of the Company or a Subsidiary at the time
of grant.
SECTION 5. REQUIRED SIX-MONTH HOLDING PERIOD.
Any equity security issued under this Plan may not be sold prior to six
months from the date of the grant of the related award without the approval
of the Company.
SECTION 6. STOCK OPTIONS.
6.1 Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options.
Any Stock Option granted under the Plan shall contain such terms, not
inconsistent with this Plan, or with respect to Incentive Stock Options, not
inconsistent with the Code, as the Committee may from time to time approve.
The Committee shall have the authority to grant Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options and which may be
granted alone or in addition to other awards granted under the Plan. To the
extent that any Stock Option intended to qualify as an Incentive Stock Option
does not so qualify, it shall constitute a separate Nonqualified Stock
Option. An Incentive Stock Option may be granted only within the ten-year
period commencing from the Effective Date and may only be exercised within
ten years of the date of grant or five years in the case of an Incentive
Stock Option granted to an optionee ("10% Stockholder") who, at the time of
grant, owns Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company.
6.2 Terms and Conditions. Stock Options granted under the Plan shall
be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may not be less than 100% of the Fair Market Value of the
Stock as defined above; provided, however, that the exercise price of an
Incentive Stock Option granted to a 10% Stockholder shall not be less than
110% of the Fair Market Value of the Stock.
(b) Option Term. Subject to the limitations in Section 6.1,
above, the term of each Stock Option shall be fixed by the Committee.
5<PAGE>
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Committee and as set forth in Section 11, below. If the Committee
provides, in its discretion, that any Stock Option is exercisable only in
installments, i.e., that it vests over time, the Committee may waive such
installment exercise provisions at any time at or after the time of grant in
whole or in part, based upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise
and waiting period provisions are applicable in a particular case, Stock
Options may be exercised in whole or in part at any time during the term of
the Option, by giving written notice of exercise to the Company specifying
the number of shares of Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash
or, unless otherwise provided in the Agreement, in shares of Stock (including
Restricted Stock and other contingent awards under this Plan) or, partly in
cash and partly in such Stock, or such other means which the Committee
determines are consistent with the Plan's purpose and applicable law. Cash
payments shall be made by wire transfer, certified or bank check or personal
check, in each case payable to the order of the Company; provided, however,
that the Company shall not be required to deliver certificates for shares of
Stock with respect to which an Option is exercised until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof. Payments in the form of Stock shall be valued at the Fair
Market Value of a share of Stock on the date prior to the date of exercise.
Such payments shall be made by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Subject to the terms of the
Agreement, the Committee may, in its sole discretion, at the request of the
Holder, deliver upon the exercise of a Nonqualified Stock Option a
combination of shares of Deferred Stock and Common Stock; provided that,
notwithstanding the provision of Section 9 of the Plan, such Deferred Stock
shall be fully vested and not subject to forfeiture. A Holder shall have
none of the rights of a stockholder with respect to the shares subject to the
Option until such shares shall be transferred to the Holder upon the exercise
of the Option.
(e) Transferability. No Stock Option shall be transferable by the
Holder other than by will or by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the Holder's lifetime, only by the
Holder.
(f) Termination by Reason of Death. If a Holders' employment by
the Company or a Subsidiary terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined by the Committee at the time
of grant and set forth in the Agreement, shall be fully vested and may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year
(or such other greater or lesser period as the Committee may specify at
grant) from the date of such death or until the expiration of the stated term
of such Stock Option, which ever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's employment
by the Company or any Subsidiary terminates by reason of Disability, any
Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the Holder for a period of one year
(or such other greater or lesser period as the Committee may specify at the
time of grant)
6<PAGE>
from the date of such termination of employment or until the expiration of
the stated term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 14.3,
below, and unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, if a Holder is an employee of the Company or
a Subsidiary at the time of grant and if such Holder's employment by the
Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate, except
that if the Holder's employment is terminated by the Company or a Subsidiary
without cause or due to Normal Retirement, then the portion of such Stock
Option which has vested on the date of termination of employment may be
exercised for the lesser of three months after termination of employment or
the balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of
an Incentive Stock Option, the aggregate Fair Market Value of Stock
(determined at the time of grant of the Option) with respect to which
Incentive Stock Options become exercisable by a Holder during any calendar
year (under all such plans of the Company and its Parent and Subsidiary)
shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any
time, in its sole discretion, offer to buy out a Stock Option previously
granted, based upon such terms and conditions as the Committee shall
establish and communicate to the Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock Option shall be
confirmed by and shall be subject to the terms of, the Agreement executed by
the Company and the Holder.
6.3 Stock Reload Option. The Committee may also grant to the Holder
(concurrently with the grant of an Incentive Stock Option and at or after the
time of grant in the case of a Nonqualified Stock Option) a Stock Reload
Option up to the amount of shares of Stock held by the Holder for at least
six months and used to pay all or part of the exercise price of an Option
and, if any, withheld by the Company as payment for withholding taxes. Such
Stock Reload Option shall have an exercise price equal to the Fair Market
Value as of the date of the Stock Reload Option grant. Unless the Committee
determines otherwise, a Stock Reload Option may be exercised commencing one
year after it is granted and shall expire on the date of expiration of the
Option to which the Reload Option is related.
SECTION 7. STOCK APPRECIATION RIGHTS.
7.1 Grant and Exercise. The Committee may grant Stock Appreciation
Rights to participants who have been, or are being granted, Options under the
Plan as a means of allowing such participants to exercise their Options
without the need to pay the exercise price in cash. In the case of a
Nonqualified Stock Option, a Stock Appreciation Right may be granted either
at or after the time of the grant of such Nonqualified Stock Option. In the
case of an Incentive Stock Option, a Stock Appreciation Right may be granted
only at the time of the grant of such Incentive Stock Option.
7<PAGE>
7.2 Terms and Conditions. Stock Appreciation Rights shall be subject
to the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be
exercisable as determined by the Committee and set forth in the Agreement,
subject to the limitations, if any, imposed by the Code, with respect to
related Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate and
shall no longer be exercisable upon the termination or exercise of the
related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be
exercisable upon such terms and conditions as shall be determined by the
Committee and set forth in the Agreement and by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
Holder shall be entitled to receive a number of Option Shares equal to the
SAR Value divided by the exercise price of the Option.
(d) Shares Affected Upon Plan. The granting of a Stock
Appreciation Rights shall not affect the number of shares of Stock available
under for awards under the Plan. The number of shares available for awards
under the Plan will, however, be reduced by the number of shares of Stock
acquirable upon exercise of the Stock Option to which such Stock Appreciation
right relates.
SECTION 8. RESTRICTED STOCK.
8.1 Grant. Shares of Restricted Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom, and the time or times at which,
grants of Restricted Stock will be awarded, the number of shares to be
awarded, the price (if any) to be paid by the Holder, the time or times
within which such awards may be subject to forfeiture (the "Restriction
Period"), the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the awards.
8.2 Terms and Conditions. Each Restricted Stock award shall be subject
to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of
the Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear
a legend to the effect that ownership of the Restricted Stock (and such
Retained Distributions), and the enjoyment of all rights appurtenant thereto,
are subject to the restrictions, terms and conditions provided in the Plan
and the Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or
any portion of the Restricted Stock and any securities constituting Retained
Distributions that shall be forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The
Holder will
8<PAGE>
have the right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as the Board
may in its sole discretion designate, pay or distribute on such Restricted
Stock and to exercise all other rights, powers and privileges of a holder of
Common Stock with respect to such Restricted Stock, with the exceptions that
(i) the Holder will not be entitled to delivery of the stock certificate or
certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vest requirements with respect
thereto shall have been fulfilled; (ii) the Company will retain custody of
the stock certificate or certificates representing the Restricted Stock
during the Restriction Period; (iii) other than regular cash dividends and
other cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or declared with respect to the
Restricted Stock (and such Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to the restricted Stock)
until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have
become vested and with respect to which the Restriction Period shall have
expired; (iv) a breach of any of the restrictions, terms or conditions
contained in this Plan or the Agreement or otherwise established by the
Committee with respect to any Restricted Stock or Retained Distributions will
cause a forfeiture of such Restricted Stock and any Retained Distributions
with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction
Period with respect to each award of Restricted Stock and the satisfaction of
any other applicable restrictions, terms and conditions (i) all or part of
such Restricted Stock shall become vested in accordance with the terms of the
Agreement, subject to Section 11, below, and (ii) any Retained Distributions
with respect to such Restricted Stock shall become vested to the extent that
the Restricted Stock related thereto shall have become vested, subject to
Section 11, below. Any such Restricted Stock and Retained Distributions that
do not vest shall be forfeited to the Company and the Holder shall not
thereafter have any rights with respect to such Restricted Stock and Retained
Distributions that shall have been so forfeited.
SECTION 9. DEFERRED STOCK.
9.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants
of Deferred Stock shall be awarded, the number of shares of Deferred Stock to
be awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the shares will be
deferred, and all the other terms and conditions of the awards.
9.2 Terms and Conditions. Each Deferred Stock award shall be subject
to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 9.2 (d) below, where
applicable), shares certificates shall be issued and delivered to the Holder,
or his legal representative, representing the number equal to the shares
covered by the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred stock
shall not have any rights of a stockholder by virtue of such award until the
9<PAGE>
expiration of the applicable Deferral Period and the issuance and delivery of
the certificates representing such Stock. The shares of Stock issuable upon
expiration of the Deferral Period shall not be deemed outstanding by the
Company until the expiration of such Deferral period and the issuance and
delivery of such Stock to the Holder.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral
Period with respect to each award of Deferred Stock and the satisfaction of
any other applicable restrictions, terms and conditions all or part of such
Deferred Stock shall become vested in accordance with the terms of the
Agreement, subject to Section 11, below. Any such Deferred Stock that does
not vest shall be forfeited to the Company and the Holder shall not
thereafter have any rights with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and the
Committee may at any time, defer the receipt of an award (or an installment
of an award) for an additional specified period or until a specified event
(the "Additional Deferral Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock awards (or such
installment).
SECTION 10. OTHER STOCK-BASED AWARDS.
10.1 Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable,
in value in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be
consistent with the purposes of the Plan, including, without limitation,
purchase rights, shares of Common Stock awarded which are not subject to any
restrictions or conditions, convertible or exchangeable debentures, or other
rights convertible into shares of Common Stock and awards valued by reference
to the value of securities of or the performance of specified subsidiaries.
Other Stock-Based Awards may be awarded either alone or in addition to or in
tandem with any other awards under this Plan or any other plan of the
Company.
10.2 Eligibility for Other Stock-Based Awards. The Committee shall
determine the eligible persons to whom and the time or times at which grants
of such other stock-based awards shall be made, the number of shares of
Common Stock to be awarded pursuant to such awards, and all other terms and
conditions of the awards.
10.3 Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee
and to Section 11, below.
SECTION 11. ACCELERATED VESTING AND EXERCISABILITY.
If (i) any person or entity other than the Company and/or any
stockholders of the Company as of the Effective Date acquire securities of
the Company (in one or more transactions) having 25% or more of the total
voting power of all the Company's securities then outstanding and (ii) the
Board of Directors of the Company does not authorize or otherwise approve
such acquisition, then, the vesting periods of any and all Options and other
awards granted and outstanding under the Plan shall be accelerated and all
such Options and awards will
10<PAGE>
immediately and entirely vest, and the respective holders thereof will have
the immediate right to purchase and/or receive any and all Stock subject to
such Options and awards on the terms set forth in this Plan and the
respective agreements respecting such Options and awards.
SECTION 12. AMENDMENT AND TERMINATION.
Subject to Section 4 hereof, the Board may at any time, and from time to
time, amend, alter, suspend or discontinue any of the provisions of the Plan,
but no amendment, alteration, suspension or discontinuance shall be made
which would impair the rights of a Holder under any Agreement theretofore
entered into hereunder, without the Holder's consent.
SECTION 13. TERM OF PLAN.
13.1 Effective Date. The Plan shall be effective as of the date on
which the Company's stockholders approved the Plan ("Effective Date").
13.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time no further awards may be granted
and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten-year period following the Effective Date.
SECTION 14. GENERAL PROVISIONS.
14.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under
the Plan if the Agreement relating thereto is not executed and returned to
the Company within 10 days after the Agreement has been delivered to the
Holder for his or her execution.
14.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a
general creditor of the Company.
14.3 Employees.
(a) Engaging in Competition With the Company. In the event a
Holder's employment with the Company or a Subsidiary is terminated for any
reason whatsoever, and within one year after the date thereof such Holder
accepts employment with any competitor of, or otherwise engages in
competition with, the Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained by such Holder at any time during the period
beginning on that date which is six months prior to the date of such Holder's
termination of employment with the Company.
(b) Termination for Cause. The Committee may, in the event a
Holder's employment with the company or a Subsidiary is terminated for cause,
annul any award granted under this Plan to return to the Company the
economic value of any award which was realized or obtained by such Holder at
any time during the period beginning on that date which is six months prior
to the date of such Holder's termination of employment with the Company.
11<PAGE>
(c) No Right of Employment. Nothing contained in the Plan or in
any award hereunder shall be deemed to confer upon any Holder who is an
employee of the Company or any Subsidiary any right to continued employment
with the Company or any Subsidiary, nor shall it interfere in any way with
the right of the Company or any Subsidiary to terminate the employment of any
Holder who is an employee at any time.
14.4 Investment Representations. The Committee may require each person
acquiring shares of Stock pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in writing that the Holder is
acquiring the shares for investment without a view to distribution thereof.
14.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
14.6 Withholding Taxes. Not later than the date as of which an amount
must first be included in the gross income of the Holder for Federal income
tax purposes with respect to any option or other award under the Plan, the
Holder shall pay to the Company, or made arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditioned upon such payment or arrangements
and the Company or the Holder's employer (if not the Company) shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Holder from the Company or any
Subsidiary.
14.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of Nevada (without regard to choice of law provisions).
14.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement
plan of the Company or any Subsidiary and shall not affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to awards under
this Plan).
14.9 Non-Transferability. Except as otherwise expressly provided in the
Plan, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and
any attempt to alienate, sell, assign, hypothecate, pledge, exchange,
transfer, encumber or charge the same shall be void.
14.10 Applicable Laws. The obligations of the Company with respect
to all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
12<PAGE>
agencies as may be required, including, without limitation, the Securities
Act of 1933, as amended, and (ii) the rules and regulations of any securities
exchange on which the Stock may be listed.
14.11 Conflicts. If any of the terms or provisions of the Plan or
an Agreement (with respect to Incentive Stock Options) conflict with the
requirements of Section 422 of the Code, then such terms or provisions shall
be deemed inoperative to the extent they so conflict with the requirements of
said Section 422 of the Code. Additionally, if this Plan or any Agreement
does not contain any provision required to be included herein under Section
422 of the Code, such provision shall be deemed to be incorporated herein and
therein with the same force and effect as if such provision had been set out
at length herein and therein. If any of the terms or provision of any
Agreement conflict with any terms or provision of the Plan, then such terms
or provision shall be deemed inoperative to the extent they so conflict with
the requirements of the Plan. Additionally, if any Agreement does not
contain any provision required to be included therein under the Plan, such
provision shall be deemed to be incorporated therein with the same force and
effect as if such provision had been set out at length therein.
14.12 Non-Registered Stock. The shares of Stock to be distributed
under this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register
the Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Stock on a national securities
exchange.
13<PAGE>
THE QUANTUM GROUP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED
JUNE 27, 1997 BY MANAGEMENT
The undersigned hereby appoints Ehrenfried Liebich, President or Keith
J. Fryer, Vice President, as proxy with full power of substitution, to vote
shares of the undersigned in The Quantum Group, Inc., which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders to be held at the executive offices of the Company, Park Irvine
Business Center, 14771 Myford Road Building B, Tustin, California 92780, at
2:00 p.m. local time on June 27, 1997.
Please review each item and check the appropriate box.
1. To elect the following directors to serve for the ensuing year and
until their successors are duly elected and qualified: Ehrenfried Liebich,
John F. Pope and Keith J. Fryer.
/ / Authority Granted / / Authority Withheld
2. To approve of a one for three reverse split of the issued and
outstanding common shares of The Quantum Group, Inc. as of June 27, 1997.
/ / Authority Granted / / Authority Withheld
3. To approve the 1997 Stock Option Plan of the Company.
/ / Authority Granted / / Authority Withheld
4. To amend the Articles of Incorporation to create a class of
Preferred Stock, to consist of 5,000,000 shares which may be issued in series
or classes and with such other designation of rights and preferences as may
be determined by the Board of Directors.
/ / Authority Granted / / Authority Withheld
5. To transact such other business as may properly come before the
meeting, and, if necessary, to adjourn the meeting from time to time.
/ / Authority Granted / / Authority Withheld
This proxy will be voted in accordance with the authority granted. In
the absence of directions otherwise, this proxy will be voted For each of the
above matters.
1<PAGE>
PLEASE DATE AND SIGN (EXACTLY) AS NAME APPEARS ON YOUR STOCK
CERTIFICATE. IF SHARES ARE REGISTERED IN MORE THAN ONE NAME, SIGNATURES OF
ALL SUCH PERSONS ARE REQUIRED. A CORPORATION SHOULD SIGN IN FULL CORPORATE
NAME BY A DULY AUTHORIZED OFFICER STATING HIS TITLE. TRUSTEES, GUARDIANS,
CUSTODIANS, EXECUTORS AND ADMINISTRATORS SHOULD SIGN IN THEIR OFFICIAL
CAPACITY, GIVING THEIR FULL TITLE AS SUCH. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
Dated the ______ day of June, 1997.
____________________________________
____________________________________
Signature(s) of Shareholder(s)
Return proxies to:
The Quantum Group, Inc.
Park Irvine Business Center
14771 Myford Road, Building B
Tustin, California 92780
2<PAGE>
