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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 18, 1997
SNAKE EYES GOLF CLUBS, INC.
(Name of Registrant as Specified in its Charter)
Delaware 0-26344 59-3303066
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
13000 Sawgrass Village Circle, Suite 30
Ponte Vedra Beach, Florida 32082
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 273-8772
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ITEM 5. OTHER EVENTS.
At the annual meeting (the "Annual Meeting") of shareholders of Golf-
Technology Holding, Inc., an Idaho corporation ("Golf-Idaho") held on Tuesday,
December 16, 1997, the shareholders of Golf-Idaho approved the reincorporation
proposal described in the definitive proxy of Golf-Idaho, dated November 13,
1997, involving (i) the reincorporation of Golf-Idaho in the State of Delaware,
and (ii) a change of the corporate name of Golf-Idaho to "Snake Eyes Golf Clubs,
Inc." On December 16, 1997, Snake Eyes Golf Clubs, Inc. ("Golf-Del") was
incorporated in the State of Delaware as a wholly owned subsidiary of
Golf-Idaho. On December 18, 1997, the Certificate of Merger for the merger of
Golf-Idaho into Golf-Del was filed in the State of Delaware and the Articles of
Merger, including the Plan of Merger, by and between Golf-Del and Golf-Idaho
were filed in the State of Idaho. Accordingly, on December 18, 1997, Golf-Idaho
merged into Golf-Del, the surviving corporation of such merger.
At the Annual Meeting the shareholders of Golf-Idaho also approved the
Golf-Technology Holding, Inc. 1997 Stock Option and Long-Term Incentive Plan
(the "1997 Plan"). Pursuant to that certain Unanimous Written Consent of the
Board of Directors (the "Board") of Golf-Del dated as of January 5, 1998, the
Board (i) changed the name of the 1997 Plan to the Snake Eyes Golf Clubs, Inc.
1997 Stock Option and Long-Term Incentive Plan, and (ii) ratified, amended
and changed the name of the Golf-Technology Holding, Inc. 1995 Stock Option
Plan to the Snake Eyes Golf Clubs, Inc. 1995 Stock Option Plan.
ITEM 7. EXHIBITS.
(3)(i) Certificate of Incorporation of Snake Eyes Golf Clubs, Inc.
(3)(ii) By-laws of Snake Eyes Golf Clubs, Inc.
(99a) Certificate of Merger
(99b) Articles of Merger
(99c) Snake Eyes Golf Clubs, Inc. Amended and Restated 1995 Stock Option
Plan.
(99d) Snake Eyes Golf Clubs, Inc. 1997 Stock Option and Long-Term Incentive
Plan.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized on January 6, 1998.
SNAKE EYES GOLF CLUBS, INC.
By: /s/ Harold E. Hutchins
-----------------------------------
Name: Harold E. Hutchins
Title: President, Chief Executive
Officer, Chief Financial
Officer, Chief Operating
Officer, and Secretary
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EXHIBIT INDEX
(3)(i) Certificate of Incorporation of Snake Eyes Golf Clubs, Inc.
(3)(ii) By-laws of Snake Eyes Golf Clubs, Inc.
(99a) Certificate of Merger
(99b) Articles of Merger
(99c) Snake Eyes Golf Clubs, Inc. Amended and Restated 1995 Stock Option
Plan.
(99d) Snake Eyes Golf Clubs, Inc. 1997 Stock Option and Long-Term Incentive
Plan.
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EXHIBIT (3)(I)
CERTIFICATE OF INCORPORATION
OF
SNAKE EYES GOLF CLUBS, INC.
FIRST: The name of the corporation is Snake Eyes Golf Clubs, Inc.
(hereinafter referred to as the "Corporation"),
SECOND: The address of the registered office of the Corporation in the
State of Delaware is, The Corporation Trust Center, 1209 Orange Street,
Wilmington, DE 19801, New Castle County. The name of the registered agent of
the Corporation at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
FOURTH: A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is thirty million (30,000,000),
consisting of twenty-five million (25,000,000) shares of Common Stock, par value
one-tenth of one cent ($0.001) per share (the "Common Stock") and five million
(5,000,000) shares of Preferred Stock, par value one-tenth of one cent ($0.001)
per share (the "Preferred Stock").
B. The board of directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock without a vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock Designation.
C. SERIES A PREFERRED STOCK. Four Hundred Thousand (400,000) of the
Five Million (5,000,000) authorized shares Preferred Stock of the Corporation
shall be designated Series A preferred stock (the "Series A Preferred Stock")
and shall possess the rights set forth below:
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(a) VOTING RIGHTS. (i) Except as otherwise provided herein or as
required by law, the holders of shares of Series A Preferred Stock shall not be
entitled to vote on any matters that come before the shareholders.
(ii)In the event the Corporation shall fail to pay current
dividends on the Series A Preferred on four Dividend Payment Dates (as defined
herein), whether consecutive or non-consecutive, the holders shall be entitled
to vote, on a one-vote-per-share of Series A Preferred Stock basis, with the
holders of the Common Stock on all matters submitted to the Company's
shareholders. The holders shall continue to be entitled to the foregoing right
to vote, notwithstanding the subsequent payment of any of or all such
dividends.
(iii)On all matters on which the Series A Preferred Stock is
entitled to vote by law, the holders shall be entitled to one vote per share of
Series A Preferred Stock, voting separately as a single class.
(b) DIVIDEND RIGHTS. (i) Each issued and outstanding share of Series
A Preferred Stock shall entitle the holder of record thereof to receive, when,
as and if declared by the Board of Directors, out of funds legally available
therefor, dividends in cash at the annual rate of nine percent (9%), as adjusted
for stock splits, stock dividends, recapitalization, reclassifications and
similar events, payable quarterly on March 31, June 30, September 30 and
December 31, of each year, commencing June 30, 1995 (each a "Dividend Payment
Date"). Dividends and distributions (other than those payable solely in Common
Stock) may be paid, or declared and set aside for payment, upon shares of Common
Stock in any calendar year only if dividends shall have been paid, or declared
and set apart for payment, on account of all shares of Series A Preferred Stock
then issued and outstanding, at the aforesaid rate for such calendar year.
(ii)The right to dividends upon the issued and outstanding shares
of Series A Preferred Stock shall be cumulative from the date of issuance of
such share of Preferred Stock to which the dividend relates so that such rights
shall be deemed to accrue, whether earned, or whether there be funds legally
available therefor, or whether said dividends shall have been declared; and if
such dividends shall not have been declared and paid, the deficiency shall first
be fully paid on the Series A Preferred Stock, before any dividend or other
distribution (other than those payable solely in Common Stock) may be paid, or
declared and set apart for payment, to the holders of shares of Common Stock,
and shall in any event be paid upon conversion of the Series A Preferred Stock,
in cash, or at the election of the holders of shares of Series A Preferred
Stock, partly in cash and partly in shares of Common Stock, or all in shares of
Common Stock, at the fair market value of the Common Stock at the time of
payment, as determined in as set forth in paragraph (e) hereof. Any
accumulation of dividends on the shares of Series A Preferred Stock shall not
bear interest. The dividends payable upon the issued and outstanding shares of
Series A Preferred Stock shall be payable upon a pro rata basis.
(iii)The restrictions on dividends and distributions with respect
to shares of Common Stock and of Series A Preferred Stock set forth in paragraph
(b) hereof are in addition to, and not in derogation of, the other restrictions
on such dividends and distributions set forth herein.
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(iv)The Holders shall be entitled to the voting rights set forth
in paragraph (a)(ii) in the event dividends are not paid on four Dividend
Payment Dates.
(c) LIQUIDATION RIGHTS. In the event of a voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, the holders of
record of shares of Series A Preferred Stock shall be entitled to receive, out
of the assets of the Corporation legally available therefor, five Dollars
($5.00) per share of Series A Preferred Stock, plus a further amount per share
equal to dividends, if any (i) then declared and unpaid on account of shares of
Series A Preferred Stock and (ii) whether or not declared, then accrued in
accordance with the provisions of subparagraph (b)(ii) hereof before any payment
shall be made or any assets distributed to the holders of shares of Common
Stock. If, upon any liquidation, dissolution, or winding up, whether voluntary
or involuntary, the assets thus distributed among the holders of the Series A
Preferred Stock shall be insufficient to permit payment to such holders of the
full preferential amounts aforesaid, then the entire assets of the Corporation
to be distributed shall be distributed ratably among the holders of the Series A
Preferred Stock shall be insufficient to permit payment to such holders of the
full preferential amounts aforesaid, then the entire asserts of the Corporation
to be distributed shall be distributed ratably among the holders of Series A
Preferred Stock.
(d) CONVERSION RIGHTS. (i) Subject to the terms and conditions
hereof, each holder of record of shares of Series A Preferred Stock may, at any
time, upon surrender to the Corporation of the certificates therefor at the
principal office of the Corporation or at such other place as the Corporation
shall designate, convert all or any part of such holder's shares of Series A
Preferred Stock into such number of fully paid and non-assessable shares of
Common Stock of the Corporation (as such Common Stock shall then be constituted)
equal to the product of (A) the number of shares of Series A Preferred Stock
which such holder shall then surrender to the Corporation, multiplied by (B) the
number determined by dividing Five Dollars ($5.00) by the Conversion Price (as
hereinafter defined) per share for the Series A Preferred Stock in effect at the
time of conversion.
(ii)For purposes of this Certificate of Designation:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued by the Corporation after the Issuance Date (as defined herein)
whether or not subsequently reacquired or retired by the Corporation, other than
(i) shares of Common Stock issued upon conversion of the Series A Preferred
Stock, (ii) any shares of the Company's Common Stock issued pursuant to shares
which are currently reserved for issuance under the Golf-Technology Holding,
Inc. Stock Option Plan (as such plan may be reconstituted to purchase Common
Stock of the Company) and (iii) up to 500,000 shares of Common Stock (which
number may be proportionately increased or decreased solely in the event of a
subdivision or combination of the Company's Common Stock or the payment of a
dividend on all shares of the Company's Common Stock payable in Common Stock of
the Company) issued pursuant to options, other rights and convertible securities
having exercise or conversion prices below the Conversion Price in effect which
options, rights or securities are issued as incentive compensation to employees
of the Company or its affiliates or to independent contractors who act as agents
for the Company or its affiliates in connection with the Company's product
sales.
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"CONVERSION PRICE" shall mean the price at which shares of the Common
Stock shall be deliverable upon conversion of the Series A Preferred Stock. The
Conversion Price shall initially be Five Dollars ($5.00). The Conversion Price
shall be subject to adjustment as provided below:
"CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares or securities convertible into, exercisable for or exchangeable for
Additional Shares of Common Stock.
"ISSUANCE DATE" shall mean the date the first share of Series A
Preferred Stock is issued.
"OPTIONS" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities.
(iii)ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES
(A)In the event the Corporation at any time or from time to time shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification, stock split or otherwise
than by payment of a dividend in Common Stock), then and in any such event, the
Conversion Price in effect shall be proportionately decreased:
(i)in the case of any such dividend, immediately after the close
of business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or
(ii)in the case of any such subdivision, at the close of business
on the date immediately prior to the date upon which such subdivision becomes
effective.
(B)In the event the outstanding shares of Common Stock shall be
combined or consolidated, by the reclassification or otherwise, into a lesser
number of shares of Common Stock, the Conversion Price in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
(C)In case of any consolidation or merger of the Corporation with or
into another corporation or the conveyance of all or substantially all of the
assets of the Corporation to another corporation, each share of Series A
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Corporation deliverable upon conversion of such Series A
Preferred Stock would have been entitled upon such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment (as determined by the
Board of Directors) shall be made in the application of the provisions herein
set forth with respect to the rights and interest thereafter of the holders of
the Series A Preferred Stock, to the end that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as reasonably may be
possible, in relation to any, shares of
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stock or other property thereafter deliverable upon the conversation of the
Series A Preferred Stock.
(D)If the Common Stock issuable upon the conversion of the Series A
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for above), the Conversion Price then in effect shall, concurrently
with the effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series A Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holder would otherwise have been entitled to receive, a number of shares of such
other class or classes of stock into which the Common Stock issuable upon
conversion of the Series A Preferred Stock immediately prior to such
effectiveness would have been changed.
(E)If and whenever, after the Issuance Date, the Corporation shall
issue or sell, or is, in accordance with subparagraphs E(1) through E(6), deemed
to have issued or sold, any Additional Shares of Common Stock for a
consideration per share less than the Conversion Price in effect for the Series
A Preferred Stock, immediately prior to the time of such issue or sale, then,
forthwith upon such issue or sale, such Conversion Price shall be reduced as of
the opening of business on the date of such issue or sale, to a price determined
by multiplying the Conversion Price for the Series A Preferred Stock by a
fraction (a) the numerator of which shall be (A) the number of shares of Common
Stock outstanding immediately prior to such issue or sale plus (B) the number of
shares of Common Stock which the aggregate consideration received (or by express
provision hereof deemed to have been received) by the Corporation for the total
number of Additional Shares of Common Stock so issued would purchase at such
Conversation Price for the Series A Preferred Stock and (b) the denominator of
which shall be the number of shares of Common Stock outstanding at the close of
business on the date of such issue after giving effect to such issue of
Additional Shares of Common Stock.
For purposes of this subparagraph E, the following subparagraphs (1)
to (6) shall also be applicable:
(E)(1)ISSUANCE OF OPTIONS. In case at any time after the
Issuance Date the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any Options for the purchase of Common
Stock or any stock or Convertible Securities whether or not such Options or the
right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Additional Shares of Common Stock
are issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversation or
exchange thereof, by (ii) the total maximum number of Additional Shares of
Common Stock issuable upon the exercise of all such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of
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such Options) shall be less than the Conversion Price in effect for the Series A
Preferred Stock immediately prior to the time of the granting of such Options,
then the total maximum number of Additional Shares of Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued for such price per share as of the
date of granting of such Options or the issuance of such Convertible Securities
and thereafter shall be deemed to be outstanding. Except as otherwise provided
in subparagraph E(3), no adjustment of either Conversion Price shall be made
upon the actual issue of such Additional Shares of Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual issue of
such Additional shares of Common Stock upon conversion or exchange of such
Convertible Securities.
(E)(2)ISSUANCE OF CONVERTIBLE SECURITIES. In case the
Corporation at any time after the Issuance Date shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon such conversion or exchange (determined
by dividing (i) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the total maximum
number of Additional Shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Conversion
Price in effect for the Series A Preferred Stock, immediately prior to the time
of such issue or sale, then the total maximum number of Additional Shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as of
the date of the issue or sale of such Convertible Securities and thereafter
shall be deemed to be outstanding, provided that (a) except as otherwise
provided in subparagraph (E)(3), no adjustment of the Conversion Price shall be
made upon the actual issue of such Additional Shares of Common Stock upon
conversion or exchange of such Convertible Securities and (b) if any such issue
or sale of such Convertible Securities is made upon exercise of any Options to
purchase any such Convertible Securities for which adjustments of the Conversion
Price have been or are to be made pursuant to other provisions of this
subparagraph (E)(1), no further adjustment of such Conversion Price shall be
made by reason of such issue or sale.
(E)(3)CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the
happening of any of the following events, namely, if the purchase price provided
for in any Option referred to in subparagraph (E)(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph (E)(1) or (E)(2), or the rate
at which Convertible Securities referred to in subparagraph (E)(1) or (E)(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Conversion Price in effect for the
Series A Preferred Stock, at the time of such event shall forthwith be
readjusted to the Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold, but only if as a result
of such adjustment the Conversion Price then in effect hereunder is thereby
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reduced; and on the expiration of any Option the issuance of which has reduced
the Conversion Price or the termination of any such right to convert or exchange
Convertible Securities the issuance of which has reduced the Conversion Price,
the Conversion Price them in effect hereunder shall forthwith be increased to
the Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
(E)(4)CONSIDERATION FOR STOCK. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred on
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such consideration
as determined in good faith by the Board of Directors of the Corporation.
(E)(5)RECORD DATE. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(E)(6)TREASURY SHARES. The disposition of any shares of Common
Stock owned or held by or for the account of the Corporation shall be considered
an issue or sale of Additional Shares of Common Stock for the purpose of this
subparagraph E.
(iv) Whenever the Conversion Price or the amount of Common Stock
or other securities deliverable upon the conversion of Series A Preferred Stock
shall be adjusted pursuant to the provisions hereof, the Corporation shall
forthwith file, at its principal executive office and with any transfer agent or
agents for its Series A Preferred Stock and Common Stock, a statement, signed by
the Chairman of the Board, President, or one of the Vice Presidents of the
Corporation, and by its Chief Financial Officer or one of its Assistant
Treasurers, stating the newly adjusted Conversion Price and adjusted amount of
its Common Stock or other securities deliverable per share of Series A Preferred
Stock calculated to the nearest one one-hundredth and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. A copy of such statement
shall be sent to each holder of Series A Preferred Stock. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is required.
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(v) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series A Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the
Corporation lawfully to issue such Common Stock upon the conversion of Series A
Preferred Stock.
(vi) No fraction of shares of Common Stock shall be issued upon
conversion, but in lieu thereof the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of a share of Common Stock as
determined pursuant to paragraph (e) hereof.
(vii)The Corporation will not, but amendment to this Certificate
of Designation or by amendment of its Certificate of Incorporation (the
"Charter") or through any reorganization, transfer of assets, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this paragraph (d) and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series A Preferred Stock
against impairment.
(e) REDEMPTION. (i) The Corporation may, at its option, redeem the
Series A Preferred Stock, in whole and not in part, out of funds legally
available therefor, by action of the Board of Directors, at any time on or after
six months from the date of issuance of the last share of Preferred Stock
pursuant to the Corporation's Confidential Private Placement Memorandum dated
January 19, 1995 at a redemption price of $5.00 per share, plus all accrued and
unpaid dividends on a share of Series A Preferred Stock, upon notice and in the
manner set forth in, and subject to the conditions of, this paragraph (e);
PROVIDED, the current market price of the Common Stock (the closing sale price
as reported by the Nasdaq National Market or, if not traded thereon, the closing
bid price as reported by Nasdaq or, if not quoted thereon, the closing bid price
in the National Quotation Bureau sheet listing for the Common Stock) equals or
exceeds $7.50 per share (as may be adjusted proportionately upward or downward
solely in the event of a subdivision or combination of the Company's Common
Stock or the payment of a dividend on all of the Company's Common Stock payable
in Common Stock of the Company) for 20 consecutive trading days ending no more
than 10 days prior to the date of notice of redemption.
(ii) REDEMPTION NOTICE. If the Corporation elects to redeem the
Preferred Stock, the Corporation shall mail, postage prepaid, not less than 30
days nor more than 60 days prior to the business day designated in such notice
for the closing of such redemption (the "Redemption Date"), written notice
thereof (the "Redemption Notice"), to each holder of record of the Series A
Preferred Stock, at his post office address last shown on the records of the
Corporation. Each such Redemption Notice shall state:
(A)The number of shares of Series A Preferred Stock held by the
holder that the Corporation shall redeem;
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(B)The Redemption Date and Redemption Price;
(C)The date upon which the holder's conversion rights (as set
forth in paragraph (d) above) as to such shares terminate which termination
shall be five days before the Redemption Date; and
(D)That the holder is to surrender to the Corporation, in its
manner and at the place designated, his certificate or certificates representing
the shares of Series A Preferred Stock to be redeemed.
(iii)SURRENDER OF CERTIFICATES; PAYMENT. On or before the
Redemption Date, each holder of shares of Series A Preferred Stock, unless such
holder has exercised his right to convert the shares as provided in paragraph
(d) hereof, shall surrender the certificate or certificates representing such
shares to the Corporation, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price for such share shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired.
(iv)RIGHTS SUBSEQUENT TO REDEMPTION. If the Redemption Notice
shall have been duly given, and if on the Redemption Date the Redemption Price
therefor is either paid or made available for payment through the deposit
arrangement specified in subparagraph (vii) below, then notwithstanding that the
certificates evidencing any of the shares of Series A Preferred Stock so called
for redemption shall not have been surrendered, the dividends with respect to
such shares shall cease to accrue after the Redemption Date and all rights with
respect to such shares shall forthwith terminate after the Redemption Date,
except only the right of the holders to receive the Redemption Price without
interest upon surrender of their certificate or certificates therefor.
(v)DEPOSIT OF FUNDS. On or prior to the Redemption Date, the
Corporation shall deposit with any bank or trust company, having a capital and
surplus of at least $100,000,000 as a trust fund, a sum equal to the aggregate
Redemption Price of all shares of Series A Preferred Stock called for redemption
on such Redemption Date and not yet converted, with irrevocable instructions and
authority to the bank or trust company to pay, on and after each such Redemption
Date, the Redemption Price to the respective holders upon the surrender of their
share certificates. From and after the date of such deposit (but not prior to
the Redemption Date), the Series A Preferred Stock shall be redeemed. The
deposit shall constitute full payment of the shares of their holders, and from
and after the Redemption Date the Series A Preferred Stock shall be deemed to be
no longer outstanding, and the holders thereof shall cease to be shareholders
with respect to such shares and shall have no rights with respect thereto except
the rights to receive, from the bank or trust company, payment of the Redemption
Price of the shares, without interest, upon surrender of their certificates
therefor. Any funds so deposited and unclaimed at the first anniversary of the
Redemption Date shall be released or repaid to the Corporation, after which the
holders of shares called for redemption shall be entitled to receive payment of
the Redemption Price only from the Corporation.
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<PAGE>
(f)PROTECTIVE PROVISIONS. So long as any shares of Series A Preferred
Stock are outstanding, the Corporation shall not, without the affirmative vote
of the holders of record of sixty-six and two-thirds percent (66 2/3%) of the
outstanding shares of Series A Preferred Stock voting as a class:
(i)Amend, repeal or modify any provision of, or add any provision
to, the Corporation's Charter or By-laws or this Certificate of Designation if
such action would alter or change the rights, preferences, privileges or powers
of, or the restrictions provided for the benefit of, the Series A Preferred
Stock so as to affect the Series A Preferred Stock adversely; or
(ii)Reclassify the shares of Common Stock or any other shares of
stock hereafter created junior to the Series A Preferred Stock as to dividends
or assets into shares of Series A Preferred Stock or into shares having any
preference or priority as to dividends or assets superior to or on a parity with
that of the Series A Preferred Stock.
D. SERIES B PREFERRED STOCK. Ten Thousand (10,000) of the Five
Million (5,000,000) authorized shares of Preferred Stock of the Corporation
shall be designated Series B Preferred Stock (the "Series B Preferred Stock")
and shall possess the rights and privileges set forth below:
(a) DIVIDENDS (i) The holder of each issued and outstanding share of
Series B Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors of the Corporation, out of the assets at the time
legally available for such purpose, dividends at a rate of $32.50, payable
annually in arrears. No dividends shall be declared and paid on the Series
B Preferred Stock (other than a dividend payable solely in shares of Series
B Preferred Stock) unless all accrued but unpaid dividends on the
Corporation's existing class of Series A Preferred Stock have been declared
and paid in cash. Such dividends shall not be cumulative and no right to
such dividends shall accrue to holders of Series B Preferred Stock unless
declared by the Corporation's Board of Directors; provided, however, that
if all shares of Series B Preferred Stock have not been converted into
common stock by April 30, 1997 such dividends shall begin to accumulate on
all shares of Series B Preferred Stock which remain outstanding at such
time and shall be payable, subject to clause (ii) below, on April 30, 1997
and each April 30 thereafter. At the Corporation's election, such
dividends may be declared in cash, or in additional shares of Series B
Preferred Stock in an amount equal to the number of shares of Series B
Preferred Stock which on such date would be convertible into that number of
shares of common stock, par value $.001 per share (the "Common Stock")
which shall be determined as follows: the amount of the dividend divided by
the closing bid price of the Common Stock on April 30th (or the first
following business day if such date should fall on a weekend or holiday).
No dividends shall be declared or paid with respect to the Corporation's
Common Stock (other than a dividend payable solely in Common Stock of the
Corporation), or upon any other class of Preferred Stock of the Corporation
with a dividend preference subordinate to the dividend preference of the
Series B Preferred Stock, unless all accrued but unpaid dividends on the
Series B Preferred Stock has been declared and paid and a dividend of equal
or greater amount per share (on an as-if-
10
<PAGE>
converted to Common Stock basis) is first declared and paid with respect to
the Series B Preferred Stock.
(ii) No dividends shall be paid on the Series B Preferred Stock
at such time as:
(A) such payment would violate Delaware law; or
(B) such payment would impair the net capital or other
financial requirements applicable to the Corporation established by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission,
or any other state of federal securities authority or agency, any state or
federal commodities authority or agency, or any commodities or securities
exchange.
(b) LIQUIDATION PREFERENCE (i) In the event of any liquidation,
dissolution or winding-up of the Corporation, either voluntary or
involuntary (a "Liquidation"), the holders of shares of the Series B
Preferred Stock then issued and outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
shareholders, whether from capital, surplus or earnings, before any payment
shall be made to the holders of shares of the Common Stock or upon any
other series of Preferred Stock of the Corporation with a liquidation
preference subordinate to the liquidation preference of the Series B
Preferred Stock, an amount equal to one thousand dollars ($1,000) per
share. The liquidation preference of the Series B Preferred Stock shall be
junior in right of payment to the liquidation preference of the
Corporation's existing class of Series A Preferred Stock. If, upon any
Liquidation of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders
of shares of the Series B Preferred Stock, and the holders of any other
series of Preferred Stock with a liquidation preference equal to the
liquidation preference of the Series B Preferred Stock the full amounts to
which they shall respectively be entitled, the holders of shares of the
Series B Preferred Stock, holders of shares of the Series B Preferred
Stock, and the holders of any other series of Preferred Stock with
liquidation preference equal to the liquidation preference of the Series B
Preferred Stock and Series B Preferred Stock shall receive all of the
assets of the Corporation available for distribution and each such holder
of shares of the Series B Preferred Stock, holders of share of the Series B
Preferred Stock, and the holders of any other series of Preferred Stock
with a liquidation preference equal to the liquidation preference of the
Series B Preferred Stock shall share ratably in any distribution in
accordance with the amounts due such shareholders. After payment shall
have been made to the holders of shares of the Series B Preferred Stock of
the full amount to which they shall be entitled, as aforesaid, the holders
of shares of the Series B Preferred Stock shall be entitled to no further
distributions thereon and the holders of shares of the Common Stock and of
shares of any other series of stock of the Corporation shall be entitled to
share, according to their respective rights and preferences, in all
remaining assets of the Corporation available for distribution to its
shareholders.
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<PAGE>
(ii) A merger or consolidation of the Corporation with or into
any other corporation, or a sale, lease, exchange, or transfer of all or any
part of the assets of the Corporation which shall not in fact result in the
liquidation (in whole or in part) of the Corporation and the distribution of its
assets to its shareholders shall not be deemed to be a voluntary or involuntary
liquidation (in whole or in part), dissolution, or winding-up of the
Corporation.
(c) CONVERSION OF SERIES B PREFERRED STOCK The holders of Series B
Preferred Stock shall have the following conversion rights:
(i) RIGHT TO CONVERT. Each share of Series B Preferred Stock
shall be convertible, on the Conversion Dates and at the Conversion
Prices set forth below, into fully paid and nonassessable shares of
Common Stock.
(ii) MECHANICS OF CONVERSION. Each holder of Series B
Preferred Stock who desires to convert the same into shares of Common
Stock shall provide notice ("Conversion Notice") via telecopy to the
Corporation. The original Conversion Notice and the certificate or
certificates representing the Series B Preferred Stock for which
conversion is elected, shall be delivered to the Corporation by
international courier, duly endorsed. The date upon which a
Conversion Notice is properly received by the Corporation shall be a
"Notice Date."
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series B
Preferred Stock at the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid; provided that the
original shares of Series B Preferred Stock to be converted are received by the
transfer agent or the Corporation within three business days after the Notice
Date and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date. If the original
shares of Series B Preferred Stock to be converted are not received by the
transfer agent or the Corporation within three business days after the Notice
Date, the Conversion Notice shall become null and void.
(iii) CONVERSION DATES. The Series B Preferred Stock shall
become convertible into shares of Common Stock at any time commencing forty-five
(45) days after the last day on which there is an original issuance of the
Series B Preferred Stock (the "Conversion Date").
(iv) CONVERSION PRICE. Each share of Series B Preferred Stock
shall be convertible into the number of shares of Common Stock according to the
following formula:
N X 1,000
- ---------
Conversion Price
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<PAGE>
where:
N = the number of shares of the Series B Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (x) the closing bid price or the Corporation's
Common Stock on the date of the original issuance of the
Series B Preferred Stock, or (y) the average closing bid
price of the Corporation's Common Stock for the five (5)
trading days immediately preceding the Notice Date;
provided, however, in no event shall the Conversion Price be
less than $4.00 nor greater than $6.05; provided, further,
however, that the aforesaid $4.00 minimum Conversion Price
shall be applicable on and after the first to occur of (i)
January 1, 1997, (ii) August 15, 1996, if the Corporation's
Common Stock has not been listed on the NASDAQ SmallCap
Market on or prior to such date, or (iii) October 1, 1996,
if the Company's unaudited financial statements for the
quarter ended June 30, 1996 (as set forth in its Form 10-QSB
filed with the Securities and Exchange Commission) reflected
less than $350,000 of net income before income taxes.
(v) AUTOMATIC CONVERSION. Each share of Series B Preferred
Stock outstanding on December 31, 1997 automatically shall be converted into
Common Stock on such date at the Conversion Price then in effect, and December
31, 1997 shall be deemed to be the Notice Date with respect to such conversion.
(vi) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of any shares, share or fractional share of Series B
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of shares (or fractions thereof) of Series B Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share.
If, after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the closing bid price of the Corporation's
Common Stock on the Notice Date multiplied by such fraction.
(vii) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common stock, solely for the purpose of effecting the
conversion of the shares of the Series B Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series B Preferred Stock; and
if at any time the number of authorized but unissued shares of Common stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series B Preferred Stock, the
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<PAGE>
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(viii) ADJUSTMENT TO CONVERSION PRICE.
(A) If, prior to the conversion of all shares of Series B
Preferred Stock, the number of outstanding shares or Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(B) If prior to the conversion of all shares of Series B
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock or the Corporation shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Corporation or another entity, then the holders of Series B
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series B Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such share of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series B Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the holders of the Series B Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series B Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument the
obligation to deliver to the holders of the Series B Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series B Preferred Stock may be entitled to purchase.
(C) If any adjustment under this subsection would create a
fractional share of Common Stock or a right to acquire a fractional share if
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
(d) VOTING. Except as otherwise provided by the Delaware Business
Corporation Law, the holders of the Series B Preferred Stock shall have no
voting power whatsoever, and no holder of Series B Preferred Stock shall vote or
otherwise participate in any proceeding in which actions shall be taken by the
Corporation or the shareholders thereof or be entitled to notification as to any
meeting of the Board of Directors or the shareholders.
14
<PAGE>
(e) PROTECTIVE PROVISIONS. So long as shares of Series B Preferred
Stock are outstanding, the Corporation shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series B Preferred Stock:
(i) alter or change the rights, preferences or privileges of
the shares of Series B Preferred Stock so as to affect adversely the Series C
preferred Stock;
(ii) create any new class or series of stock being on a parity
with or having a preference over the Series C Preferred Stock with respect to
dividends, to payments upon Liquidation (as provided for in Section B of this
Designation) or to redemption; or
(iii) do any act or thing not authorized or contemplated by
this Designation which would result in taxation of the holders of shares of the
Series B Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
(f) STATUS OF CONVERTED STOCK. In the event any shares of Series B
Preferred Stock shall be converted as contemplated by this Designation, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class of series, and shall not be
issuable by the Corporation as Series B Preferred Stock.
E. SERIES C PREFERRED STOCK. Five Thousand (5,000) of the
Five Million (5,000,000) authorized shares of Preferred Stock of the Company
shall be designated Series C Preferred Stock (the "Series C Preferred Stock").
The Series C Preferred Stock shall be pari passu with the Company's Series B
Preferred Stock and shall possess the rights and privileges set forth below:
(a) DIVIDENDS (i) The holder of each issued and outstanding share of
Series C Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors of the Company, out of the assets at the time
legally available for such purpose, dividends at a rate of $33.30, payable
annually in arrears. No dividends shall be declared and paid on the Series
C Preferred Stock (other than a dividend payable solely in shares of Series
C Preferred Stock) unless all accrued but unpaid dividends on the Company's
existing class of Series A Preferred Stock have been declared and paid in
cash. Such dividends shall not be cumulative and no right to such
dividends shall accrue to holders of Series C Preferred Stock unless
declared by the Company's Board of Directors; provided, however, that if
all shares of Series C Preferred Stock have not been converted into common
stock by December 31, 1997 such dividends shall begin to accumulate on all
shares of Series C Preferred Stock which remain outstanding at such time
and shall be payable, subject to clause (ii) below, on December 31, 1997
and each December 31 thereafter. At the Company's election, such dividends
may be declared in cash, or in additional shares of Series C Preferred
Stock in an amount equal to the number of shares of Series C Preferred
Stock which on such date would be convertible into that number of
15
<PAGE>
shares of common stock, par value $.001 per share (the "Common Stock")
which shall be determined as follows: the amount of the dividend divided by
the closing bid price of the Common Stock on December 31st (or the first
following business day if such date should fall on a weekend or holiday).
No dividends shall be declared or paid with respect to the Company's Common
Stock (other than a dividend payable solely in Common Stock of the
Company), or upon any other class of Preferred Stock of the Company with a
dividend preference subordinate to the dividend preference of the Series C
Preferred Stock, unless all accrued but unpaid dividends on the Series C
Preferred Stock has been declared and paid and a dividend of equal or
greater amount per share (on an as-if-converted to Common Stock basis) is
first declared and paid with respect to the Series C Preferred Stock and
Series B Preferred Stock on a pari passu basis.
(ii) No dividends shall be paid on the Series C Preferred Stock
at such time as:
(A) such payment would violate Delaware law; or
(B) such payment would impair the net capital or other
financial requirements applicable to the Company established by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission,
or any other state of federal securities authority or agency, any state or
federal commodities authority or agency, or any commodities or securities
exchange.
(b) LIQUIDATION PREFERENCE (i) In the event of any liquidation,
dissolution or winding-up of the Company, either voluntary or involuntary
(a "Liquidation"), the holders of shares of the Series C Preferred Stock
then issued and outstanding shall be entitled to be paid out of the assets
of the Company available for distribution to its shareholders, whether from
capital, surplus or earnings, before any payment shall be made to the
holders of shares of the Common Stock or upon any other series of Preferred
Stock of the Company with a liquidation preference subordinate to the
liquidation preference of the Series C Preferred Stock, an amount equal to
one thousand dollars ($1,000) per share. The liquidation preference of the
Series C Preferred Stock shall be junior in right of payment to the
liquidation preference of the Company's existing class of Series A
Preferred Stock and shall be on a pari passu basis with the right of
payment to the liquidation preference of the Company's existing class of
Series B Preferred Stock. If, upon any Liquidation of the Company, the
assets of the Company available for distribution to its shareholders shall
be insufficient to pay the holders of shares of the Series C Preferred
Stock, holders of shares of the Series B Preferred Stock, and the holders
of any other series of Preferred Stock with a liquidation preference equal
to the liquidation preference of the Series C Preferred Stock the full
amounts to which they shall respectively be entitled, the holders of shares
of the Series C Preferred Stock, holders of shares of the Series B
Preferred Stock, and the holders of any other series of Preferred Stock
with liquidation preference equal to the liquidation preference of the
Series C Preferred Stock and Series B Preferred Stock shall receive all of
the assets of the Company available for distribution and each such holder
of shares of the Series C
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<PAGE>
Preferred Stock, holders of share of the Series B Preferred Stock, and the
holders of any other series of Preferred Stock with a liquidation
preference equal to the liquidation preference of the Series C Preferred
Stock shall share ratably in any distribution in accordance with the
amounts due such shareholders. After payment shall have been made to the
holders of shares of the Series C Preferred Stock of the full amount to
which they shall be entitled, as aforesaid, the holders of shares of the
Series C Preferred Stock shall be entitled to no further distributions
thereon and the holders of shares of the Common Stock and of shares of any
other series of stock of the Company shall be entitled to share, according
to their respective rights and preferences, in all remaining assets of the
Company available for distribution to its shareholders.
(ii) A merger or consolidation of the Company with or into any
other corporation, or a sale, lease, exchange, or transfer of all or any part of
the assets of the Company which shall not in fact result in the liquidation (in
whole or in part) of the Company and the distribution of its assets to its
shareholders shall not be deemed to be a voluntary or involuntary liquidation
(in whole or in part), dissolution, or winding-up of the Company.
(c) CONVERSION OF SERIES C PREFERRED STOCK The holders of Series C
Preferred Stock shall have the following conversion rights:
(i) RIGHT TO CONVERT. Each share of Series C Preferred Stock
shall be convertible, on the Conversion Dates and at the Conversion Prices set
forth below, into fully paid and nonassessable shares of Common Stock.
(ii) MECHANICS OF CONVERSION. Each holder of Series C Preferred
Stock who desires to convert the same into shares of Common Stock shall provide
notice in the form of the Notice of Conversion or Exercise attached to the
subscription agreement pursuant to which the Series C Preferred Stock was issued
(a "Conversion Notice") via telecopy to the Company. The original Conversion
Notice and the certificate or certificates representing the Series C Preferred
Stock for which conversion is elected, shall be delivered to the Company by
international courier, duly endorsed. The date upon which a Conversion Notice
is properly received by the Company shall be a "Notice Date."
The Company shall use all reasonable efforts to issue and deliver within
three (3) business days after the Notice Date, to such holder of Series C
Preferred Stock at the address of the holder on the stock books of the Company,
a certificate or certificates for the number of shares of Common Stock to which
the holder shall be entitled as aforesaid; provided that the original shares of
Series C Preferred Stock to be converted are received by the transfer agent or
the Company within three business days after the Notice Date and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. If the original shares of Series C
Preferred Stock to be converted are not received by the transfer agent or the
Company within three business days after the Notice Date, the Conversion Notice
shall become null and void.
17
<PAGE>
(iii) CONVERSION DATES. The Series C Preferred Stock shall
become convertible into shares of Common Stock at any time commencing forty-five
(45) days after the last day on which there is an original issuance of the
Series C Preferred Stock (the "Conversion Date").
(iv) CONVERSION PRICE. Each share of Series C Preferred Stock
shall be convertible into the number of shares of Common Stock according to the
following formula:
N X 1,000
- ---------
Conversion Price
where:
N = the number of shares of the Series C Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (i) $2.25 per share or (ii) the average
closing bid price on the NASDAQ SmallCap Market on the five
trading days immediately preceding the holder's delivery of
a Conversion Notice to the Company.
(v) AUTOMATIC CONVERSION. Each share of Series C Preferred
Stock outstanding on June 30, 2002 automatically shall be converted into Common
Stock on such date at the Conversion Price then in effect, and June 30, 2002
shall be deemed to be the Notice Date with respect to such conversion.
(vi) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of any shares, share or fractional share of Series C
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of shares (or fractions thereof) of Series C Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share.
If, after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Company shall, in lieu of
issuing any fractional share, pay the holder otherwise entitled to such fraction
a sum in cash equal to the closing bid price of the Company's Common Stock on
the Notice Date multiplied by such fraction.
(vii) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common stock, solely for the purpose of effecting the
conversion of the shares of the Series C Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series C Preferred Stock; and
if at any time the number of authorized but unissued shares of Common stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series C Preferred Stock, the Company
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<PAGE>
will take such corporate action as may be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(viii) ADJUSTMENT TO CONVERSION PRICE.
(A) If, prior to the conversion of all shares of Series C
Preferred Stock, the number of outstanding shares or Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(B) If prior to the conversion of all shares of Series C
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock or the Company shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Company or another entity, then the holders of Series C
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series C Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such share of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series C Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the holders of the Series C Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series C Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Company shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the holders of the Series C Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series C Preferred Stock may be entitled to purchase.
(C) If any adjustment under this subsection would create a
fractional share of Common Stock or a right to acquire a fractional share if
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
(d) VOTING. Except as otherwise provided by the Delaware Business
Corporation Law, the holders of the Series C Preferred Stock shall have no
voting power whatsoever, and no holder of Series C Preferred Stock shall vote or
otherwise participate in any proceeding in which actions shall be taken by the
Company or the shareholders thereof or be entitled to notification as to any
meeting of the Board of Directors or the shareholders.
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<PAGE>
(e) PROTECTIVE PROVISIONS. So long as shares of Series C Preferred
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series C Preferred Stock:
(i) alter or change the rights, preferences or privileges of
the shares of Series C Preferred Stock so as to affect adversely the Series C
preferred Stock;
(ii) create any new class or series of stock being on a parity
with or having a preference over the Series C preferred Stock with respect to
dividends, to payments upon Liquidation (as provided for in Section B of this
Certificate Designation) or to redemption; or
(iii) do any act or thing not authorized or contemplated by
this Designation which would result in taxation of the holders of shares of the
Series C Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
(f) STATUS OF CONVERTED STOCK. In the event any shares of Series C
Preferred stock shall be converted as contemplated by this Certificate of
Designation, the shares so converted shall be canceled, shall return to the
status of authorized but unissued Preferred Stock of no designated class of
series, and shall not be issuable by the Company as Series C Preferred Stock.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed
by or under the direction of the board of directors. In addition to the powers
and authority expressly conferred upon them by statute or by this Certificate of
Incorporation or the by-laws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by
written ballot unless the by-laws so provide.
C. Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders.
D. Special meetings of stockholders of the corporation may be
called only by the Chairman of the Board or the President or by the board of
directors acting pursuant to a resolution adopted by a majority of the Whole
Board. For purposes of this Certificate of
20
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Incorporation, the term "Whole Board" shall mean the total number of authorized
directors whether or not there exist any vacancies in previously authorized
directorships.
SIXTH: A. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
number of directors shall be fixed from time to time exclusively by the board of
directors pursuant to a resolution adopted by a majority of the Whole Board.
The directors, other than those who may be elected by the holders of any series
of Preferred Stock under specified circumstances, shall be divided into three
classes, with the term of office of the first class to expire at the
Corporation's first annual meeting of stockholders, the term of office of the
second class to expire at the Corporation's second annual meeting of
stockholders and the term of office of the third class to expire at the
Corporation's third annual meeting of stockholders. At each annual meeting of
stockholders, directors shall be elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from any
increase in the authorized number of directors or any vacancies in the board of
directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall, unless otherwise provided by law or by
resolution of the board of directors, be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been chosen expires.
No decrease in the authorized number of directors shall shorten the term of any
incumbent director.
C. Advance notice of stockholder nominations for the election
of directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
by-laws of the Corporation.
D. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire board of
directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least sixty-six and two-thirds
percent (66.67%) of the voting power of all of the then-outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SEVENTH: The board of directors is expressly empowered to adopt, amend
or repeal the by-laws of the Corporation. Any adoption, amendment or
repeal of the by-laws of the Corporation by the board of directors shall
require the approval of a majority of the Whole Board. The stockholders
shall also have power to adopt, amend or repeal the by-laws of the
Corporation; provided, however, that, in addition to any vote of the
holders of any class or series of stock of the Corporation required by law
or by this Certificate of Incorporation, the affirmative vote of the
holders of at least fifty percent (50%) of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation
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entitled to vote generally in the election of directors, voting together as
a single class, shall be requested to adopt, amend or repeal any provision
of the by-laws of the Corporation.
EIGHTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law or (iv) for any transaction for which the director
derived an improper personal benefit. If the Delaware General Corporation
Law is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred
upon stockholders are granted subject to this reservation; provided,
however, that, notwithstanding any other provision of this Certificate of
Incorporation or any provision of law that might otherwise permit a lesser
vote or no vote, but in addition to any vote of the holders of any class or
series of the stock of this Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66.67%) of the voting power of all
the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors, voting together as
a single class, shall be required to amend or repeal this Article NINTH,
Sections C or D of Article FIFTH, Article SIXTH, Article SEVENTH, or
Article EIGHTH.
IN WITNESS WHEREOF, the undersigned incorporator hereby executes this
document and affirms that the facts set forth herein are true under the
penalties of perjury the 16th day of December, 1997.
/s/ Alexander Canate
------------------------
Alexander Canate
Incorporator
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EXHIBIT (3)(II)
SNAKE EYES GOLF CLUBS, INC.
BY-LAWS
ARTICLE I - STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
(1) An annual meeting of the stockholders, for the election of directors
to succeed those whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
on such date, and at such time as the board of directors (the "Board of
Directors" or "Board") of Snake Eyes Golf Clubs, Inc. (the "Corporation") shall
each year fix, which date shall be within thirteen (13) months of the last
annual meeting of stockholders. The annual meetings of stockholders will be held
in May of each year or such other date as the Board shall fix. The annual
meeting of stockholders held in December 1997 shall be deemed to be the annual
meeting for 1997 and 1998 and the next annual meeting of stockholders shall be
held in May 1999 or such other date as the Board shall fix.
(2) Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (a) pursuant to the
Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of the notice provided for in these By-laws, who
procedures set fourth in these By-laws.
(3) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (2) of these
By-laws, the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principle executive offices of the Corporation
not less than one hundred twenty (120) days or more than one hundred fifty (150)
days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than thirty (30) days or delayed by more than sixty (60) days
from such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the later of the sixtieth
(60th) day prior to such annual meeting or the tenth (10) day following the day
on which the public announcement of such meeting is first made by the
Corporation. Such stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the
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meeting, the reasons for conducting such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(4) Notwithstanding anything in the second sentence of paragraph (3) of
these By-laws to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least
seventy (70) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by these By-laws shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth (10) day following the day on which such public
announcement is first made by the Corporation.
(5) Only such persons who are nominated in accordance with the procedures
set forth in these By-laws shall be eligible to serve as directors and only such
business shall be conducted at an annual meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
these By-laws. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in these By-laws.
The chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to brought before the meeting was made in
accordance with the procedures set forth in these By-laws and, if any proposed
nomination or business is not in compliance with these By-laws, to declare that
such defective proposed business or nomination shall be disregarded.
(6) For purposes of these By-laws, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14, or 15 (d) of the Exchange Act.
(7) Notwithstanding the foregoing provisions of these By-laws, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in these By-laws. Nothing in these By-laws shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2. SPECIAL MEETINGS: NOTICE
Special meetings of the stockholders, other than those required by statute,
may be called at any time by the Board of Directors pursuant to a resolution
approved by a majority of the whole Board of Directors. Notice of every special
meeting, stating the time, place and purpose,
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shall be given by mailing, postage prepaid, at least ten (10) but not more than
sixty (60) days before each such meeting, a copy of such notice addressed to
each stockholder of the Corporation at his/her/its post office address as
recorded on the books of the Corporation. The Board of Directors may postpone
or reschedule any previously scheduled special meeting.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting.
SECTION 3. NOTICE OF MEETINGS.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
SECTION 4. QUORUM.
At any meeting of the stockholders, the holders of a majority of all
of the shares of the stock entitled to vote at the meeting, present in person or
by proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes is required, a majority of the shares of
such class or classes present in person or represented by proxy shall constitute
a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the
meeting may adjourn the meeting to another place, date, or time.
SECTION 5. ORGANIZATION.
Such person as the Board of Directors may have designated or, in the
absence of such a person, the Chairman of the Board or, in his or her absence,
the Chief Executive Officer of the Corporation or, in his or her absence, such
person as may be chosen by the holders of a majority of the shares entitled to
vote who are present, in person or by proxy, shall call to order any meeting of
the stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such person
as the chairman appoints.
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SECTION 6. CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.
The chairman shall have the power to adjourn the meeting to another place, date
and time. The date and time of the opening and closing of the polls for each
matter upon which the stockholders will vote at the meeting shall be announced
at the meeting.
SECTION 7. PROXIES AND VOTING.
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law in accordance with the procedure established for
the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefore by stockholder entitled to vote or by his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
The Corporation may, and to the extent required by law, shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting may, and to the extent
required by law, shall, appoint one or more inspectors to act at the meeting.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. Every vote taken
by ballots shall be counted by a duly appointed inspector or inspectors.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law, all other matters shall be determined
by a majority of the votes cast affirmatively or negatively.
SECTION 8. STOCK LIST.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary
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business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. NUMBER, ELECTION AND TERM OF DIRECTORS.
Subject to the rights of the holders of any series of Preferred Stock
to elect directors under specified circumstances, the number of directors shall
be fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors which the
Corporation would have if there were no vacancies. The directors, other than
those who may be elected by the holders of any series of Preferred Stock under
specified circumstances, shall be divided, with respect to the time for which
they severally hold office, into three classes with the term of office of the
first class to expire at the Corporation's first annual meeting of stockholders,
the term of office of the second class to expire at the Corporation's second
annual meeting of stockholders and the term of office of the third class to
expire at the Corporation's third annual meeting of stockholders, commencing
with the first annual meeting, (i) directors elected to succeed those directors
whose terms then expire shall be elected for a term of office to expire at the
third succeeding annual meeting of stockholders after their election, with each
director to hold office until his or her successor shall have been duly elected
and qualified, and (ii) if authorized by a resolution of the Board of Directors,
directors may be elected to fill any vacancy on the Board of Directors,
regarding less of how such vacancy shall have been created.
SECTION 2. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Subject to applicable law and to the rights of the holders of any
series of Preferred Stock with respect to such series of Preferred Stock, and
unless the Board of Directors otherwise determines, newly created directorships
resulting form any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be filled
only by a majority vote of the directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the entire Board of Directors shall shorten the term of
any incumbent director.
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SECTION 3. REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
SECTION 4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the
President or by two or more directors then in office and shall be held at such
place, on such date, and at such time as they or he or she shall fix. Notice of
the place, date, and time of each such special meeting shall be given each
director by whom it is not waived by mailing written notice not less than five
(5) days before the meeting or by telephone or by telegraphing or telexing or by
facsimile transmission of the same not less than twenty-four (24) hours before
the meeting. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.
SECTION 5. QUORUM.
At any meeting of the Board of Directors, a majority of the total
number of the whole Board shall constitute a quorum for all purposes. If quorum
shall fail to attend any meeting, a majority of those present may adjourn the
meeting to another place, date, or time, without further notice or waiver
thereof.
SECTION 6. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
SECTION 7. CONDUCT OF BUSINESS.
At any meeting of the Board of Directors, business shall be transacted
in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
SECTION 8. POWERS.
The Board of Directors may, except as otherwise required by law,
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, including, without limiting the generality of the
foregoing, the unqualified power:
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(1) To declare dividends from time to time in accordance with
law;
(2) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock option, stock
purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, not inconsistent
with these By-laws, for the management of the Corporation's business and
affairs.
SECTION 9. COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the certificate of incorporation, the
Board of Directors shall have the authority to fix the compensation of the
directors. The directors may be paid their expenses, if any, of attendance at
each meting of the Board of Directors and may be paid a fixed sum for attendance
at each meeting of the Board of Directors or paid a stated salary or paid other
compensation as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
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ARTICLE III - COMMITTEES
SECTION 1. COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors, by a vote of a majority of the whole Board,
may from time to time designate committees of the Board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member of members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meting of the committee. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting, whether or not he or she or they constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
SECTION 2. CONDUCT OF BUSINESS.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
ARTICLE IV - OFFICERS
SECTION 1. GENERALLY.
The officers of the Corporation shall consist of a President, one or
more Vice Presidents, a Secretary, a Treasure and such other officers as may
from time to time be appointed by the Board of Directors. Officers shall be
elected by the Board of Directors, which shall consider that subject at its
first meeting after every annual meeting of stockholders. Each officer shall
hold office until his or her successor is elected and qualified or until his or
her earlier resignation or removal. Any number of offices may be held by the
same person. The salaries of officers elected by the Board of Directors shall
be fixed from time to time by the Board of Directors or by such officers as may
be designated by resolution of the Board.
SECTION 2. PRESIDENT.
The President shall be the Chief Executive Officer of the Corporation.
Subject to the provisions of these By-laws and to the direction of the Board of
Directors, he or she shall have the responsibility for the general management
and control of the business and affairs of the Corporation and shall perform all
duties and have all powers which are commonly incident to the
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office of chief executive or which are delegated to him or her by the Board of
Directors. He or she shall power to sign all stock certificates, contracts and
other instruments of the Corporation which are authorized and shall have general
supervision and direction of all of the other offices, employees and agents of
the Corporation.
SECTION 3. VICE PRESIDENT.
Each Vice President shall have such powers and duties as may be
delegated to him or her by the Board of Directors. One (1) Vice President shall
be designated by the Board to perform the duties and exercise the powers of the
President in the event of the President's absence or disability.
SECTION 4. TREASURER.
The Treasurer shall have the responsibility for maintaining the financial
records of the Corporation. He or she shall make such disbursements of the
funds of the Corporation as are authorized and shall render from time to time an
account of all such transactions and of the financial condition of the
Corporation. The Treasurer shall also perform such other duties as the Board of
Directors may from time to time prescribe.
SECTION 5. SECRETARY.
The Secretary shall issue all authorized notices for, and shall keep
minutes of all meetings of the stockholders and the Board of Directors. He or
she shall have charge of the Corporate books and shall perform such other duties
as the Board of Directors may from time to time prescribe.
SECTION 6. DELEGATION OF AUTHORITY.
The Board of Directors may from time to time delegate the powers or
duties of any officer to any other officers or agents, notwithstanding any
provision hereof.
SECTION 7. REMOVAL.
Any officer of the Corporation may be removed at any time, with or
without cause, by the Board of Directors.
SECTION 8. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the President or
any officer or any officer of the Corporation authorized by the President shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other Corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
Corporation.
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ARTICLE V - STOCK
SECTION 1. CERTIFICATE OF STOCK.
Each stockholder shall be entitled to a certificate signed by, or in
the name of the Corporation by, the President or a Vice President, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasure,
certifying the number of shares owned by him or her. Any or all of the
signatures on the certificate may be by facsimile.
SECTION 2. TRANSFERS OF STOCK.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these
By-laws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
SECTION 3. RECORD DATE.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may, except as
otherwise required by law, fix a record date, which record date shall not
precede the date on which the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, nor more than sixty (60) days
prior to the time for such other action as herein before described; provided,
however, that if no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held, and, for
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or to exercise any rights of change,
conversion or exchange of stock or for any other purpose, the record date shall
be at the close of business on the day on which the Board of Directors adopts a
resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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<PAGE>
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
SECTION 5. REGULATIONS.
Except as otherwise specifically provided herein or required by law,
all notices required to be given to any stockholder, director, officer, employee
or agent shall be in writing and may in every instance be effectively given by
hand delivery to the recipient thereof, by depositing such notice in the mails,
postage paid, recognized overnight delivery service or by sending such notice by
facsimile, receipt acknowledged, or by prepaid telegram or mailgram. Any such
notice shall be addressed to such stockholder, director, officer, employee or
agent at his or her last know address as the same appears on the books of the
Corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mails or by telegram or mailgram, shall be
the time of the giving of the notice.
SECTION 2. WAIVERS.
A written waiver of any notice, signed by a stockholder, director,
officer, employee or agent, whether before of after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
Attendance at any meeting shall constitute waiver of notice except attendance
for the sole purpose of objecting to the timeliness of notice.
ARTICLE VII - MISCELLANEOUS
SECTION 1. FACSIMILE SIGNATURES.
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these By-laws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board of Directors or a committee thereof.
SECTION 2. CORPORATE SEAL.
The Board of Directors may provide a suitable seal, containing the
name of the Corporation, which seal shall be in the charge of the Secretary. If
and when so directed by the Board of Directors or a committee thereof,
duplicates of the seal may be kept and used by the Treasurer or by an Assistant
Secretary or Assistant Treasurer.
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SECTION 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS.
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
SECTION 4. FISCAL YEAR.
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
SECTION 5. TIME PERIODS.
In applying any provision of these By-laws which requires that an act
be done or not be done a specified number of days prior to an event or that an
act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. RIGHT TO INDEMNIFICATION.
Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a director or an officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section 3 of this ARTICLE VIII with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof ) was authorized by the Board of Directors
of the Corporation.
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<PAGE>
SECTION 2. RIGHT TO ADVANCEMENT OF EXPENSE.
The right to indemnification conferred in Section 1 of this ARTICLE
VIII shall include the right to be paid by the Corporation the expenses
(including attorney's fees) incurred in defending any such proceeding in advance
of its final disposition (hereinafter an "advancement of expenses"); provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section 2 or otherwise. The rights to indemnification and
to the advancement of expenses conferred in Sections 1 and 2 of this ARTICLE
VIII shall be contract rights and such rights shall continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and administrators.
SECTION 3. RIGHT OF INDEMNITEE TO BRING SUIT.
If a claim under Section 1 or 2 of this ARTICLE VIII is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20) days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
indemnitee has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of
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<PAGE>
providing that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this ARTICLE VIII or otherwise shall be on the
Corporation.
SECTION 4. NON-EXCLUSIVITY OF RIGHTS.
The rights to indemnification and to the advancement of expenses
conferred in this ARTICLE VIII shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 5. INSURANCE.
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of the Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
ARTICLE IX - AMENDMENTS
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors is expressly authorized to make, alter, amend and repeal
these By-laws subject to the power of the holders of capital stock of the
Corporation to alter, amend or repeal the By-laws; provided, however, that with
respect to the powers of holders of capital stock to make, alter, amend and
repeal By-Laws of the Corporation, notwithstanding any other provision of these
By-Laws or any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law, these
By-Laws or any Preferred Stock, the affirmative vote of the holders of at least
two-thirds (66.67%) of the voting power of all of the then-outstanding shares
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to make, alter, amend or repeal any provision of
these By-Laws.
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<PAGE>
EXHIBIT (99A)
CERTIFICATE OF MERGER
GOLF-TECHNOLOGY HOLDING, INC.
INTO
SNAKE EYES GOLF CLUBS, INC.
The undersigned corporation
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
Golf-Technology Holding, Inc. Idaho
Snake Eyes Golf Clubs, Inc. Delaware
SECOND: That an Agreement and Plan of Merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by each
of the constituent corporations in accordance with the requirements of section
252 of the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is Snake
Eyes Golf Clubs, Inc., a Delaware corporation.
FOURTH: That the Certificate of Incorporation Snake Eyes Golf Clubs,
Inc., a Delaware corporation which is surviving the merger, shall be the
Certificate of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement and Plan of Merger is on file at the
principal place of business of the surviving corporation, the address of which
is 13000 Sawgrass Village Circle, Ponte Vedra Beach, Florida 32082.
SIXTH: That a copy of the Agreement and Plan of Merger will be furnished
by the surviving corporation, on request and without cost, to any stockholder of
any constituent corporation.
<PAGE>
SEVENTH: The authorized capital stock of each foreign corporation which is
a party to the merger is as follows:
CORPORATION CLASS NUMBER OF SHARES PAR VALUE PER SHARE
- ----------- ----- ---------------- -------------------
Golf-Technology Common Stock 25,000,000 $.001
Holding, Inc.
Golf-Technology Preferred Stock 5,000,000 $.001
Holding, Inc.
EIGHTH: That this Certificate of Merger shall be effective upon its
filing with the State of Delaware.
[Signature page follows, remainder of page left intentionally blank]
2
<PAGE>
Dated: December 16, 1997
SNAKE EYES GOLF CLUBS, INC.
By:____________________________
Harold E. Hutchins
President and Secretary
3
<PAGE>
EXHIBIT (99B)
ARTICLES OF MERGER
Pursuant to the provisions of Section 30-1-1105 and Section 30-1-1107 of
the Idaho Business Corporation Act, the undersigned corporations adopt the
following Articles of Merger for the purpose of merging them into one of such
corporations:
1. The name of the surviving corporation in the merger is Snake Eyes Golf
Clubs, Inc., a corporation organized and existing under the laws of the
state of Delaware.
2. The Plan of Merger is attached as ANNEX A.
3. The Plan of Merger was adopted by the constituent corporations in the
following manner:
(a) The Plan of Merger was approved by resolutions adopted by the board of
directors of each constituent corporation.
(b) As to the approval of the Plan of Merger by the shareholders of
Golf-Technology Holding, Inc., the designation, number of
outstanding shares and number of votes entitled to be cast by
each voting group entitled to vote separately on the Plan, and
the total number of votes cast for and against the Plan by each
voting group entitled to vote separately thereon is as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VOTES NUMBER OF NUMBER OF VOTES
DESIGNATION OUTSTANDING SHARES ENTITLED TO BE CAST VOTES CAST FOR CAST AGAINST
- ----------- ------------------ ------------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock
and Series A 5,736,408 3,117,241 3,106,782 8,544
Preferred Stock
</TABLE>
The number of undisputed votes cast for the Plan of Merger, as
set forth above for each voting group, was sufficient for
approval by that voting group.
4. Snake Eyes Golf Clubs, Inc. has complied with the application provisions of
the laws of the state of Delaware under which it is incorporated, and this
merger is permitted by such laws.
<PAGE>
Dated: December 16, 1997 GOLF-TECHNOLOGY HOLDING, INC.
By: /s/ Harold E. Hutchins
-----------------------
Harold E. Hutchins
President and Secretary
2
<PAGE>
ANNEX A
PLAN AND AGREEMENT OF MERGER
BETWEEN
SNAKE EYES GOLF CLUBS, INC.
(A DELAWARE CORPORATION)
AND
GOLF-TECHNOLOGY HOLDING, INC.
(AN IDAHO CORPORATION)
This Plan and Agreement of Merger made and entered into on the 16th day of
December, 1997, by and between Snake Eyes Golf Clubs, Inc. a Delaware
corporation ("GOLF-Del") and Golf-Technology Holding, Inc., an Idaho corporation
("GOLF-Idaho").
WITNESSETH:
WHEREAS, GOLF-Del is a corporation organized and existing under the laws of
the State of Delaware, its Certificate of Incorporation having been filed in the
Office of the Secretary of State of the State of Delaware on Decemebr 16, 1997,
and
WHEREAS, GOLF-Idaho is a corporation organized and existing under the laws
of the State of Idaho; and
WHEREAS, the aggregate number of shares which GOLF-Idaho has authority to
issue is thirty million (30,000,000); and
WHEREAS, the board of directors of each of the constituent corporations
deems it advisable that GOLF-Idaho be merged into GOLF-Del, the Delaware
corporation, on the terms and conditions hereinafter set forth, in accordance
with the applicable provisions of the statutes of the States of Delaware and
Idaho respectively, which permit such merger;
NOW, THEREFORE, in consideration of the premises and of the agreements,
covenants and provisions hereinafter contained, GOLF-Del and GOLF-Idaho, by
their respective boards of directors, have agreed and do hereby agree, each with
the other as follows:
3
<PAGE>
ARTICLE I
GOLF-Del and GOLF-Idaho shall be merged into a single corporation, in
accordance with applicable provisions of the laws of the State of Idaho and of
the State of Delaware, by GOLF-Idaho merging into GOLF-Del, the Delaware
corporation, which shall be the surviving corporation.
ARTICLE II
Upon the merger becoming effective as provided in the applicable laws of
the State of Idaho and of the State of Delaware (the time when the merger shall
so become effective being sometimes herein referred to as the "Effective Date of
the Merger") the two constituent corporations shall become a single corporation,
which shall be GOLF-Del, the Delaware corporation, as the surviving corporation,
and the separate existence of GOLF-Idaho corporation shall cease except to the
extent provided by the laws of the State of Idaho.
ARTICLE III
The Certificate of Incorporation of GOLF-Del shall be the Certificate of
Incorporation of GOLF-Del which is attached hereto as EXHIBIT A.
ARTICLE IV
The manner of converting the outstanding shares of GOLF-Idaho into shares
of Golf-Del shall be as follows: (1) each outstanding share of GOLF-Idaho's
common stock, $0.001 par value, will automatically be converted into one share
of GOLF-Del common stock, $0.001 par value, (2) each outstanding share of
GOLF-Idaho's Series A Preferred Stock, $0.001 par value, will automatically be
converted into one share of GOLF-Del Series A Preferred Stock, $.001 par value,
and (3) each outstanding share of GOLF-Idaho's Series B Preferred Stock, $0.001
par value, will automatically be converted into one share of GOLF-Del Series B
Preferred Stock, $0.001 par value and (4) each outstanding share of GOLF-Idaho's
Series C Preferred Stock, $0.001 par value, will automatically be converted into
one share of GOLF-Del's Series C Preferred Stock, $0.001 par value, upon the
effective date of the merger. Each stock certificate representing issued and
outstanding shares of GOLF-Idaho's common stock, Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock will continue to represent
the same number of shares of common stock, Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock, respectively, of GOLF-Del. IT WILL
NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES
FOR STOCK CERTIFICATES OF GOLF-DEL. However, shareholders may exchange their
certificates if they so choose. The common stock of GOLF-Idaho is quoted on the
NASDAQ SmallCap Market (the "NASDAQ SmallCap") and the after the merger
GOLF-Del's common stock will continue to be traded on the NASDAQ SmallCap under
the symbol "SNKE+".
4
<PAGE>
IN WITNESS WHEREOF, GOLF-Del and GOLF-Idaho, pursuant to the approval and
authority duly given by resolutions adopted by their respective boards of
directors have caused this Plan and Agreement of Merger to be executed by an
authorized officer of each party thereto.
SNAKE EYES GOLF CLUBS, INC.
(A Delaware Corporation)
By: /s/ Harold E. Hutchins
------------------------
Harold E. Hutchins
Secretary
GOLF-TECHNOLOGY HOLDING, INC.
(An Idaho Corporation)
By: /s/ Harold E. Hutchins
------------------------
Harold E. Hutchins
Secretary
5
<PAGE>
I, Harold E. Hutchins, Secretary of (1) Snake Eyes Golf Clubs, Inc.
("GOLF-Del"), a corporation organized and existing under the laws of the State
of Delaware and (2) Golf-Technology Holding, Inc. ("GOLF-Idaho"), a corporation
organized and existing under the laws of the State of Idaho, hereby certify, as
Secretary of the said corporations, that the Plan and Agreement of Merger to
which this certificate is attached (the "Plan"), after having been duly signed
on behalf of said corporations by an authorized officer of Golf-Idaho and
Golf-Del, the Plan and Agreement of Merger was duly approved by the sole
shareholder of GOLF-Del pursuant to a unanimous written consent of such sole
shareholder of Golf-Del and that thereby the Plan was duly adopted as the act of
the sole shareholder of Golf-Del and submitted to and approved by the
shareholders of GOLF-Idaho at the annual meeting of shareholders of GOLF-Idaho,
for the purpose of considering and taking action upon said Plan and Agreement of
Merger, that 5,736,408 shares of voting stock of GOLF-Idaho were on said date
issued and outstanding and that the holders of 3,117,241 shares of GOLF-Idaho
voted by ballot in favor of said Plan and Agreement of Merger and the holders of
8,544 shares of GOLF-Idaho voted by ballot against same, the said affirmative
vote representing at least a majority of the total number of shares of the
outstanding capital stock of GOLF-Idaho, and that thereby the Plan and
Agreement of Merger was at said meeting duly adopted as the act of the
Shareholders of GOLF-Idaho, and the duly adopted agreement of said corporation.
WITNESS my hand on behalf of said corporations on this 16th day of
December, 1997.
SNAKE EYES GOLF CLUBS, INC.
(A Delaware Corporation)
By: /s/ Harold E. Hutchins
-------------------------
Harold E. Hutchins
Secretary
GOLF-TECHNOLOGY HOLDING, INC.
(An Idaho Corporation)
By: /s/ Harold E. Hutchins
-------------------------
Harold E. Hutchins
Secretary
6
<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
SNAKE EYES GOLF CLUBS, INC.
See Exhibit (3)(i)
7
<PAGE>
EXHIBIT (99C)
SNAKE EYES GOLF CLUBS, INC.
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
1. PURPOSE.
This Amended and Restated Snake Eyes Golf Clubs, Inc. 1995 Stock Option
Plan (the "Plan") is intended to provide incentives to the directors, officers,
consultants and employees of SNAKE EYES GOLF CLUBS, INC. (the "Company")
(formerly known as GOLF-TECHNOLOGY HOLDING, INC.) and its subsidiaries by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which do not qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
("Non-Qualified Option" or "Non-Qualified Options"). Non-Qualified Options are
referred to hereafter individually as an "Option".
2. DEFINITIONS.
As used in the Plan, the following definitions apply to the terms indicated
below:
(A) BOARD
"Board" shall mean the Board of Directors of the Company.
(B) EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(C) PARTICIPANT
"Participant" shall mean an employee, officer, director or outside
director of the Company or any subsidiary of the Company or a consultant to the
Company or any subsidiary of the Company selected to participate in the Plan and
to whom an Option is granted pursuant to the Plan, and, upon his or her death,
that person's successors, heirs, executors, and administrators, as the case may
be.
(D) RELATED COMPANY
"Related Company" shall mean a subsidiary or parent of the Company.
(E) SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
3. ADMINISTRATION OF THE PLAN.
(A) BOARD OR COMMITTEE ADMINISTRATION.
<PAGE>
The Plan shall be administered by the Board. The Board may appoint an
Option Committee (the "Committee") of two or more of its members to administer
this Plan, PROVIDED, HOWEVER, the Committee shall not take any action under the
Plan unless it is at all times composed solely of not less than two
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Exchange Act. Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if the Committee is not composed of two Non-Employee
Directors when the Company is subject to the Securities Act, or, if the
Committee is unable to act or no Committee has been appointed and the Board
shall take any and all actions required or permitted to be taken by the
Committee under the Plan and shall serve as the Committee.
Subject to ratification of the grant or authorization of each Option by the
Board (if so required by applicable state law), and subject to the terms of the
Plan, the Committee shall have the authority to:
(i) designate the employees, officers, directors or outside
directors of the Company or any subsidiary or consultants
to the Company or any subsidiary to whom Options may be
granted and the amount of such Options;
(ii) determine the time or times at which Options may be
granted;
(iii) determine the price of shares subject to each Option,
which price shall not be less than the minimum prices
specified in Paragraph 6;
(iv) determine, subject to Paragraphs 7 and 8, the time or
times when each Option shall become exercisable and the
duration of the exercise period;
(v) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options, and the
nature of such restrictions, if any;
(vi) in its absolute discretion and without amendment to the
Plan, (i) accelerate the date on which any Option granted
under the Plan becomes exercisable or (ii) otherwise
adjust any of the terms of any Option (except that no
such adjustment shall, without the consent of a
Participant, reduce the Participant's rights under any
previously granted and outstanding Option);
(vii) grant, in its absolute discretion and without amendment
to the Plan, Options on the condition that such
Participants surrender to the Committee for cancellation
such other Options (including without limitation, Options
with higher exercise prices and values) as the Committee
specifies. Notwithstanding Paragraph 4 herein, prior to
the surrender of such other Options, Options granted
pursuant to the preceding sentence of this Paragraph 3(a)
shall not count against the limit set forth in such
Paragraph 4; and
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<PAGE>
(viii) interpret and construe any provision of the Plan and
prescribe and rescind rules and regulations for
administering the Plan as it may deem necessary or
appropriate.
The interpretation and construction by the Committee of any provisions of the
Plan or of any Option granted under it shall be final and binding on all
parties.
(B) COMMITTEE ACTIONS.
The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. From time
to time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company (and any affiliate that may
adopt the Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination unless such action, omission or determination was taken or made by
such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
(C) GRANT OF OPTIONS TO DIRECTORS.
All grants of Options to directors shall in all respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Directors who are either (i) eligible for Options pursuant to the Plan
or (ii) have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan,
except that no such director shall act upon the granting to himself of Options,
but any such member may be counted in determining the existence of a quorum at
any meeting of the Board during which action is taken with respect to the
granting to him of Options
4. STOCK.
The stock subject to Options shall be authorized but unissued shares of
Common Stock of the Company, par value $.001 per share (the "Common Stock"), or
shares of Common Stock reacquired by the Company in any manner. The aggregate
number or shares which may be issued pursuant to the Plan is seven hundred fifty
thousand (750,000). The aggregate number or shares which may be issued pursuant
to this Plan may be adjusted as provided in Paragraph 11. If any Option granted
under the Plan shall expire or terminate for any reason without having been
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<PAGE>
exercised in full or shall cease for any reason to be exercisable in whole or in
part, the unpurchased shares subject to such Options shall again be available
for grants of Options under the Plan.
5. GRANTING OF OPTIONS.
Options may be granted under the Plan at any time at or after May 15, 1995
and prior to May 15, 2005. The date of grant of an Option under the Plan will
be the date specified by the Committee at the time it grants the Option;
provided, however, that such date shall not be prior to the date on which the
Committee acts to approve the grant.
(A) PRICE.
The exercise price per share as specified in the grant agreement
relating to each Option granted under the Plan shall be determined by the
Committee, PROVIDED, HOWEVER, that the exercise price per share of each Option
granted under the Plan may be less than or equal to the fair market value on the
date of such grant but not less than fifty (50%) percent of fair market value on
the date of such grant.
(B) DETERMINATION OR FAIR MARKET VALUE.
If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
closing selling price per share on that date of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
closing selling price per share on that date of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price per share last quoted on
that date by an established quotation service for over-the-counter securities,
if the Common Stock is not reported on the NASDAQ National Market List.
However, if the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
(C) OPTION DURATION.
Subject to earlier termination as provided in Paragraphs 7 and 8, each
Option shall expire on the date specified by the Committee which shall be no
later than ten years from the date of grant.
6. EXERCISE OF OPTION.
Subject to the provisions of Paragraphs 7 and 8, each Option granted
under the Plan shall be exercisable as follows:
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(A) VESTING.
The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
(B) FULL VESTING OR INSTALLMENTS.
Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
(C) PARTIAL EXERCISE.
Each Option or installment may be exercised at any time or from time
to time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable.
(D) ACCELERATION OF VESTING.
The Committee shall have the right to accelerate the date of exercise
of any installment of any Option.
7. TERMINATION OF EMPLOYMENT.
If a Participant ceases to be employed by or provide services to the
Company or its subsidiaries other than by reason of death or disability as
defined in Paragraph 6, no further installments of his Option shall become
exercisable, and his Option shall terminate after the passage of sixty (60) days
from the date of termination of his employment or severance of service, but in
no event later than on their specified expiration dates. Employment or service
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed
ninety (90) days or, if longer, any period during which such Participant 's
right to reemployment is guaranteed by statute. A bona fide leave of absence
with the written approval of the Committee shall not be considered an
interruption of employment under the Plan, provided that such written approval
contractually obligates the Company or its subsidiaries to continue the employ
of the Participant after the approved period of absence. Options granted under
the Plan shall not be affected by any change of employment within or among the
Company and its subsidiaries, so long as the Participant continues to be an
employee or in the service of the Company or its subsidiaries. Nothing in the
Plan shall be deemed to give any Participant of any Option the right to be
retained in employment or other service by the Company or its subsidiaries for
any period of time.
Notwithstanding the above, if a Participant ceases to employed by the
Company and all its subsidiaries for Misconduct, all outstanding Options granted
to such Participant shall automatically expire at the commencement of the
business as of the date of such termination.
"Misconduct" shall mean, when used in connection with the termination
of a Participant's employment, conduct, as determined by the Board of Directors,
involving one or more of the following: (i) the substantial and continuing
failure of the Participant to render services to the Company in accordance with
the terms or requirements of his employment; (ii) a determination by two-thirds
(2/3) of the members of the Board of Directors that the Participant has
inadequately performed the requirements of his employment; (iii) disloyalty,
gross negligence,
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dishonesty or breach of fiduciary duty to the Company; (iv) the commission of an
act of embezzlement, fraud, disloyalty, dishonesty or deliberate disregard of
the rules or policies of the Company which results in loss, damage or injury to
the Company, whether directly or indirectly; (v) the unauthorized disclosure of
any trade secret or confidential information of the Company; or (vi) the
commission of an act which constitutes unfair competition with the Company or
which induces any customer of the Company to break a contract with the Company
in making such determination, the Board of Directors shall act fairly and in
utmost good faith and shall give the Participant an opportunity to appear and to
be heard at a hearing before the Board of Directors or any committee and present
evidence on his behalf.
8. DEATH; DISABILITY.
(A) DEATH.
If a Participant ceases to be employed by the Company and its
subsidiaries by reason of his death, any Option of his may be exercised, to the
extent of the number of shares with respect to which he could have exercised it
on the date of his death, by his estate, personal representative or beneficiary
who has acquired the Option by will or by the laws of descent and distribution,
at any time prior to the earlier of the specified expiration date of the Option
or one hundred eighty (180) days from the date of the Participant's death.
(B) DISABILITY.
If a Participant ceases to be employed by the Company and its
subsidiaries by reason of his disability, he shall have the right to exercise
any Option held by him on the date of termination of employment, to the extent
of the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the specified expiration date of the
Option or one hundred eighty (180) days from the date of the termination of the
Participant's employment or service due to disability. For the purposes of the
Plan, the term "disability" shall mean permanent and total disability" as
defined in Section 422(c)(6) of the Code or successor statute.
9. ASSIGNABILITY/TRANSFERS.
(A) ASSIGNABILITY.
No Option shall be assignable or transferable by the Participant
except by will or by the laws of descent and distribution, and during the
lifetime of the Participant each Option shall be exercisable only by him.
(B) UPON DEATH.
Upon the death of a Participant, outstanding Options granted to such
Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Option, or the
right to exercise any Option, shall be effective to bind the Company unless the
Committee shall
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have been furnished with (a) written notice thereof and with a copy of the will
and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with
all the terms and conditions of the Options that are or would have been
applicable to the Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Option.
10. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by instruments (which need not be identical) in
such forms as the Committee may from time to time approve. Such instruments
shall conform to the terms and conditions set forth in Paragraphs 5 through 9
hereof and may contain such other provisions as the Committee deems advisable
which are not inconsistent with the Plan. The Committee may from time to time
confer authority and responsibility on one or more of its own members and/or one
or more officers of the Company to execute and deliver such instruments. The
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable from time to time to carry out the terms of such
instruments.
11. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights
with respect to Options granted to him hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the grant
agreement between the Participant and the Company relating to such Option:
(A) OPTIONS - STOCK DIVIDENDS AND STOCK SPLITS.
Subject to any required action by the shareholders of the Company, if
the shares of Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock or there shall be any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
exercise price per share to reflect such subdivision, combination or stock
dividend.
(B) OPTIONS - CONSOLIDATIONS, MERGERS, SALE, DISSOLUTION OR
LIQUIDATION.
Subject to any required action by the shareholders of the Company, if
the Company is to be consolidated with or acquired by another entity in a
merger, sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), dissolution or liquidation of the Company, the Committee
shall, as to outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting immediately prior to such event
(whether or not then exercisable) on an equitable basis for the shares then
subject to such Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; (ii) upon
written notice to the Participants, provide that all Options must be exercised,
to the extent then exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; (iii)
terminate all Options in exchange for a cash
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payment equal to the excess of the fair market value of the shares subject to
such Options (to the extent then exercisable) over the exercise price thereof;
or (iv) any combination of (i), (ii) and (iii).
Subject to any required action by the shareholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of shares of Common
Stock subject to such Option would have received in such merger or
consolidation.
(C) OPTIONS - RECAPITALIZATION OR REORGANIZATION.
In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph (b) above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, a Participant upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
new securities of equivalent value as he would have received if he had exercised
his Option prior to such recapitalization or reorganization.
(D) ISSUANCE OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares or stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made to Options for dividends paid in cash or in property other than
securities of the Company.
(E) ADJUSTMENTS.
Upon the happening of any of the events described in subparagraphs
(a), (b) or (c) above, the class and aggregate number of shares set forth in
Paragraph 4 hereof that are subject to Options which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events described in such subparagraphs. The Committee shall
determine the specific adjustments to be made under this Paragraph 11 and its
determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of an Option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee.
12. MEANS OF EXERCISING OPTIONS.
(A) NOTICE AND PAYMENT OF EXERCISE PRICE
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An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office to the attention of
its Secretary. Such notice shall identify the Option being exercised and
specify the number of shares as to which such Option is being exercised, shall
be signed by the Participant and shall be accompanied by the grant agreement(s)
evidencing the Option. Such written request shall be accompanied by full
payment of the purchase price therefore either (a) in United States dollars in
cash or by certified check, bank cashier's check or wire transfer; (b) subject
to the approval of the Committee, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Option; (c) subject to the approval of the Committee, by
delivery of the Participant's personal recourse note bearing interest payable
not less than annually at no less than one hundred percent (100%) of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, or (d)
subject to the approval of the Committee, pursuant to procedures adopted by the
Committee whereby the Participant, by a properly written notice, directs (x) an
immediate market sale or margin loan respecting all or a part of the share of
Common Stock to which the Participant is entitled upon exercise pursuant to an
extension of credit by the Company to the Participant of the exercise price, (y)
the delivery of the shares of Common Stock from the Company directly to the
brokerage firm, and (z) the delivery of the exercise price form the sale or
margin loan proceeds from the brokerage directly to the Company; or (e) subject
to the approval of the Committee, by any combination of (a), (b), (c) and (d)
above or such other method as the Committee may approve from time to time.
Any payment in shares of Common Stock shall be effected by the
delivery of such shares to the Secretary of the Company, duly endorsed in blank
or accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time.
(B) CERTIFICATES
Certificates for shares of Common Stock purchased upon the exercise of
an Option shall be issued in the name of the Participant or his or her
beneficiary, as the case may be, and delivered to the Participant or his or her
beneficiary, as the case may be, as soon as practicable following the date on
which the Option is exercised.
(C) FRACTIONAL SHARES
No fractional shares shall be issued under the Plan and the
Participant shall receive from the Company cash in lieu of such fractional
shares.
13. TERM AND AMENDMENT OF PLAN.
This Plan was amended and restated by the Board on January 5, 1998.
The Plan shall expire at the end of the day on May 15, 2005 (except as to
Options outstanding on that date).
The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of the Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option granted to an Participant under the Plan.
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The Board may amend the Plan, subject to the limitations cited above, in such
manner as it deems necessary to permit the granting of Options meeting the
requirements of future amendments or issued regulations, if any, to the Code or
to the Exchange Act. If the Plan becomes qualified under Section 16b-3 of the
Exchange Act, an amendment would require shareholder approval under such Rule
16b-3 to retain the Plan's qualification, then such amendment shall be presented
to shareholders for ratification, provided however, that the failure to obtain
shareholder ratification shall not affect the validity of the Plan if so amended
and the Options granted hereunder. In addition, if the rules of NASDAQ or such
other exchange on which the securities of the Company are traded would require
shareholder approval of any amendment to the Plan, the amendment shall be
presented to shareholders for ratification.
14. EXPENSES/APPLICATION OF FUNDS.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company from the sale of shares pursuant to Options granted
under the Plan shall be used for general corporate purposes.
15. GOVERNMENTAL REGULATION.
The Company's obligation to sell and deliver shares of the Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares.
The Company shall be under no obligation to effect the registration pursuant to
the Securities Act of any interests in the Plan or any shares of Common Stock to
be issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to the Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of NASDAQ and any other securities exchange on which shares of
Common Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Common Stock pursuant
to the terms hereof, that the recipient of such shares make such covenants,
agreements, and representations, and that such certificates bear such legends,
as the Committee, in its sole discretion, deems necessary or desirable.
The exercise of any Option granted hereunder shall be effective only at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Common Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of NASDAQ and any other securities exchange on which shares of
Common Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform
the Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain a refund of any amount
paid with respect thereto.
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All Common Stock issued pursuant to the terms of the Plan shall constitute
"restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act, and may not be transferred except in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE STATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER SALE, PLEDGE, TRANSFER OR
OTHER DISPOSITION WILL NOT VIOLATE APPLICATE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued pursuant to
an effective registration statement under the Securities Act and in accordance
with applicable state securities laws.
16. WITHHOLDING OF ADDITIONAL INCOME TAXES.
(A) CASH REMITTANCE.
Whenever shares of Common Stock are to be issued upon the exercise of
an Option, the Company shall have the right to require the Participant to remit
to the Company in cash an amount sufficient to satisfy federal, state, and local
withholding tax requirements, if any, attributable to such exercise, occurrence
or payment prior to the delivery of any certificate or certificates for such
shares.
(B) STOCK REMITTANCE.
Subject to Paragraph 16(c) hereof, at the election of the Participant,
subject to the approval of the Committee, when shares of Common Stock are to be
issued upon the exercise of an Option, in lieu of the remittance required by
Paragraph 16(a) hereof, the Participant may tender to the Company a number of
shares of Common Stock determined by such Participant, the fair market value of
which at the tender date the Committee determines to be sufficient to satisfy
the minimum federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or grant and not greater than the
Participant's estimated total federal, state and local tax obligations
associated with such exercise, occurrence or grant.
(C) STOCK WITHHOLDING.
The Company shall have the right, when shares of Common Stock are to
be issued upon the exercise of an Option, in lieu of requiring the remittance
required by Paragraph 16(a) hereof, to withhold a number of such shares, the
fair market value of which at the exercise date the
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Committee determines to be sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence
or grant and is not greater than the Participant's estimated total, federal,
state and local tax obligations associated with such exercise, occurrence or
grant.
17. RIGHTS UNDER THE PLAN.
(A) NO RIGHTS AS A STOCKHOLDER.
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Option granted pursuant to
the Plan until the date the person becomes the owner of record with respect to
such shares. Except as otherwise expressly provided in Paragraph 11 hereof, no
adjustment to any Option shall be made for dividends or other rights for which
the record date occurs prior to the date such stock certificate is issued.
(B) NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or any grant agreement shall confer upon
any Participant any right with respect to the continuation of his or her
employment by or service with the Company or any subsidiary of the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment or consulting agreement to the contrary, at any time to
terminate such employment or service or to increase or decrease the compensation
of the Participant from the rate in existence at the time of the grant of an
Option.
(C) NO RIGHTS TO OPTIONS.
No person shall have any claim or right to receive an Option
hereunder. The Committee's granting of an Option to a Participant at any time
shall neither require the Committee to grant an Option to such Participant or
any other Participant or other person at any time nor preclude the Committee
from making subsequent grants to such Participant or any other Participant or
other person.
(D) NO OBLIGATION TO EXERCISE.
The grant to a Participant of an Option shall impose no obligation
upon such Participant to exercise such Option.
18. FAILURE TO COMPLY.
In addition to the remedies of the Company elsewhere provided for herein, a
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Option, unless such failure is remedied by such
Participant (or beneficiary) within ten (10) days after having been notified of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Option, in whole or in part, as the Committee, in its
absolute discretion may determine.
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19. GOVERNING LAW; CONSTRUCTION.
The validity and construction of the Plan and the instruments evidencing Options
shall be governed by the laws of the State of Delaware, or the laws of any
jurisdiction in which the Company or its successors in interest maybe organized.
In construing this Plan, the singular shall include the plural, and the
masculine gender shall include the feminine and neuter, unless the context
otherwise required.
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EXHIBIT (99D)
SNAKE EYES GOLF CLUBS, INC.
1997 STOCK OPTION AND LONG-TERM INCENTIVE PLAN
Adopted and Effective as of November 3, 1997
<PAGE>
TABLE OF CONTENTS
1. PURPOSE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(b) Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(c) Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(d) Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(e) Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(f) Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(g) Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(h) Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(i) Incentive Award . . . . . . . . . . . . . . . . . . . . . . . . . .2
(j) Incentive Stock Option. . . . . . . . . . . . . . . . . . . . . . .3
(k) Issue Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(l) Non-Qualified Stock Option . . . . . . . . . . . . . . . . . . . . .3
(m) Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(n) Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(o) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(p) Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . .3
(q) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(r) Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . . .4
(s) Vesting Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3. ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . .4
(a) Board or Committee Administration.. . . . . . . . . . . . . . . . . .4
(b) Committee Actions.. . . . . . . . . . . . . . . . . . . . . . . . . .5
(c) Grant of Options to Directors.. . . . . . . . . . . . . . . . . . . .6
4. ELIGIBLE EMPLOYEES AND OTHERS.. . . . . . . . . . . . . . . . . . . . . . .6
5. STOCK.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6. GRANTING OF OPTIONS OR RESTRICTED STOCK.. . . . . . . . . . . . . . . . . .7
(a) Plan Awards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
(b) Individual Awards.. . . . . . . . . . . . . . . . . . . . . . . . . .7
7. OPTION PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
(a) Price.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
(b) Determination or Fair Market Value. . . . . . . . . . . . . . . . . .8
8. OPTION DURATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
9. EXERCISE OR OPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
10. TERMINATION OF EMPLOYMENT. . . . . . . . . . . . . . . . . . . . . . . . .9
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(a) Termination other than for Cause, Retirement, Death or Disability . .9
(b) Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . .9
(c) Death / Disability / Retirement.. . . . . . . . . . . . . . . . . . .10
11. ASSIGNABILITY/ TRANSFERS.. . . . . . . . . . . . . . . . . . . . . . . . .10
(a) Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(b) Upon Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
12. MEANS OF EXERCISING OPTIONS. . . . . . . . . . . . . . . . . . . . . . . .10
(a) Notice and Payment of Exercise Price. . . . . . . . . . . . . . . . .10
(b) Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(c) Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . .11
13. INCENTIVE STOCK OPTION LIMITATIONS.. . . . . . . . . . . . . . . . . . . .11
(a) $100,000 Annual Limitation on Incentive Stock Options.. . . . . . . .11
(b) Ten (10%) Owners. . . . . . . . . . . . . . . . . . . . . . . . . . .12
(c) Employee Status / Price . . . . . . . . . . . . . . . . . . . . . . .12
(d) Notice to Company of Disqualifying' Position. . . . . . . . . . . . .12
14. GRANT AGREEMENT / TERMS AND CONDITIONS OF OPTIONS. . . . . . . . . . . . .12
15. RESTRICTED STOCK.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
(a) Issue Date and Vesting Date. . . . . . . . . . . . . . . . . . . . .13
(b) Conditions to Vesting. . . . . . . . . . . . . . . . . . . . . . . .13
(c) Restrictions on Transfer Prior to Vesting . . . . . . . . . . . . . .13
(d) Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . .14
(e) Consequences Upon Vesting. . . . . . . . . . . . . . . . . . . . . .14
(f) Effect of Termination of Employment . . . . . . . . . . . . . . . . .15
16. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(a) Options - Stock Dividends and Stock Splits.. . . . . . . . . . . . .15
(b) Options - Consolidations, Mergers, Sale, Dissolution or Liquidation..15
(c) Options - Recapitalization or Reorganization. . . . . . . . . . . . .16
(d) Modification of Incentive Stock Options.. . . . . . . . . . . . . . .16
(e) Outstanding Restricted Stock.. . . . . . . . . . . . . . . . . . . .16
(f) Issuance of Securities.. . . . . . . . . . . . . . . . . . . . . . .17
(g) Adjustments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
17. TERM AND AMENDMENT OF PLAN.. . . . . . . . . . . . . . . . . . . . . . . .17
18. CONVERSION / TERMINATION OF INCENTIVE STOCK OPTIONS. . . . . . . . . . . .18
19. EXPENSES/APPLICATION OF FUNDS. . . . . . . . . . . . . . . . . . . . . . .18
20. GOVERNMENTAL REGULATION. . . . . . . . . . . . . . . . . . . . . . . . . .18
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21. WITHHOLDING OF ADDITIONAL INCOME TAXES.. . . . . . . . . . . . . . . . . .19
(a) Cash Remittance.. . . . . . . . . . . . . . . . . . . . . . . . . . .19
(b) Stock Remittance. . . . . . . . . . . . . . . . . . . . . . . . . . .20
(c) Stock Withholding.. . . . . . . . . . . . . . . . . . . . . . . . . .20
2 RIGHTS UNDER THE PLAN.. . . . . . . . . . . . . . . . . . . . . . . . . . .20
(a) No Rights as a Stockholder. . . . . . . . . . . . . . . . . . . . . .20
(b) Accrual of Dividends. . . . . . . . . . . . . . . . . . . . . . . . .20
(c) No Special Employment Rights. . . . . . . . . . . . . . . . . . . . .21
(c) No Rights to Options. . . . . . . . . . . . . . . . . . . . . . . . .21
(d) No Obligation to Exercise.. . . . . . . . . . . . . . . . . . . . . .21
23. FAILURE TO COMPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
24. GOVERNING LAW; CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . .21
iii
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SNAKE EYES GOLF CLUBS, INC.
1997 STOCK OPTION AND LONG-TERM INCENTIVE PLAN
1. PURPOSE.
This Snake Eyes Golf Clubs, Inc. 1997 Stock Option and Long-Term Incentive
Plan, formerly known as the Golf-Technology Holding, Inc. 1997 Stock Option and
Long-Term Incentive Plan, is intended to promote the interests of Snake Eyes
Golf Clubs, Inc. and its shareholders by providing key employees of the Company
and its subsidiaries, on whose judgment, initiative, and efforts the successful
conduct of the business of the Company depends, and who are responsible for the
management, growth, and protection of the business, as well as directors of the
Company and consultants to the Company and its subsidiaries with appropriate
incentives and rewards to encourage employees to continue in the employ of the
Company and to maximize their performance and to encourage directors and
consultants to maximize their efforts on behalf of the Company.
2. DEFINITIONS.
As used in the Plan, the following definitions apply to the terms
indicated below:
(A) BOARD
"Board" shall mean the Board of Directors of the Company.
(B) CAUSE
"Cause" shall mean, when used in connection with the termination of a
Participant's employment, the termination of the Participant's employment on
account of: (i) the willful and continued failure by the Participant
substantially to perform his or her duties and obligations to the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), (ii) the willful violation by the Participant of (A) any federal or
state law or (B) any rule of the Company, which violation would materially
reflect on the Participant's character, competence, or integrity, (iii) a breach
by a Participant of the Participant's duty of loyalty to the Company such as
Participant's solicitation of customers or employees of the Company on behalf of
any other person, (iv) the Participant's unauthorized removal from the Company's
premises of any document (in any medium or form) relating to the Company, its
business, or its customers, PROVIDED, HOWEVER, that no such removal shall be
deemed "unauthorized" if it is in furtherance of an individual's duties and
obligations to the Company and such removal is a common practice at the Company,
(v) the Participant's unauthorized disclosure to any person of any confidential
information regarding the Company, (vi) the willful engaging by the Participant
in any other misconduct which is materially injurious to the Company or (vii)
any event that constitutes
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"cause" (or any similar term that constitutes the basis on which the Company may
terminate the employee's employment with the Company) for purposes of an
employment agreement between the Participant and the Company. For purposes of
this Paragraph 2(b) no act, or failure to act, on a Participant's part shall be
considered "willful" unless done, or omitted to be done, by the Participant in
bad faith and without reasonable belief that the action or omission was in the
best interests of the Company. Any rights the Company may have hereunder in
respect of the events giving rise to Cause shall be in addition to the rights
the Company may have under any other agreement with the Participant or at law or
in equity. If, subsequent to the termination of a Participant's employment
without Cause, it is determined by the Board that the Participant's employment
could have been terminated for Cause, such Participant's employment shall, at
the election of the Committee in its sole discretion, be deemed to have been
terminated for Cause.
(C) CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
(D) COMMITTEE
"Committee" shall mean the Option Committee of the Board as provided
in Paragraph 3.
(E) COMPANY
"Company" shall mean Snake Eyes Golf Clubs, Inc., a Delaware
corporation.
(F) COMMON STOCK
"Common Stock" shall mean the common stock, par value $.001 per share,
of the Company.
(G) DISABILITY
"Disability" shall mean any physical or mental condition as a result
of which a Participant is disabled as described in Section 422(c)(6) of the
Code.
(H) EXCHANGE ACT
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(I) INCENTIVE AWARD
"Incentive Award" shall mean an Option or a Restricted Stock award
granted pursuant to the terms of the Plan.
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(j) Incentive Stock Option
"Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
identified as an Incentive Stock Option in the grant agreement by which it is
evidenced.
(K) ISSUE DATE
"Issue Date" shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued by the
Company pursuant to the terms of Paragraph 15(d) hereof.
(L) NON-QUALIFIED STOCK OPTION
"Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(M) OPTION
"Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Paragraph 6 hereof. Each Option, or portion thereof, shall
be identified as either an Incentive Stock Option or a Non-Qualified Stock
Option in the grant agreement by which such Option is evidenced.
(N) PARTICIPANT
"Participant" shall mean an employee, officer, director or outside
director of the Company or any subsidiary of the Company or a consultant to the
Company or any subsidiary of the Company selected to participate in the Plan and
to whom an Incentive Award is granted pursuant to the Plan, and, upon his or her
death, that person's successors, heirs, executors, and administrators, as the
case may be.
(O) PLAN
"Plan" shall mean this Snake Eyes Golf Clubs, Inc. 1997 Stock Option
and Long-Term Incentive Plan, as it may be amended from time to time.
(P) RESTRICTED STOCK
"Restricted Stock" shall mean a share of Common Stock that is granted
pursuant to the terms of Paragraph 15 hereof and that is subject to the
restrictions set forth in Paragraph 15(c) hereof for as long as such
restrictions continue to apply to such share.
(Q) RETIREMENT
3
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"Retirement" shall mean a Participant's termination of employment
(other than by reason of death or Disability and other than a termination that
is (or is deemed to have been) for Cause) on or after the later of (i) the date
the Participant attains age 65 and (ii) the date the Participant has completed
five years of service with the Company.
(R) SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
(S) VESTING DATE
"Vesting Date" shall mean the date and/or dates established by the
Committee on which Restricted Stock may vest.
3. ADMINISTRATION OF THE PLAN.
(A) BOARD OR COMMITTEE ADMINISTRATION.
The Plan shall be administered by the Board. The Board may appoint an
Option Committee (the "Committee") of two or more of its members to administer
this Plan, PROVIDED, HOWEVER, the Committee shall not take any action under the
Plan unless it is at all times composed solely of not less than two
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Exchange Act. Hereinafter, all references in this Plan to the "Committee"
shall mean the Board if the Committee is not composed of two Non-Employee
Directors when the Company is subject to the Securities Act, or, if the
Committee is unable to act or no Committee has been appointed and the Board
shall take any and all actions required or permitted to be taken by the
Committee under the Plan and shall serve as the Committee.
Subject to ratification of the grant or authorization of each
Incentive Award by the Board (if so required by applicable state law), and
subject to the terms of the Plan, the Committee shall have the authority to:
(i) designate the employees, officers, directors or outside
directors of the Company or any subsidiary or consultants
to the Company or any subsidiary to whom Incentive Awards
may be granted and the amount and type of such Incentive
Awards;
(ii) determine the time or times at which Incentive Awards may
be granted;
(iii) determine the price of shares subject to each Option,
which price shall not be less than the minimum prices
specified in Paragraphs 7 and 13 with respect to
Non-Qualified and Incentive Stock Options;
4
<PAGE>
(iv) determine whether each Option granted shall be an
Incentive Stock Option or a Non-Qualified Stock Option;
(v) determine, subject to Paragraph 8, the time or times
when each Option shall become exercisable and the
duration of the exercise period;
(vi) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options, and the
nature of such restrictions, if any;
(vi) in its absolute discretion and without amendment to the
Plan, (i) accelerate the date on which any Option granted
under the Plan becomes exercisable, (ii) accelerate the
Issue Date or Vesting Date of any share of Restricted
Stock issued under the Plan or waive any condition
imposed thereunder, or (iii) otherwise adjust any of the
terms of any Incentive Award (except that no such
adjustment shall, without the consent of a Participant,
reduce the Participant's rights under any previously
granted and outstanding Incentive Award);
(vii) grant, in its absolute discretion and without amendment
to the Plan, Incentive Awards on the condition that such
Participants surrender to the Committee for cancellation
such other Incentive Awards (including without
limitation, Options with higher exercise prices and
values) as the Committee specifies. Notwithstanding
Paragraph 5 herein, prior to the surrender of such other
Incentive Awards, Incentive Awards granted pursuant to
the preceding sentence of this Paragraph 3(a) shall not
count against the limit set forth in such Paragraph 5;
and
(viii) interpret and construe any provision of the Plan and
prescribe and rescind rules and regulations for
administering the Plan as it may deem necessary or
appropriate.
The interpretation and construction by the Committee of any provisions of the
Plan or of any Incentive Award granted under it shall be final and binding on
all parties.
(B) COMMITTEE ACTIONS.
The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. From time
to time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and
5
<PAGE>
appoint new members in substitution therefor, fill vacancies however caused, or
remove all members of the Committee and thereafter directly administer the Plan.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company (and any affiliate that may
adopt the Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination unless such action, omission or determination was taken or made by
such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
(C) GRANT OF OPTIONS TO DIRECTORS.
All grants of Options to directors shall in all respects be made in
accordance with the provisions of this Plan applicable to other eligible
persons. Directors who are either (i) eligible for Options pursuant to the Plan
or (ii) have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan,
except that no such director shall act upon the granting to himself of Options,
but any such member may be counted in determining the existence of a quorum at
any meeting of the Board during which action is taken with respect to the
granting to him of Options.
4. ELIGIBLE EMPLOYEES AND OTHERS.
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be those employees, officers, directors and outside directors of
the Company or consultants to the Company who are responsible for the
management, growth, and protection of the business of the Company; PROVIDED,
HOWEVER, that Incentive Stock Options may only be granted to employees of the
Company or its subsidiaries. Those officers and directors of the Company who
are not employees may not be granted Incentive Stock Options under the Plan.
Non-qualified Stock Options or Restricted Stock may be granted to any employee,
officer or director (whether or not also an employee) or consultant of the
Company or its subsidiaries. The Committee may take into consideration a
recipient's individual circumstances in determining whether to grant an
Incentive Stock Option, Non-Qualified Stock Option or Restricted Stock.
Granting of any Incentive Award to any individual or entity shall neither
entitle that individual or entity to, nor disqualify him from, participation in
any other grant of Incentive Awards.
5. STOCK.
The stock subject to Incentive Awards shall be authorized but unissued
shares of Common Stock or shares of Common Stock reacquired by the Company in
any manner. The aggregate number or shares which may be issued by the Committee
in its sole and absolute discretion pursuant to which Incentive Awards may be
granted under the Plan is one million two hundred
6
<PAGE>
and fifty thousand (1,250,000) shares. The aggregate number or shares which may
be issued pursuant to this Plan may be adjusted as provided in Paragraph 16. If
any Incentive Award granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the underlying shares covered by such Incentive
Awards shall again be available for future grants of Incentive Awards under the
Plan.
6. GRANTING OF OPTIONS OR RESTRICTED STOCK.
(A) PLAN AWARDS.
Under the Plan, the Committee may, in its sole and absolute
discretion, grant either or both of the following types of Incentive Awards to a
Participant: an Option or Restricted Stock.
Incentive Awards may be granted by the Committee pursuant to the Plan
at any time on or after the adoption of the Plan by the Board, effective as of
November 3, 1997, and prior to November 3, 2007; PROVIDED, HOWEVER, that any
Incentive Stock Options granted hereunder shall be subject to the ratification
and approval of the Plan by the consent of the shareholders within twelve (12)
months of the effective date; further provided, that failure to obtain
shareholder approval shall not affect the validity of this Plan and the
Incentive Awards granted hereunder except that all previous grants of Incentive
Stock Options shall automatically become grants of Non-Qualified Stock Options
and no further Incentive Stock Options shall be granted under the Plan.
The date of grant of an Incentive Award under the Plan will be the
date specified by the Committee at the time it grants the Incentive Award;
PROVIDED, HOWEVER, that such date shall not be prior to the date on which the
Committee acts to approve the Incentive Award. The Committee shall have the
right, with the consent of the Participant, to convert an Incentive Stock Option
granted under the Plan to a Non-Qualified Stock Option pursuant to Paragraph 18.
(B) INDIVIDUAL AWARDS.
Incentive Awards granted under the Plan may be made up entirely of one
type of Incentive Award or any combination of both Options and Restricted Stock,
in the Committee's sole discretion.
7. OPTION PRICE
(A) PRICE.
The exercise price per share as specified in the grant agreement
relating to each Option granted under the Plan shall be determined by the
Committee, PROVIDED, HOWEVER, that the exercise price per share of each
Incentive Stock Option granted under the Plan shall not be less than the
exercise prices set forth in Paragraph 13 hereof. The exercise price per share
of each
7
<PAGE>
Non-Qualified Stock Option granted under the Plan may be less than or equal to
the fair market value on the date of such grant but not less than eighty-five
percent (85%) of fair market value on the date of such grant.
(B) DETERMINATION OR FAIR MARKET VALUE.
If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
closing selling price per share on that date of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
closing selling price per share on that date of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price per share last quoted on
that date by an established quotation service for over-the-counter securities,
if the Common Stock is not reported on the NASDAQ National Market List.
However, if the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
8. OPTION DURATION.
Subject to earlier termination as provided in Paragraph 10 and the
Incentive Stock Option limitations as provided in Paragraph 13, each Option
shall expire on the date specified by the Committee which shall be no later than
ten years from the date of grant.
9. EXERCISE OR OPTION.
Subject to the provisions of Paragraph 10, each Option granted under the
Plan shall be exercisable as follows:
(i) VESTING. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such installments as the
Committee may specify. In the absence of provisions is an individual grant
agreement or employment agreement to the contrary, Options shall vest ratably
over a five (5) year period commencing on the first anniversary of the date of
grant.
(ii) FULL VESTING OR INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.
(iii) PARTIAL EXERCISE. Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up to the total
number of shares with respect to
8
<PAGE>
which it is then exercisable. Upon partial exercise of an Option, the grant
agreement evidencing such Option, marked with such notations as the Committee
may deem appropriate to evidence such partial exercise, shall be returned to the
Participant exercising such Option together with the delivery of the
certificates described in Paragraph 12 hereof.
(iv) ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided that
the Committee shall not, without the consent of a Participant, accelerate the
exercise date of any installment of any Option granted to any employee as an
Incentive Stock Option (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 18) if such acceleration would violate the annual vesting
limitation contained in Section 422 of the Code, as described in Paragraph 13.
10. TERMINATION OF EMPLOYMENT.
Unless otherwise provided in the Participant's grant agreement or
employment agreement, the following provisions shall apply upon the termination
of a Participant's employment:
(A) TERMINATION OTHER THAN FOR CAUSE, RETIREMENT, DEATH OR DISABILITY
If a Participant who has been granted an Option ceases to be employed
by the Company and all its subsidiaries other than for Cause or by reason of
Retirement, death or Disability, no further installments of his Options shall
become exercisable, and his Options shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates. Options granted to such Participant,
to the extent they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination.
Employment shall be considered as continuing uninterrupted during any
bona fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave does
not exceed ninety (90) days or, if longer, any period during which such
Participant 's right to reemployment is guaranteed by statute. A bona fide
leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any subsidiary to
continue the employee of the Participant after the approved period of absence.
Incentive Stock Options granted under the Plan shall not be affected by any
change of employment within or among the Company and its subsidiaries, so long
as the Participant continues to be an employee of the Company or any subsidiary.
(B) TERMINATION FOR CAUSE
If a Participant who has been granted an Option ceases to employed by
the Company and all its subsidiaries for Cause, all outstanding Options granted
to such Participant shall automatically expire at the commencement of the
business as of the date of such termination.
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<PAGE>
(c) Death / Disability / Retirement.
If a Participant who has been granted an Option ceases to be employed
by the Company and all subsidiaries by reason of his death, Disability or
Retirement, he or his personal representative or estate or beneficiary who has
acquired the Option by will or by the laws of decent and distribution, shall
have the right to exercise any Options held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he could
have exercised it on that date, at any time prior to the specified expiration
date of the Option. Options granted to such Participant, to the extent they were
not exercisable at the time of such termination, shall expire at the close of
business on the date of such termination. The effect of exercising any
Incentive Stock Option on a day that is more than ninety (90) days after the
date of termination (or, in the case of a termination of employment on account
of death or Disability, on a day that is more than one year after the date of
such termination) will be to cause such Incentive Stock Option to be treated as
a Non-Qualified Stock Option.
11. ASSIGNABILITY/ TRANSFERS.
(A) ASSIGNABILITY
No Option shall be assignable or transferable by the Participant
except by will or by the laws of descent and distribution and during the
lifetime of the Participant each Option shall be exercisable only by the
Participant.
(B) UPON DEATH.
Upon the death of a Participant, outstanding Options granted to such
Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Option, or the
right to exercise any Option, shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and with a
copy of the will and/or such evidence as the Committee may deem necessary to
establish the validity of the transfer and (b) an agreement by the transferee to
comply with all the terms and conditions of the Options that are or would have
been applicable to the Participant and to be bound by the acknowledgments made
by the Participant in connection with the grant of the Option.
12. MEANS OF EXERCISING OPTIONS.
(A) NOTICE AND PAYMENT OF EXERCISE PRICE
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office to the attention of
its Secretary. Such notice shall identify the Option being exercised and
specify the number of shares as to which such Option is being exercised, shall
be signed by the Participant and shall be accompanied by the grant agreement(s)
evidencing the Option. Such written request shall be accompanied by full
payment
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<PAGE>
of the purchase price therefore either (a) in United States dollars in cash or
by certified check, bank cashier's check or wire transfer; (b) subject to the
approval of the Committee, through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Option; (c) subject to the approval of the Committee, by delivery
of the Participant's personal recourse note bearing interest payable not less
than annually at no less than one hundred percent (100%) of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Code, or (d)
subject to the approval of the Committee, pursuant to procedures adopted by the
Committee whereby the Participant, by a properly written notice, directs (x) an
immediate market sale or margin loan respecting all or a part of the share of
Common Stock to which the Participant is entitled upon exercise pursuant to an
extension of credit by the Company to the Participant of the exercise price, (y)
the delivery of the shares of Common Stock from the Company directly to the
brokerage firm, and (z) the delivery of the exercise price form the sale or
margin loan proceeds from the brokerage directly to the Company; or (e) subject
to the approval of the Committee, by any combination of (a), (b), (c) and (d)
above or such other method as the Committee may approve from time to time.
Any payment in shares of Common Stock shall be effected by the
delivery of such shares to the Secretary of the Company, duly endorsed in blank
or accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time.
(B) CERTIFICATES
Certificates for shares of Common Stock purchased upon the exercise of
an Option shall be issued in the name of the Participant or his or her
beneficiary, as the case may be, and delivered to the Participant or his or her
beneficiary, as the case may be, as soon as practicable following the date on
which the Option is exercised.
(C) FRACTIONAL SHARES
No fractional shares shall be issued under the Plan and the
Participant shall receive from the Company cash in lieu of such fractional
shares.
13. INCENTIVE STOCK OPTION LIMITATIONS.
(A) $100,000 ANNUAL LIMITATION ON INCENTIVE STOCK OPTIONS.
Each eligible employee may be granted Incentive Stock Options only to
the extent that, in the aggregate under this Plan and all Incentive Stock Option
plans of the Company and any subsidiary, such Incentive Stock Options do not
become exercisable for the first time by such employee during any calendar year
in a manner which would entitle the employee to purchase more than $100,000 in
fair market value (determined at the time the Incentive Stock Options were
granted) of Common Stock in that year. Any Options granted to an employee in
excess of such amount will be granted as Non-Qualified Stock Options.
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(b) Ten (10%) Owners
In the case of an Incentive Stock Option to be granted to an employee
owning stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its subsidiaries, the price per
share specified in the agreement relating to such Incentive Stock Option shall
not be less than one hundred ten percent (110%) of the fair market value per
share of Common Stock on the date of grant and the Incentive Stock Option shall
expire five years from the date of grant.
(C) EMPLOYEE STATUS / PRICE
No Incentive Stock Option may be granted to an individual if, at the
time of the proposed grant, such individual is not an employee of the Company.
In addition all Incentive Stock Options shall be granted at no less than 100% of
fair market value.
(D) NOTICE TO COMPANY OF DISQUALIFYING' POSITION.
Each employee who receives an Incentive Stock Option must agree to
notify the Company in writing immediately after the employee makes a
Disqualifying Disposition of' any Common Stock acquired pursuant to the exercise
of an Incentive Stock Option. A Disqualifying Disposition is any disposition
(including any sale) of such Common Stock before the later of (a) two years
after the date the employee was granted the Incentive Stock Option, or (b) one
year after the date the employee acquired Common Stock by exercising the
Incentive Stock Option. If the employee has died before such stock is sold,
these holding period requirements do not apply and no Disqualifying Disposition
can occur thereafter.
(E)
In the event an Incentive Stock Option granted hereunder does not meet
the requirements set forth in this Paragraph 13, such Incentive Stock Option
shall automatically be deemed to be a Non-Qualified Stock Option, but all other
terms and provisions of such Incentive Stock Option shall remain unchanged.
14. GRANT AGREEMENT / TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by grant agreements (which need not be
identical) in such form as the Committee may from time to time approve. Such
grant agreements shall conform to the terms and conditions set forth in
Paragraphs 6 through 13 hereof and may contain such other provisions as the
Committee deems advisable. In granting any Non-Qualified Stock Option, the
Committee may specify that such Non-Qualified Stock Option shall be subject to
the restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Committee may
determine. The Committee may from time to time confer authority and
responsibility on one or more of its own members and/or one or more officers of
the Company to execute and deliver such instruments. The proper officers of the
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Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.
In the event of any conflict between the terms of the Plan, and a grant
agreement pursuant to which Options have been granted hereunder or the terms of
an employment agreement pursuant to which an employee of the Company who is a
Participant has been granted Options hereunder, the terms of the applicable
employment agreement or related grant agreement shall control. Notwithstanding
the foregoing, no change in any employment agreement or grant agreement shall
cause any Incentive Stock Option granted hereunder to be considered a
Non-Qualified Stock Option.
15. RESTRICTED STOCK.
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of
shares of Restricted Stock shall comply with and be subject to the following
terms and conditions:
(A) ISSUE DATE AND VESTING DATE.
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Paragraphs 15(c) and 15(f) hereof, upon the occurrence of the Issue
Date with respect to a share of Restricted Stock, a share of Restricted Stock
shall be issued in accordance with the provisions of Paragraph 15(d) hereof.
Provided that all conditions to the vesting of a share of Restricted Stock
imposed pursuant to Paragraph 15(b) hereof are satisfied, and except as provided
in Paragraphs 15(c) and 15(f) hereof, upon the occurrence of the Vesting Date
with respect to a share of Restricted Stock, such share shall vest and the
restrictions of Paragraph 15(c) hereof shall cease to apply to such share.
(B) CONDITIONS TO VESTING.
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion, deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any shares of Restricted Stock, that
the Participant or the Company achieve such performance criteria as the
Committee may specify at the time of the grant of such shares.
(C) RESTRICTIONS ON TRANSFER PRIOR TO VESTING.
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest, or
right in, or with respect to, such share, but immediately upon
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any attempt to transfer such rights, such share, and all the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(D) ISSUANCE OF CERTIFICATES.
(i) Except as provided in Paragraphs 15(c) or 15(f) hereof,
reasonably promptly after the Issue Date with respect to shares of Restricted
Stock, the Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such shares were granted, evidencing such
shares, PROVIDED, that the Company shall not cause to be issued such stock
certificate unless it has received a stock power duly endorsed in blank with
respect to such shares. Each such stock certificate shall bear the following
legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND
CONDITIONS (INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST
TRANSFER) CONTAINED IN THE GOLF-TECHNOLOGIES HOLDING, INC. 1997 STOCK
OPTION AND LONG-TERM INCENTIVE PLAN AND RESTRICTED STOCK AWARD
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND
SNAKE EYES GOLF CLUBS, INC. A COPY OF THE PLAN AND AGREEMENT IS ON
FILE IN THE OFFICE OF THE SECRETARY OF SNAKE EYES GOLF CLUBS, INC. C/O
SNAKE EYES GOLF CLUBS, INC., 13000 SAWGRASS VILLAGE CIRCLE, SUITE 30,
PONTE VEDRA BEACH, FLORIDA 32082.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Paragraph 15(d)(i) hereof,
together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be deposited by the Company with a
custodian designated by the Company. The Company shall cause such custodian to
issue to the Participant a receipt evidencing the certificates held by it which
are registered in the name of the Participant.
(E) CONSEQUENCES UPON VESTING.
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Paragraph 15(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Paragraph 15(d)(i) hereof, together with
any other property of the Participant held by the custodian pursuant to
Paragraph 15(d)(ii) hereof.
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(f) Effect of Termination of Employment.
(i) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the vesting of
shares of Restricted Stock granted to such Participant, the shares of Restricted
Stock shall be forfeited on the date of such termination, provided however, that
the Committee may, in its sole and absolute discretion, vest the Participant in
all or any portion of shares of Restricted Stock which would otherwise be
forfeited pursuant to the provisions of this Paragraph.
(ii) In the event of the termination of a Participant's employment
for Cause, all shares of Restricted Stock granted to such Participant which have
not vested as of the date of such termination shall immediately be forfeited.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights
with respect to Incentive Awards granted to him hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in the grant
agreement between the Participant and the Company relating to such Incentive
Award:
(A) OPTIONS - STOCK DIVIDENDS AND STOCK SPLITS.
Subject to any required action by the shareholders of the Company, if
the shares of Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any shares of Common
Stock as a stock dividend on its outstanding Common Stock or there shall be any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
exercise price per share to reflect such subdivision, combination or stock
dividend.
(B) OPTIONS - CONSOLIDATIONS, MERGERS, SALE, DISSOLUTION OR
LIQUIDATION.
Subject to any required action by the shareholders of the Company, if
the Company is to be consolidated with or acquired by another entity in a
merger, sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), dissolution or liquidation of the Company, the Committee
shall, as to outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting immediately prior to such event
(whether or not then exercisable) on an equitable basis for the shares then
subject to such Options the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition; (ii) upon
written notice to the Participants, provide that all Options must be exercised,
to the extent then exercisable, within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
fair market value of the shares subject to
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such Options (to the extent then exercisable) over the exercise price thereof;
or (iv) any combination of (i), (ii) and (iii).
Subject to any required action by the shareholders of the Company, in
the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders
of shares of Common Stock receive securities of another corporation), each
Option outstanding on the date of such merger or consolidation shall pertain to
and apply to the securities which a holder of the number of shares of Common
Stock subject to such Option would have received in such merger or
consolidation.
(C) OPTIONS - RECAPITALIZATION OR REORGANIZATION.
In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph (b) above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, a Participant upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise the
new securities of equivalent value as he would have received if he had exercised
his Option prior to such recapitalization or reorganization.
(D) MODIFICATION OF INCENTIVE STOCK OPTIONS.
Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs (a), (b) or (c) with respect to Incentive Stock Options shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
Incentive Stock Options (as that term is defined in Paragraph 424 of the Code)
or would cause any adverse tax consequences for the holders of such Incentive
Stock Options. If the Committee determines that such adjustments made with
respect to Incentive Stock Options would constitute a modification of such
Incentive Stock Options, it may refrain from making such adjustments.
(E) OUTSTANDING RESTRICTED STOCK.
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
a Participant with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split, reverse stock
split, recapitalization, merger, consolidation, combination, exchange of shares
or similar corporate exchange will not vest until such share of Restricted Stock
vests and shall be promptly deposited with the custodian designated pursuant to
Paragraph 15(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, to
reflect any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares or similar corporate
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change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Participants under the grant.
(F) ISSUANCE OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares or stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Incentive Awards. No
adjustments shall be made to Options for dividends paid in cash or in property
other than securities of the Company.
(G) ADJUSTMENTS.
Upon the happening of any of the events described in subparagraphs
(a), (b) or (c) above, the class and aggregate number of shares set forth in
Paragraph 5 hereof that are subject to Options which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events described in such subparagraphs. The Committee shall
determine the specific adjustments to be made under this Paragraph 16 and its
determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of an Option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee.
17. TERM AND AMENDMENT OF PLAN.
This Plan was adopted by the Board on November 3, 1997, subject to the
approval by the shareholders of the Company of the Plan. The Plan shall expire
at the end of the day on November 3, 2007 (except as to Options outstanding on
that date). Subject to the provisions of Paragraph 6 above, Incentive Awards
may be granted under the Plan prior to the date of stockholder approval of the
Plan.
The Board may at any time, or from time to time, suspend or terminate the
Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of the Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option granted to an Participant under the Plan. The Board may amend
the Plan, subject to the limitations cited above, in such manner as it deems
necessary to permit the granting of Incentive Awards meeting the requirements of
future amendments or issued regulations, if any, to the Code or to the Exchange
Act. If the Plan becomes qualified under Section 16b-3 of the Exchange Act, an
amendment would require shareholder approval under such Rule 16b-3 to retain the
Plan's qualification, then such amendment shall be presented to shareholders for
ratification, provided however, that the failure to obtain shareholder
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ratification shall not affect the validity of the Plan if so amended and the
Incentive Awards granted hereunder. In addition, if the rules of NASDAQ or such
other exchange on which the securities of the Company are traded would require
shareholder approval of any amendment to the Plan, the amendment shall be
presented to shareholders for ratification.
18. CONVERSION / TERMINATION OF INCENTIVE STOCK OPTIONS.
The Committee, at the written request of any Participant may in its
discretion take such actions as may be necessary to convert such Participant's
Incentive Stock Options (or any installments or portions or installments
thereof) that have not been exercised on the date of conversion into
Non-Qualified Stock Options at any time prior to the expiration of such
Incentive Stock Options, regardless of whether the Participant is an employee of
the Company or a subsidiary at the time of such conversion. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Incentive Stock Options.
At the time of such conversion, the Committee (with the consent of the
Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Stock Options as the Committee in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any Participant the right to have such
Participant's Incentive Stock Options converted into Non-Qualified Stock
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action. The Committee, with the consent of the Participant, may
also terminate any portion of any Incentive Stock Option that has not been
exercised at the time of such termination.
19. EXPENSES/APPLICATION OF FUNDS.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company from the sale of shares pursuant to Options granted
under the Plan shall be used for general corporate purposes.
20. GOVERNMENTAL REGULATION.
The Company's obligation to sell and deliver shares of the Common Stock
under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares.
The Company shall be under no obligation to effect the registration pursuant to
the Securities Act of any interests in the Plan or any shares of Common Stock to
be issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Common Stock pursuant to the Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of NASDAQ and any other securities exchange on which shares of
Common Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Common Stock pursuant
to the terms hereof, that the recipient of such shares make such covenants,
agreements, and representations, and that such certificates bear such legends,
as the Committee, in its sole discretion, deems necessary or desirable.
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The exercise of any Option granted hereunder shall be effective only at
such time as counsel to the Company shall have determined that the issuance and
delivery of shares of Common Stock pursuant to such exercise is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of NASDAQ and any other securities exchange on which shares of
Common Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform
the Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain a refund of any amount
paid with respect thereto.
All Common Stock issued pursuant to the terms of the Plan shall constitute
"restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act, and may not be transferred except in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF
PROVIDES EVIDENCE STATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER SALE, PLEDGE, TRANSFER OR
OTHER DISPOSITION WILL NOT VIOLATE APPLICATE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued pursuant to
an effective registration statement under the Securities Act and in accordance
with applicable state securities laws.
21. WITHHOLDING OF ADDITIONAL INCOME TAXES.
(A) CASH REMITTANCE.
Whenever shares of Common Stock are to be issued upon the exercise of
an Option, the occurrence of the Issue Date or the Vesting Date with respect to
a share of Restricted Stock, the Company shall have the right to require the
Participant to remit to the Company in
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cash an amount sufficient to satisfy federal, state, and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment prior
to the delivery of any certificate or certificates for such shares.
(B) STOCK REMITTANCE.
Subject to Paragraph 21(c) hereof, at the election of the Participant,
subject to the approval of the Committee, when shares of Common Stock are to be
issued upon the exercise of an Option, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock, in lieu of the
remittance required by Paragraph 21(a) hereof, the Participant may tender to
the Company a number of shares of Common Stock determined by such Participant,
the fair market value of which at the tender date the Committee determines to be
sufficient to satisfy the minimum federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or grant and not
greater than the Participant's estimated total federal, state and local tax
obligations associated with such exercise, occurrence or grant.
(C) STOCK WITHHOLDING.
The Company shall have the right, when shares of Common Stock are to
be issued upon the exercise of an Option, the occurrence of the Issue Date or
the Vesting Date with respect to a share of Restricted Stock, in lieu of
requiring the remittance required by Paragraph 21(a) hereof, to withhold a
number of such shares, the fair market value of which at the exercise date the
Committee determines to be sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence
or grant and is not greater than the Participant's estimated total, federal,
state and local tax obligations associated with such exercise, occurrence or
grant.
22 RIGHTS UNDER THE PLAN.
(A) NO RIGHTS AS A STOCKHOLDER.
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to the Plan until the date the person becomes the owner of record with
respect to such shares. Except as otherwise expressly provided in Paragraph 16
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
(B) ACCRUAL OF DIVIDENDS
Whenever Restricted Stock is paid to a Participant or beneficiary
under the Plan, such Participant or beneficiary shall also be entitled to
receive, with respect to each share of Restricted Stock paid, an amount equal to
any cash dividends, and number of shares of Common Stock equal to any stock
dividends, declared and paid with respect to a share of Common Stock between the
date the relevant Restricted Stock was granted and the date the shares of
Restricted
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Stock are being distributed. At the discretion of the Committee, interest may
be paid on the amount of cash dividends withheld, including cash dividends on
stock dividends, at a rate and subject to such terms as determined by the
Committee.
(C) NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or any grant agreement shall confer upon
any Participant any right with respect to the continuation of his or her
employment by or service with the Company or any subsidiary of the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment or consulting agreement to the contrary, at any time to
terminate such employment or service or to increase or decrease the compensation
of the Participant from the rate in existence at the time of the grant of an
Incentive Award.
(C) NO RIGHTS TO OPTIONS.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
(D) NO OBLIGATION TO EXERCISE.
The grant to a Participant of an Option shall impose no obligation
upon such Participant to exercise such Option.
23. FAILURE TO COMPLY.
In addition to the remedies of the Company elsewhere provided for herein, a
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Incentive Award, unless such failure is remedied by
such Participant (or beneficiary) within ten (10) days after having been
notified of such failure by the Committee, shall be grounds for the cancellation
and forfeiture of such Incentive Award, in whole or in part, as the Committee,
in its absolute discretion may determine.
24. GOVERNING LAW; CONSTRUCTION.
The validity and construction of the Plan and the instruments evidencing
Options shall be governed by the laws of the State of Delaware, or the laws of
any jurisdiction in which the Company or its successors in interest maybe
organized. In construing this Plan, the singular shall include the plural, and
the masculine gender shall include the feminine and neuter, unless the context
otherwise requires.
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