<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
RED OAK HEREFORD FARMS, INC.
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(Name of Registrant as Specified in Its Charter)
HARLEY DILLARD
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
RED OAK HEREFORD FARMS, INC.
2010 Commerce Drive
Red Oak, Iowa 51566
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 22, 2000
--------------------
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Red Oak Hereford Farms, Inc. (the
"Company") will be held at the Red Coach Inn, Highway 34, Red Oak, Iowa, on
Monday, May 22, 2000, at 10:30 a.m. (local time) for the following purposes:
(1) to elect nine directors to hold office until the Annual Meeting of
Shareholders in 2001, and until their successors are elected and qualified;
(2) to consider and vote upon a proposal to amend the Company's Amended
and Restated Certificate of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue from 50,000,000 shares to
100,000,000 and the number of Preferred Stock from 5,000,000 to 10,000,000;
(3) to consider and vote upon a proposal to approve the Company's 2000
Stock Option Plan;
(4) to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on April 14, 2000
will be entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/S/Peter Hudgins
--------------------------------
Peter Hudgins
Secretary
April __, 2000
Red Oak, Iowa
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WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, YOU ARE
URGED TO SIGN, MARK, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ADDRESSED REPLY ENVELOPE, WHICH IS FURNISHED FOR YOUR CONVENIENCE. THIS
ENVELOPE NEEDS NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
RED OAK HEREFORD FARMS, INC.
2010 Commerce Drive
Red Oak, Iowa 51566
712-623-9224
-------------------
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
May 22, 2000
-------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Red Oak Hereford Farms, Inc. (the
"Company") to be used in voting at the Annual Meeting of Shareholders to be held
on Monday, May 22, 2000, at 10:30 a.m., at the Red Coach Inn, Highway 34, Red
Oak, Iowa, or at any adjournment or adjournments thereof. This Proxy Statement,
the Notice, the Proxy, and the Company's 1999 Annual Report have been mailed on
or before May 1, 2000 to each shareholder of record at the close of business
April 14, 2000.
You are requested to sign, mark, and complete the enclosed Proxy and
return it in the addressed reply envelope which is furnished for your
convenience. If any matters that are not specifically set forth on the proxy
card and in this Proxy Statement properly come before the Annual Meeting, the
proxy intends to vote on such matters in accordance with his reasonable business
judgement.
Proxies in the form enclosed, if duly signed, marked, and received in
time for voting, will be voted in accordance with the directions of the
shareholders. The giving of a Proxy does not preclude the right to vote in
person should the shareholder so desire. A shareholder may revoke a Proxy by
giving notice to the Secretary of the Company in writing at the address of the
principal executive offices or in open meeting, but such revocation shall not
affect any vote previously taken.
The expense of soliciting Proxies for the Annual meeting, including the
cost of preparing, assembling, and mailing the Notice, Proxy, and Proxy
Statement, will be paid by the Company. The solicitation will be made by the use
of the mails and through brokers and banking institutions and may also be made
by officers and regular employees of the Company. Proxies may be solicited by
personal interview, mail, telephone, and possibly by facsimile transmission.
As hereinafter used, and unless otherwise provided, the term "Executive
Officers" refers to the President and Chief Executive Officer, Chief Operating
Officer, and the Vice President and Chief Financial Officer.
1
<PAGE>
VOTING SECURITIES
General
Each holder of record of the Company's Common Stock, par value $0.001
per share, at the close of business on April 14, 2000, is entitled to one vote
per share on matters that come before the Annual Meeting.
The presence, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast on
a particular matter constitutes a quorum to take action at a shareholders'
meeting. Shares which are present, or represented by a proxy, will be counted
for quorum purposes regardless of whether the holder of the shares or proxy
fails to vote on a matter ("Abstentions") or whether a broker with discretionary
authority fails to exercise its discretionary authority to vote shares with
respect to the matter ("Broker Non-Votes"). The affirmative vote of at least a
majority of the votes cast at the Annual Meeting of Shareholders by all
shareholders entitled to vote thereon is required to adopt any proposal. For
voting purposes, only shares voted either for or against the adoption of
proposal or the election of directors, and neither Abstentions not Broker
Non-Votes, will be counted as voting in determining whether a proposal is
approved or a director is elected. As a consequence, Abstentions and Broker
Non-Votes will have no effect on the adoption of a proposal or the election of a
director.
At the close business on April 14, 2000, there were 16,019,165 shares
of the Company's Common Stock entitled to vote at the Annual Meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of April 14, 2000, the shares of the
Company's Common Stock held by shareholders of the Company who were known by the
Company to own beneficially more than 5% of its outstanding Common Stock, by the
Directors and nominees, and by all Directors and Executive Officers of the
Company as a group:
2
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<TABLE>
<CAPTION>
Amount and Nature Percentage of Shares
Title of Class Name of Of Beneficial Owned by Beneficial
Beneficial Owner Ownership (1) Owners and Management
- --------------- ------------------------------- -------------------------- ----------------------------------
<S> <C> <C> <C>
Common Gordon Reisinger 6,812,653 (2) 38%
Rural Route 3
Red Oak, Iowa 51566
Common Cimarron Investments, LP 2,433,333 15%
Rural Route 3
Red Oak, Iowa 51566
Common John Derner 8,646,655 (3) 45%
2353 213th Avenue
Milford, Iowa 51351
Common JKSBM, LP 2,175,000 14%
2353 213th Avenue
Milford, Iowa 51351
Common Charles Kolbe 1,112,154 (4) 7%
Common Dwayne Lewis 95,333 (5) *
Common Charles Wilson 1,397,625 (6) 8%
Common Johan Smit 325,000 (7) 2%
Common Jack Holden 45,334 (8) *
Common Ron Daggett 92,334 (9) *
Common All Officers and Directors as 18,738,688 (10) 81%
a Group: (12 persons)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents less than 1%
(1) Beneficial ownership has been determined pursuant to Rule 13(d)-3 (d) (1)
under the Securities Exchange Act of 1934, as amended.
(2) Includes 512,820 shares owned by Cimarron Properties which is owned and
controlled by Gordon Reisinger and 2,433,333 shares owned by Cimarron
Investments, LP, a family partnership controlled by Mr. Reisinger. Also,
includes 1,880,000 stock options held by Mr. Reisinger.
3
<PAGE>
(3) Includes 2,175,000 shares owned by JKSBM, a family limited partnership,
which is owned and controlled by Mr. Derner, and 512,821 shares owned by
Derner's of Milford, a company controlled by Mr. Derner and 265,000 shares
owned by the Derner Foundation which Mr. Derner controls. Also, includes
1,380,000 stock options held by Mr. Derner, 326,000 Common Stock purchase
warrants and 311,000 Series B Preferred Stock convertible into 1,555,000
shares of Common Stock.
(4) Includes 512,821 shares owned by Wall Lake Cattle Company, a company
controlled by Mr. Kolbe. Mr. Kolbe also holds 60,000 stock options.
(5) Includes options to purchase 5,000 shares of Common Stock and warrants to
purchase 13,333 shares of Common Stock.
(6) Includes 48,750 shares of Common Stock, 220,000 shares of Series B
Preferred Stock convertible into 1,100,000 shares of Common Stock and 3,900
Series C Stock which is convertible into Common Stock at a ratio of five to
one and 229,375 warrants to purchase Common Stock.
(7) Includes 1,000 shares of Common Stock and 54,000 shares of Series B
Preferred Stock convertible into 270,000 shares of Common Stock and 54,000
warrants.
(8) Includes options to purchase 5,000 shares of Common Stock and warrants to
purchase 13,334 shares of Common Stock.
(9) Includes 17,000 shares of Common Stock held jointly with Mr. Daggett's
spouse. Also includes warrants to purchase 30,334 shares of Common Stock
jointly held and options to purchase 5,000 shares of Common Stock. Also
includes 7,000 Series B Preferred shares convertible into 35,000 shares of
Common Stock and 7,000 warrants.
(10) Includes warrants to purchase 740,476 shares of Common Stock, options to
purchase 3,520,000 shares of Common Stock, 449,600 shares of Series B
Preferred Stock and 3,900 shares of Series C Preferred Stock both
convertible into Common Stock at a ratio of 5 to 1.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting, nine persons will be elected to the Board of
Directors to serve for one year.
Listed below are the nominees for the Board of Directors. Any Proxy not
specifically marked will be voted by the named proxies for the election of the
nominees named below, except as otherwise instructed by the shareholders. It is
not contemplated that any of the nominees will be unable or unwilling to serve
as a Director, but if that should occur, the Board of Directors reserves the
right to nominate another person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
FOLLOWING NOMINEES:
4
<PAGE>
NOMINEES FOR DIRECTORS
Johan Alexander Smit, Director, age 46. Mr. Smit is Managing Director
of Smitfort Steel. As director of Smitfort-Staal BV, Mr. Smit manages a
worldwide steel company. He attended the London School of Economics and received
his Masters in Business Administration from the University of Neyerrode. Mr.
Smit is an honorary member of the Dutch Export Federation, a board member of
Business Club Zwijndrecht (ovz) and a supervisory board member of the Dutch
Trading Company.
Gordon Reisinger, Director and President, age 60. Prior to its
acquisition by the Company, Mr. Reisinger was the managing partner and a 33.33%
owner in Midland Cattle Company, which he formed in 1987. Midland is a cattle
trader, which buys and sells feeder cattle nationwide, including cattle for the
Companies Hereford programs. Mr. Reisinger has managed the Eldora Livestock
auction his father built in 1939 and has been active in family farming and
cattle operations, cattle feeding, commercial and farmer feedlot quality-control
auditing, and nationwide cattle brokering his entire life. Mr. Reisinger holds a
Bachelor's Degree in Animal Science from Iowa State University.
John Derner, Director and Vice President, age 49. Mr. Derner owns and
manages an 8,000 head cattle feedlot and a large row crop operation in West Lake
Okoboji, Iowa. Mr. Derner also owns a manufacturing company, Shell Rock
Products, Inc., which manufactures and distributes numerous ornamental concrete
products nationwide.
Charles Kolbe, Director and Chairman of the Board, age 58. Mr. Kolbe
owns a family farming and cattle feeding operation in Lake View, Iowa. In
addition to farming and cattle feeding operations, Mr. Kolbe has been active in
the financial world, having held positions as a director and principal of banks
in Iowa and Minnesota. Mr. Kolbe was a co-founder and 33.33% owner of Midland
prior to its acquisition by the Company. He is on the executive committee of the
Iowa Cattleman's Association, Iowa Beef Industry Council and the National
Livestock and Meat Board. He is past President of the Iowa Cattleman's
Association and past Chairman of the Iowa Beef Industry Council.
Jack B. Holden, Director, age 35. Mr. Holden manages his family's
Hereford operation, Holden Herefords, on a 2,000-acre ranch near Valier,
Montana. Mr. Holden is active in the National Cattleman's Beef Association,
Montana Stockgrowers and its Seedstock Committee. He is also active in the
American Hereford Association and the Montana Farm Bureau. He serves as Director
of the Montana Hereford Association, and Vice President and Director of the
Pondera County Canal and Reservoir Company.
Dwayne Lewis, Director, age 68. Mr. Lewis operates Lewis Feedlot. He
currently runs approximately 17,000 cattle in this operation. He has been active
in the Nebraska Livestock Feeders Association and chaired the Environmental
Committee for the National Feeders Association. He has been a member of National
Cattlemen's Beef Association and Nebraska Cattlemen's Association.
Mr. Lewis' quarterhorse operation is recognized as one of the top
stables in the United States. He has served as President of the Nebraska
Quarterhorse Association and a member of the Board of Directors of the American
Quarterhorse Association.
Along with his cattle feeding and quarterhorse operations, Mr. Lewis
and his two sons operate 3,500 acres of irrigated farmland. He has also served
as Chairman of the Board of Gibbon Bank for twelve years. His community service
included twenty years as a member and term as President of the local School
Board in his district near Kearney, Nebraska.
Ron Daggett, Director, age 53. Mr. Daggett served as a First Vice
President, Sales for Dean Witter from 1994 to 1997. For the past three years,
Mr. Daggett has served as First Vice President, Sales for First Union
Securities, Inc.
5
<PAGE>
Marius Morin, Director, age 42. Mr. Morin has been a management
consultant for international business development programs for the past fifteen
years.
Charles Wilson, Director, age 81. Mr. Wilson is Chairman, President,
and CEO of Wilson Concrete Company. He has been President and CEO of the company
since 1949. Mr. Wilson holds BS Degrees in both Civil and General Engineering
from Iowa State University. Wilson has received numerous awards including the
PCI (Precast/Prestressed Concrete Institute) Medal of Honor, an award given only
eleven times in the last forty years and the Corporate Partner of the Year Award
for his support of the Mid-American Counsel and the Nischa Nimat District of the
Boy Scouts.
During the fiscal year ended December 31, 1999, six scheduled meetings
of the Board of Directors were held.
The Company issues each director 1,000 shares of Common Stock for
attendance at each meeting of the Board of Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities of the Company.
Officers, directors, and greater than ten-percent shareholders are required
under regulations promulgated by the Securities and Exchange Commission to
furnish the Company with copies of all Section 16(a) forms which they file.
Certain Directors and Executive Officers have inadvertently omitted
filing Form 3 or Form 4's within the required time period. The Forms 3 and 4 for
each Director and Executive Officer either has been filed or is in the process
of being filed.
The Directors and Executive Officers include: Gordon Reisinger, John
Derner, Charles Kolbe, Dwayne Lewis, Jack Holden, Ron Daggett, Marius Morin,
Charles Wilson, Johan Smit, John Schiering, Harley Dillard, and Pete Hudgins.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has a standing Audit Committee.
The Committee is charged with the responsibility of reviewing reports from the
Company's independent certified public accountants, keeping the Board informed
with respect to the Company's accounting policies, and the adequacy of internal
controls, making recommendations regarding the selection of the Company's
independent certified public accountants and reviewing the scope of their audit.
The Audit Committee was created by corporate resolution by the Board of
Directors on January 29, 1999. The Audit Committee members currently consist of
Ron Daggett and Chuck Kolbe. The Audit Committee has held one meeting during the
last fiscal year ended December 31, 1999.
6
<PAGE>
The Board of Directors has a standing Compensation Committee, the
function of which is to review and make recommendations with respect to
compensation of the President, Chief Executive Officer, and the other key
executive officers of the Company, including salary, bonus, and benefits under
the various compensation plans maintained by the Company. The Compensation
Committee members are Gordon Reisinger, Charles Kolbe, John Derner, and Charles
Wilson. During the fiscal year ended December 31, 1999, there was one meeting of
the Compensation Committee.
The Board of Directors has a standing Nominating Committee charged with
the responsibility of making its recommendations annually to the Board with
respect to those persons for whose election as Directors by the shareholders'
proxies shall be solicited by the Board of Directors and the filling of any
vacancy among the shareholder-elected Directors. The Nominating Committee will
consider shareholder recommendations of nominees for election to the Board if
the recommendations are accompanied by comprehensive written information
relating to the recommended individual's business experience and background and
by a consent executed by the recommended individual stating that he or she
desires to be considered as a nominee, and, if nominated or elected, that he or
she will serve as a Director. Recommendations should be sent to the Secretary of
the Company by December 1, 2000, to consider and recommend the candidates to be
nominated for election at the next meeting.
EXECUTIVE OFFICERS (Not Also Directors):
Harley Dillard, Vice President and Chief Financial Officer. Mr. Dillard
worked in public accounting and then with Monfort of Colorado in several
capacities, including plant Controller for the Monfort Greeley Slaughter Plant
and Controller for the Monfort Portion Foods Division. He gained more consumer
product experience as Controller and Director of Finance for the Denver
Coca-Cola Franchise. From 1984 until 1996, Mr. Dillard held positions with
Robertson Associates Manufacturing, Inc., ("RAMI") an aluminum
beverage-packaging manufacturer. Mr. Dillard joined RAMI as Controller and was
promoted to Vice President and Chief Financial Officer. Since 1996 until he
joined the Company, Mr. Dillard was General Manager of Cruisin Cuisine/WP&G
Distributing, a privately held manufacturer and distributor of wholesale food
products. Mr. Dillard is a Certified Public Accountant.
Pete Hudgins, Vice President - Special Projects. Mr. Hudgins' lifelong
cattle industry experience began with his participation as the fifth generation
of a commercial Hereford ranching and buying business in Texas. His
entrepreneurial activities in real estate development, oil and gas, and niche
cattle marketing bring a unique skill profile to the special projects of
building a unique proprietary branded beef business. Among his responsibilities
are investor, customer, and producer relations, which draw on substantial cattle
organization and capital formation experience. He also coordinates projects with
Mr. Reisinger and other management in various areas of the enterprise.
John Schiering, Chief Operating Officer, Red Oak Farms, Inc. Mr.
Schiering was appointed to his position in January of 2000. Since 1995, he has
been a management consultant working primarily on confectionery projects. From
1985 to 1995, he was Vice President and General Manager of Borden Candy
Products. Mr. Schiering holds a B.A. degree from Brown University and J.D.
degree from the New England School of Law. Mr. Schiering is admitted to practice
law in the Commonwealth of Massachusetts.
7
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Policies Applicable To Executive Officers
The purpose of the Company's executive compensation program is to
attract, retain, and motivate qualified executives to manage the business of the
Company so as to maximize profits and shareholder value. Executive compensation
in the aggregate is made up principally of the executive's annual base salary, a
bonus which may be awarded under the Company's Management Incentive Plan and
awards of Company stock or stock options under the Company's 1997 and 1998 Stock
Option Plans. The Company's Compensation Committee (the "Committee") annually
considers and makes recommendations to the Board of Directors as to executive
compensation including changes in base salary and bonuses.
Consistent with the above-noted purpose of the executive compensation
program, it is the policy of the Committee, in recommending the aggregate annual
compensation of executive officers of the Company, to consider the overall
performance of the Company, the performance of the division of the Company for
which the executive has responsibility and the individual contribution and
performance of the executive. The performance of the Company and of the function
for which the executive has responsibility are significant factors in
determining aggregate compensation although they are not necessarily
determinative. While shareholders' total return is important and is considered
by the Committee, it is subject to the vagaries of the public market place and
the Company's compensation program focuses on the Company's strategic plans,
corporate performance measures, and specific corporate goals, which should lead
to improved performance. The corporate performance measures, which the Committee
considers, include sales, earnings, return on equity, and comparisons of sales
and earnings with prior years, with budgets, and with the Company's competitors
and peer group.
The Compensation Committee does not rely on any fixed formula or
specific numerical criteria in determining an executive's aggregate
compensation. It considers both corporate and personal performance criteria,
competitive compensation levels, the economic environment and changes in the
cost of living as well as the recommendations of management. The Committee
exercises business judgment based on all of these criteria and the purpose of
the executive compensation program.
Compensation Committee
Gordon Reisinger
John Derner
Charles Kolbe
Charles Wilson
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<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------------------
Long-term Compensation
----------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------------------------------
(1)
Name and Principal Other Annual Restricted Number of LTIP All Other
Position Year Salary Bonus Compensation Stock Awards Options Payouts Compensation
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gordon Reisinger 1999 $ 120,000 -0- $16,667 $3,500 -0- -0- $451
Chief Executive 1998 $ 120,000 -0- $53,333 $97,970 -0- -0- -0-
Officer/President/ 1997 $ 100,000 $ 106,802 -0- -0- 5,000 -0- $121,500
Director
Harley Dillard 1999 $ 125,000 -0- -0- -0- 60,000 -0- -0-
Treasurer/Chief 1998 $ 110,000 -0- -0- $25,000 140,000 -0- -0-
Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Values of Restricted Stock Awards shown in the Summary Compensation Table
are based on the average market price of the Company's Common Stock on the
date of the grant.
Option Grants in Last Fiscal Year
---------------------------------
Individual Grants
-----------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
% of Total Potential Realization
Options Value at Assumed
Granted to Exercise Annual Rates of Stock
Options Employees Price Per Expiration Price Appreciation for
Name Granted in Fiscal Yr. Share Date Option Terms(1)
- ------------------------------------------------------------------------------------------------------------------------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Harley Dillard, CFO 60,000 100% $1.50 2009 $146,000 $233,436
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts reported in the column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming the specified compounded rates of appreciation of the
Common Stock over the term of the options. These numbers are calculated
based on rules promulgated by the Commission and do not represent the
Company's estimate of future Common Stock price. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent on the timing
of such exercise and the future market price of the Common Stock. There can
be achieved or that the amounts reflected will be received by the
individuals. This table does not take into account any appreciation in the
price of the Common Stock from the date of grant to the present date. The
values shown are net of the exercise price, but do not include deductions
for taxes or other expenses associated with the exercise.
PROPOSAL 2-APPROVAL OF INCREASE IN THE AUTHORIZED
SHARES OF COMMON STOCK
On February 4, 2000, the Company's Board of Directors adopted and
recommended that the stockholders of the Company approve an amendment to Article
IV of the Company's Amended and Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock of the Company from
50,000,000 shares to 100,000,000 shares and to increase the number of Preferred
Stock from 5,000,000 to 10,000,000. The proposed amendment would replace Article
IV in its entirety as follows:
Article IV The aggregate number of shares, which this corporation shall
have authority to issue, are 110,000,000 shares. 100,000,000 shares of
Common Stock having a par value of $.001 per share and 10,000,000
shares of Preferred Stock having a par value of $.001 per share. Stock
of the corporation shall be of two classes, common and preferred, and
both shall be issued in such classes and have such rights, preferences
and designations as determined by the Board of Directors of the
corporation. Fully paid stock of this corporation shall not be liable
to any further call or assessment.
The Company is currently authorized to issue 50,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. As of April 14, 2000, the
record date for the Annual Meeting, 16,019,165 shares of Common Stock were
issued and outstanding and 1,412,190 shares of Preferred Stock were issued or to
be issued.
9
<PAGE>
The Board of Directors of the Company believes that it is advisable to
have available authorized but unissued shares of Common Stock and Preferred
Stock in an amount adequate to provide for the future needs of the Company. The
additional shares will be available for issuance from time to time by the
Company in the discretion of the Board of Directors, without further stockholder
action (except as may be required for a particular transaction by applicable law
or requirements of regulatory agencies), for any proper corporate purpose
including, among other things, future acquisitions, stock dividends, stock
splits, convertible debt financing and equity financings. Holders of Common
Stock do not have preemptive rights with respect to the future issuance of any
shares of Common Stock.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common Stock or Preferred
Stock, other than for possible issuance in the future in connection with the
Company's stock option plans. The additional authorized shares of Common Stock
and Preferred Stock will allow the Company to maintain the flexibility to issue
shares of Common Stock or Preferred Stock in the future without the potential
expense or delay incident to obtaining the approval of the Company's
shareholders by means of a special meeting of shareholders at such time.
Issuing additional shares of Common Stock or Preferred Stock may have
the effect of diluting the stock ownership of persons seeking to obtain control
of the Company and, accordingly, making a change in control of the Company
difficult. The Company is not aware of any attempt to obtain control of the
Company.
If the proposed amendment to the Company's Amended and Restated
Certificate of Incorporation is approved, a Certificate of Amendment will be
filed with the Secretary of State of Nevada as promptly as practicable
thereafter. The amendment would be effective upon the date of filing.
The affirmative vote of a majority of the outstanding shares of Common
Stock present, or represented and entitled to vote at the Meeting is required to
approve the amendment to the Certificate of Incorporation.
The Board of Directors recommends that shareholders vote FOR the
proposed amendment to the Amended and Restated Certificate of Incorporation.
PROPOSAL 3-APPROVAL OF THE 2000
STOCK OPTION PLAN
In February 2000, the Board of Directors adopted a proposal to create
the Company's 2000 Stock Option Plan (the "SOP") subject to shareholder
approval. The reason for the new plan is to ensure that sufficient shares are
available for issuance, which would support the Company's efforts to attract and
retain highly qualified employees.
The vote of a majority of the shares of Common Stock represented at the
Annual Meeting (excluding broker non-votes) in person or by proxy is required to
approve the SOP.
The description that follows is an overview of the material provisions
of the SOP. The description, however, does not purport to be a complete
description of all the provisions of the SOP. Any shareholder that wants to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's executive offices in Red Oak, Iowa.
Description of the SOP and Option Terms
The purpose of the SOP is to enable the Company to offer to its key
employees, officers, directors, consultants and sales representatives whose
past, present and/or potential contribution to the Company have been or will be
important to the success of the Company. The Board of Directors believes that
the proposed SOP will help the Company attract and retain highly qualified
employees.
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The SOP provides for the granting of stock options to key employees,
officers, directors, consultants and sales representatives who are deemed to
have rendered or able to render significant services to the Company, and who are
deemed to have contributed or to have the potential to contribute to the success
of the Company. The stocks subject to options under the SOP are shares of the
authorized but unissued or reacquired Common Stock. A participant is not
required to exercise any stock options, which are granted to such participant
pursuant to SOP. The number of shares of Common Stock available under the SOP is
2,000,000.
The SOP is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee shall automatically award employees a
specific number of options on the date of the grant.
The Committee may also grant to the Holder (concurrently with the grant
of an Incentive Stock Option and at or after the time of grant in the case of a
Nonqualified Stock Option) a Stock Reload Option up to the amount of shares of
Stock held by the Holder for a least six months and used to pay all or part of
the exercise price of an Option and, if any, withheld by the Company as payment
for withholding taxes. Such Stock Reload Option shall have an exercise price
equal to the Fair Market Value as of the date of the Stock Reload Option grant.
Unless the Committee determines otherwise, a Stock Reload Option may be
exercised commencing one year after it is granted and shall expire on the date
of expiration of the Option to which the Reload Option is related.
Stock appreciation rights may be granted to participants who have been,
or are being granted, options under the SOP. In the case of nonqualified stock
options, a stock appreciation right may be granted either at or after the time
of the grant of such nonqualified stock option. In the case of an Incentive
Stock Option, a stock appreciated right may be granted only at the time of the
grant of such incentive option.
Shares of Restricted Stock may be awarded either alone or in addition
to other awards granted under the SOP. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be awarded, the number of shares to be awarded, the price (if any) to
be paid by the Holder, the time or times within which such awards may be subject
to forfeiture (the "Restriction Period"), the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the awards.
Shares of Deferred Stock may be awarded either alone or in addition to
other awards granted under the SOP. The Committee shall determine the eligible
persons to whom and the time or times at which grants of Deferred Stock shall be
awarded, the number of shares of Deferred Stock to be awarded to any person, the
duration of the period (the "Deferral Period") during which and the conditions
under which, receipt of the shares will be deferred, and all the other terms and
conditions of the awards.
Other Stock-Based Awards may be awarded, subject to limitations under
applicable law, that are denominated or payable, in value in whole or in part by
reference to, or otherwise based on, or related to, shares of Common Stock, as
deemed by the Committee to be consistent with the purposes of the Plan,
including, without limitation, purchase rights, shares of Common Stock awarded
which are not subject to any restrictions or conditions, convertible or
exchangeable debentures, or other rights convertible into shares of Common Stock
and awards valued by reference to the value of securities of or the performance
of specified subsidiaries. Other Stock-Based Awards may be awarded either alone
or in addition to or in tandem with any other awards under this Plan or any
other plan of the Company.
The Committee shall determine the eligible persons to whom and the time
or times at which grants of such other stock-based awards shall be made, the
number of shares of Common Stock to be awarded pursuant to such awards, and all
other terms and conditions of the awards.
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If (i) any person or entity other than the Company and/or any
shareholders of the Company as of the Effective Date acquire securities of the
Company (in one or more transactions) having 25% or more of the total voting
power of all the Company's securities then outstanding and (ii) the Board of
Directors of the Company does not authorize or otherwise approve such
acquisition, then, the vesting periods of any and all Options and other awards
granted and outstanding under the Plan shall be accelerated and all such Options
and awards will immediately and entirely vest, and the respective holders
thereof will have the immediate right to purchase and/or receive any and all
Stock subject to such Options and awards on the terms set forth in this Plan and
the respective agreements respecting such Options and awards.
Under present tax law, the Federal income tax treatment of options
granted under the SOP is generally as described below. Local and state tax
authorities may also tax incentive compensation awarded under the SOP.
Incentive Stock Options. With respect to options, which qualify as
incentive stock options, a grantee will not recognize income for Federal income
tax purposes at the time options are granted or exercised. If the grantee
disposes of shares acquired by exercise of the options before the expiration of
two years from the date the options are granted or within one year after the
issuance of shares upon exercise of the options, the grantee will recognize in
the year of disposition (a) ordinary income, to the extent that the lesser of
either (1) the fair market value of the shares on the date of option exercise or
(2) the amount realized on disposition, exceeds the option price, and (b)
capital gain (or loss), to the extent that the amount realized on disposition
differs from the fair market value of the shares on the date of option exercise.
If the shares are sold after expiration of these holding periods, the grantee
will realize capital gain or loss (assuming the shares are held as capital
assets) equal to the difference between the amount realized on disposition and
the option price.
Non-Qualified Stock Options. With respect to options which do not
qualify as incentive stock options, the grantee will recognize no income upon
grant of the option and, upon exercise, will recognize ordinary income to the
extent of the difference between the amount paid by the grantee for the shares
and the fair market value of the shares on the date of option exercise. Upon a
subsequent disposition of the shares received under the option, the grantee will
recognize capital gain or loss, as the case may be, to the extent of the
difference between the fair market value of the shares at the time of exercise
the amount realized on the disposition (assuming the shares are held as capital
assets.)
Except as described below, the Company will be entitled to a deduction
for Federal income tax purposes at the same time and in the same amount. As a
grantee is required to recognize ordinary income as described above. To the
extent a grantee realizes capital gains as described above, the Company will not
be entitled to any deduction for Federal income tax purposes. Effective as of
the passage of the Revenue Reconciliation Act of 1993, under Section 162 of the
Internal Revenue Code, companies can no longer deduct compensation over $1
million paid to their chief executive officer and their four other most highly
compensated officers, including compensation under a plan meets certain
requirements.
With respect to accounting consideration, there is no charge to the
Company's operations in connection with the grant or exercise of an option to
employees or directors under the SOP. Unless the fair market value of the shares
at the date of the grant exceeds the exercise price of the option, in which case
there will be a charge to operations at the dates the option becomes exercisable
in the amount of such excess. If there is no charge to the Company's operations,
any material tax benefit received by the Company upon exercise of a
non-qualified stock option or as a result of a disqualifying disposition of
shares obtained upon exercise of incentive stock options is reflected as a
credit to capital in excess of par value and not as income. Earnings per share
(diluted) may be affected by the SOP by the effect on the calculation, as
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prescribed under generally accepted accounting principles, of the number of
outstanding shares of Common Stock of the Company. This calculation reflects the
potential dilutive effect, using the treasury stock method, of outstanding stock
options anticipated to be exercised even though shares have not yet been issued
upon exercise of these options. When shares are actually issued as a result of
the exercise of stock options, dilution of earnings per share (primary) may
result.
The SOP shall be effective as of the date on which the Company's
shareholders approved the SOP.
Unless terminated by the Board, this Plan shall continue to remain
effective until such time no further awards may be granted and all awards
granted under the Plan are no longer outstanding. Notwithstanding the foregoing,
grants of Incentive Stock Options may only be during the ten-year period
following the Effective Date.
As of April 14, 2000, there were approximately forty persons eligible
to receive stock options under the SOP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2000
STOCK OPTION PLAN.
Certain Relationships and Related Party Transactions
Mr. Gordon Reisinger is paid an annual salary of $120,000 as President
of the Company. Mr. Reisinger was also paid a consulting fee of $16,667 in 1999.
Mr. Reisinger is part owner of a company that leases an office building to the
Company. The lease payments made in 1999 were $48,000. He was also issued 3,000
shares of Common Stock for his services as a director. In February 2000, Mr.
Reisinger was granted options to purchase 500,000 shares of Common Stock. During
1999, the Company purchased cattle totaling $389,881 from Mr. Reisinger and a
company owned by Mr. Reisinger. During 1999, the Company provided an automobile
for Mr. Reisinger. Compensation to Mr. Reisinger for vehicle costs totaled $451
in 1999.
Mr. John Walker, Mr. Reisinger's son-in-law, works for the Company. He
buys and sells cattle and was paid $60,000 for his services in 1999. Mr. Walker
and his wife, Mrs. Kathy Walker, own an entity that buys cattle from the
Company. During 1999, cattle purchases by Mr. and Mrs. Walker from the Company
were approximately $849,016. In order to insure a sufficient supply of Hereford
cattle, the Company enterer into financing arrangements, i.e., repurchase
agreements, with related parties during 1999. The Company's agreement with the
related party is that the Company retains the benefit from any gains on the
cattle and the risk of any losses. In addition, the Company reimburses the
related party for any costs incurred on the cattle, such as grain, vet, yardage,
etc., as well as pays interest on the funds advanced by the related party to
"purchase" the cattle and to pay other expenses related to the cattle. The
cattle are purchased by the Company for meat processing. During 1999, the
Company paid $448,342 under this arrangement. Mrs. Walker works as a part-time
bookkeeper for the Company and for those services the Company paid $5,400 in
1999.
Mr. Todd Reisinger, Mr. Reisinger's son, was a meat salesman for the
Company and was paid $27,500 in 1999.
Mr. Charles Kolbe, a director and employee of the Company, received
3,000 shares as director fees in 1999. Mr. Kolbe also received consulting fees
from the Company totaling $16,667 in 1999. Mr. Kolbe also received $60,000 for
work performed for the Company. During 1999, the Company purchased cattle
totaling $302,305 from Mr. Kolbe and Mr. Kolbe's company purchased cattle from
the Company totaling $199,369.
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Mr. Reisinger, Mr. Walker, and Mr. Kolbe are owners of a trucking
business that transported cattle for the Company. During 1999, this entity was
paid $148,403 for its services.
Mr. Reisinger and Mr. Walker are part owners of a trucking company that
transports cattle for the Company. During 1999, this entity was paid $8,927.
Mr. Dwayne Lewis, a director of the Company, was issued 3,000 shares of
Common Stock for services as a director. During 1999, the Company sold cattle to
his entity totaling $1,507,130 and purchased cattle totaling $12,073,894.
Mr. John Derner was paid a consulting fee of $16,667 from the Company
in 1999. He was also paid a salary of $60,000 as an employee. He was issued
3,000 shares of Common Stock for his services as a director of the Company. Mr.
Derner is an owner of an entity that purchases cattle from the Company. In 1999,
such purchases totaled approximately $860,088. Also during 1999, the Company
purchased cattle totaling $4,743,111 from a company owned by Mr. Derner. Mr.
Derner also provided an airplane for the use by the Company. The Company pays
Mr. Derner rent on the airplane. The Company makes payments for the pilot, fuel,
and expenses to third parties. The total of rent expense paid for 1999 was
$21,000.
Messrs. Holden and Daggett each were issued 3,000 shares of Common
Stock for their services as directors of the Company. Mr. Smit was issued 1,000
shares of Common Stock for his services as a director during 1999.
Mr. Harley Dillard, the Company's Chief Financial Officer, received
compensation in 1999 totaling $125,000. Mr. Dillard was also granted options to
purchase 60,000 shares of Common Stock during 1999.
Mr. John Schiering, the Chief Operating Officer of Red Oak Farms, Inc.,
the Company's wholly owned subsidiary, has an employment agreement that provides
for a monthly salary of $11,250. The initial term of the agreement is six months
effective January 1, 2000. The agreement may be renewed upon the mutual consent
of both parties for an additional two years. In the event the agreement is
renewed after the initial term, Mr. Schiering will be required to relocate to
the Omaha, Nebraska/Red Oak, Iowa area. Upon the signing of the agreement, Mr.
Schiering was granted options to purchase 25,000 shares of Common Stock. The
options were granted at fair market value and expire within one year of date
upon which they vest which is January 1, 2000. At such time, if ever, that Mr.
Schiering relocates according to the terms of the agreement, he will be granted
the option to purchase 100,000 shares of the Company's Common Stock exercisable
equally over a three year period at a purchase price equal to the fair market
value on the date of grant. The agreement also provides for a vehicle for Mr.
Schiering's use in Red Oak, Iowa, during the initial term of the agreement as
well as reasonable airfare expense incurred in commuting from Red Oak, Iowa to
Carmel, Indiana. Such reimbursement is limited to twenty-four round trip
tickets. The agreement also provides for a reasonable housing allowance, in an
amount to be agreed upon by the parties, for the purpose of securing a modest
apartment in or around Red Oak, Iowa. In the event Mr. Schiering is terminated
without cause; he will be entitled to his regular pro-rated salary for a one
hundred and twenty-day period following notice of termination. Should the
agreement be renewed beyond its initial six month term, Mr. Schiering is
entitled to a bonus of $13,500 to be paid within thirty days after his
relocating to the Omaha/Red Oak area and granted 15,000 shares of Common Stock.
Mr. Pete Hudgins was paid $61,333 during 1999 in salary. The Company
provided Mr. Hudgins with an automobile. Compensation to Mr. Hudgins for vehicle
costs totaled $1,610 in 1999. During 1999, Mr. Hudgins and another employee of
the Company sold cattle to the Company totaling $158,984.
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PERFORMANCE GRAPH
Comparison of three-year cumulative total return among Red Oak Hereford
Farms, Inc. (HERF) and The Bloomberg Food-Meat Products Group (FMP*).
Total Return
Stock Price Plus Reinvested Dividends
[GRAPH]
- ---------------------------------------------------
HERF FMP*
- ---------------------------------------------------
12/31/96 $ 2.00 $ 12.39
12/31/97 $ 5.00 $ 17.82
12/31/98 $ 0.75 $ 13.74
12/31/99 $ 1.25 $ 8.81
- ---------------------------------------------------
* Based on information from the Bloomberg Food-Meat Products Group, as
available from Bloomberg, which includes the following companies, but from
which the company has been excluded:
Hormel Foods Corporation, Iowa Beef Packers Inc., Smithfield Foods Inc.,
Thorn Apple Valley Inc., Fresh Foods Inc., Doughtie's Foods Inc.,
Cattleman's Inc., Rymer Foods Inc., and Agri-Foods International Inc.
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INDEPENDENT PUBLIC ACCOUNTANTS
The intention of the Board of Directors is to select HLB Gross Collins,
P.C. for the 2000 fiscal year as the Company's certifying accountants. HLB Gross
Collins, P.C. will be available to answer questions at the Annual Meeting and
make any statement, if they so choose.
On December 4, 1998, BDO Seidman, LLP resigned as the Company's
certifying accountants. During the most recent fiscal year for which BDO
Seidman, LLP issued a report (1997), there was no disagreements with BDO
Seidman, LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure or any reportable events.
BDO Seidman, LLP's report on the financial statements for the fiscal year ended
December 31, 1999, contained no adverse opinion or disclaimer of opinion and was
not qualified as to audit scope or accounting principles.
On January 18, 1998, the Company retained HLB Gross Collins, P.C. as
the Company's certifying accountants.
OTHER BUSINESS
The Board of Directors does not know of any other business to come
before the Annual Meeting. However, if any additional matters are presented at
the meeting, it is the intention of the persons named in the accompanying Proxy
to vote such Proxy in accordance with their judgment on such matters.
PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholders of the Company are entitled to submit proposals on matters
appropriate for shareholder action consistent with regulations of the Securities
and Exchange Commission ("SEC") and the Company's By-Laws. Should a shareholder
wish to have a proposal considered for inclusion in the proxy statement for the
Company's 2001 Annual Meeting, under Rule 14a-8 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), such proposal must be received by the
Company on or before December 1, 2000.
In connection with the Company's 2001 Annual Meeting and pursuant to
Rule 14a-4 under the Exchange Act, if the shareholder's notice is not received
by the Company on or before February 7, 2000, the Company (through management
proxy holders) may exercise discretionary voting authority when the proposal is
raised at the annual meeting without any reference to the matter in the proxy
statement.
The above summary, which sets forth only the procedures by which
business may be properly brought before and voted upon at he Company's Annual
Meeting, is qualified in its entirety by reference to the Company's By-Laws.
All shareholder proposals and notices should be directed to the
Secretary of the Company at 2010 Commerce Drive, Red Oak, Iowa 51566.
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ANNUAL REPORT ON FORM 10-K FILED WITH
SECURITIES AND EXCHANGE COMMISSION
A copy of the Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1999 may be obtained, without charge, by any shareholder,
upon written request directed to Peter Hudgins, Secretary, Red Oak Hereford
Farms, Inc., 2010 Commerce Drive, Red Oak, Iowa 51566.
By Order of the Board of Directors
Peter Hudgins
Secretary
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APPENDIX A
RED OAK HEREFORD FARMS, INC.
2000 Stock Option Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Red Oak Hereford Farms, Inc. (the
"Company") 2000 Stock Option Plan (the "Plan") is to enable the Company to offer
to its key employees, officers, directors, consultants and sales representatives
whose past, present and/or potential contributions to the Company and its
Subsidiaries have been, are or will be important to the success of the Company,
an opportunity to acquire a proprietary interest in the Company. The various
types of long-term incentive awards which may be provided under the Plan will
enable the Company to respond to changes in compensation practices, tax laws,
accounting regulations and the size and diversity of its business.
1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Agreement" means the agreement between the Company and
the Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.
(d) "Committee" means the Stock Option Committee of the Board
or any other committee of the Board, which the Board may designate to administer
the Plan or any portion thereof. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, par
value $.001 per share.
(f) "Company" means Red Oak Hereford Farms, Inc., a
corporation organized under the laws of the State of Nevada.
(g) "Deferred Stock" means Stock to be received, under an
award made pursuant to Section 9, below, at the end of a specified deferral
period.
(h) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
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(i) "Effective Date" means the date set forth in Section 13.1,
below.
(j) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock is listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the
last sale price of the Common Stock in the principal trading market for the
Common Stock on the last trading day preceding the date of grant of an award
hereunder, as reported by the exchange or Nasdaq, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on the last
trading day preceding the date of grant of an award hereunder for which such
quotations are reported by the OTC Bulletin Board or the National Quotation
Bureau, Incorporated or similar publisher of such quotations; and (iii) if the
fair market value of the Common Stock cannot be determined pursuant to clause
(i) or (ii) above, such price as the Committee shall determine, in good faith.
(k) "Holder" means a person who has received an award under
the Plan.
(l) "Incentive Stock Option" means any Stock Option intended
to be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(m) "Nonqualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(n) "Normal Retirement" means retirement from active
employment with the Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 10,
below, that is valued in whole or in part be reference to, or is otherwise based
upon, Stock.
(p) "Parent" means any present or future parent corporation of
the Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means the Red Oak Hereford Farms, Inc. 1998 Stock
Option Plan, as hereinafter amended from time to time.
(r) "Restricted Stock" means Stock, received under an award
made pursuant to Section 8, below, that is subject to restrictions under said
Section 8.
(s) "SAR Value" means the excess of the Fair Market Value (on
the exercise date) of the number of shares for which the Stock Appreciation
Right is exercised over the exercise price that the participant would have
otherwise had to pay to exercise the related Stock Option and purchase the
relevant shares.
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(t) "Stock" means the Common Stock of the Company, par value
$.001 per share.
(u) "Stock Appreciation Right" means the right to receive from
the Company, on surrender of all or part of the related Stock Option, without a
cash payment to the Company, a number of shares of Common Stock equal to the SAR
Value divided by the exercise price of the Stock Option.
(v) "Stock Option" or "Option" means any option to purchase
shares of Stock which is granted pursuant to the Plan.
(w) "Stock Reload Option" means any option granted under
Section 6.3, below, as a result of the payment of the exercise price of a Stock
Option and/or the withholding tax related thereto in the form of Stock owned by
the Holder or the withholding of Stock by the Company.
(x) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by the Board
or a Committee. Committee members shall serve for such terms as the Board may in
each case determine, and shall be subject to removal at any time by the Board.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4, below, to award, pursuant to the terms of the Plan: (i)
Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv)
Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based Awards.
For purposes of illustration and not of limitation, the Committee shall have the
authority (subject to the express provisions of this Plan):
(a) to select the officers, key employees, directors,
consultants and sales representatives of the Company or any Subsidiary to whom
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Reload Stock Options and/or Other Stock-Based Awards may from time to time be
awarded hereunder.
(b) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations, and
any vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine);
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(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with or
apart from other equity awarded under this Plan and cash awards made by the
Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the
Plan under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated is cash and of
dividend equivalents on deferred amounts denominated in Stock;
(f) to determine the extent and circumstances under which
Stock and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new awards
of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 4 and 12, below,
the Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), to the otherwise supervise the
administration of the Plan. Subject to Section 12, below, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options (including but limited to Stock Reload Options or Stock
Appreciation rights granted in conjunction with an Incentive Stock Option) or
any Agreement providing for Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive Stock
Option under such Section 422.
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Section 3. Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 2,000,000
shares. Share of Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares of Stock that
have been granted pursuant to a Stock Option cease to be subject to a Stock
Option, or if any shares of Stock that are subject to any Stock Appreciation
Right, Restricted Stock, Deferred Stock award, Reload Stock Option or Other
Stock-Based Award granted hereunder are forfeited or any such award otherwise
terminates without a payment being made to the Holder in the form of Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. Only net shares issued upon a stock-for-stock
exercise (including stock used for withholding taxes) shall be counted against
the number of shares available under the Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, recapitalization, dividend (other than a
cash dividend), stock split, reverse stock split, or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and exercise price of shares subject to outstanding Options, in the
number of shares and Stock Appreciation Right price relating to Stock
Appreciation Rights, and in the number of shares and Stock Appreciation Right
price relating to Stock Appreciation Rights, and in the number of shares subject
to, and in the related terms of, other outstanding awards (including but not
limited to awards of Restricted Stock, Deferred Stock, Reload Stock Options and
Other Stock-Based Awards) granted under the Plan as may be determined to be
appropriate by the Committee in order to prevent dilution or enlargement of
rights, provided that the number of shares subject to any award shall always be
a whole number.
Section 4. Eligibility.
Awards may be made or granted to key employees, officers, directors,
consultants and sales representatives who are deemed to have rendered or to be
able to render significant services to the Company or its Subsidiaries and who
are deemed to have contributed or to have the potential to contribute to the
success of the Company. No Incentive Stock Option shall be granted to any person
who is not an employee of the Company or a Subsidiary at the time of grant.
Section 5. Required Six-Month Holding Period.
Any equity security issued under this Plan may not be sold prior to six
months from the date of the grant of the related award without the approval of
the Company.
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Section 6. Stock Options.
6.1 Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Code, as the Committee may from time to time approve. The Committee
shall have the authority to grant Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options and which may be granted alone or in
addition to other awards granted under the Plan. To the extent that any Stock
Option intended to qualify as an Incentive Stock Option does not so qualify, it
shall constitute a separate Nonqualified Stock Option. An Incentive Stock Option
may be granted only within the ten-year period commencing from the Effective
Date and may only be exercised within ten years of the date of grant or five
years in the case of an Incentive Stock Option granted to an optionee ("10%
Stockholder") who, at the time of grant, owns Stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company.
6.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may not be less than 100% of the Fair Market Value of the
Stock as defined above; provided, however, that the exercise price of an
Incentive Stock Option granted to a 10% Stockholder shall not be less than 110%
of the Fair Market Value of the Stock.
(b) Option Term. Subject to the limitations in Section 6.1,
above, the term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee and as set forth in Section 11, below. If the Committee provides,
in its discretion, that any Stock Option is exercisable only in installments,
i.e., that it vests over time, the Committee may waive such installment exercise
provisions at any time at or after the time of grant in whole or in part, based
upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option, by giving written notice of exercise to the Company specifying
the number of shares of Stock to be purchased. Such notice shall be accompanied
by payment in full of the purchase price, which shall be in cash or, unless
otherwise provided in the Agreement, in shares of Stock (including Restricted
Stock and other contingent awards under this Plan) or, partly in cash and partly
in such Stock, or such other means which the Committee determines are consistent
with the Plan's purpose and applicable law. Cash payments shall be made by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company; provided, however, that the Company shall not be required
to deliver certificates for shares of Stock with respect to which an Option is
exercised until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof. Payments in the form of Stock
shall be valued at the Fair Market Value of a share of Stock on the date prior
to the date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form which are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances. Subject to the
terms of the Agreement, the Committee may, in its sole discretion, at the
request of the Holder, deliver upon the exercise of a Nonqualified Stock Option
a combination of shares of Deferred Stock and Common Stock; provided that,
notwithstanding the provision of Section 9 of the Plan, such Deferred Stock
shall be fully vested and not subject to forfeiture. A Holder shall have none of
the rights of a stockholder with respect to the shares subject to the Option
until such shares shall be transferred to the Holder upon the exercise of the
Option.
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(e) Transferability. No Stock Option shall be transferable by
the Holder other than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable, during the Holder's lifetime, only by
the Holder.
(f) Termination by Reason of Death. If a Holders' employment
by the Company or a Subsidiary terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, shall be fully vested and may thereafter
be exercised by the legal representative of the estate or by the legatee of the
Holder under the will of the Holder, for a period of one year (or such other
greater or lesser period as the Committee may specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
which ever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall be fully
vested and may thereafter be exercised by the Holder for a period of one year
(or such other greater or lesser period as the Committee may specify at the time
of grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(h) Other Termination. Subject to the provisions of Section
14.3, below, and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the Company
or a Subsidiary at the time of grant and if such Holder's employment by the
Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate, except
that if the Holder's employment is terminated by the Company or a Subsidiary
without cause or due to Normal Retirement, then the portion of such Stock Option
which has vested on the date of termination of employment may be exercised for
the lesser of three months after termination of employment or the balance of
such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case
of an Incentive Stock Option, the aggregate Fair Market Value of Stock
(determined at the time of grant of the Option) with respect to which Incentive
Stock Options become exercisable by a Holder during any calendar year (under all
such plans of the Company and its Parent and Subsidiary) shall not exceed
$100,000.
(j) Buyout and Settlement Provisions. The Committee may at any
time, in its sole discretion, offer to buy out a Stock Option previously
granted, based upon such terms and conditions as the Committee shall establish
and communicate to the Holder at the time that such offer is made.
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(k) Stock Option Agreement. Each grant of a Stock Option shall
be confirmed by and shall be subject to the terms of, the Agreement executed by
the Company and the Holder.
6.3 Stock Reload Option. The Committee may also grant to the Holder
(concurrently with the grant of an Incentive Stock Option and at or after the
time of grant in the case of a Nonqualified Stock Option) a Stock Reload Option
up to the amount of shares of Stock held by the Holder for at least six months
and used to pay all or part of the exercise price of an Option and, if any,
withheld by the Company as payment for withholding taxes. Such Stock Reload
Option shall have an exercise price equal to the Fair Market Value as of the
date of the Stock Reload Option grant. Unless the Committee determines
otherwise, a Stock Reload Option may be exercised commencing one year after it
is granted and shall expire on the date of expiration of the Option to which the
Reload Option is related.
Section 7. Stock Appreciation Rights.
7.1 Grant and Exercise. The Committee may grant Stock Appreciation
Rights to participants who have been, or are being granted, Options under the
Plan as a means of allowing such participants to exercise their Options without
the need to pay the exercise price in cash. In the case of a Nonqualified Stock
Option, a Stock Appreciation Right may be granted either at or after the time of
the grant of such Nonqualified Stock Option. In the case of an Incentive Stock
Option, a Stock Appreciation Right may be granted only at the time of the grant
of such Incentive Stock Option.
7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to
the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be
exercisable as determined by the Committee and set forth in the Agreement,
subject to the limitations, if any, imposed by the Code, with respect to related
Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate
and shall no longer be exercisable upon the termination or exercise of the
related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be
exercisable upon such terms and conditions as shall be determined by the
Committee and set forth in the Agreement and by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
Holder shall be entitled to receive a number of Option Shares equal to the SAR
Value divided by the exercise price of the Option.
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(d) Shares Affected Upon Plan. The granting of a Stock
Appreciation Rights shall not affect the number of shares of Stock available
under for awards under the Plan. The number of shares available for awards under
the Plan will, however, be reduced by the number of shares of Stock acquirable
upon exercise of the Stock Option to which such Stock Appreciation right
relates.
Section 8. Restricted Stock.
8.1 Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture (the "Restriction Period"), the vesting schedule
and rights to acceleration thereof, and all other terms and conditions of the
awards.
8.2 Terms and Conditions. Each Restricted Stock award shall be subject
to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of the
Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear a
legend to the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The Holder
will have the right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as the Board may
in its sole discretion designate, pay or distribute on such Restricted Stock and
to exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (i) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vest requirements with respect thereto shall have
been fulfilled; (ii) the Company will retain custody of the stock certificate or
certificates representing the Restricted Stock during the Restriction Period;
(iii) other than regular cash dividends and other cash equivalent distributions
as the Board may in its sole discretion designate, pay or distribute, the
Company will retain custody of all distributions ("Retained Distributions") made
or declared with respect to the Restricted Stock (and such Retained
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Distributions will be subject to the same restrictions, terms and conditions as
are applicable to the restricted Stock) until such time, if ever, as the
Restricted Stock with respect to which such Retained Distributions shall have
been made, paid or declared shall have become vested and with respect to which
the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or
otherwise established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the
Restriction Period with respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions, terms and conditions (i) all
or part of such Restricted Stock shall become vested in accordance with the
terms of the Agreement, subject to Section 11, below, and (ii) any Retained
Distributions with respect to such Restricted Stock shall become vested to the
extent that the Restricted Stock related thereto shall have become vested,
subject to Section 11, below. Any such Restricted Stock and Retained
Distributions that do not vest shall be forfeited to the Company and the Holder
shall not thereafter have any rights with respect to such Restricted Stock and
Retained Distributions that shall have been so forfeited.
Section 9. Deferred Stock.
9.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom and the time or times at which grants of Deferred
Stock shall be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of the period (the "Deferral Period") during which, and
the conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.
9.2 Terms and Conditions. Each Deferred Stock award shall be subject to
the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 9.2 (d) below, where
applicable), shares certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred
stock shall not have any rights of a stockholder by virtue of such award until
the expiration of the applicable Deferral Period and the issuance and delivery
of the certificates representing such Stock. The shares of Stock issuable upon
expiration of the Deferral Period shall not be deemed outstanding by the Company
until the expiration of such Deferral period and the issuance and delivery of
such Stock to the Holder.
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(c) Vesting; Forfeiture. Upon the expiration of the Deferral
Period with respect to each award of Deferred Stock and the satisfaction of any
other applicable restrictions, terms and conditions all or part of such Deferred
Stock shall become vested in accordance with the terms of the Agreement, subject
to Section 11, below. Any such Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights
with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and
the Committee may at any time, defer the receipt of an award (or an installment
of an award) for an additional specified period or until a specified event (the
"Additional Deferral Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock awards (or such
installment).
Section 10. Other Stock-Based Awards.
10.1 Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable, in
value in whole or in part by reference to, or otherwise based on, or related to,
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, purchase rights, shares of
Common Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or
the performance of specified subsidiaries. Other Stock-Based Awards may be
awarded either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company.
10.2 Eligibility for Other Stock-Based Awards. The Committee shall
determine the eligible persons to whom and the time or times at which grants of
such other stock-based awards shall be made, the number of shares of Common
Stock to be awarded pursuant to such awards, and all other terms and conditions
of the awards.
10.3 Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee and
to Section 11, below.
Section 11. Accelerated Vesting and Exercisability.
If (i) any person or entity other than the Company and/or any
stockholders of the Company as of the Effective Date acquire securities of the
Company (in one or more transactions) having 25% or more of the total voting
power of all the Company's securities then outstanding and (ii) the Board of
Directors of the Company does not authorize or otherwise approve such
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acquisition, then, the vesting periods of any and all Options and other awards
granted and outstanding under the Plan shall be accelerated and all such Options
and awards will immediately and entirely vest, and the respective holders
thereof will have the immediate right to purchase and/or receive any and all
Stock subject to such Options and awards on the terms set forth in this Plan and
the respective agreements respecting such Options and awards.
Section 12. Amendment and Termination.
Subject to Section 4 hereof, the Board may at any time, and from time
to time, amend, alter, suspend or discontinue any of the provisions of the Plan,
but no amendment, alteration, suspension or discontinuance shall be made which
would impair the rights of a Holder under any Agreement theretofore entered into
hereunder, without the Holder's consent.
Section 13. Term of Plan.
13.1 Effective Date. The Plan shall be effective as of the date on
which the Company's stockholders approved the Plan ("Effective Date").
13.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may only be made during the
ten-year period following the Effective Date.
Section 14. General Provisions.
14.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 10 days after the Agreement has been delivered to the Holder for
his or her execution.
14.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.
14.3 Employees.
(a) Engaging in Competition With the Company. In the event a
Holder's employment with the Company or a Subsidiary is terminated for any
reason whatsoever, and within one year after the date thereof such Holder
accepts employment with any competitor of, or otherwise engages in competition
with, the Company, the Committee, in its sole discretion, may require such
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Holder to return to the Company the economic value of any award which was
realized or obtained by such Holder at any time during the period beginning on
that date which is six months prior to the date of such Holder's termination of
employment with the Company.
(b) Termination for Cause. The Committee may, in the event a
Holder's employment with the company or a Subsidiary is terminated for cause,
annul any award granted under this Plan to return to the Company the economic
value of any award which was realized or obtained by such Holder at any time
during the period beginning on that date which is six months prior to the date
of such Holder's termination of employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan or
in any award hereunder shall be deemed to confer upon any Holder who is an
employee of the Company or any Subsidiary any right to continued employment with
the Company or any Subsidiary, nor shall it interfere in any way with the right
of the Company or any Subsidiary to terminate the employment of any Holder who
is an employee at any time.
14.4 Investment Representations. The Committee may require each person
acquiring shares of Stock pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in writing that the Holder is
acquiring the shares for investment without a view to distribution thereof.
14.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
14.6 Withholding Taxes. Not later than the date as of which an amount
must first be included in the gross income of the Holder for Federal income tax
purposes with respect to any option or other award under the Plan, the Holder
shall pay to the Company, or made arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such amount. If permitted
by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company or any Subsidiary.
14.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Nevada (without regard to choice of law provisions).
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14.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
14.9 Non-Transferability. Except as otherwise expressly provided in the
Plan, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.
14.10 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the Securities Act
of 1933, as amended, and (ii) the rules and regulations of any securities
exchange on which the Stock may be listed.
14.11 Conflicts. If any of the terms or provisions of the Plan or an
Agreement (with respect to Incentive Stock Options) conflict with the
requirements of Section 422 of the Code, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of said
Section 422 of the Code. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein and therein with
the same force and effect as if such provision had been set out at length herein
and therein. If any of the terms or provision of any Agreement conflict with any
terms or provision of the Plan, then such terms or provision shall be deemed
inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be
included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length therein.
14.12 Non-Registered Stock. The shares of Stock to be distributed under
this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register the
Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Stock on a national securities
exchange.
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FRONT
RED OAK HEREFORD FARMS, INC.
2010 COMMERCE DRIVE, RED OAK, IA 51566
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of RED OAK HEREFORD FARMS, INC. (the "Company")
hereby appoints PETER HUDGINS as the attorney-in-fact and proxy of the
undersigned, with the powers the undersigned would possess if personally
present, and with full power of substitution, to vote all shares of Common Stock
of the Company at the Annual Meeting of shareholders of the Company to be held
on Monday, May 22, 2000 at 10:30 a.m. at the Red Coach Inn, Highway 34, Red Oak,
Iowa 51566, and any adjournment or postponement thereof, upon all subjects that
may properly come before the meeting, including the matters described in the
proxy statement furnished herewith, subject to any directions indicated below.
Proposal 1 - Election of Directors:
|_| FOR all nine nominees listed below.
|_| WITHHOLD AUTHORITY to vote for all nine nominees for director listed below
|_| FOR all nine nominees for director listed below, except WITHHOLD AUTHORITY
to vote for the nominee(s) whose name(s) is (are) lined through.
Nominees: Gordon Reisinger, John Derner, Ron Daggett, Charles Wilson, Dwayne
Lewis, Jack Holden, Charles Kolbe, Johan Smit, and Marius Morin.
PROPOSAL 2 - Amendment to the Company's Amended and Restated Certificate of
Incorporation as described in the proxy statement.
|_| FOR |_| AGAINIST |_| ABSTAIN
PROPOSAL 3 - Approval of the Company's 2000 Stock Option Plan.
|_| FOR |_| AGAINIST |_| ABSTAIN
PROPOSAL 4 - TO transact such other business as my properly come before the
meeting and any adjournments thereof.
<PAGE>
BACK
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder(s), if no direction is made, this Proxy
will be voted "FOR" the nominees of the Board of Directors in the election of
directors, "FOR" the proposal to amend the Company's Amended and Restated
Certificate of Incorporation as described in the proxy statement, and "FOR" the
approval of the Company's 2000 Stock Option Plan. This proxy also delegates
discretionary authority to vote with respect to any other business which may
properly come before the meeting or any adjournment or postponement thereof.
THE UNDERSIGNED HEREBY ACKOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT FURNISHED IN CONNECTION THERE WITH, AND HEREBY
RATIFIES ALL THAT THE SAID ATTORNEY AND PROXY MAY DO BY VITURE HEREOF.
Dated: _________________, 2000
-------------------------------
(Shareholder's Signature)
-------------------------------
(Shareholder's Signature)
Note: Please mark, date, and sign this proxy card and return it in the enclosed
envelope. Please sign as your name appears below. If shares are registered in
more than one name, all owners should sign. If signing in a fiduciary or
representative capacity, please give full title and attach evidence of
authority. Corporations please sign with full corporate name by a duly
authorized officer and affix corporate seal.
