SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
ARIZONA 86-0220694
- ------------------------ ------------------------
(State of Incorporation) (I.R.S. Employer ID No.)
15900 N. 78th Street, Suite 101, Scottsdale, Arizona 85260
-------------------------------------------------------------------------
(Address of Principal Offices)
Alanco Environmental Resources Corporation
1998 Stock Option Plan
&
Alanco Environmental Resources Corporation
1998 Directors and Officers Stock Option Plan
------------------------------------------------
(Full Title of the Plans)
Cynthia L. Castellano
Alanco Environmental Resources Corporation
15900 N. 78th Street, Suite 101
Scottsdale, AZ 85260
--------------------------------------------
(Name and address of Agent for Service)
(602) 607-1010
-------------------------------------------------------------
(Telephone number, including area code of Agent for Service)
CALCULATION OF REGISTRATION FEE
Title of Amount of Max. Off. Maximum Amount of
Securities Securities Price Per Aggregate Registration
Registered Registered Share(1) Offering Price Fee
- ------------- ----------- ----------- ---------- -------------
Common Stock 1,500,000 $0.50 $750,000 $208.50
(1) Estimated price in accordance with Rule 457(h) and based upon the last
reported sale on the Nasdaq SmallCap Market on November 18, 1998.<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The documents containing the information related to the Alanco
Environmental Resources Corporation 1998 Stock Option Plan and the Alanco
Environmental Resources Corporation 1998 Directors and Officers Stock Option
Plan which are being filed as part of this Registration Statement (the
"Registration Statement") and documents incorporated by reference in response
to Item 3 of Part II of this Registration Statement, which taken together
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act of 1933 (the "Securities Act") will be sent or given to
participants by the Registrant as specified by Rule 428(b)(1) of the Securities
Act.
Item 2. Registrant Information and Employee Plan Annual Information.
As required by this Item, the Registrant shall provide to participants a
written statement advising them of the availability without charge, upon
written or oral request, of documents incorporated by reference in Item 3 of
Part II hereof and of documents required to be delivered pursuant to Rule
428(b) under the Securities Act. The statement shall include the address
listing the title or department and telephone number to which the request is to
be directed.
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant incorporates the following documents filed with the
Securities and Exchange Commission by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998.
(b) The Registrant's Definitive Proxy Statement filed October 13, 1998.
(c) The Registrant's Quarterly Report on Form 10Q for the period ended
September 30, 1998.
(d) All other documents filed by Registrant after the date of this
Registration Statement under Section 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, (the Exchange Act) since the end of
the fiscal year covered by the annual report referred to in (a) above.
Item 4. Description of Securities: The Registrant's no par value common stock
is listed for trading on the NASDAQ System under the symbol _ALAN_.
Each share of common stock is entitled to its pro rata share of any
dividends declared by the Registrant. Each share of common stock is
entitled to one vote on all matters submitted to the stockholders.
Cumulative voting for the election of directors is permitted. There
are no other liquidation rights, preemptive rights or other rights
attached to the common stock and nor is the common stock subject to
any call, assessment or liability of the Registrant.
2<PAGE>
Item 5. Interests of Named Experts and Counsel: Not applicable.
Item 6. Indemnification of Officers and Directors.
The Registrant's Articles of Incorporation and Bylaws and the laws of the
State of Arizona provide for indemnification of directors and officers of the
Registrant who are indemnified generally against expenses actually and
reasonably incurred in connection with proceedings, whether civil or criminal,
provided that it is determined that they acted in good faith, were not found
guilty, and, in any criminal matter, had reasonable cause to believe that their
conduct was not unlawful.
Item 7. Exemption from Registration Claimed: Not Applicable
Item 8. Exhibits.
EXHIBIT INDEX
Exhibit Page or
Number Description Method of Filing
4.1 Alanco Environmental Resources Filed herewith
Corporation 1998 Stock Option Plan
4.2 Alanco Environmental Resources Filed herewith
Corporation 1998 Directors and
Officers Stock Option Plan
5 Opinion rendered by Dennis Filed herewith
Brovarone, counsel for the
Registrant (including consent)
23.1 Consent of Singer Lewak Greenbaum Filed herewith
& Goldstein, LLP
23.2 Consent of Hein & Associates, LLP Filed herewith
23.3 Consent of Counsel See Exhibit 5
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes.
3<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement;
(iii) To include any material information with respect to the Plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(I) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
that are incorporated by reference into this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement to the securities offered
therein, and the offering of such securities offered at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions
described in Item 6, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel
that matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
4<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Scottsdale, State of Arizona on this 30th day of
November, 1998.
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
By: /s/ John A. Carlson
----------------------------------------
John A. Carlson, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated.
NAME TITLE DATE
/s/ Robert R. Kauffman Chairman of the Board 11/30/98
------------------------- Chief Executive Officer ----------
Robert R. Kauffman
/s/ James T. Hecker Director 11/30/98
- -------------------------- ----------
James T. Hecker
/s/ Harold S. Carpenter Director 11/30/98
- -------------------------- ----------
Harold S. Carpenter
/s/ Steven P. Oman Director 11/30/98
- -------------------------- ----------
Steven P. Oman
/s/ Thomas C. LaVoy Director 11/30/98
- -------------------------- ----------
Thomas C. LaVoy
5<PAGE>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
1998 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, terms have the meaning hereinafter set forth unless the
context should clearly indicate the contrary:
(a) "Board" shall mean the Board of Directors of the Company, or the
Executive Committee of such Board;
(b) "Committee" shall mean the Administrative Committee appointed by the
Board to oversee the administration of this Plan;
(c) "Company" shall mean Alanco Environmental Resources Corporation, an
Arizona corporation;
(d) "Director" shall mean a member of the Board;
(e) "Employee" shall mean any person, including officers and directors,
employed by the Company who in the judgment of the Committee has the ability to
positively affect the profitability and economic well-being of the Company.
Part-time employees, independent contractors, consultants and advisors
performing bonafide services to the Company shall also be deemed employees
solely for the purpose of participation under the Plan. The payment of a
director's fee by the Company shall not be sufficient to constitute
"employment" by the Company;
(f) "Fair market value" shall mean the average of the closing price for
ten consecutive trading days at which the Stock is listed in the NASDAQ
quotation system ending on the day prior to the date an Option is granted
hereunder;
(g) "Grant" means the issuance of an Option hereunder to an Optionee
entitling such Optionee to acquire Stock on the terms and conditions set forth
in a Stock Option Agreement to be entered into with the Optionee. "Grant" may
also include a direct grant of stock;
(h) "Incentive Stock Option" shall mean a compensatory Option provided to
an employee of the Company giving him or her the right to purchase Stock at a
predetermined price under a plan that meets certain Internal Revenue Code
requirements and involves registered stock;
(i ) "Non-Statutory Option" shall mean all Options which are not Incentive
Stock Options;
(j) "Option" shall mean the right granted to an Optionee to acquire Stock
of the Company pursuant to the Plan;
(k) "Optionee" shall mean an Employee of the Company to whom a Grant
hereunder has been made;<PAGE>
1998 STOCK OPTION PLAN
Page 2
(l) "Plan" shall mean the Alanco Environmental Resources Corporation 1998
Stock Option Plan, the terms of which are herein set forth;
(m) "Stock" shall mean the common stock of the Company or, in the event
the outstanding shares of stock are hereafter changed into or exchanged for
shares of different stock or securities of the Company or some other
corporation, such other stock or securities;
(n) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee under which an Optionee may acquire Stock pursuant to the Plan.
ARTICLE II
THE PLAN
2.1 NAME. The plan shall be known as the "Alanco Environmental
Resources Corporation 1998 Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the business and
development of the Company and its shareholders by affording to the Employees
of the Company the opportunity to acquire an equity interest in the Company by
the grant of Options to such persons under the terms herein set forth. By
doing so, the Company seeks to motivate, retain and attract highly competent,
highly motivated personnel whose judgment, initiative, leadership and continued
efforts will contribute to the success of the Company. The Options to be
granted hereunder are either "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, or "Non-Statutory
Stock Options". However, at no time will the Plan be considered or operate as a
"tandem" option plan or will any Employee be subjected to a tandem option
provision.
2.3 EFFECTIVE DATE. The Plan shall become effective upon its adoption
by the Board of the Company. Thereafter, the Plan shall be submitted to the
shareholders of the Company for approval within 12 months after the date said
Plan is adopted by the Board.
2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from the
date the Plan is adopted by the Board of the Company and at such time any
Options granted hereunder shall be void and of no further force or effect.
ARTICLE III
PARTICIPANTS
Any Employee of the Company, or of any of its wholly owned subsidiaries,
shall be eligible to be granted an Option under the Plan. The Committee shall
adopt criteria pursuant to which Options shall be granted. The Committee may
grant Options to any eligible Employee in accordance with such determinations
as the Committee may, from time to time, in its sole discretion make. A
Director of the Company or of a subsidiary who is not also an employee of the
Company will not be eligible to receive an "Incentive Stock Option" pursuant to
the Plan. <PAGE>
1998 STOCK OPTION PLAN
Page 3
ARTICLE IV
ADMINISTRATION
4.1 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan, the Committee
shall have the sole discretion and authority to determine from among eligible
persons those to whom and the time or times at which Options may be granted and
the number of shares of Stock to be subject to each Option. Subject to the
express provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations related to it and to determine the details and provisions of each
Stock Option Agreement and to make all other determinations necessary or
advisable in the administration of the Plan.
4.2 RECORDS OF PROCEEDINGS. The Committee shall maintain written
minutes of its actions which shall be maintained among the records of the
Company.
4.3 MAJORITY. A majority of the members of the Committee shall
constitute a quorum and any action taken by a majority present at such meeting
at which a quorum is present or any action taken without a meeting evidenced by
a writing executed by all members of the Committee shall constitute the action
of the Committee.
4.4 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee in all matters relating to eligible Optionees,
their status, death, retirement, disability and such other pertinent facts as
the Committee may require. The Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
All expenses of the Committee shall be paid by the Company.
4.5 COMPOSITION OF THE COMMITTEE. The Committee shall consist of up to
three (3) individuals appointed by the Board from among its members.
Appointment to the Committee shall be for a term of one (1) year or until new
individuals are appointed to the Committee by the Board. Any individual
designated and serving as a member of the Committee shall be entitled to
indemnification in relation to such service by the Company to the fullest
extent called for or permitted by Article X of the Bylaws of the Company.
4.6 COMMITTEE AUTHORITY. If the Committee deems it necessary or in the
best interest of the Company or its shareholders, the Committee may impose
restrictions of the subsequent transferability of Stock issued pursuant to
Options to be granted hereunder. In the event of the imposition of any such
conditions, the Stock of the Company to be issued pursuant to the exercise of
an Option shall have any such restrictions prominently displayed as a legend on
such certificate.<PAGE>
1998 STOCK OPTION PLAN
Page 4
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 LIMITATION. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Stock which may be issued and sold
hereunder shall not exceed 750,000 shares. The Company shall take such action
as necessary to reserve the aforesaid number of shares for issuance pursuant to
the Plan.
5.2 OPTIONS GRANTED UNDER THE PLAN. Shares of stock with respect to
which an Option is granted hereunder, but which lapses prior to exercise, shall
be considered available for grant hereunder. Therefore, if Options granted
hereunder shall terminate for any reason without being wholly exercised, new
Options may be granted hereunder covering the number of shares to which such
terminated Options related.
5.3 ANTI-DILUTION. In the event the Stock subject to Options hereunder is
changed into or exchanged for a different number or kind of stock or other
securities of the Company or of another organization by reason of merger,
consolidation or reorganization, recapitalization, reclassification,
combination of shares, stock split or stock dividend;
(a) The aggregate number of shares of Stock subject to Options which may
be granted hereunder shall be adjusted appropriately;
(b) Rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted appropriately;
(c) Where dissolution or liquidation of the Company or any merger or
consolidation in which the Company is not a surviving corporation is involved,
each outstanding Option shall terminate and the Optionee holding such Option
shall have the right immediately prior to such dissolution, liquidation, merger
or combination to exercise his Option, in whole or in part, to the extent that
it shall not have been exercised without regard to any installment exercise
provision.
The manner of application of the foregoing provision shall be determined
solely by the Committee and any such adjustment may provide for the elimination
of fractional share interests.
ARTICLE VI
6.1 OPTIONS. Each Option granted hereunder shall be evidenced by
minutes of a meeting of or the written consent of the Committee and by a
written Stock Option Agreement dated as of the date of grant and executed by
the Company and the Optionee, which agreement shall set forth such terms and
conditions as may be determined by the Committee consistent with the Plan.
6.2 PARTICIPATION, LIMITATIONS.
(a) Options qualifying as "Incentive Stock Options" under Section 422 of
the Internal Revenue Code, as amended, may be granted from time to time to
Employees of the Company to purchase shares of the Company's Stock.<PAGE>
1998 STOCK OPTION PLAN
Page 5
(1) The maximum number of shares for which an Incentive Stock Option
or Options may be granted under the Plan to any one Employee shall be 100,000.
(b) Options defined as "Non-Statutory Stock Options" which do not satisfy
the requisites of Section 422 of the Internal Revenue Code, as amended, may
also be granted under this Plan.
6.3 OPTION PRICE. The per share Option price for the stock subject to
each Option shall be determined by the Committee, but the per share exercise
price shall not be less than the Fair Market Value of the Stock on the date the
Option is granted.
6.4 OPTION PERIOD. Each Option granted hereunder must be granted within
ten (10) years from the effective date of the Plan. The period for the
exercise of each Option shall be determined by the Committee, but in no
instance shall such period exceed ten (10) years from the date of grant of the
Option. The Committee may prescribe such period after the grant of an Option
which must expire before such Option may be exercised as the Committee deems
appropriate.
6.5 OPTION EXERCISE.
(a) Options granted hereunder may not be exercised until and unless the
Optionee shall meet the conditions precedent established by the Committee for
the Employees.
(b) Options may be exercised by Employees for whole shares only.
Optionees may exercise their Option in whole at any time, or in part from time
to time in each year on a cumulative basis with any portion not exercised to be
carried over for exercise in subsequent years. Options shall be exercised by
written notice of intent to exercise the Option with respect to a specified
number of shares delivered to the Company at its principal office and payment
in full to the Company at said office of the amount of the Option price for the
number of shares with respect to which the Option(s) are then being exercised.
(c) No person to whom Incentive Stock Options are granted hereunder shall
receive Options, first exercisable during any single calendar year, for Stock,
the fair market value of which (determined at the time of the grant of the
Options) exceeds $100,000.
(d) No Option may be exercised by any Optionee unless a registration
statement, such as form S-8, covering the Stock subject thereto has been filed
with and declared effective by the Securities and Exchange Commission and an
appropriate registration or exemption therefrom, is in effect or available in
the state of residence of the exercising Optionee.
6.6 NON-TRANSFERABILITY OF OPTION. No Option or any right relative
thereto shall be transferred by an Optionee otherwise than by will or by the
laws of descent and distribution. During the lifetime of an Optionee, the
Option shall be exercisable only by him or her.<PAGE>
1998 STOCK OPTION PLAN
Page 6
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT.
(a) If the Employee's relationship with the Company shall be terminated,
with or without cause, or by the act of the Employee, the Optionee's right to
exercise such Incentive Stock Options shall terminate and all rights thereunder
shall cease three (3) months after the date on which such person's association
is terminated. Provided however, that if the Optionee shall die or become
permanently and totally disabled while employed by the Company, as solely
determined by the Committee in accordance with its policies, then either his or
her personal representatives or a transferee under the Optionee's will or
pursuant to the laws of descent and distribution, or the disabled Optionee may
exercise the Incentive Stock Options in full one (1) year from the date of such
death or disability. In the case of an Optionee's retirement in accordance
with the Company's established retirement policy, such Incentive Stock Options
shall remain exercisable by the Optionee for three (3) months from the date of
such retirement.
(b) The exercise schedule for Non-Statutory Stock Options following
termination, death or total and permanent disablement of the Optionee will be
determined by the Committee at the time of grant.
(c) No transfer of an Option by the Optionee by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with a written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of such Option.
6.8 RIGHTS AS A SHAREHOLDER/VESTING OF OPTIONS.
(a) An Optionee or a transferee of an Option shall have no rights as a
shareholder of the Company with respect to any shares subject to any
unexercised Options.
(b) Incentive Stock Options are exercisable once vested. Twenty-five
percent (25%) of the shares issuable under the Incentive Stock Options shall
vest six months from date of Grant provided that the Optionee has remained an
Employee of the Company for not less than six months from date of Grant,
twenty-five percent (25%) of the shares issuable under the Incentive Stock
Options shall vest one year from date of Grant provided that Optionee has
remained an Employee of the Company for not less than one year from the date of
Grant, and the remaining fifty percent (50%) of the shares issuable under the
Incentive Stock Options shall vest two years from date of Grant provided that
Optionee has remained an Employee of the Company for not less than two years
from the date of Grant. Otherwise the options shall lapse.
(c) Non-Statutory Stock Options are exercisable once vested. The vesting
schedule for Non-Statutory Stock Options will be determined by the Committee
when granted.
6.9 REQUIRED FILINGS. An Optionee to whom an Option is granted under
the terms of the Plan is required to file appropriate reports with the Internal
Revenue Service. As a condition of the receipt of an Option hereunder,<PAGE>
1998 STOCK OPTION PLAN
Page 7
Optionee shall agree to make necessary filings with the Internal Revenue
Service. The Committee shall assist and cooperate with Optionee by providing
the necessary information required for compliance of this condition.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder, or
any portion thereof, prior to the obtaining of any approval or clearance from
any federal or state governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable.
ARTICLE VIII
TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN
The Board may at any time, upon recommendation of the Committee,
terminate, and may at any time and from time to time and in any respect amend
or modify the Plan. Provided, however, if the Plan has been submitted to and
approved by the shareholders of the Company no such action by the Board may be
taken without approval of the majority of the shareholders of the Company
which: (a) increases the total number of shares of Stock subject to the Plan,
except as contemplated in Section 5.3 hereof; (b) changes the manner of
determining the Option price; or (c) withdraws the administration of the Plan
from the Committee.
ARTICLE IX
EMPLOYMENT
9.1 EMPLOYMENT. Nothing in the Plan or any Option granted hereunder or
in any Stock Option Agreement shall confer upon an Employee receiving such
Option or Stock Option Agreement the status as an employee of the Company.
Further, nothing in the Plan or any Option granted hereunder shall in any
manner create in any Optionee the right to continue their relationship with the
Company or create any vested interest in such relationship, including
employment.
9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not effect
any other stock option, incentive, or other compensation plan in effect for the
Company or any of its subsidiaries, nor shall the Plan preclude the Company or
any subsidiary thereof from establishing any other forms of incentive or other
compensation for employees or non-employee Directors of the Company, or any
subsidiary thereof.
9.3 PLAN EFFECT. The Plan shall be binding upon the successors and
assigns of the Company.
9.4 TENSE. When used herein nouns in the singular shall include the
plural.<PAGE>
1998 STOCK OPTION PLAN
Page 8
9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of articles
and sections hereof are inserted for convenience and reference and constitute
no part of the Plan.
As approved by the Shareholders on November 6, 1998.<PAGE>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, terms have the meaning hereinafter set forth unless the
context should clearly indicate the contrary:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Committee" shall mean the Administrative Committee appointed by the
Board to oversee the administration of this Plan;
(c) "Company" shall mean Alanco Environmental Resources Corporation, an
Arizona corporation;
(d) "Director" shall mean a member of the Board;
(e) "Fair market value" shall mean the average of the closing price for
ten consecutive trading days at which the Stock is listed in the NASDAQ
quotation system ending on the day prior to the date an Option is granted
hereunder;
(f) "Grant" means the issuance of an Option hereunder to an Optionee
entitling such Optionee to acquire Stock on the terms and conditions set forth
in a Stock Option Agreement to be entered into with the Optionee;
(g) "Officer" shall mean an Executive Officer of the Company;
(h) "Option" shall mean the right granted to an Optionee to acquire Stock
of the Company pursuant to the Plan;
(i) "Optionee" shall mean an Officer of the Company or a Director of the
Company to whom a Grant hereunder has been made;
(j) "Plan" shall mean the Alanco Environmental Resources Corporation 1998
Directors and Officers Stock Option Plan, the terms of which are herein set
forth;
(k) "Stock" shall mean the common stock of the Company or, in the event
the outstanding shares of stock are hereafter changed into or exchanged for
shares of different stock or securities of the Company or some other
corporation, such other stock or securities;
(l) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee under which an Optionee may acquire Stock pursuant to the Plan.
ARTICLE II
THE PLAN
2.1 NAME. The plan shall be known as the "Alanco Environmental
Resources Corporation 1998 Directors and Officers Stock Option Plan."<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 2
2.2 PURPOSE. The purpose of the Plan is to advance the business and
development of the Company and its shareholders by affording to the Directors
and Officers of the Company the opportunity to acquire an equity interest in
the Company by the grant of Options to such persons under the terms herein set
forth. By doing so, the Company seeks to motivate, retain and attract highly
competent, highly motivated Executive Officers and Directors to lead the
Company through this critical time in its evolution and ensure the success of
the Company. The Options to be granted hereunder are Non-Statutory Options
made available to Directors and Officers of Alanco Environmental Resources
Corporation.
2.3 EFFECTIVE DATE. The Plan shall become effective upon its adoption
by the Board of the Company. Thereafter, the Plan shall be submitted to the
shareholders of the company for approval within 12 months after the date said
Plan is adopted by the Board.
2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from the
date the Plan is adopted by the Board of the Company and at such time any
Options granted hereunder shall be void and of no further force or effect.
ARTICLE III
PARTICIPANTS
Only Officers and Directors of the Company shall be eligible to be granted
an Option under the Plan. The Committee may grant Options to any Director or
Officer in accordance with the terms hereunder and such other determinations as
the Committee may, from time to time, in its sole discretion make.
ARTICLE IV
ADMINISTRATION
4.1 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan, the Committee
shall have the sole discretion and authority to determine from among eligible
persons those to whom and the time or times at which Options may be granted and
the number of shares of Stock to be subject to each Option. Subject to the
express provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations related to it and to determine the details and provisions of each
Stock Option Agreement and to make all other determinations necessary or
advisable in the administration of the Plan.
4.2 RECORDS OF PROCEEDINGS. The Committee shall maintain written
minutes of its actions which shall be maintained among the records of the
Company.
4.3 MAJORITY. A majority of the members of the Committee shall
constitute a quorum and any action taken by a majority present at such meeting,
when properly noticed, at which a quorum is present or any action taken without<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 3
a meeting evidenced by a writing executed by all members of the Board shall
constitute the action of the Committee.
4.4 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee in all matters relating to eligible Optionees,
their status, death, retirement, disability and such other pertinent facts as
the Committee may require. The Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
All expenses of the Committee shall be paid by the Company.
4.5 COMPOSITION OF THE COMMITTEE. The Committee shall consist of up to
three (3) individuals appointed by the Board from among its members, at least
two (2) of which are non-employee Directors. Appointment to the Committee
shall be for a term of one (1) year or until new individuals are appointed to
the Committee by the Board.. Any individual designated and serving as a member
of the Committee shall be entitled to indemnification in relation to such
service by the Company to the fullest extent called for or permitted by Article
X of the Bylaws of the Company.
4.6 COMMITTEE AUTHORITY. If the Committee deems it necessary or in the
best interest of the Company or its shareholders, the Committee may impose
restrictions of the subsequent transferability of Stock issued pursuant to
Options to be granted hereunder. In the event of the imposition of any such
conditions, the Stock of the Company to be issued pursuant to the exercise of
an Option shall have any such restrictions prominently displayed as a legend on
such certificate.
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 LIMITATION. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Stock which may be issued and sold
hereunder shall not exceed 750,000 shares. The Company shall take such action
as necessary to reserve the aforesaid number of shares for issuance pursuant to
the Plan.
5.2 OPTIONS GRANTED UNDER THE PLAN. Shares of stock with respect to
which an Option is granted hereunder, but which lapses prior to exercise, shall
be considered available for grant hereunder. Therefore, if Options granted
hereunder shall terminate for any reason without being wholly exercised, new
Options may be granted hereunder covering the number of shares to which such
terminated Options related.
5.3 ANTI-DILUTION. In the event the Stock subject to Options hereunder is
changed into or exchanged for a different number or kind of stock or other
securities of the Company or of another organization by reason of merger,
consolidation or reorganization, recapitalization, reclassification,
combination of shares, stock split or stock dividend;
(a) The aggregate number of shares of Stock subject to Options which may
be granted hereunder shall be adjusted appropriately;<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 4
(b) Rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted appropriately;
(c) Where dissolution or liquidation of the Company or any merger or
consolidation in which the Company is not a surviving corporation is involved,
each outstanding Option shall terminate and the Optionee holding such Option
shall have the right immediately prior to such dissolution, liquidation, merger
or combination to exercise his Option, in whole or in part, to the extent that
it shall not have been exercised without regard to any installment exercise
provision.
The manner of application of the foregoing provision shall be determined
solely by the Committee and any such adjustment may provide for the elimination
of fractional share interests.
ARTICLE VI
6.1 OPTIONS.
(a) The Company will grant to non-employee Directors newly appointed to
the Board of Directors an option to purchase 20,000 shares of common stock at
fair market value.
(b) Upon each subsequent anniversary of the election to the Board of
Directors, the non-employee directors will be granted from the Company an
option to purchase 10,000 shares of common stock at fair market value.
(c) The Board of Directors or the Administrative Committee may grant
additional options to Directors and Executive Officers, setting forth such
terms, conditions, and exercise schedules as may be determined by the Committee
or Board of Directors.
(d) Each Option granted hereunder shall be evidenced by minutes of a
meeting of or the written consent of the Committee and by a written Stock
Option Agreement dated as of the date of grant and executed by the Company and
the Optionee, which agreement shall set forth such terms and conditions as may
be determined by the Committee consistent with the Plan.
6.2 LIMITATIONS. The Options granted hereunder are non-statutory
Options which do not satisfy the requisites of Section 422 of the Internal
Revenue Code, as amended.
6.3 OPTION PRICE. The per share Option price for the stock subject to
each Option shall be determined by the Committee, but the per share exercise
price shall not be less than the fair market value of the Stock on the date the
Option is granted.
6.4 OPTION PERIOD. Each Option granted hereunder must be granted within
ten (10) years from the effective date of the Plan. The period for the
exercise of each Option shall be determined by the Committee, but in no
instance shall such period exceed ten (10) years from the date of grant of the
Option. The Committee may prescribe such period after the grant of an Option<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 5
which must expire before such Option may be exercised as the Committee deems
appropriate.
6.5 OPTION EXERCISE.
(a) Options granted hereunder may not be exercised until and unless the
Optionee shall meet the conditions precedent established by the Committee for
Officers and Directors.
(b) Options may be exercised by Officers and Directors for whole shares
only. Officer and Director Optionees may exercise their Option in whole at any
time, or in part from time to time in each year on a cumulative basis with any
portion not exercised to be carried over for exercise in subsequent years.
Options shall be exercised by written notice of intent to exercise the Option
with respect to a specified number of shares delivered to the Company at its
principal office and payment in full to the Company at said office of the
amount of the Option price for the number of shares with respect to which the
Option(s) are then being exercised.
(c) No Option may be exercised by any Optionee unless a registration
statement, such as form S-8, covering the Stock subject thereto has been filed
with and declared effective by the Securities and Exchange Commission and an
appropriate registration or exemption therefrom, is in effect or available in
the state of residence of the exercising Optionee.
6.6 NON-TRANSFERABILITY OF OPTION. No Option or any right relative
thereto shall be transferred by an Optionee otherwise than by will or by the
laws of descent and distribution. During the lifetime of an Optionee, the
Option shall be exercisable only by him or her.
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF RELATIONSHIP.
(a) The exercise schedule for Non-Statutory Stock Options following
termination, death or total and permanent disablement of the Optionee will be
determined by the Committee at the time of grant.
(b) No transfer of an Option by the Optionee by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with a written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of such Option.
6.8 RIGHTS AS A SHAREHOLDER/VESTING OF OPTIONS.
(a) An Optionee or a transferee of an Option shall have no rights as a
shareholder of the Company with respect to any shares subject to any
unexercised Options.
(b) Options are exercisable once vested. All of the shares issuable
under the Options shall vest one year from date of Grant provided that Optionee
has remained a Director or Executive Officer of the Company for not less than
one year from the date of Grant. Otherwise, the Options shall lapse.<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 6
6.9 REQUIRED FILINGS. An Optionee to whom an Option is granted under
the terms of the Plan is required to file appropriate reports with the
Securities and Exchange Commission and the Internal Revenue Service. As a
condition of the receipt of an Option hereunder, Optionees shall agree to make
the necessary filings. The Company shall assist and cooperate with Optionees
by providing the necessary information required for compliance of this
condition.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder, or
any portion thereof, prior to the obtaining of any approval or clearance from
any federal or state governmental agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable.
ARTICLE VIII
TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN
The Board may at any time terminate the plan, and may at any time and from
time to time and in any respect amend or modify the Plan. Provided, however, if
the Plan has been submitted to and approved by the shareholders of the Company
no such action by the Board may be taken without approval of the majority of
the shareholders of the Company which: (a) increases the total number of shares
of Stock subject to the Plan; (b) changes the manner of determining the Option
price; or (c) withdraws the administration of the Plan from the Committee.
ARTICLE IX
EMPLOYMENT
9.1 EMPLOYMENT. Nothing in the Plan or any Option granted hereunder or
in any Stock Option Agreement shall confer upon a non-employee Director
receiving such Option or Stock Option Agreement the status as an employee of
the Company. Further, nothing in the Plan or any Option granted hereunder
shall in any manner create in any Optionee the right to continue their
relationship with the Company or create any vested interest in such
relationship, including employment.
9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not effect
any other stock option, incentive, or other compensation plan in effect for the
Company or any of its subsidiaries, nor shall the Plan preclude the Company or
any subsidiary thereof from establishing any other forms of incentive or other
compensation for employees or non-employee Directors of the Company, or any
subsidiary thereof.
9.3 PLAN EFFECT. The Plan shall be binding upon the successors and
assigns of the Company.<PAGE>
1998 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
Page 7
9.4 TENSE. When used herein nouns in the singular shall include the
plural.
9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of articles
and sections hereof are inserted for convenience and reference and constitute
no part of the Plan.
As approved by the Shareholders on November 6, 1998.<PAGE>
DENNIS BROVARONE
ATTORNEY AND COUNSELOR AT LAW
11249 West 103rd Drive
Westminster, Colorado 80021
ph: 303 466 4092 / fax: 303 466 4826
November 20, 1998
Board of Directors
Alanco Environmental
Resources Corporation
Re: Registration Statement on Form S-8
Gentlemen:
You have requested my opinion as to the legality of the issuance by Alanco
Environmental Resources Corporation, (the "Corporation") of up to 1,500,000
shares of Common Stock (the "Shares") pursuant to a Registration Statement on
Form S-8 (the "Registration Statement") to be filed on or before November 30,
1998.
Pursuant to your request I have reviewed and examined:(1).The Articles of
Incorporation of the Corporation, as amended (the "Articles"); (2). The Bylaws
of the Corporation, as certified by the Secretary of the Corporation; (3). The
minute book of the Corporation; (4). A copy of certain resolutions of the
Board of Directors of the Corporation; (5). The Registration Statement; (6).
The Stock Option Plans covered by the Registration Statement; and (7).Such
other matters as I have deemed relevant in order to form my opinion.
Based upon the foregoing, and subject to the qualifications set forth below,
I am of the opinion that the Shares, if issued as described in the Registration
Statement will have been duly authorized, legally issued, fully paid and non-
assessable.
This opinion is furnished by me as counsel to the Corporation and is solely
for your benefit. Neither this opinion nor copies hereof may be relied upon by
any other person without my prior written consent. My opinion is subject to
the qualification that no opinion is expressed herein as to the application of
state securities or Blue Sky laws.
Not withstanding the above, I consent to the use of this opinion in the
Registration Statement.
Very truly yours,
/s/DENNIS BROVARONE
Dennis Brovarone <PAGE>
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
10960 Wilshire Boulevard, Suite 1100
Los Angeles, California 90024
Telephone (310)477-3924
Fax (310)478-6070
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated August 15, 1997, accompanying the consolidated
financial statements of Alanco Environmental Resources Corporation (formerly
known as Alanco Resources Corporation) and subsidiaries appearing in the 1998
Annual Report of Alanco Environmental Resources Corporation to its shareholders
and accompanying the schedule included in the Annual Report on Form 10-K for
the year ended June 30, 1998 which are incorporated by reference in this
Registration Statement. We consent to the incorporation by reference in the
Registration Statement of the aforementioned reports.
/s/ Singer Lewak Greenbaum & Goldstein LLP
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 24, 1998<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated August 20,
1998 accompanying the consolidated financial statements of Alanco Environmental
Resources Corporation to the Form S-8 Registration Statement of Alanco
Environmental Resources Corporation.
/s/Hein + Associates LLP
Hein + Associates LLP
Denver, Colorado
November 19, 1998<PAGE>
