As filed with the Securities and Exchange Commission on December 2, 1997
Registration No. 333-1210
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Post Effective Amendment No. 1 to
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
BALTIC INTERNATIONAL USA, INC.
(Exact name of Registrant as specified in its charter)
TEXAS 76-0336843
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1990 Post Oak Blvd., Suite 1630 Robert L. Knauss
Houston, Texas 77056-3813 Baltic International USA, Inc.
(713) 961-9299 1990 Post Oak Blvd., Suite 1630
(Address, including zip code, and Houston, Texas 77056-3813
telephone number, including (713) 961-9299
area code, of registrant's (Name, address, including zip code,
principal executive offices) and telephone number, including
area code, of agent for service)
1992 EQUITY INCENTIVE PLAN
(Full title of the plan)
COPY TO:
Norman T. Reynolds, Esq.
Bowersox, Herron & Williamson, L.L.P.
5005 Riverway, Suite 160
Houston, Texas 77056
Phone (281) 820-5050
CALCULATION OF REGISTRATION FEE
Title of Proposed Maximum Proposed Maximum Amount of
Securities To Be Amount Being Offering Price Aggregate Registration
Registered Registered (1) Per Share (2) Offering Price (2) Fee (2)
Common Stock, par value
$0.01 per share 1,500,000 $0.422 $633,000 $218
TOTAL 1,500,000 - $633,000 $218 (3)
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended,
the number of shares of the issuer's Common Stock registered hereunder
will be adjusted in the event of stock splits, stock dividends or
similar transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h), on the basis of the average
of the high and low prices of the Common Stock reported by Nasdaq on
December 1, 1997.
(3) Filing fees of $885.45 were previously paid.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The following documents filed by Baltic International USA. Inc.
("Company" or "Registrant") with the Securities and Exchange Commission
are incorporated herein by reference:
1. The Company's latest annual report filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), or, either (i) the Company's latest prospectus filed
pursuant to Rule 424(b) under the Securities Act of 1933, as amended
("Securities Act") that contains audited financial statements for the
Company's latest fiscal year for which such statements have been filed
or (ii) the Company's effective Registration Statement on Form 10 filed
under the Exchange Act containing audited financial statements for the
Company's latest fiscal year.
2. All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered by the
annual report or the prospectus referred to in (1) above.
3. The description of the Common Stock that is contained in a
registration statement or amendment thereto filed under Section 12 of
the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment to the Registration Statement which
indicates that all shares of common stock offered have been sold or
which deregisters all of such shares then remaining unsold, shall be
deemed to be a part hereof from the date of filing of such documents.
Item 6. Indemnification of Directors and Officers
The Restated Articles of Incorporation of the Company ("Restated
Articles") provide for indemnification of Directors and Officers in
accordance with the Texas Business Corporation Act. Article Nine of the
Restated Articles provides as follows:
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Article 2.41 under the Texas Business Corporation Act, or (iv) for any
transaction from which the director derived an improper personal
benefit, whether or not the benefit resulted from an action taken in the
person's official capacity.
Article Eight of the Restated Articles provides as follows:
A. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceedings, whether civil, criminal,
administrative, or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was
unlawful.
B. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect
of any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court
shall deem proper.
C. To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceedings referred to in A and B, or in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
D. Any indemnification under paragraphs A and B of this Article
Eight (unless ordered by a court) shall b e made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct
set forth in paragraphs A and B. Such determination shall be made (1)
by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable, a quorum
of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by a majority of the stockholders.
E. Expenses incurred in defending a civil or criminal action,
suite or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by
the Board of Directors upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Article Eight.
F. The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Article shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any by-
law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
G. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article Eight.
H. For purposes of this Article Eight, references to the
"Corporation" shall include, in addition to the resulting Corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence
had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is
or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article
Eight with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate
existence had continued.
I. For purposes of this Article Eight, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the Corporation" as referred to in this Article
Eight.
J. The indemnification and advancement of expenses provided by,
or ranted pursuant to, this Article Eight shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
The foregoing discussion of the Company's Restated Articles and of
the Texas Business Corporation Act is not intended to be exhaustive and
is qualified in its entirety by such Restated Articles and statutes,
respectively.
Item 8. Exhibits
The following exhibits are filed as part of this Registration
Statement:
Exhibit No. Identification of Exhibit
4.1 (2) - Common Stock Specimen
5.1 (1) - Opinion Regarding Legality
10.3 (1) - 1992 Equity Incentive Plan
23.1 (1) - Consent of Counsel (included in Exhibit 5.1)
23.2 (1) - Consent of Arthur Andersen
(1) Filed herewith.
(2) Previously filed as an exhibit to the Company's Registration
Statement on Form SB-2 (No. 33-74654-D), as amended, and
incorporated herein by reference thereto.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
i. To include any prospectus required by Section 10(a)(3)
of the Securities Act;
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 set
forth in the registration statement; and
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
(ii) do not apply if the registration statement is
on Form S-8, and the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed
with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
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.
(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 liability under the Securities Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) 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 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 6
above, 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 Securities 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 the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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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 authorized this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on
the 1st day of December, 1997.
BALTIC INTERNATIONAL USA, INC.
By /s/ Robert L. Knauss
--------------------------------
ROBERT L. KNAUSS, Chairman of
the Board and Chief Executive
Officer
____________________________
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Robert L. Knauss Chairman of the Board and Chief December 1, 1997
- -----------------------
ROBERT L. KNAUSS Executive Officer (Principal
Executive Officer)
/s/ James W. Goodchild President and Chief Operating December 1, 1997
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JAMES W. GOODCHILD Officer and Director
/s/ David A. Grossman Chief Financial Officer and December 1, 1997
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DAVID A. GROSSMAN Corporate Secretary (Principal
Financial and Accounting Officer)
/s/ Homi M. Davier Director December 1, 1997
- -----------------------
HOMI M. DAVIER
/s/ Paul R. Gregory Director December 1, 1997
- -----------------------
PAUL R. GREGORY
/s/ Adolf af Jochnick Director December 1, 1997
- -----------------------
ADOLF af JOCHNICK
/s/ Jonas af Jochnick Director December 1, 1997
- -----------------------
JONAS af JOCHNICK
/s/ Juris Padegs Director December 1, 1997
- -----------------------
JURIS PADEGS
/s/ Ted Reynolds Director December 1, 1997
- -----------------------
TED REYNOLDS
/s/ Morris A. Sandler Director December 1, 1997
- -----------------------
MORRIS A. SANDLER
Exhibit 5.1
NORMAN T. REYNOLDS
Attorney at Law
5005 Riverway, Suite 160
Post Office Box 131326
Houston, TX 77219-1326
Telephone (281) 820-5050
Fax (713) 355-2250
December 1, 1997
Baltic International USA, Inc.
1990 Post Oak Blvd., Suite 1630
Houston, Texas 77056
Re: Baltic International USA, Inc.
Registration Statement on Form S-8
Gentlemen:
I have acted as counsel for Baltic International USA, Inc. (the Company")
in connection with the registration by the Company of 1,500,000 shares of its
common stock, par value $0.01 per share (the "Securities"), as contemplated by
the Company's Registration Statement on Form S-8 filed on the date hereof with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended.
In connection therewith, I have examined, among other things, the
Articles of Incorporation and Bylaws of the Company, the corporate proceedings
of the Company with respect to the issuance and registration of the
Securities, the Registration Statement, certificates of public officials,
statutes and other instruments and documents, as a basis for the opinions
expressed herein.
Based upon and subject to the foregoing, and upon such other matters as
I have determined to be relevant, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Texas.
2. All of the Securities, upon issuance and delivery thereof, will be
validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Norman T. Reynolds
Norman T. Reynolds
Exhibit 10.3
1992 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to
advance the interests of Baltic International USA, Inc. (the "Company")
by enhancing its ability to attract and retain employees and other
persons or entities who are in a position to make significant
contributions to the success of the Company through ownership of shares
of the Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling the
Company to grant Awards in the form of Options all as more fully
described below.
2. ADMINISTRATION
The Plan will be administered by the Board of Directors of the
Company (the "Board"). The Board will have authority, not inconsistent
wit the express provisions of the Plan and in addition to other
authority granted under the Plan, to (a) grant Awards at such time or
times as it may choose; (b) determine the size of each Award, including
the number of shares of Stock subject to the Award; (c) determine the
type or types of each Award; (d) determine the terms and conditions of
each Award; (e) waive compliance by a Participant (as defined below)
with any obligations to be performed by the Participant under an Award
and waive any term or condition of an Award; (f) amend or cancel an
existing Award in whole or in part ( and if an award is cancelled, grant
another Award in its place on such terms as the Board shall specify),
except that the Board may not, without the consent of the holder of an
Award, take any action under this clause with respect to such Award if
such action would adversely affect the rights of such holder; (g)
prescribe the form or forms of instruments that are required or deemed
appropriate under the Plan, including any written notices and elections
required of Participants, and change such forms from time to time; (h)
adopt, amend and rescind rules and regulations for the administration of
the Plan; and (i) interpret the Plan and decide any questions and settle
all controversies and disputes that may arise in connection the Plan.
Such determination and actions of the Board, and all other
determinations and actions of the Board made or taken under authority
granted be any provision of the Plan, will be conclusive and will bind
all parties. Nothing in this paragraph shall be construed as limiting
the power of the Board to make adjustments under Section 7.3 or Section
8.6.
The Board may, in its discretion, delegate some or all of its
powers with respect to the Plan to a committee (the "Committee"), in
which event all references (as appropriate) to the Board hereunder shall
be deemed to refer to the Committee. The Committee, if one is
appointed, shall consist of at least two directors. A majority of the
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee by a writing signed by a
majority of the Committee members. On and after registration of the
Stock under the Securities Exchange Act of 1934 (the "1934 Act"), the
Board shall delegate the power to select directors and officers to
receive Awards under the Plan and the timing, pricing and amount of such
Awards to a committee, all members of which shall be disinterested
persons with the meaning of Rule 16B-3 under the 1934 Act.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved
by the stockholders of the Company. Grants of the Awards under the plan
may be made prior to that date (but after Board adoption of the Plan),
subject to such approval of the Plan.
No Award may be granted under the Plan after September 30, 2002
but Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to the adjustment as provided in Section 8.6 below, the
aggregate number of shares of Stock that may be delivered under the Plan
will be 1,500,000. If any Award requiring exercise by the Participant
for delivery of Stock terminates without having been exercised in full,
or if any Award payable in Stock or cash is satisfied in cash rather
1
than Stock, the number of shares of Stock as to which such Award was not
exercised or for which cash was substituted will be available for future
grants.
Stock delivered under the Plan may be either authorized by
unissued Stock or previously issued Stock acquired by the Company and
held in treasury. No fractional shares of Stock will be delivered under
the Plan.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants")
will be persons in the employ of the Company ("Employees") and other
persons or entities (including without limitation non-Employee directors
of the Company) who, in the opinion of the Board, are in a position to
make a significant contribution to the success of the Company.
6. TYPES OF AWARDS
6.1 Options
(a) Nature of Options. An Option is an Award entitling
the recipient on exercise thereof to purchase Stock at a specified
exercise price.
Both "incentive stock options," as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") (any
Option intended to quality as an incentive stock option being
hereinafter referred to as an "ISO"), and Options that are not incentive
stock options, may be granted under the Plan. ISOs shall be awarded
only to Employees.
(b) Exercise Price. The exercise price of an Option will
be determined by the Board subject to the following:
(1) The exercise price of an ISO shall not be less
than 100% (110% in the case of an ISO granted to a ten-percent
shareholder) of the fair market value of the Stock subject to the
Option, determined as of the time the Option is granted. A "ten-percent
shareholder" is any person who at the time of grant owns, directly or
indirectly, or is deemed to own by reason of the attribution rules of
section 424(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any
of its subsidiaries.
(2) In no case may the exercise price paid for Stock
which is part of an original issue of authorized Stock be less than 60%
of the fair market value of the stock subject to the Option, determined
as of the time the Option is granted.
(3) The Board may reduce the exercise price of an
Option at any time after the time of grant, but in the case of an Option
originally awarded as an ISO, only with the consent of the Participant.
(c) Duration of Options. The latest date on which an
Option may be exercised will be the seventh anniversary (third
anniversary, in the case of an ISO granted to a ten-percent shareholder)
of the day immediately preceding the date the Option was granted, or
such earlier date as may have been specified by the Board at the time
the Option was granted.
(d) Exercise of Options. An Option will become
exercisable at such time or times, and on such conditions, as the Board
may specify. The Board may at any time accelerate the time at which all
or any part of the Option may be exercised.
Any exercise of an Option must be in writing, signed
by the proper person and delivered or mailed to the Company, accompanied
by (1) any documents required by the Board and (2) payment in full in
accordance with paragraph (e) below for the number of shares for which
the Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an
Option must be paid for as follows: (1) in cash or by check (acceptable
to the Company in accordance with guidelines established for this
purpose), bank draft or money order payable to the order of the Company
or (2) if so permitted by the instrument evidencing the Option (or in
the case of an Option which is not an ISO, by the Board at or after
grant of the Option), (i) through the
2
delivery of shares of Stock which
have been outstanding for at least six months (unless the Board
expressly approves a shorter period) and which have a fair market value
on the last business day preceding the date of exercise equal to the
exercise price, or (ii) by delivery of a promissory note of the Option
holder to the Company, payable on such terms as are specified by the
Board, or (iii) by delivery of an unconditional and irrevocable
undertaking by a broker to delivery promptly to the Company sufficient
funds to pay the exercise price, or (iv) by any combination of the
permissible forms of payment; provided, that if the Stock delivered upon
exercise of the Option is an original issue of authorized Stock, at
least so much of the exercise price as represents the par value of such
Stock must be paid other than by the Option holder's personal check or
promissory note.
(f) Discretionary Payments. If the market price of shares
of Stock subject to an Option exceeds the exercise price of the Option
at the time of its exercise, the Board may cancel the Option and cause
the Company to pay in cash or in shares of Common Stock (at a price per
share equal to the fair market value per share) to the person exercising
the Option an amount equal to the difference between the fair market
value of the Stock which would have been purchased pursuant to the
exercise (determined on the date the Option is cancelled) and the
aggregate exercise price which would have been paid. The Board may
exercise its discretion to take such action only if it has received a
written request from the person exercising the Option, but such a
request will not be binding on the Board.
6.2 Loans and Supplemental Grants.
(a) Loans. The Company may make a loan to a Participant
("Loan"), either on the date of or after the grant of any Award to the
Participant. A Loan may be made either in connection with the purchase
of Stock under the Award or with the payment of any Federal, state and
local income tax with respect to income recognized as a result of the
Award. The Board will have full authority to decide whether to make a
Loan, including the interest rate (which may be zero), whether the Loan
is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the
conditions, if any, under which it may be forgiven. However, no Loan
may have a term (including extensions) exceeding ten years in duration.
(b) Supplemental Grants. In connection with any Award,
the Board may at the time such Award is made or at a later date, provide
for and grant a cash award to the Participant ("Supplemental Grant") not
to exceed an amount equal to (1) the amount of any federal, state and
local income tax on ordinary income for which the Participant may be
liable with respect to the Award, determined by assuming taxation at the
highest marginal rate, plus (2) an additional amount on a grossed-up
basis intended to make the Participant whole on an after-tax basis after
discharging all the Participant's income tax liabilities arising from
all payments under this Section 6. Any payment under this subsection
(b) will be made at the time the Participant incurs Federal income tax
liability with respect to the Award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1 Death. If a Participant dies, the following will apply:
(a) All Options and Stock Appreciation Rights held by the
Participant immediately prior to death, to the extent then exercisable,
may be exercised by the Participant's executor or administrator or the
person or persons to whom the Option or Right is transferred by will or
the applicable laws of descent and distribution, at any time within the
one year period ending with the first anniversary of the Participant's
death (or such shorter or longer period as the Board may determine), and
shall thereupon terminate. In no event, however, shall an Option or
Stock Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section 7.
Except as otherwise determined by the Board, all Options and Stock
Appreciation Rights held by a Participant immediately prior to death
that are not then exercisable shall terminate at death.
(b) Except as otherwise determined by the board, all
Restricted stock held by the Participant must be transferred to the
Company (and, in the event the certificates representing such Restricted
Stock are held by the Company, such Restricted Stock will be so
transferred without any further action by the Participant) in accordance
with Section 6.3 above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant was
not irrevocably entitled prior to death will be forfeited and the Award
cancelled as of the time of death, unless otherwise determined by the
Board.
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7.2 Termination of Service (Other Than By Death). If a
Participant who is an Employee ceases to be an Employee for any reason
other than death, or if there is a termination (other than be reason of
death) of the consulting, service or similar relationship in respect of
which a non-Employee Participant was granted an Award hereunder (such
termination of the employment or other relationship being hereinafter
referred to as a "Status Change"), the following will apply:
(a) Except as otherwise determined by the Board, all
Options and Stock Appreciation Rights held by the Participant that were
not exercisable immediately prior to the Status Change shall terminate
at the time of the Status Change. Any Options or Rights that were
exercisable immediately prior to the Status Change will continue to be
exercisable for a period of three months or such longer period as the
Board may determine), and shall thereupon terminate, unless the Award
provides by its terms for immediate termination in the event of a Status
Change or unless the Status Change results from a discharge for cause
which in the opinion of the Board casts such discredit on the
Participant as to justify immediate termination of the Award. In no
event, however, shall an Option or Stock appreciation Right remain
exercisable beyond the latest date on which it could have been exercised
without regard to this Section 7. For purposes of this paragraph, in
the case of a Participant who is an Employee, a Status Change shall not
be deemed to have resulted by reason of (i) a sick leave or other bona
fide leave of absence approved for purposes of the Plan by the Board, so
long as the Employee's right to reemployment is guaranteed either by
statute or by contract, or (ii) a transfer of employment between the
Company and a subsidiary or between subsidiary, or to the employment of
a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which
section 424(a) of the Code applies.
(b) Except as otherwise determined by the Board, all
Restricted Stock held by the Participant at the time of the Status
Change must be transferred to the Company (and, in the event the
certificates representing such Restricted Stock are held by the Company,
such Restricted Stock will be so transferred without any further action
by the Participant) in accordance with Section 6.3 above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant was
not irrevocably entitled prior to the Status Change will be forfeited
and the Award cancelled as of the date of such Status Change unless
otherwise determined by the Board.
7.3 Certain Corporate Transactions. In the event of a
consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all the
Company's outstanding Stock by a single person or entity or by a group
of persons and/or entities acting in concert, or in the event of the
sale or transfer of substantially all the Company's assets or a
dissolution of liquidation of the Company (a "covered transaction"), all
outstanding Awards will terminate as of the effective date of the
covered transaction, and the following rules shall apply:
(a) Subject to paragraphs (b) and (c) below, the Board may
in its sole discretion, prior to the effective date of the covered
transaction, (1) make each outstanding Option and Stock Appreciation
Right exercisable in full, (2) remove the restrictions from each
outstanding share of Restricted Stock, (3) cause the Company to make any
payment and provide any benefit under each outstanding Deferred Stock
Award, Performance Award, and Supplemental Grant which would have been
made or provided with the passage of time had the transaction not
occurred and the Participant not suffered a Status Change (or died), and
(4) forgive all or any portion of the principal of or interest on a
Loan.
(b) If an outstanding Award is subject to performance or
other conditions (other than conditions relating to the mere passage of
time and continued employment) which will not have been satisfied at the
time of the covered transaction, the Board may in its sole discretion
remove such conditions. If it does not do so, however, such Award will
terminate as of the date of the covered transaction notwithstanding
paragraph (a) above.
(c) With respect to an outstanding Award held by a
participant who, following the covered transaction, will be employed by
or otherwise providing services to a corporation which is a surviving or
acquiring corporation in such transaction or an affiliate of such a
corporation, the Board may, in lieu of the action described in paragraph
(a) above, arrange to have such surviving or acquiring corporation or
affiliate grant to the Participant a replacement award which, in the
judgment of the Board, is substantially equivalent to the Award.
4
8. GENERAL PROVISIONS
8.1 Documentation of Awards. Awards may be evidenced by such
written instruments, if any, as may be prescribed by the Board from time
to time. Such instruments may be in the form of agreements to be
executed by both the Participant and the Company, or certificates,
letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2 Rights as a Stockholder, Dividend Equivalents. Except as
specifically provided by the Plan, the receipt of an Award will not give
a Participant rights as a stockholder; the participant will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Stock. However, the Board
may, on such conditions as it deems appropriate, provide that a
Participant will receive a benefit in lieu of cash dividends that would
have been payable on any or all Stock subject to the Participant's Award
had such Stock been outstanding. Without limitation, the Board may
provide for payment to the Participant of amounts representing such
dividends, either currently or in the future, or for the investment of
such amounts on behalf of the Participant.
8.3 Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Stock pursuant to the Plan or to
remove restriction from shares previously delivered under the Plan (a)
until all conditions of the Award have been satisfied or removed, (b)
until, in the opinion of the Company's counsel, all applicable federal
and state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange, until the
shares to be delivered have been listed or authorized to be listed on
such exchange upon official notice of notice of issuance, and (d) until
all other legal matters in connection with the issuance and delivery of
such shares have been approved by the Company's counsel. If the sale of
Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the
Award such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that
the certificates evidencing such Stock bear an appropriate legend
restricting transfer.
If an Award is exercised by the Participant's legal
representative, the Company will be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the
authority of such representative.
8.4 Tax Withholding. The Company will withhold from any cash
payment made pursuant to an Award an amount sufficient to satisfy all
federal, state and local withholding tax requirements (the "withholding
requirements").
In the case of an Award pursuant to which Stock may be
delivered, the Board will have the right to require that the participant
or other appropriate person remit to the Company an amount sufficient to
satisfy the withholding requirements, or make other arrangements
satisfactory to the Board with regard to such requirements, prior to the
delivery of any Stock. If and to the extent that such withholding is
required, the board may permit the Participation or such other person to
elect at such time and in such manner as the Board provides to have the
Company hold back from the shares to be delivered, or to deliver to the
Company, Stock having a value calculated to satisfy the withholding
requirement.
If at the time an ISO is exercised the Board determines that
the Company could be liable for withholding requirements with respect to
a disposition of the Stock received upon exercise, the Board may require
as a condition of exercise that the person exercising the ISO agree (a)
to inform the Company promptly of any disposition (within the meaning of
section 424(c) of the Code) of Stock received upon exercise, and (b) to
give such security as the Board deems adequate to meet the potential
liability of the Company for the withholding requirements and to augment
such security from time to time in any amount reasonably deemed
necessary by the Board to preserve the adequacy of such security.
8.5 Nontransferability of Awards. No Award (other than an Award
in the form of an outright transfer of cash or Unrestricted Stock) may
be transferred other than by will or by the laws of descent and
distribution, and during an employee's lifetime an Award requiring
exercise may be exercised only by the Participant (or in the event of
the Participant's incapacity, the person or persons legally appointed to
act on the Participant's behalf).
5
8.6 Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's
capitalization, or other distribution to common stockholders other than
normal cash dividends, after the effective date of the Plan, the Board
will make any appropriate adjustments to the maximum number of shares
that may be delivered under the Plan under Section 4 above.
(b) In any event referred to in paragraph (a), the Board
will also make any appropriate adjustments to the number and kind of
shares of stock and securities subject to Awards then outstanding or
subsequently granted, any exercise prices relating to Awards and any
other provision of Award affected by such change. The Board may also
make such adjustments to take into account material changes in law or in
accounting practices or principals, mergers, consolidations,
acquisitions, dispositions or similar corporate transactions, or any
other event, if it is determined by the Board that adjustments are
appropriate to avoid distortion in the operation of the Plan.
8.7 Employment Rights, Etc. Neither the adoption of the Plan
nor the grant of Awards will confer upon any person any right to
continued retention by the Company or any subsidiary as an Employee or
otherwise, or affect in any way the right of the Company or subsidiary
to terminate an employment, service or similar relationship at any time.
Except as specifically provided by the Board in any particular case, the
loss of existing or potential profit Awards granted under the Plan will
not constitute an element of damages in the event of termination of an
employment, service or similar relationship even if the termination is
in violation of an obligation of the Company to the Participant.
8.8 Deferral of Payments. The Board may agree at any time, upon
request of the Participant, to defer the date on which any payment under
an Award will be made.
8.9 Past Services as Consideration. Where a Participant
purchases Stock under an Award for a price equal to the par value of the
Stock the Board may determine that such price has been satisfied by past
services rendered by the Participant.
9. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a
Participant will affect the Company's right to grant to such Participant
awards that are not subject to the Plan, to issue to such Participant
Stock as a bonus or otherwise, or to adopt other plans or arrangements
under which Stock be issued to Employees.
The Board may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by
law, or may at any time terminate the Plan as to any further grants of
Awards, provided that (except to the extent expressly required or
permitted by the Plan) no such amendment will, without the approval of
the stockholders of the Company, effectuate a change for which
stockholder approval is required in order for the plan to continue to
qualify for the award of ISOs under section 422 of the Code and to
continue to qualify under Rule 16b-3 promulgated under Section 16 of the
1934 Act.
10. SECURITIES MATTERS
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any shares of Common
Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the
Company shall not be obligated to cause to be issued or delivered any
certificates evidencing shares of Common Stock pursuant to the Plan
unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms
hereof, that the recipient of such shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee in its sole discretion, deems necessary or
desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to the Company shall have determined
that the issuance and delivery of shares of Common Stock pursuant to
such exercise is
6
in compliance with all applicable laws, regulations of
governmental authorities and the requirements of any securities exchange
on which shares of Common Stock are traded. The Company may, in its
sole discretion, defer the effectiveness of any exercise of an Option
granted hereunder in order to allow the issuance of shares of Common
Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available
under federal or state securities laws. The Company shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that
effectiveness of the exercise of an Option has been deferred, the
Participant may, by written notice, withdraw such exercise and obtain
the refund of any amount paid with respect thereto.
7
Exhibit 23.2
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report
dated April 15, 1997 included in Baltic International USA, Inc.'s Form
10-KSB for the year ended December 31, 1996, and to all references to
our firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
December 1, 1997