U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A-1
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 2001
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
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Commission file number 0-29245
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
FLORIDA 65-0452156
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3750 Investment Lane, Suite 5 32904
West Palm Beach, Florida (Zip Code)
(Address of principal executive offices)
Issuer's telephone number, including area code: (561) 863-8446
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,632,813 shares of common
stock were outstanding as of April 26, 2002.
EXPLANATORY NOTE
Pursuant to Rule 12b-15 of the Securities and Exchange Act of 1934, as
amended, Health & Nutrition Systems International, Inc. hereby files this
Amendment No. 1 on Form 10-K/A to include in Part III, Items 10 - 12, and to
amend Item 13, of its Annual Report on Form 10-KSB for the year ending December
31, 2001.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
As of April 26, 2002, our directors and executive officers are:
Name Age Position/Office
- ---- --- ---------------
Christopher Tisi 32 Interim Chairman of the Board, President and
Chief Executive Officer
Ted Alflen 55 Director
Daryl Green 41 Director
Steve Pomerantz 45 Director
The business experience of our executive officer and directors is set
forth below:
Christopher Tisi has been our Chief Executive Officer and Interim
Chairman of the Board since December 2001. Mr. Tisi has been our President and
Secretary since November 2000, and was our Chief Operating Officer from December
1999 until November 2000. From March 1998 until December 1999, Mr. Tisi was our
Vice President of Sales and Marketing. From 1994 to March 1998, Mr. Tisi was our
Vice President of Training.
Ted Alflen has been one of our directors since October 2000. In March
1991, Mr. Alflen founded TCCD International Inc. and served as President from
1991 to present. TCCD manufactures and markets crystal deodorants. TCCD recently
acquired Real Natural Products and the Moistic brand of all natural lip balms.
Mr. Alflen has been in sales and marketing for over 29 years.
Darryl Green has been one of our directors since August 10, 2001. Mr.
Green has been an independent business consultant in the nutrition industry from
June 2001 until present. He was the Vice President of retail sales of General
Nutrition Centers from June 1999 until June 2001. He held the position of Vice
President of retail operations for the Southeastern United States for GNC from
January 1996 until June 1999, and was the Director of Operations for the GNC NY
City Designated Market Area from January 1993 until January 1996.
Steve Pomerantz has been one of our directors since 1994. From November
2000 to December 2001, Mr. Pomerantz was our Chairman of the Board and
Treasurer, and he held the office of Chief Executive Officer from March 1998
until December 2001. He was our President from March 1998 until November 2000.
From 1995 to March 1998, Mr. Pomerantz was our Vice President of Finance and
Chief Operating Officer. Presently, Mr. Pomerantz is pursuing his own business
interests.
Each director holds his office until the next annual meeting of the
shareholders unless he resigns or is removed.
2
SECTION 16(A) - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(e) of the Securities Exchange Act of 1934
during the fiscal year ended December 31, 2001, we are not aware of any person
that failed to file on a timely basis, as disclosed in the aforementioned forms,
reports required by Section 16(a) of the Exchange Act during the fiscal year
ended December 31, 2001, other than an unintentional failure to timely file by
our former director, William Husa, one Form 4 reporting one transaction.
ITEM 10. EXECUTIVE COMPENSATION
The following table provides a summary of cash and non-cash
compensation for each of the last three fiscal years ended December 1999, 2000
and 2001 received by each of our chief executive officer and our other executive
officers whose total annual salary and bonus exceeded $100,000 during fiscal
year 2001, (each a "Named Officer" and collectively the "Named Officers"). No
other executive officers were paid salary and bonus compensation by us which
exceeded $100,000 during 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- -----------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
POSITION YEAR ($)(1) ($) ($)(2) OPTIONS(#)(3) ($)
- ------------------- ---- ------ --- ------ -------------- ---
Christopher Tisi 2001 133,281 7,524 - - -
President, Chief 2000 $100,000 18,169 - 102,000 -
Executive Officer, 1999 61,000 4,047 - - -
Secretary and Interim
Chairman of the Board(4)
Steve Pomerantz 2001 114,321 3,762 - - 50,000(5)
(4) 2000 100,000 11,642 - 50,000 -
1999 13,356 1,022 - - -
- --------------------
(1) Payment of $23,443 of Steve Pomertanz's 2001 salary and $32,578 of Chris
Tisi's 2001 salary was deferred in 2001 and will be paid during 2002 in
twelve equal monthly installments.
(2) The Named Officers did not receive any other annual compensation not
categorized as salary or bonus except for perquisites and other personal
benefits which in the aggregate did not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for such Named Officer.
(3) In 2000, Mr. Pomerantz was granted options under our 1998 Stock Option Plan
for the purchase of 50,000 shares of common stock. Such options were
granted at the then current market value of the shares. The options granted
vested immediately on the date of grant. Also in 2000, Mr. Tisi was granted
options under our 1998 Stock Option Plan for the purchase of 102,000 shares
of common stock. Such options were granted at the then current market value
of the shares. The options granted vested immediately on the date of grant.
3
(4) Mr. Pomerantz resigned as Chief Executive Officer, Treasurer and Chairman
of the Board on December 14, 2001, and Mr. Tisi assumed the position of
Chief Executive Officer, Secretary and Interim Chairman of the Board on
December 14, 2001. Mr. Tisi has served as President since October 1, 2000.
(5) Paid to Mr. Pomertanz as severance pursuant to the terms of his Severance
Agreement effective as of January 1, 2002, $18,750 of which is to be paid
to third parties in connection with settlement of litigation.
STOCK OPTION GRANTS
No stock options were granted to the Named Officers during fiscal year
2001 under our 1998 Stock Option Plan or otherwise. We do not currently have
(and have not previously had) any plan pursuant to which any stock appreciation
rights may be granted.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information relating to the number and
value of options held on December 31, 2001 by each of the Named Officers. No
options to purchase common stock were exercised by either of our Named Officers
during the year ended December 31, 2001.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 2001
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at
Shares Value Options at Dec. 31, 2001 (#) Dec. 31, 2001 ($)(1)
Acquired on Realized ---------------------------- --------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --- ----------- ------------- ----------- -------------
Christopher Tisi - - 102,000(2) -
President, Chief
Executive Officer,
Secretary and Interim
Chairman of the Board
Steve Pomerantz - - 50,000(2) -
(1) The last sales price of our common stock on the NASDAQ National Market
System on December 31, 2001, which was $0.10 per share, and the exercise
price of the options of both Mr. Tisi and Mr. Pomerantz are $0.50 per
share. Accordingly, the options are not in-the-money.
(2) Options granted under our 1998 Stock Option Plan.
COMPENSATION OF DIRECTORS
During 2001, we paid to each of our non-employee directors meeting fees
of $500 for each board meeting they attended and for each committee meeting they
attended (if held separately from a board meeting). Pursuant to the terms of our
1998 Stock Option Plan, grants of stock options for the purchase of our common
shares may be made to each of our directors. We did not grant any options to our
directors during 2001.
4
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Effective January 1, 2002, we entered into a new employment agreement
with Chris Tisi, our Chief Executive Officer, President, Secretary and Interim
Chairman of the Board. The agreement provides for a base salary of $140,000
($18,750 of which will be used to pay certain amounts owing to third parties in
connection with the settlement of litigation) as well as bonuses which are
contingent upon increases in revenue over prior periods and net income results.
The agreement provides that bonuses will be determined quarterly with 33% of
such bonuses to be paid quarterly and the balance to be paid at year-end
depending on the maintenance of previously achieved performance levels. The
agreement also provides for an annual grant of 50,000 stock options under our
1998 Stock Option Plan. The options will have a four-year term and will be
vested 100% on the date of grant. The agreement also provides for the payment of
an amount equal to the lesser of (i) $275,000 or (ii) the maximum "golden
parachute" payment permitted to be deducted by us under the federal tax law in
the event Mr. Tisi is terminated after a change of control. An amendment to the
agreement provides that $32,578 of Mr. Tisi's salary for 2001 which was not paid
to him during 2001 will be paid in 2002 in twelve equal monthly installments.
Effective January 1, 2002, we entered into a severance agreement with
Steve Pomerantz, our former Chairman of the Board, Chief Executive Officer, and
Treasurer. The agreement provides for a severance payment of $50,000 to be paid
over the next year ($18,750 of which will be used to pay certain amounts owing
to third parties in connection with the settlement of litigation). An amendment
to the agreement provides that $23,443 of Mr. Pomerantz's salary for 2001 which
was not paid to him during 2001 will be paid in 2002 in twelve equal monthly
installments.
In light of the fact that Mr. Pomerantz has in the past personally
guaranteed certain obligations of the Company to third parties (the "Guaranteed
Obligations"), the severance agreement provides that on the earlier to occur of
(i) a Change in Control, or (ii) December 31, 2002, we will provide substitute
collateral for the Guaranteed Obligations in exchange for a release from Mr.
Pomerantz from any and all personal liability on the Guaranteed Obligations. If
we are unable to provide substitute collateral within the agreed time, we are
required to repay the Guaranteed Obligations in full within thirty (30) days
thereafter. We are also obligated to repay any outstanding principal and accrued
but unpaid interest under a bank loan to us by no later than the earlier to
occur of (i) July 1, 2002 and (ii) a Change of Control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows, as of April 26, 2002, the number of shares of
our common stock beneficially owned by
o each person whom we know beneficially owns more than 5% of the
common stock,
o each director and nominee for director,
o each executive officer included in the Summary Compensation
Table, and
o all executive officers and directors as a group.
5
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
------------------
NUMBER OF SHARES AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) PERCENT OF CLASS (3)
- ---------------------------------------- ------------------------ --------------------
Christopher Tisi 819,088(4)(5) 21.6%
Steve Pomerantz 401,829(5) 10.9%
Ted Alflen 4,250(5) *
Daryl Green - -
J.C. Herbert Bryant, III 266,534(6) 7.3%
8390 Currency Drive, #5
West Palm Beach, FL 33404
Tony D'Amato 308,502(4) 8.5%
1526 Michigan Avenue, #1
Miami Beach, FL
Anthony and Renate Dell'Aquila 205,000(6) 5.6%
15377 Whispering Willow Dr.
Wellington, FL 33414
Napoleon and Tania Paz 214,300(6) 5.9%
51 Seabreeze Ave.
Delray Beach, FL 33483
EAI Partners, Inc. 275,000(7) 7.6%
1900 Corporate Blvd., #305-W
Boca Raton, FL 33431
All executive officers and directors as a 1,225,167(8) 31.9%
group (4 persons)
- -----------------------------
* Less than 1%
(1) The address of the executive officer and each director is c/o the Company,
3750 Investment Lane, Suite 5, West Palm Beach, FL 33404.
(2) Unless otherwise noted, all persons named in the table have sole voting and
dispositive power with respect to all shares of common stock beneficially
owned by them.
(3) Based upon 3,632,813 outstanding shares as of April 26, 2002, and, with
respect to each holder of options exercisable, or notes convertible, within
60 days of April 26, 2002, the shares issuable under such instruments.
(4) In 2000, Tony D'Amato ("D'Amato") executed and delivered to Chris Tisi
("Tisi") and the Company a Shareholders' Agreement pursuant to which
D'Amato granted to Tisi an irrevocable proxy (the "Irrevocable Proxy")
authorizing Tisi to vote shares of the Company beneficially owned by
D'Amato as of that date and any shares of the Company acquired by D'Amato
thereafter. The Irrevocable Proxy had a two-year term. On January 31, 2001,
Tisi relinquished his right to vote pursuant to the Irrevocable Proxy with
respect to 125,000 shares beneficially owned by D'Amato as of that date. As
disclosed in the 13D dated April 24, 2002 filed by Steve Pomerantz
6
("Pomerantz"), Tisi and D'Amato, on April 29, 2002, D'Amato executed and
delivered to Tisi a First Amendment to the Shareholders' Agreement (the
"First Amendment") pursuant to which D'Amato extended the term of the
Shareholders' Agreement and the Irrevocable Proxy for an additional
two-year period. In addition, Tisi and Pomerantz have entered into an oral
understanding that each will vote the shares of common stock beneficially
owned by him (or, in the case of Tisi, as to which he has voting power)
together as a group, but only for the following purposes: (i) in favor of
the same person or persons to be nominated and elected to serve on the
board of directors to fill any vacancies on the board, if and as such
vacancies may arise from time to time (whether such vacancy occurs by
removal, resignation or an increase in the size of the board of directors)
at any time prior to our 2002 annual meeting of stockholders, or any
adjournment thereof, and (ii) in favor of the same person or persons to be
nominated and elected as the slate of nominees, and elected, to the board
of directors to be voted upon by the shareholders at our 2002 annual
meeting of shareholders, or any adjournment thereof. Accordingly, Tisi has
sole voting power of 819,088 shares and sole dispositive power of 416,788
shares, and D'Amato has sole voting power of 125,000 shares and sole
dispositive power of 308,502 shares.
(5) Share ownership of the following persons includes shares subject to
immediately exercisable options or options exercisable within 60 days of
April 26, 2002, as follows: for Mr. Pomerantz - 50,000 shares; for Mr. Tisi
- 152,000 shares; and for Mr. Alflen - 1,250.
(6) The share amounts of Bryant, Anthony and Renate Dell'Aquila and Napoleon
Paz are based upon the disclosures made by each of them in their respective
Schedule 13Ds filed with the Securities and Exchange Commission on or about
June 27, 2001. Mr. and Mrs. Dell'Aquila share voting and dispositive power.
(7) Based upon EAI Partners, Inc.'s receipt of 275,000 shares of our common
stock in connection with the settlement of litigation adverse to the
Company, we believe that EAI Partners, Inc. is a beneficial owner of this
amount.
(8) Includes an aggregate of 203,250 shares subject to immediately exercisable
options or options exercisable within 60 days of April 26, 2002 held by
executive officers and directors as a group.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the years ended December 31, 2001 and December 31, 2000, we sold
$63,881 and $163,969 respectively of products to KMS-Thin Tab, an entity we
believe is controlled by J.C. Herbert Bryant III, a beneficial owner of greater
than five percent of our stock. These sales were on terms no more favorable than
those given to unaffiliated third parties in arms-length transactions.
On January 12, 2002, we repaid a $100,000 loan from SunTrust Bank which
was collateralized by a certificate of deposit in the principal amount of
$100,000 pledged by Steve Pomerantz, our former Chief Executive Officer and
Chairman of the Board. Accordingly, on that date, the collateral was released.
On January 15, 2002, we obtained another short-term loan from SunTrust Bank in
the amount of $23,400. This loan is collateralized by a certificate of deposit
in the amount of $23,400 owned by Steve Pomerantz. The loan is due on July 15,
2002 and is payable in monthly installments of $4,167.
7
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Form 10-KSB
FINANCIAL STATEMENTS:
o Independent Auditors' Report
o Balance Sheets as of December 31, 2001 and 2000
o Statements of Operations for the years ended December 31, 2001
and 2000
o Statements of Changes in Stockholders' Equity for the years
ended December 31, 2001 and 2000
o Statements of Cash Flows for the years ended December 31, 2001
and 2000
o Notes to Financial Statements
THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS FORM 10-KSB
The exhibits to this Form 10-KSB appear following the Company's
Financial Statements included in this report.
3.1(a) Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1(A) of
Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File Number
000-29245).
3.1(b) Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1(B)
of Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File
Number 000-29245).
3.1(c) Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1(C) of
Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File Number
000-29245).
3.1(d) Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1(D) of
Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001; Commission File Number
000-29245).
3.2 By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of Registrant's registration
statement on Form 10-SB, filed on January 31, 2000; Commission File Number 000-29245).
3.3 Amendment to the Restated ByLaws of the Company dated September 25, 2000 (incorporated by reference
to Exhibit 3.3 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001; Commission
File Number 000-29245).
8
3.4 Amendment to the Restated ByLaws of the Company dated November 10, 2000 (incorporated by reference
to Exhibit 3.4 of Registrant's Annual Report on form 10-KSB, filed on April 16, 2001; Commission
File Number 000-29245).
10.1 Employment Agreement between the Company and Chris Tisi effective as of January 1, 2002
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.2 Severance Agreement between the Company and Steven Pomerantz effective as of January 1, 2002
(incorporated by reference to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.3 Factoring and Security Agreement between LSQ Funding Group L.C. and Health and Nutrition Systems
International, Inc. effective as of March 15, 2002 (incorporated by reference to Exhibit 10.3 of
Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.4 Indemnification Agreement dated March 15, 2002 between LSQ Funding Group L.C. and Christopher Tisi
(incorporated by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-KSB, filed on
April 12, 2002; Commission File Number 000-29245).
10.5 Indemnification Agreement between the Company and Chris Tisi dated January 1, 2002 (incorporated by
reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on February 13, 2002;
Commission File Number 000-29245).
10.6 Indemnification Agreement between the Company and Steven Pomerantz dated January 1, 2002
(incorporated by reference to Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.7 Lease Agreement between the Company and Fred Keller, Trustee dated November 1, 2000 (incorporated by
reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001;
Commission File Number 000-29245).
10.8 Lease Agreement between the Company and Fred Keller, Trustee dated January 1, 2001 (incorporated by
reference to Exhibit 10.6 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001;
Commission File Number 000-29245).
10.9 Secured Party's Bill of Sale between Fleet National Bank and the Company dated January 12, 2001
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on
January 26, 2001; Commission File Number 000-29245).
10.10 Trademark Assignment from Heritage Consumer Products, LLC to the Company dated January 12, 2001
(incorporated by reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on
January 26, 2001; Commission File Number 000-29245).
9
10.11 Agreement between the Company and Steven Pomerantz dated January 12, 2001 (incorporated by reference
to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on January 26, 2001; Commission
File Number 000-29245).
10.12 Shareholders' Agreement among Tony D'Amato, Chris Tisi, and the Company dated July 13, 2000
(incorporated by reference to Exhibit 1 of Christopher Tisi, Steven Pomerantz, Tony Musso, and Tony
D'Amato's Schedule 13D, filed on February 14, 2001; Commission File Number 000-29245).
10.13 Irrevocable Proxy dated July 13, 2000 (incorporated by reference to Exhibit 2 of Christopher Tisi,
Steven Pomerantz, Tony Musso, and Tony D'Amato's Schedule 13D, filed on February 14, 2001;
Commission File Number 000-29245).
10.14 Waiver dated January 31, 2001 (incorporated by reference to Exhibit 3 of Christopher Tisi, Steven
Pomerantz, Tony Musso, and Tony D'Amato's Schedule 13D, filed on February 14, 2001; Commission File
Number 000-29245).
10.15 Joint Filing Agreement dated April 24, 2002 (incorporated by reference to Exhibit 6 of Christopher
Tisi, Steven Pomerantz and Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File
Number 0-29245).
10.16 Exclusive Manufacturing Agreement dated April 11, 2002 between the Company and Garden State
Nutritionals, a division of VitaQuest International, Inc. (incorporated by reference to Exhibit
10.16 of Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.17 Security Agreement dated April 11, 2002 between the Company and Garden State Nutritionals, a
division of VitaQuest International, Inc. (incorporated by reference to Exhibit 10.17 of
Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.18 Health & Nutrition Systems International, Inc. 1998 Stock Option Plan (incorporated by reference to
Exhibit 10.18 of Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File
Number 000-29245).
10.19 Promissory Note dated April 11, 2002 between the Company as borrower and Garden State Nutritionals
as lender (incorporated by reference to Exhibit 10.19 of Registrant's Annual Report on Form 10-KSB,
filed on April 12, 2002; Commission File Number 000-29245).
10.20 Subordination Agreement dated April 11, 2002 among the Company, LSQ Funding Group, L.C. and Garden
State Nutritionals (incorporated by reference to Exhibit 10.20 of Registrant's Annual Report on Form
10-KSB, filed on April 12, 2002; Commission File Number 000-29245).
10.21 Amendment No. 1 dated April 29, 2002 to the Employment Agreement between the Company and Chris Tisi
effective as of January 1, 2002.
10.22 Amendment No. 1 dated April 29, 2002 to the Severance Agreement between the Company and Steven
Pomerantz effective as of January 1, 2002.
10.23 First Amendment to Shareholders' Agreement among Tony D'Amato, Christhopher Tisi and the Company dated
April 24, 2002 (incorporated by reference to Exhibit 4 of Christopher Tisi, Steven Pomerantz and
Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File Number 0-29245).
10
10.24 Irrevocable Proxy dated April 24, 2002 (incorporated by reference to Exhibit 5 of Christopher Tisi,
Steven Pomerantz and Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File Number
000-29245).
10.25 Option Agreement effective as of February 12, 2002 between the Company and Christopher Tisi.
16.1 Letter from Butner & Kahle, CPA dated September 6, 2000 (incorporated by reference to Exhibit 16.4
of Registrant's Current Report on Form 8-K filed on September 7, 2000; Commission File Number
000-29245).
24 Power of attorney (included on signature page)
(b) Reports on Form 8-K
1. Form 8-K filed on December 10, 2001 reporting an Item 5 event.
2. Form 8-K filed on December 18, 2001 reporting an Item 5 event.
11
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: April 29, 2002 Health & Nutrition Systems International, Inc.
(Registrant)
By: /s/ Christopher Tisi
------------------------------------------
Christopher Tisi
Interim Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
12
Index to Exhibits
- -----------------
Exhibit Description of Exhibits
------- -----------------------
Number
------
3.1(a) Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1(A) of
Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File Number
000-29245).
3.1(b) Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1(B)
of Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File
Number 000-29245).
3.1(c) Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1(C) of
Registrant's registration statement on Form 10-SB, filed on January 31, 2000; Commission File Number
000-29245).
3.1(d) Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1(D) of
Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001; Commission File Number
000-29245).
3.2 By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 of Registrant's registration
statement on Form 10-SB, filed on January 31, 2000; Commission File Number 000-29245).
3.3 Amendment to the Restated ByLaws of the Company dated September 25, 2000 (incorporated by reference
to Exhibit 3.3 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001; Commission
File Number 000-29245).
3.4 Amendment to the Restated ByLaws of the Company dated November 10, 2000 (incorporated by reference
to Exhibit 3.4 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001; Commission
File Number 000-29245).
10.1 Employment Agreement between the Company and Chris Tisi effective as of January 1, 2002
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.2 Severance Agreement between the Company and Steven Pomerantz effective as of January 1, 2002
(incorporated by reference to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.3 Factoring and Security Agreement between LSQ Funding Group L.C. and Health and Nutrition Systems
International, Inc. effective as of March 15, 2002 (incorporated by reference to Exhibit 10.3 of
Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.4 Indemnification Agreement dated March 15, 2002 between LSQ Funding Group L.C. and Christopher Tisi
(incorporated by reference to Exhibit 10.4 of Registrant's Annual Report on Form 10-KSB, filed on
April 12, 2002; Commission File Number 000-29245).
10.5 Indemnification Agreement between the Company and Chris Tisi dated January 1, 2002 (incorporated by
reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on February 13, 2002;
Commission File Number 000-29245).
10.6 Indemnification Agreement between the Company and Steven Pomerantz dated January 1, 2002
(incorporated by reference to Exhibit 10.4 of Registrant's Current Report on Form 8-K filed on
February 13, 2002; Commission File Number 000-29245).
10.7 Lease Agreement between the Company and Fred Keller, Trustee dated November 1, 2000 (incorporated by
reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001;
Commission File Number 000-29245).
10.8 Lease Agreement between the Company and Fred Keller, Trustee dated January 1, 2001 (incorporated by
reference to Exhibit 10.6 of Registrant's Annual Report on Form 10-KSB, filed on April 16, 2001;
Commission File Number 000-29245).
10.9 Secured Party's Bill of Sale between Fleet National Bank and the Company dated January 12, 2001
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K filed on
January 26, 2001; Commission File Number 000-29245).
10.10 Trademark Assignment from Heritage Consumer Products, LLC to the Company dated January 12, 2001
(incorporated by reference to Exhibit 10.2 of Registrant's Current Report on Form 8-K filed on
January 26, 2001; Commission File Number 000-29245).
10.11 Agreement between the Company and Steven Pomerantz dated January 12, 2001 (incorporated by reference
to Exhibit 10.3 of Registrant's Current Report on Form 8-K filed on January 26, 2001; Commission
File Number 000-29245).
10.12 Shareholders' Agreement among Tony D'Amato, Chris Tisi, and the Company dated July 13, 2000
(incorporated by reference to Exhibit 1 of Christopher Tisi, Steven Pomerantz, Tony Musso, and Tony
D'Amato's Schedule 13D, filed on February 14, 2001; Commission File Number 000-29245).
10.13 Irrevocable Proxy dated July 13, 2000 (incorporated by reference to Exhibit 2 of Christopher Tisi,
Steven Pomerantz, Tony Musso, and Tony D'Amato's Schedule 13D, filed on February 14, 2001;
Commission File Number 000-29245).
10.14 Waiver dated January 31, 2001 (incorporated by reference to Exhibit 3 of Christopher Tisi, Steven
Pomerantz, Tony Musso, and Tony D'Amato's Schedule 13D, filed on February 14, 2001; Commission File
Number 000-29245).
10.15 Joint Filing Agreement dated April 24, 2002 (incorporated by reference to Exhibit 6 of Christopher
Tisi, Steven Pomerantz and Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File
Number 000-29245).
10.16 Exclusive Manufacturing Agreement dated April 11, 2002 between the Company and Garden State
Nutritionals, a division of VitaQuest International, Inc. (incorporated by reference to Exhibit
10.16 of Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.17 Security Agreement dated April 11, 2002 between the Company and Garden State Nutritionals, a
division of VitaQuest International, Inc. (incorporated by reference to Exhibit 10.17 of
Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File Number
000-29245).
10.18 Health & Nutrition Systems International, Inc. 1998 Stock Option Plan (incorporated by reference to
Exhibit 10.18 of Registrant's Annual Report on Form 10-KSB, filed on April 12, 2002; Commission File
Number 000-29245).
10.19 Promissory Note dated April 11, 2002 between the Company as borrower and Garden State Nutritionals
as lender (incorporated by reference to Exhibit 10.19 of Registrant's Annual Report on Form 10-KSB,
filed on April 12, 2002; Commission File Number 000-29245).
10.20 Subordination Agreement dated April 11, 2002 among the Company, LSQ Funding Group, L.C. and Garden
State Nutritionals (incorporated by reference to Exhibit 10.20 of Registrant's Annual Report on Form
10-KSB, filed on April 12, 2002; Commission File Number 000-29245).
10.21 Amendment No. 1 dated April 29, 2002 to the Employment Agreement between the Company and Chris Tisi
effective as of January 1, 2002.
10.22 Amendment No. 1 dated April 29, 2002 to the Severance Agreement between the Company and Steven
Pomerantz effective as of January 1, 2002.
10.23 First Amendment to Shareholders' Agreement among Tony D'Amato, Chris Tisi and the Company dated
April 24, 2002 (incorporated by reference to Exhibit 4 of Christopher Tisi, Steven Pomerantz and
Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File Number 0-29245).
10.24 Irrevocable Proxy dated April 24, 2002 (incorporated by reference to Exhibit 5 of Christopher Tisi,
Steven Pomerantz and Tony D'Amato's Schedule 13D, filed on April 29, 2002; Commission File Number
0-29245).
10.25 Option Agreement effective as of February 12, 2002 between the Company and Christopher Tisi.
16.1 Letter from Butner & Kahle, CPA dated September 6, 2000 (incorporated by reference to Exhibit 16.4
of Registrant's Current Report on Form 8-K filed on September 7, 2000; Commission File Number
000-29245).
24 Power of attorney (included on signature page)
Exhibit 10.21
FIRST AMENDMENT TO
------------------
EMPLOYMENT AGREEMENT
--------------------
This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "First Amendment") is
made and entered into as of this 29th day of April, 2002 by and between HEALTH &
NUTRITION SYSTEMS INTERNATIONAL, INC., a Florida corporation ("HNS", "Company"
or the "Employer"), and CHRIS TISI, an individual (the "Employee").
Preliminary Statement
---------------------
The parties have entered into an Employment Agreement (the "Agreement")
effective as of January 1, 2002, and desire to amend such Agreement as set forth
in this First Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
ARTICLE I
1. The provisions of this First Amendment shall govern and control over
any conflicting or inconsistent provisions in the Agreement, but except as
modified hereby, the Agreement remains in full force and effect. Terms used
herein but not defined herein shall have the meanings given them in the
Agreement. The first sentence of Section 2.2 is hereby amended by deleting the
same in its entirety and substituting therefor the following:
"Employee agrees to devote his time and energies to performance of his
duties on behalf of Employer, which duties are the general and customary duties
generally associated with the positions of Chief Executive Officer ("CEO"),
President and Interim Chairman of the Board of Directors."
2. Subsection 2.5(a)(ii) is hereby amended by deleting the same in its
entirety and substituting therefor the following:
"the Company having materially changed the scope and type of the duties
the Employee is to perform, or assigning the Employee to work outside the
Southeast Florida region, in each case unless the Employee specifically consents
thereto; provided, however, Employee acknowledges that, upon the Board's
election of a Chairman of the Board, Employee shall cease serving in the
position of Interim Chairman of the Board and such cessation shall not
constitute a constructive termination hereunder."
3. The fourth sentence of Section 3.1 is hereby amended by deleting the
same in its entirety and substituting therefor the following:
"The parties hereto acknowledge and agree that (i) as of the Effective
Date of the Agreement, Employer owed Employee $32,578 for base salary and bonus
accrued but not paid during the fiscal year ending December 31, 2001 (the "Back
Pay") and (ii) as of date hereof, Employer has paid $10,000 of Back Pay to
Employee, and (iii) Employer shall pay to Employee the rest of the Back Pay in
twelve equal monthly installments of $1,881.50 commencing May 1, 2002, provided
that this obligation may be prepaid as the Employer's cash flow permits."
4. This First Amendment shall be governed by Florida law, and may be
executed in any number of counterparts and by facsimile. All executed
counterparts shall constitute one agreement notwithstanding that all signatories
are not signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the Employer and the Employee have executed and
delivered this First Amendment to Employment Agreement as of the day and year
first above written.
THE EMPLOYER:
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
By: /s/Ted Alflen
----------------------------------------
Name: Ted Alflen
Title: Director
THE EMPLOYEE:
/s/Christopher Tisi
----------------------------------------
Chris Tisi
2
Exhibit 10.22
FIRST AMENDMENT TO
------------------
SEVERANCE AGREEMENT
-------------------
This FIRST AMENDMENT TO SEVERANCE AGREEMENT (this "First Amendment") is
made and entered into as of this 29th day of April, 2002 and amends that certain
Severance Agreement (the "Agreement") effective as of January 1, 2002 by and
between HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC., a Florida corporation
("HNS", or the "COMPANY") and STEVEN POMERANTZ, an individual ("Pomerantz").
Terms used herein but not defined herein shall have the meanings given
them in the Agreement
WHEREAS, the parties to the Agreement desire to amend such Agreement as
set forth in this First Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
1. Section 3.3 is hereby amended and restated in its entirety to read
as follows:
"The parties hereto acknowledge and agree that (i) the Company owes
Pomerantz $23,443 for base salary and bonus accrued but not paid during the
fiscal year ending December 31, 2001 (the "Back Pay") and (ii) Employer shall
pay to Employee the Back Pay in twelve equal monthly installments of $1,953.58
commencing May 1, 2002."
2. All other terms and provisions of the Agreement remain in full force
and effect.
3. This First Amendment may be executed in any number of counterparts.
All executed counterparts shall constitute one agreement notwithstanding that
all signatories are not signatories to the original or the same counterpart.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the HNS and Pomerantz have executed this First
Amendment to Severance Agreement as of the day and year first above written.
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
By: /s/Christopher Tisi
---------------------------------------
Name: Christopher Tisi
Title:
/s/Steven Pomerantz
---------------------------------------------
Steve Pomerantz
2
Exhibit 10.25
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
-----------------------------------
UNDER
-----
1998 STOCK OPTION PLAN
----------------------
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into effective as of the 12th day of February, 2002, by and between
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC. (hereinafter referred to as the
"Company"), and Christopher Tisi (hereinafter referred to as the "Option
Holder").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the parties hereto hereby
agree as follows:
1. Grant Under 1998 Stock Option Plan. Subject to the terms and
conditions of this Agreement and the Company's 1998 Stock Option Plan (as
amended from time to time, the "Plan"), the Company hereby grants to the Option
Holder an option (the "Option") to purchase 50,000 shares (the "Option Shares")
of the Common Stock of the Company, $.001 par value per share (the "Common
Stock"), at the exercise price of $0.12 per share (the "Option Price"). The
Option is granted effective as of February 12, 2002 (the "Granting Date"). The
Option hereby granted shall expire thirty (30) days after the delivery of this
Agreement to the Option Holder unless the Option Holder signs and returns this
Agreement to the Company within said thirty (30) days.
2. Grant as Nonqualified Stock Option; Other Options. The Option is not
intended to qualify as an incentive stock option under Section 422(b) of the
Internal Revenue Code of 1986 (the "Code"). The Option is a Nonqualified Stock
Option as provided in the Plan. The Option is in addition to any other options
heretofore or hereafter granted to the Option Holder by the Company, but a
duplicate original of this instrument shall not effect the grant of another
option.
3. Vesting of Option. If the Option Holder has continued to be employed
or retained by the Company on the following dates, the Option Holder may
exercise the Option for the number of shares set forth opposite the applicable
date:
Date Number of Shares
---- ----------------
January 31, 2002 50,000
- ---------------------------------- -------------------------------
- ---------------------------------- -------------------------------
- ---------------------------------- -------------------------------
- ---------------------------------- -------------------------------
The foregoing rights are cumulative and, while the Option Holder
continues to be employed or retained by the Company, may be exercised up to and
including the date which is four (4) years from the Granting Date.
4. 1998 Stock Option Plan. The Option is granted pursuant to and is
governed in all respects by the Plan including, without limitation, Section 7
(Terms and Conditions of Options) and Section 8 (Terms and Conditions) of the
Plan. The rights of the Option Holder are subject to all of the terms and
conditions of this Agreement and the Plan, and the provisions of the Plan are
hereby incorporated by reference into this Agreement. In the event of any
conflict between the terms of this Agreement and the terms of the Plan, the
terms of the Plan shall control. The Option Holder hereby acknowledges receipt
of a copy of the Plan and agrees to be bound by all terms and provisions thereof
and further agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under this Agreement
or the Plan. Unless otherwise defined in this Agreement or unless the context
otherwise requires, capitalized terms used herein shall have the same meanings
as in the Plan.
5. Right of First Refusal. The Company shall have a right of first
refusal with respect to all of the Option Shares of Option Holder as provided in
Section 10 (Right of First Refusal) of the Plan.
6. Partial Exercise. Exercise of the Option up to the extent provided
in Section 3 above may be made in part at any time and from time to time within
the above limits.
7. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, the Option may be exercised by thirty (30) days' prior written
notice to the Company, at the principal executive office of the Company, or to
such transfer agent as the Company shall designate. Such notice shall state the
election to exercise the Option and the number of Option Shares in respect of
which it is being exercised and shall be signed by the person or persons so
exercising the Option. Such notice shall be accompanied by payment of the full
Option Price of such shares. The Option Price for all Option Shares shall be
payable in United States Dollars in cash or by check, or any combination of the
foregoing, equal in amount to the aggregate of the Option Price for all Option
Shares purchased. In no event shall the Company be required to issue any Option
Shares prior to admission of such shares to listing on any stock exchange on
which the Company's Common Stock may then be listed, and unless the Option
Shares are at that time effectively registered or, in the opinion of counsel for
the Company, exempt from registration under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and other federal and state laws and regulations having similar
requirements.
8. Agreement to Purchase for Investment. The Option Holder agrees that
unless otherwise consented to in writing by the Company, the Option Shares will
be purchased for investment only and not with any intention to resell or
distribute the same and that upon the exercise of the Option or any part thereof
the Option Holder will deliver to the Company a representation in writing, in
such form as the Company shall require, that the Option Shares are being
acquired for investment purposes only and will not be resold except in
compliance with 1933 Act and in compliance with all other federal and state
securities laws.
9. Legend. The certificates representing the Option Shares will bear a
conspicuous legend in substantially the following form:
The securities represented by this certificate have been
acquired for investment purposes only and have not been
registered under the Securities Act of 1933, as amended, or
under applicable state securities laws. Such securities may
not be sold, transferred, pledged or hypothecated unless the
registration provisions of said laws have been complied with
or unless approved by the Company, which approval may be
conditioned upon receipt of an opinion of counsel (acceptable
to the Company) that such registration is not required.
Transfer of these securities is further restricted by the
terms of a Stock Option Agreement between the Company and the
holder hereof.
2
10. Option Not Transferable. The Option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Option Holder's lifetime only the Option Holder shall have the right to exercise
the Option.
11. No Obligation to Exercise Option. The grant and acceptance of the
Option imposes no obligation on the Option Holder to exercise it.
12. No Rights as Stockholder until Exercise. The Option Holder shall
have no rights as a stockholder with respect to Option Shares subject to this
Agreement until a stock certificate therefor has been issued to the Option
Holder and such Option Shares are fully paid for. Except as is expressly
provided in the Plan with respect to certain changes in the capitalization of
the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate is issued.
13. Withholding Taxes. If any portion of the Option is treated as a
Nonqualified Stock Option, the Option Holder hereby agrees that the Company may
withhold from the Option Holder's wages the appropriate amount of federal, state
and local withholding taxes attributable to the Option Holder's exercise of such
Nonqualified Stock Option. At the Company's discretion, the amount required to
be withheld may be withheld in cash from such wages, or (with respect to
compensation income attributable to the exercise of the Option) in kind from the
Common Stock otherwise deliverable to the Option Holder on exercise of the
Option. The Option Holder further agrees that, if the Company does not withhold
an amount from the Option Holder's wages sufficient to satisfy the Company's
withholding obligation, the Option Holder will reimburse the Company on demand,
in cash, for the amount underwithheld.
14. Cancellation of Options. The Committee may, in its sole discretion,
in cases involving a serious breach of conduct by an Option Holder or activity
of an Option Holder in competition with the business of the Company, cancel the
Option, whether or not vested, in whole or in part. Such cancellation shall be
effective as of the date specified by the Committee. Without limitation,
activities which shall constitute a serious breach of conduct include: (i) the
disclosure or misuse of confidential information or trade secrets; (ii)
activities in violation of the Company's policies; (iii) the violation or breach
of any material provision in any employment contract or other agreement between
the Option Holder and the Company; (iv) engaging in conduct relating to the
Option Holder's employment with or retention by the Company for which either
criminal or civil penalties may be sought; and (v) engaging in activities which
adversely affect or which are inimical, contrary or harmful to the interests of
the Company or its business operations. The determination of whether an Option
Holder has engaged in a serious breach of conduct or activity in competition
with the business of the Company shall be determined by the Committee in good
faith and in its sole discretion.
15. Lock-up Agreement. The Option Holder agrees that the Option Holder
will not, for a period of at least 120 days following the effective date of the
Company's initial distribution of securities in an underwritten public offering
to the general public pursuant to a registration statement filed with the
Securities and Exchange Commission, directly or indirectly, sell, offer to sell
or otherwise dispose of the Company's securities other than any securities which
are included in such initial public offering.
16. Integrated Agreement. This Agreement and the Plan constitute the
entire understanding and agreement of the Option Holder and the Company with
respect to the subject matter contained herein and therein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Option Holder and the Company other than those as set forth or provided for
herein and therein. To the extent contemplated herein and therein, the
provisions of this Agreement and the Plan shall survive any exercise of the
Option and shall remain in full force and effect.
3
17. Right of Company to Terminate Services. Nothing herein contained
shall affect the right of the Company to terminate the Option Holder's services,
responsibilities or duties or his authority to represent the Company at any time
for any reason whatsoever, subject to other written agreements with the Option
Holder, if any.
18. Enumeration and Headings. The enumeration and headings contained in
this Agreement are for convenience of reference only and shall not control or
affect the meaning or construction of any of the provisions of this Agreement.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same agreement.
20. Governing Law. This Agreement and the respective rights and
obligations of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to its
conflicts of laws provisions.
IN WITNESS WHEREOF the Company and the Option Holder have caused this
Agreement to be executed as of the day and year first above written.
COMPANY:
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
By: /s/Ted Alflen
--------------------------------------------
Title: Director
--------------------------------------------
OPTION HOLDER:
/s/Christopher Tisi
---------------------------------------------
Signature
Christopher Tisi
---------------------------------------------
Print Name
3750 Investment Lane
---------------------------------------------
Street Address
West Palm Beach, FL 33404
---------------------------------------------
City State Zip
---------------------------------------------
Social Security Number
4