As filed with the U.S. Securities and Exchange Commission on October 30, 2000
File No. ______________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Enova Holdings, Inc.
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(Exact name of Registrant as specified in its charter)
Nevada 33-0803552
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1196 E. Willow Street, Long Beach, CA 90806
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(Address of Principal Executive Offices, including ZIP Code)
Enova Holdings Inc. 2000 Stock Option Plan
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(Full title of the plan)
Fred Cohn, 1196 E. Willow Street, Long Beach, CA 90806
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(Name and address of agent for service)
(562) 426-1321
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(Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum Amount of
Title of Securities Amount of Maximum Aggregate Registration
to be Registered Shares to be Offering Offering Fee
Registered Price Per Share(1) Price(1)
$.001 par value
common stock 2,000,000 $.001 $2,000 $.53
Total $.001 $2,000 $.53
2,000,000
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(1) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act. However, since Enova Holdings, Inc. is not yet trading
and the book value of the shares is a negative number, we have used the
par value as the proposed maximum offering price per share in this
calculation.
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PROSPECTUS
ENOVA HOLDINGS, INC.
2,000,000 Shares of Common Stock underlying
Enova Holdings, Inc. 2000 Stock Option Plan
This Prospectus relates to the offer and sale by Enova Holdings,
Incorporated, a Nevada corporation ("Enova"), of shares of its $.001 par value
per share common stock (the "Common Stock") to certain eligible key employees,
consultants, directors and officers (the "Consultants") pursuant to Enova
Holdings, Inc. 2000 Stock Option Plan (the "Stock Option Plan"). Enova is
registering hereunder and then issuing, as a bonus and/or option, to the
Consultants, 2,000,000 shares of the Common Stock under the Stock Option Plan in
consideration for services rendered.
The Common Stock is not subject to any restriction on transferability.
Recipients of shares other than persons who are "affiliates" of Enova within the
meaning of the Securities Act of 1933 (the "Act") may sell all or part of the
shares in any way permitted by law, including sales in the over-the-counter
market at prices prevailing at the time of such sale. An affiliate is summarily,
any director, executive officer or controlling shareholder of Enova. The
"affiliates" of Enova may become subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which would limit their
discretion in transferring the shares acquired in Enova. If the Consultant who
is not now an "affiliate" becomes an "affiliate" of the Enova in the future, he
would then be subject to Section 16(b) of the Exchange Act.
These Securities Have Not Been Approved Or Disapproved By The
Securities And Exchange Commission Nor Has The Commission
Passed Upon The Accuracy Or Adequacy Of This Prospectus. Any
Representation To The Contrary Is A Criminal Offense.
The date of this Prospectus is October 27, 2000
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This Prospectus is part of a Registration Statement which was filed and
became effective under the Securities Act of 1933, as amended (the "Securities
Act"), and does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations promulgated by the U.S. Securities and Exchange Commission (the
"Commission") under the Securities Act. The statements in this Prospectus as to
the contents of any contracts or other documents filed as an exhibit to either
the Registration Statement or other filings by Enova with the Commission are
qualified in their entirety by the reference thereto.
A copy of any document or part thereof incorporated by reference in
this Prospectus but not delivered herewith will be furnished without charge upon
written or oral request. Requests should be addressed to: Enova Holdings, Inc.,
1196 E. Willow Street, Long Beach, CA 90806. Enova's telephone number is (562)
426-1321.
Enova is subject to the reporting requirements of the Exchange Act and
in accordance therewith files reports and other information with the Commission.
These reports, as well as the proxy statements, information statements and other
information filed by Enova under the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W. Washington D.C. 20549. Copies may be obtained at the prescribed
rates.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representation must not be relied upon as having
been authorized by Enova. This Prospectus does not constitute an offer or a
solicitation by anyone in any state in which such is not authorized or in which
the person making such is not qualified or to any person to whom it is unlawful
to make an offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has not been a
change in the affairs of Enova since the date hereof.
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TABLE OF CONTENTS
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS 6
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ITEM 1.PLAN INFORMATION 6
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DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION 7
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ITEM 2.REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION 7
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INFORMATION REQUIRED IN THE REGISTRATION STATEMENT 8
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ITEM 3.INCORPORATION OF DOCUMENTS BY REFERENCE 8
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ITEM 4.DESCRIPTION OF SECURITIES 9
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ITEM 5.INTERESTS OF NAMED EXPERTS AND COUNSEL 9
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS 9
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ITEM 7.EXEMPTION FROM REGISTRATION CLAIMED 9
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ITEM 8.EXHIBITS 10
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ITEM 9.UNDERTAKINGS 10
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SIGNATURES 12
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EXHIBIT INDEX 13
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
GENERAL INFORMATION
Enova Holdings Inc.
Enova has its principal executive offices at: 1196 E. Willow Street,
Long Beach, California 90806.
Purposes
The Common Stock is to be issued by Enova pursuant to the Enova
Holdings, Inc. 2000 Stock Option Plan (the "Stock Option Plan"), approved by the
Board of Directors of Enova (the "Board of Directors"). The Stock Option Plan is
intended to provide a method whereby Enova may provide an increased incentive
for individuals to render services to Enova in the future and to exert maximum
effort for the success of Enova's business, thereby advancing the interests of
Enova, and all of its shareholders. The Stock Option Plan is effective from
January 3, 2000 and continues to December 31, 2010. A copy of the Stock Option
Plan has been filed as an exhibit to this Registration Statement.
Common Stock
The Board of Directors has authorized the issuance of up to 2,000,000
shares of the Common Stock underlying the Stock Option Plan upon effectiveness
of this Registration Statement.
The Consultants
Pursuant to the Stock Option Plan, Enova's Board of Directors or
Committee shall grant the right to receive Common Stock to the Consultants for
services rendered to, or to be rendered to, or on behalf of, Enova, such that
the fair market value of the Shares approximates the fair market value of
services as determined at the discretion of the Board of Directors.
No Restrictions on Transfer
The Consultants will become the record and beneficial owners of the
shares of Common Stock upon issuance and delivery and are entitled to all of the
rights of ownership, including the right to vote any shares awarded and to
receive ordinary cash dividends on the Common Stock.
Tax Treatment to the Consultant
The Common Stock is not qualified under Section 401(a) of the Internal
Revenue Code. The Consultants, therefore, will be required for federal income
tax purposes to recognize ordinary income during the taxable year in which the
first of the following events occurs: (a) the shares become freely transferable,
or (b) the shares cease to be subject to a substantial risk of forfeiture.
Accordingly, absent a specific contractual provision to the contrary, the
Consultants will receive compensation taxable at ordinary rates equal to the
fair market value of the shares on the date of receipt since there will be no
substantial risk of forfeiture or other restrictions on transfer. If, however,
the Consultant receives shares of common stock pursuant to the exercise of an
option or options at an exercise price below the fair market value of the shares
on the date of exercise, the difference between the exercise price and the fair
market value of the stock on the date of exercise will be deemed ordinary income
for federal income tax purposes. The Consultants are urged to consult each of
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their tax advisors on this matter. Further, if any recipient is an "affiliate,"
Section 16(b) of the Exchange Act is applicable and will affect the issue of
taxation.
Tax Treatment to Enova
The amount of income recognized by any recipient hereunder in
accordance with the foregoing discussion will be an expense deductible by Enova
for federal income tax purposes in the taxable year of Enova during which the
recipient recognizes income.
Restrictions on Resales
In the event that an affiliate of Enova acquires shares of Common Stock
hereunder, the affiliate will be subject to Section 16(b) of the Exchange Act.
Further, in the event that any affiliate acquiring shares hereunder has sold or
sells any shares of Common Stock in the six months preceding or following the
receipt of shares hereunder, any so called "profit", as computed under Section
16(b) of the Exchange Act, would be required to be disgorged from the recipient
to Enova. Services rendered have been recognized as valid consideration for the
"purchase" of shares in connection with the "profit" computation under Section
16(b) of the Exchange Act. Enova has agreed that for the purpose of any "profit"
computation under 16(b) the price paid for the common stock issued to affiliates
is equal to the value of services rendered. Shares of Common Stock acquired
hereunder by persons other than affiliates are not subject to Section 16(b) of
the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION
Enova hereby incorporates by reference (i) its annual report on Form
10-KSB (or 10-SB) for the year ended December 31, 1999, filed pursuant to
Section 13 of the Exchange Act, (ii) any and all Quarterly Reports on Forms 10-Q
(or 10-QSB or 8K) which were not reviewed by independent certified public
accountants, filed under the Securities or Exchange Act subsequent to the filing
of Enova's Annual Report on Form 10-K (or 10-SB) for the fiscal year ended
December 31, 1999, as well as all other reports filed under Section 13 of the
Exchange Act, and (iii) its annual report, if any, to shareholders delivered
pursuant to Rule 14a-3 of the Exchange Act. In addition, all further documents
filed by Enova pursuant to Section 13, 14, or 15(d) of the Exchange Act prior to
the termination of this offering are deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing. All documents
which when together, constitute this Prospectus, will be sent or given to
participants by the Registrant as specified by Rule 428(b)(1) of the Securities
Act.
Item 2. Registrant Information and Employee Plan Annual Information
A copy of any document or part thereof incorporated by reference in
this Registration Statement but not delivered with this Prospectus or any
document required to be delivered pursuant to Rule 428(b) under the Securities
Act will be furnished without charge upon written or oral request. Requests
should be addressed to: Enova Holdings, Inc., 1196 E. Willow Street, Long Beach,
California 90806.
7
Legal Opinion and Experts
Richard O. Weed has rendered an opinion on the validity of the
securities being registered. Mr. Weed is not an "affiliate" of Enova. He does
not currently own any shares of Enova's common stock.
The consolidated financial statements of Enova Holdings, Inc., incorporated by
reference in Enova's Form 10-SB, for the year ended December 31, 1999 have been
audited by Weinberg & Company, P.A., independent auditors, as set forth in their
report incorporated herein by reference, and are incorporated herein in reliance
upon such report given upon the authority of the firm as experts in auditing and
accounting.
Indemnification of Officers and Directors
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
registrant pursuant to the foregoing provisions, or otherwise, registrant has
been advised that in the opinion of the Securities 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 registrant of expenses
incurred or paid by a director, officer of controlling person of 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, 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 is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Registrant hereby states that (i) all documents set forth in (a)
through (c), below, are incorporated by reference in this registration
statement, and (ii) all documents subsequently filed by registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
(a) Registrant's latest Annual Report, whether filed pursuant
to Section 13(a) or 15(d) of the Exchange Act;
(b) 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 annual
report referred to in (a), above; and
(c) The latest prospectus filed pursuant to Rule 424(b) under
the Securities Act.
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Item 4. Description of Securities
No description of the class of securities (i.e. the $.001 par value
Common Stock) is required under this item because the Common Stock is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel
Mr. Weed does not presently own any shares of Enova's common stock.
Item 6. Indemnification of Directors and Officers
Under Nevada law, a corporation may indemnify its officers, directors,
employees and agents under certain circumstances, including indemnification of
such person against liability under the Securities Act of 1933. A true and
correct copy of Section 78.7502 of Nevada Revised Statutes that addresses
indemnification of officers, directors, employees and agents is attached hereto
as Exhibit 99.1.
In addition, Section 78.037 of the Nevada Revised Statutes and Enova's
Articles of Incorporation and Bylaws provide that a director of this corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages due to breach of fiduciary duty as a director for actions made
in good faith and in reasonable belief that the action or actions were in the
best interest of the corporation, except for liability (a) for acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law; or
(b) for the payments of distribution in violation of Nevada Revised Statute
78.300.
The effect of these provisions may be to eliminate the rights of Enova
and its stockholders (through stockholders' derivative suit on behalf of Enova)
to recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (a) - (b) of the
preceding paragraph.
Item 7. Exemption from Registration Claimed
Not applicable.
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Item 8. Exhibits
(a) The following exhibits are filed as part of this registration
statement pursuant to Item 601 of Regulation S-B and are specifically
incorporated herein by this reference:
Exhibit No. Title
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5.1 Opinion of Counsel re: Legality
10.1 The Enova Holdings Inc. 2000 Stock Option Plan
23.1 Consent of Richard O. Weed, special counsel to
registrant, to the use of his opinion with respect to
the legality of the securities being registered hereby
and to the references to him in the Prospectus filed
as a part hereof.
23.2 Consent of Weinberg & Company, P.A.
99.1 Section 78.7502 of Nevada Revised Statutes
Item 9. Undertakings
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 to:
(i) include any prospectus required by Section 10 (a) (3)
of the Securities Act;
(ii) 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, represents a
fundamental change in the information set forth in the
registration statement; and
(iii) 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, paragraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective
amendment by those paragraph is incorporated by reference from
period reports filed by the registrant small business issuer
under the Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to 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.
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(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.
(4) To deliver or cause to be delivered with the prospectus, to
each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14e-3 under the
Securities Exchange Act of 1934; and, where interim financial
information require to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause
to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of registrant's annual
report pursuant to Section 13(a) of the Securities Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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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 has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Long Beach, State of California on October 27, 2000.
ENOVA HOLDINGS, INC.
(Registrant)
By: /s/ Dr. Alan V. Phan
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Dr. Alan V. Phan, Chairman
Pursuant to the requirements of the 1933 Act, this registration
statement or amendment has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
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/s/ Dr. Alan Phan Director, October 27, 2000
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Dr. Alan Phan Chairman of the Board
/s/ Manu Ohri Director October 27, 2000
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Manu Ohri President
/s/ Fred Cohn Director, Chief Executive October 27, 2000
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Fred Cohn Officer, Secretary
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FORM S-8 REGISTRATION STATEMENT
EXHIBIT INDEX
The following Exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-B and are specifically incorporated herein
by this reference:
Exhibit
Number in
Registration
Statement Description Page
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5.1 Opinion of Counsel 14
10.1 Enova Holdings, Inc. 2000 Stock Option Plan 16
23.1 Consent of Richard O. Weed to Use of Opinion 25
23.2 Consent of Independent Auditors, Weinberg & Company, P.A. 26
99.1 Section 78.7502 of Nevada Revised Statutes 27
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EXHIBIT 5.1
OPINION OF COUNSEL
WEED & CO. L.P.
4695 MACARTHUR COURT, SUITE 1450, NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
EMAIL: SPECIALPROJECTCOUNSEL@MSN.COM
WRITER'S DIRECT NUMBER
(949) 475-9086, EXT. 6
October 27, 2000
Board of Directors
Enova Holdings, Inc.
1196 E. Willow Street
Long Beach, CA 90806
RE: Form S-8 Registration Statement
Dear Members of the Board:
As special project counsel to Enova Holdings, Incorporated, a Nevada
corporation (the "Company"), in connection with that certain Form S-8
registration statement dated October 27, 2000, I have been asked to provide an
opinion of counsel as to the legality of the securities being registered,
indicating whether they will, when sold, be legally issued, fully paid and
non-assessable.
I am of the opinion that:
1. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Nevada, the jurisdiction of its incorporation,
2. The terms and provisions of the common stock conform to the
description thereof contained in the registration statement, and
the form of the stock certificates used to evidence the common
stock are in good and proper form and no stockholder is entitled
to preemptive rights to subscribe for or purchase any of the
common stock,
3. The issuance and the sale of the shares of common stock has been
duly and validly authorized and the securities will, when sold,
be duly legally issued, fully paid and non-assessable shares of
common stock of the Company.
This opinion is limited to matters existing as of this date and no
responsibility is assumed to advise you of changes (factual or legal) which may
hereafter occur, whether deemed material or not.
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This opinion is not to be used, circulated, quoted or otherwise
referred to in whole or in part for any other purpose, except as set forth in my
consent.
Very truly yours,
/s Richard O. Weed
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Richard O. Weed
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EXHIBIT 10.1
ENOVA HOLDINGS INC.
2000 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of ENOVA HOLDINGS INC. ("Company")
2000 Stock Option Plan ("PLAN") is to encourage ownership of the common
stock of Company, by eligible key employees, directors, and officers
providing service to the Company and its subsidiaries and licensees,
and to provide increased incentive for such employees and other persons
to render services to the Company and its subsidiaries in the future
and to exert maximum effort for the success of the business of the
Company and its subsidiaries.
2. DEFINITIONS. As used herein, and in any Option granted hereunder, the
following definitions shall apply:
a) "Board" shall mean the Board of Directors of the Company.
b) "Common Stock" shall mean the common stock of the Company or any
other class of shares of capital stock which has the right to
participate in assets available for distribution to shareholders
after the preferences of all other classes of capital stock has
been satisfied.
c) Company" shall mean ENOVA HOLDINGS INC.
d) "Committee" shall mean the Committee appointed by the Board in
accordance with paragraph (a) Section 3 of the Plan. If no
Committee is appointed, the term "Committee" shall refer to the
Board.
e) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment
by the Company or any Subsidiary. Continuous Employment shall not
be considered interrupted in the case of sick leave, military leave
or any other leave of absence approved by the Company or in the
case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.
f) "Employee" shall mean any person, including officers, directors,
employees and consultants, employed by the Company or any
Subsidiary on either a full-time or part-time basis.
g) "Incentive Stock Option" shall mean any Option granted under this
Plan, or any other option granted to an Employee, which complies
with the provisions of Section 422A of the United States Internal
Revenue Code of 1986, as amended from time to time (herein called
the "Code").
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h) "Non-Qualified Stock Option" shall mean any Option granted under
this Plan which does not qualify in whole or in part as an
"incentive stock option" under the provision of Section 422A of the
Code.
i) "Option" shall mean a stock option granted pursuant to the Plan.
j) "Optioned Shares" shall mean the Common Stock subject to an Option
granted pursuant to the Plan.
k) "Optionee" shall mean a person who receives an Option under the
plan.
l) "Plan" shall mean this 1995 Stock Option Plan.
m) "Share" shall mean a share of the Common Stock as adjusted in
accordance with Section 6(i) of the Plan.
n) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing 50 percent or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.
3. ADMINISTRATION OF THE PLAN.
a) PROCEDURE. The Plan shall be administered by the Board. The Board
may appoint a Committee consisting of not less than two members of
the Board to administer the Plan on behalf of the Board, subject to
such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until serve until
otherwise directed by the Board. From time to time, the Board may
increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new
members in substitutions therefore, fill vacancies, however caused,
and remove all members of the Committee and, thereafter, directly
administer the Plan.
Members of the Board or Committee who are either eligible for
Options or have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any Options
pursuant to the Plan; provided that no such member shall act upon
the granting, amendment or modification of an Option to himself, but
any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which
action is taken with respect to the granting of an Option to him.
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b) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock;
(ii) to determine the exercise price of Options to be granted (which
price, in the case of Incentive Stock Options, shall be not less
than the minimum specified in Section 6(b) hereof), the Employees to
whom and the time or times at which Options shall be granted, and
the number of Shares to be represented by each Option; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and
regulations relating to the Plan, (v) to determine the terms and
provisions of each Option granted under the Plan (which need not be
identical and, with the consent of the holder thereof, to modify or
amend any Option; (vi) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an
Option previously granted by the Committee, and (vii) to make all
other determinations deemed necessary or advisable for the
administration of the Plan.
EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all
Optionees and any other holders of any other holders of any Options
granted under the Plan.
4. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in paragraph
6(h) and 6(1) hereof and to the provisions of Section 9 hereof, a total of
two million (2,000,000) shares of Common Stock shall be subject to the Plan.
The Shares subject to the Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company, and such amount
of shares shall be made available (for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding
Options at the termination of the Plan shall cease to be reserved (for the
purpose of the Plan, but until termination of the Plan the Company shall
make available a sufficient number of shares to meet the requirements of the
Plan, but until termination of the Plan shall cease to be reserved for the
purpose of the Plan, but until termination of the Plan the Company shall
make available a sufficient number of shares to meet the requirements of the
Plan. Should any Option expire or be canceled prior to its exercise in full,
the shares theretofore subject to such Option may again be made subject to
an Option under the Plan.
5. ELIGIBILITY.
a) Incentive Stock Options under the Plan may be granted only to
Employees for a reason connected with their employment by the
Company or any Subsidiary. Non- Qualified Stock Options may be
granted under the Plan to Employees for reason connected with
their employment or other service to the Company or any
Subsidiary. An Employee who has been granted an Incentive
Stock Option or a Non- Qualified Stock Option, if he or she is
otherwise eligible, may be granted additional Incentive Stock
Options or Non-Qualified Stock Options.
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b) The aggregate fair market value (determined at the time an
Incentive Stock Option is granted) of the Common Stock with
respect to which any Incentive Stock Option may be exercisable
for the first time by an Optionee during any calendar year
(under this Plan and any other stock option plans of the
Company and its Subsidiaries) shall not exceed $100,000.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, (or shall it interfere in any way
with his right or the Company's right to terminate his employment or other
position at any time.
6. TERMS AND CONDITIONS. Each Option granted under the Plan shall be evidenced
by an agreement, in a form approved by the Committee, which shall be subject
to the following express terms and conditions and to such other terms and
conditions as the Committee may deem appropriate.
a) OPTION PERIOD. Each option agreement shall specify the period
for which the Option thereunder is granted (which in no event
shall exceed ten years from the date of grant) and shall
provide that the Option shall expire at the end of such
period. In the outstanding stock of the Company (determined in
accordance with Section 425(d) of the Code) on the date the
Incentive Stock Option is granted to him, the option period
shall not exceed five years from the date of grant.
b) OPTION PERIOD. The purchase price of each share of Common
Stock subject to each Option granted pursuant to the Plan
shall be determined by the Committee at the time the Option is
granted. In the case of Incentive Stock Options, such purchase
price shall not be less that the fair market value of a share
of Common Stock on the date the Option is granted, as
determined by the Committee; provided, however, that in the
case of an Incentive Stock Option granted to an Optionee who
owns more than ten percent (10%) of the outstanding stock of
the Company (determined in accordance with Section 425(d) of
the Code) on the date Option is granted to him, the option
price shall not be less that 110% of the fair market value of
a share of Common Stock on such date.
c) EXERCISE PERIOD. No part of any Option may be exercised until
the Optionee shall have remained in the employ of the Company
or any of its Subsidiaries for such period after the date on
which the Option is granted as the Committee may specify in
the option agreement.
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d) PROCEDURE FOR EXERCISE. Options shall be exercised by the
delivery of written notice to the Company setting forth the
number of shares with respect to which the Option is to be
exercised. An Option may not be exercised for fractional
shares. Unless stock of Company is used to acquire such shares
in accordance with paragraph 6(k), such notice shall be
accompanied by cash or certified check, bank draft, or postal
or express money order payable to the order of the Company for
an amount equal to the Option price of such shares and
specifying the address to which the certificates for such
shares are to be mailed. As promptly as practicable after
receipt of such written notification and payment, the Company
shall deliver to the Optionee certificates for the number of
shares with respect to which such Option has been so
exercised, issued in the Optionee's name; provided, however,
that such delivery shall be deemed effected for all purposes
when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail,
addressed to the Optionee, at the address specified pursuant
to this paragraph 6(d). Until the issuance of the stock
certificates, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the
optioned shares.
e) Termination of Employment. If an Optionee to whom an Option
has been granted ceases to be employed by the Company or any
of it's Subsidiaries for any reason other than death or
disability, the options granted to him shall thereupon
terminate except as otherwise provided in any written contract
of employment entered into between the Optionee and the
Company or any Subsidiary prior to the termination of
employment.
f) Disability or Death of Optionee. In the event of the
disability or death of the holder of an Option under the plan
while he is employed by the Company or any of its
Subsidiaries, the Options previously granted to him may be
exercised (to the extent he would have been entitled to do so
at the date of his disability or death) at any time and from
time to time, within a period of one year after his disability
or death, by the Optionee, by the executor or administrator of
his estate or by the person or persons to whom his rights
under the Option shall pass by will or the laws of descent and
distribution, but in no event may the Option be exercised
after its expiration. An employee shall be deemed to be
disabled if, in the opinion of a physician selected by the
Committee, he is incapable of performing services for the
Company or any of its subsidiaries by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and
indefinite duration lasting not less than 12 months.
g) No Rights as Stockholder. No Optionee shall have any rights as
a stockholder with respect to shares covered by an Option
until the date of issuance of a stock certificate for such
shares; except as provided in paragraphs 6(h) or 6(i), no
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adjustment for dividends, or otherwise, shall be made if the
record date therefore is prior to the date of issuance of such
certificate.
h) Extraordinary Corporate Transactions; Adjustment for
Recapitalization, Merger. etc. If the Company is dissolved or
liquidated, or is merged or consolidated into or with another
corporation, other than by a merger or consolidation in which
the Company is the surviving corporation, the then exercisable
but unexercised Options granted under the Plan shall not be
exercisable after date of such dissolution, liquidation,
merger or consolidation, unless such other surviving
corporation makes provision for adoption of the Plan and the
assumption of the company's obligations thereunder.
Notwithstanding any provision of this Plan, the Committee is authorized
to take such action as it determines to be necessary or advisable, and fair and
equitable to Optionees, with respect to Option held by Optionees in the event of
a sale or transfer of all or substantially all of the Company's assets, or
merger or consolidation (other than a merger or consolidation in which the
Company is the surviving corporation and no shares are converted into or
exchanged for securities, cash or any other thing of value).
Such action may include (but is not limited to) the following:
(A) Accelerating the vesting of any Option to permit
its exercise in full during such period as the
Committee in its sole discretion shall prescribe
following the public announcement of a sale or
transfer of assets or merger or consolidation.
(B) Permitting an Optionee, at any time during such
period as the Committee in its sole discretion
shall prescribe following the consummation of
such a merger, consolidation or sale or transfer
of assets, to surrender any Option (or any
portion thereof to the Company for cancellation.
(C) Requiring any Optionee, at any time following the
consummation of such a merger, consolidation or
sale or transfer of assets, if required by the
terms of the agreements relating thereto, to
surrender any Option (or any portion thereof) to
the Company in return for a substitute Option
which is issued by the corporation surviving such
merger or consolidation or the corporation which
acquired such assets (or by an affiliate of such
corporation) and which the Committee, in its sole
discretion, determines to have a value to the
Optionee substantially equivalent to the value to
the Optionee of the Option (or portion thereof)so
surrendered.
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Subject to any action which the Committee may take pursuant to the
provisions of this paragraph 6(h) and paragraph 6(i), in the event of any
merger, consolidation or sale or transfer of assets referred to in this
paragraph 6(h) or paragraph 6(i), upon any exercise thereafter of an Option, an
Optionee shall, at no additional cost other than payment of the exercise price
of the Option, be entitled to receive in lieu of Shares, (1) the number and
class of Shares or other security, or (2) the amount of cash, or (3) property,
or (4) a combination of the foregoing, to which the Optionee would have been
entitled pursuant to the terms of such merger, consolidation or sale or transfer
of assets, if immediately prior thereto the Optionee had been the holder of
record of the number of Shares for which such Option shall be so exercised.
i) Changes in Company's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or
power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalization, reorganization or
other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or
any issuance of Common Stock or subscription rights thereto,
or any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. Provided,
however, that if the outstanding shares of common Stock of the
Company shall at any time be changed or exchanged by
declaration of a stock dividend, stock split, combination of
shares, or recapitalization, the number and kind of shares
subject to the Plan or subject to any Options theretofore
granted, and the option prices, shall be appropriately and
equitably adjusted so as to maintain the proportionate number
of shares without changing the aggregate option price.
j) Investment Representation. Each option agreement shall contain
an agreement that, upon demand by the Committee for such a
representation, the Optionee [or any person acting under
paragraph 6(f)] shall deliver to the Committee at the time of
any exercise of an Option a written representation that the
shares to be acquired upon such exercise are to be acquired
for investment and not for resale or with a view to the
distribution thereof.
Upon such demand, delivery of such a representation prior to the
delivery of any shares issued upon exercise of an Option and prior to the
expiration of the option period shall be a condition precedent to the right of
the Optionee or such other person to purchase any shares.
k) Payment with Stock. Subject to approval of the Committee, an
Employee may pay for any shares of Common Stock with respect
to which an Option has been exercised by tendering to the
Company other shares of Common Stock at the time of the
exercise of such Option, provided, however, that at the time
of such exercise, the Company shall have a Committee
consisting of three or more disinterested directors who shall
22
approve the payment for option shares with other shares. The
certificates representing such other shares of Common stock
must be accompanied by a stock power duly executed with
signature guaranteed. The value of Common Stock so tendered
shall be determined by the Committee in its sole discretion.
The Committee may, in its sole and absolute discretion, refuse
any tender of shares of Common Stock, in which case it shall
deliver the tendered shares of Common Stock back to the
employee and notify the employee of such refusal.
l) Options Not Transferable. No Option or interest or right
therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or
any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted
disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 6(l) shall
prevent transfers by will or by the applicable laws of descent
and distribution, or transfers made with the express written
authorization of the Committee, whose authorization may be
withheld at its absolute discretion.
7. Amendments or Terminations. The Board of Directors may amend, alter or
discontinue the Plan, but not amendment or alteration shall be made which
would impair the rights of any participant under any Option theretofore
granted without his consent, or which without the approval of the
shareholders, would: (i) except as is provided in paragraphs 6(b) and 6(1)
of the Plan, increase the total number of shares reserved for the purposes
of the Plan or decrease the option price provided for in paragraph 6(b) of
the Plan, (ii) change the class of persons eligible to participate in the
Plan as provided in paragraph 5 of the Plan, (iii) extend the option period
provided for in paragraph 6(a) of the Plan, or (iv) extend the expiration
date of this Plan set forth in paragraph 9 of the Plan.
8. Compliance with Other Laws and Regulations. The Plan, the grant and exercise
of Options thereunder, and the obligation of the Company to sell and deliver
shares under such Options, shall be subject to all applicable federal and
state laws, rules and regulations and to such approvals by the governmental
or regulatory agency as may be required. The Company shall not be required
to issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any
federal or state law, or any ruling or regulation of any government body
which the Company shall, in its sole discretion, determine to be necessary
or advisable. Further, it is the intention of the Company that the Plan
comply in all respects with the provision of Rule 16b- 3 of the United
States Securities and Exchange Act of 1934, as amended. If any Plan
provision is found or determined not to be in compliance with such Rule
16b-3 of the United States Securities and Exchange Act of 1934, as amended.
If any Plan provision is found or determined not to be in compliance with
such Rule 16b-3 the provision shall be deemed null and void.
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9. Effectiveness and Expiration of Plan. The Plan shall be effective on January
3, 2000, the date the Board of Directors of the Company initially adopted
the Plan, subject to the express condition that stockholders of the Company
shall have approved and ratified the Plan within one year thereafter. For
the purpose of granting Options hereunder, this Plan shall expire on
December 31, 2010, ten years after the effective date of the Plan and
thereafter no Option shall be granted pursuant to the Plan.
10. Cancellation and Issuance. The Committee may, as it's sole discretion,
subject to the provision of the Plan, cancel outstanding Option and issue
replacement Options under the Plan under terms and at exercise prices it
deems beneficial to the Company and the Optionees, to further the purposes
of the Plan. Notwithstanding this paragraph 10, no Option may be canceled,
or otherwise amended or modified, without the written consent of the
Optionee.
APPROVED THIS EFFECTIVE DAY THIS 25TH DAY OF SEPTEMBER BY THE BOARD OF DIRECTORS
/s/ Dr. Alan Phan
--------------------
Dr. Alan Phan, Director
/s/ Manu Ohri
--------------------
Manu Ohri, Director
/s/ Fred Cohn
--------------------
Fred Cohn, Director
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