As filed with the Securities and Exchange Commission on January 20, 2004
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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POWER3 MEDICAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
65-0565144
(IRS Employer Identification Number)
8374 Market Street, # 439
Bradenton, Florida 34202
(Address of principal executive offices)
Timothy S. Novak, Chairman & CEO
Power3 Medical Products, Inc.
8374 Market Street, # 439
Bradenton, Florida 34202
(Name and address of agent for service)
(941) 360-3039
(Telephone number, including area code of agent for service)
2004 Directors, Officers and Consultants
Stock Option, Stock Warrant and Stock Award Plan
(Full title of the Plans)
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CALCULATION OF REGISTRATION FEE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price per aggregate offering Amount of
be registered Registered(1) share(2) price(2) registration fee(3)
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Common Stock,
$.001 par value 6,000,000 $0.33 $1,980,000.00 $182.16
Warrants 2,000,000 $.50 $1,000,000.00 $92.00
---------------------- ----------------------
TOTAL 8,000,000 $274.16
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
(1) Includes Common Stock underlying Warrants plus such indeterminate
number of shares of Common Stock of the Registrant as may be issuable
by reason of the anti-dilution provisions of the Plan.
(2) Pursuant to Rule 457(h) under the Securities Act of 1933, as amended,
the registration fee was computed on the basis of the market value of
the shares of Common Stock underlying the Warrants to be registered
hereby estimated in accordance with Rule 457(c), solely for the purpose
of computing the registration fee, on the basis of the average of the
high and low sales prices per share of Common Stock of the Registrant
on January 15, 2004.
(3) The offering price is based upon the exercise price of the warrants
pursuant to Rule 457(f)(2).
PART I
The documents containing the information specified in this Part I will
be sent or given to participants in the 2004 Directors, Officers and Consultants
Stock Option, Stock Warrant and Stock Award Plan(the "Plan) as specified by Rule
428(b)(1). Pursuant to the instructions for Form S-8, such documents need not be
filed with the Commission either as part of the Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424. These documents and
the documents incorporated by reference in this Registration Statement pursuant
to Item 3 of Part II of this Registration Statement, taken together, constitute
a prospectus that meets the requirements of Section 10(a) of the Securities Act
of 1933, as amended. See Rule 428(a)(1).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The documents listed in(a) and(b) below have been filed by the
Registrant, Power3 Medical Products, Inc., a New York corporation(the
"Company"), with the Securities and Exchange Commission(the "Commission") and
are incorporated by reference in this Registration Statement. All documents
subsequently filed by the Registrant pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
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 the
Registration Statement and to be part thereof from the date of filing of such
documents.
(a) Form 10-QSB for the quarter ended September 30, 2003 and
filed on October 8, 2003, Form 10-KSB for the year ended December 31,
2002 and filed on April 15, 2003, Form 10-KSB/A for the year ended
December 31, 2002 and filed on May 23, 2003 and Form 10-KSB/A for the
year ended December 31, 2002 and filed on May 27, 2003. The above
referenced reports, which were previously filed with the Commission,
are incorporated herein by reference.
(b) All other reports filed pursuant to Section 13 or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
Registrant's Form 10-KSB for the period ended December 31, 2002.
The above referenced reports, which were previously filed with the
Commission, are incorporated herein by reference.
Item 4: Description of Securities
Not Applicable
Item 5: Interests of Named Experts and Counsel.
None
Item 6: Indemnification of Directors and Officers.
722. Authorization for indemnification of directors and officers.
(a) A corporation may indemnify any person made, or threatened
to be made, a party to an action or proceeding ( other than one by or
in the right of the corporation to procure a judgment in its favor),
whether civil or criminal, including an action by or in the right of
any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the corporation served in
any capacity at the request of the corporation, by reason of the fact
that he, his testator or intestate, was a director or officer of the
corporation, or served such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the
best interests of the corporation and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe that his
conduct was unlawful.
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not in itself create a presumption
that any such director or officer did not act, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the
best interests of the corporation or that he had reasonable cause to
believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened
to be made, a party to an action by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he, his
testator or intestate, is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as
a director or officer of any other corporation of any type or kind,
domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him in connection with the defense or
settlement of such action, or in connection with an appeal therein, if
such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the
corporation, except that no indemnification under this paragraph shall
be made in respect of (1) a threatened action, or a pending action
which is settled or otherwise disposed of, or (2) any claim, issue or
matter as to which such person shall have been adjudged to be liable to
the corporation, unless and only to the extent that the court in which
the action was brought, or, if no action was brought, any court of
competent jurisdiction, determines upon application that, in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be
deemed to have requested a person to serve an employee benefit plan
where the performance by such person of his duties to the corporation
also imposes duties on, or otherwise involves services by, such person
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on a person with respect to an employee benefit plan pursuant
to applicable law shall be considered fines; and action taken or
omitted by a person with respect to an employee benefit plan in the
performance of such person's duties for a purpose reasonably believed
by such person to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is
not opposed to the best interests of the corporation.
Item 7. Exemption From Registration Claimed.
Not Applicable
Item 8: Exhibits
The following documents are filed as Exhibits to this Registration
Statement:
4.1 -- 2004 Directors, Officers and Consultants Stock Option,
Stock Warrant and Stock Award Plan
5 -- Opinion of Sonfield & Sonfield as to the authorization and
issuance of the shares being registered.
24.1 -- Consent of Sonfield & Sonfield(included in Exhibit 5)
24.2 -- Consent of Kingery, Crouse & Hohl, P.A., Certified Public
Accountant
Item 9: Undertakings
The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement to include any material
information with respect to the plan of distribution
not previously disclosed in the registration
statement or any material change to such information
in the registration statement;
(b) that, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement 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; and
(c) 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.
SIGNATURES
THE REGISTRANT: 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
Bradenton, Florida on the 20th day of January, 2004.
POWER3 MEDICAL PRODUCTS, Inc.
By: /s/Timothy S. Novak
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Timothy S. Novak, Chairman of the Board and Chief Executive Officer
Principal Executive Officer
By: /s/R. Paul Gray
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R. Paul Gray, Chief Financial Officer, Secretary, Treasurer and Director
Principal Accounting Officer and Principal Financial Officer
THE PLAN: Pursuant to the requirements of the Securities Act of 1933,
the Board of Directors who administer the 2004 Directors, Officers and
Consultants Stock Option, Stock Warrant and Stock Award Plan have duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Bradenton, Florida on the 20th day of January,
2004.
/s/Timothy S. Novak /s/R. Paul Gray
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Timothy S. Novak, Director R. Paul Gray, Director
EXHIBIT 4.1
Power3 Medical Products, Inc.
2004 DIRECTORS, OFFICERS AND CONSULTANTS
STOCK OPTION, STOCK WARRANT AND STOCK AWARD PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of the 2004 Directors, Officers and
Consultants Stock Option, Stock Warrant and Stock Award Plan ("Plan") is to
maintain the ability of Power3 Medical Products, Inc., a New York corporation
(the "Company") and its subsidiaries to attract and retain highly qualified and
experienced directors, employees and consultants and to give such directors,
employees and consultants a continued proprietary interest in the success of the
Company and its subsidiaries. In addition the Plan is intended to encourage
ownership of common stock, $.001 par value ("Common Stock"), of the Company by
the directors, employees and consultants of the Company and its Affiliates (as
defined below) and to provide increased incentive for such persons to render
services and to exert maximum effort for the success of the Company's business.
The Plan provides eligible employees and consultants the opportunity to
participate in the enhancement of shareholder value by the grants of warrants,
options, restricted common or convertible preferred stock, unrestricted common
or convertible preferred stock and other awards under this Plan and to have
their bonuses and/or consulting fees payable in warrants, restricted common or
convertible preferred stock, unrestricted common or convertible preferred stock
and other awards, or any combination thereof. In addition, the Company expects
that the Plan will further strengthen the identification of the directors,
employees and consultants with the stockholders. Certain options and warrants to
be granted under this Plan are intended to qualify as Incentive Stock Options
("ISOs") pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), while other options and warrants and preferred stock granted
under this Plan will be nonqualified options or warrants which are not intended
to qualify as ISOs ("Nonqualified Options"), either or both as provided in the
agreements evidencing the options or warrants described in Section 5 hereof and
shares of preferred stock. As provided in the designation described in Section
7. Employees, consultants and directors who participate or become eligible to
participate in this Plan from time to time are referred to collectively herein
as "Participants". As used in this Plan, the term "Affiliates" means any "parent
corporation" of the Company and any "subsidiary corporation" of the Company
within the meaning of Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Composition of Committee. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). When acting in such capacity
the Board is herein referred to as the "Committee," which shall also designate
the Chairman of the Committee. If the Company is governed by Rule 16b-3
promulgated by the Securities and Exchange Commission ("Commission") pursuant to
the Securities Exchange Act of 1934, as amended ("Exchange Act"), no director
shall serve as a member of the Committee unless he or she is a "disinterested
person" within the meaning of such Rule 16b-3.
(b) Committee Action. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall constitute
a quorum, and all determinations of the Committee shall be made by not less than
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote of its members at a meeting duly called and held.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of the Plan, and may
grant authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be appointed as
the Committee.
(c) Committee Expenses. All expenses and liabilities incurred by the
Committee in the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants or other persons.
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in
Section 5(d)(xiii) hereof, the aggregate number of shares that may be optioned,
subject to conversion or issued under the Plan is 10,000,000 shares of Common
Stock, warrants, options, preferred stock or any combination thereof. The shares
subject to the Plan shall consist of authorized but unissued shares of Common
Stock and such number of shares shall be and is hereby reserved for sale for
such purpose. Any of such shares which may remain unsold and which are not
subject to issuance upon exercise of outstanding options or warrants or
conversion of outstanding shares of preferred stock at the termination of the
Plan shall cease to be reserved for the purpose of the Plan, but until
termination of the Plan or the termination of the last of the options or
warrants granted under the Plan, whichever last occurs, the Company shall at all
times reserve a sufficient number of shares to meet the requirements of the
Plan. Should any option or warrant expire or be cancelled prior to its exercise
in full, the shares theretofore subject to such option or warrant may again be
made subject to an option, warrant or shares of convertible preferred stock
under the Plan.
Immediately upon the grant of any option, warrant, shares of preferred
stock or award, the number of shares of Common Stock that may be issued or
optioned under the Plan will be increased. The number of shares of such increase
shall be an amount such that immediately after such increase the total number of
shares issuable under the Plan and reserved for issuance upon exercise of
outstanding options, warrants or conversion of shares of preferred stock will
equal 15% of the total number of issued and outstanding shares of Common Stock
of the Company. Such increase in the number of shares subject to the Plan shall
occur without the necessity of any further corporate action of any kind or
character.
SECTION 4. ELIGIBILITY. The Participants shall include directors, employees,
including officers, of the Company and its divisions and subsidiaries, and
consultants and attorneys who provide bona fide services to the Company.
Participants are eligible to be granted warrants, options, restricted common or
convertible preferred stock, unrestricted common or convertible preferred stock
and other awards under this Plan and to have their bonuses and/or consulting
fees payable in warrants, restricted common or convertible preferred stock,
unrestricted common or convertible preferred stock and other awards. A
Participant who has been granted an option, warrant or preferred stock hereunder
may be granted an additional option, warrant options, warrants or preferred
stock, if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS OR WARRANTS.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive warrants, options, restricted common or
convertible preferred stock, or unrestricted common or convertible preferred
stock under the Plan, (ii) to determine the number of shares of Common Stock to
be covered by such grant or such options or warrants and the terms thereof,
(iii) to determine the type of Common Stock granted: restricted common or
convertible preferred stock, unrestricted common or convertible preferred stock
or a combination of restricted and unrestricted common or convertible preferred
stock, and (iv) to determine the type of option or warrant granted: ISO,
Nonqualified Option or a combination of ISO and Nonqualified Options. The
Committee shall thereupon grant options or warrants in accordance with such
determinations as evidenced by a written option or warrant agreement. Subject to
the express provisions of the Plan, the Committee shall have discretionary
authority to prescribe, amend and rescind rules and regulations relating to the
Plan, to interpret the Plan, to prescribe and amend the terms of the option or
warrant agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(b) Stockholder Approval. All ISOs granted under this Plan are subject
to, and may not be exercised before, the approval of this Plan by the
stockholders prior to the first anniversary date of the Board meeting held to
approve the Plan, by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present, or represented by proxy, and entitled
to vote thereat, or by written consent in accordance with the laws of the State
of New York, provided that if such approval by the stockholders of the Company
is not forthcoming, all options or warrants and stock awards previously granted
under this Plan other than ISOs shall be valid in all respects.
(c) Limitation on Incentive Stock Options and Warrants. The aggregate
fair market value (determined in accordance with Section 5(d)(ii) of this Plan
at the time the option or warrant is granted) of the Common Stock with respect
to which ISOs may be exercisable for the first time by any Participant during
any calendar year under all such plans of the Company and its Affiliates shall
not exceed $3,000,000.
(d) Terms and Conditions. Each option or warrant 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:
(i) Option or Warrant Period. The Committee shall promptly
notify the Participant of the option or warrant grant and a written
agreement shall promptly be executed and delivered by and on behalf of
the Company and the Participant, provided that the option or warrant
grant shall expire if a written agreement is not signed by said
Participant (or his agent or attorney) and returned to the Company
within 60 days from date of receipt by the Participant of such
agreement. The date of grant shall be the date the option or warrant is
actually granted by the Committee, even though the written agreement
may be executed and delivered by the Company and the Participant after
that date. Each option or warrant agreement shall specify the period
for which the option or warrant thereunder is granted (which in no
event shall exceed ten years from the date of grant) and shall provide
that the option or warrant shall expire at the end of such period. If
the original term of an option or warrant is less than ten years from
the date of grant, the option or warrant may be amended prior to its
expiration, with the approval of the Committee and the Participant, to
extend the term so that the term as amended is not more than ten years
from the date of grant. However, in the case of an ISO granted to an
individual who, at the time of grant, owns stock possessing more than
10 percent of the total combined voting power of all classes of stock
of the Company or its Affiliate ("Ten Percent Stockholder"), such
period shall not exceed five years from the date of grant.
(ii) Option or Warrant Price. The purchase price of each share
of Common Stock subject to each option or warrant granted pursuant to
the Plan shall be determined by the Committee at the time the option or
warrant is granted and, in the case of ISOs, shall not be less than
100% of the fair market value of a share of Common Stock on the date
the option or warrant is granted, as determined by the Committee. In
the case of an ISO granted to a Ten Percent Stockholder, the option or
warrant price shall not be less than 110% of the fair market value of a
share of Common Stock on the date the option or warrant is granted. The
purchase price of each share of Common Stock subject to a Nonqualified
Option or Warrant under this Plan shall be determined by the Committee
prior to granting the option or warrant. The Committee shall set the
purchase price for each share subject to a Nonqualified Option or
Warrant at either the fair market value of each share on the date the
option or warrant is granted, or at such other price as the Committee
in its sole discretion shall determine.
At the time a determination of the fair market value of a
share of Common Stock is required to be made hereunder, the
determination of its fair market value shall be made by the Committee
in such manner as it deems appropriate.
(iii) Exercise Period. The Committee may provide in the option
or warrant agreement that an option or warrant may be exercised in
whole, immediately, or is to be exercisable in increments. In addition,
the Committee may provide that the exercise of all or part of an option
or warrant is subject to specified performance by the Participant.
(iv) Procedure for Exercise. Options or warrants shall be
exercised in the manner specified in the option or warrant agreement.
The notice of exercise shall specify the address to which the
certificates for such shares are to be mailed. A Participant shall be
deemed to be a stockholder with respect to shares covered by an option
or warrant on the date specified in the option or warrant agreement .
As promptly as practicable, the Company shall deliver to the
Participant or other holder of the warrant, certificates for the number
of shares with respect to which such option or warrant has been so
exercised, issued in the holder's name or such other name as holder
directs; 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 with a carrier for overnight delivery,
addressed to the holder at the address specified pursuant to this
Section 6(d).
(v) Termination of Employment. If an executive officer to whom
an option or warrant is granted ceases to be employed by the Company
for any reason other than death or disability, any option or warrant
which is exercisable on the date of such termination of employment may
be exercised during a period beginning on such date and ending at the
time set forth in the option or warrant agreement; provided, however,
that if a Participant's employment is terminated because of the
Participant's theft or embezzlement from the Company, disclosure of
trade secrets of the Company or the commission of a willful, felonious
act while in the employment of the Company (such reasons shall
hereinafter be collectively referred to as "for cause"), then any
option or warrant or unexercised portion thereof granted to said
Participant shall expire upon such termination of employment.
Notwithstanding the foregoing, no ISO may be exercised later than three
months after an employee's termination of employment for any reason
other than death or disability.
(vi) Disability or Death of Participant. In the event of the
determination of disability or death of a Participant under the Plan
while he or she is employed by the Company, the options or warrants
previously granted to him may be exercised (to the extent he or she
would have been entitled to do so at the date of the determination of
disability or death) at any time and from time to time, within a period
beginning on the date of such determination of disability or death and
ending at the time set forth in the option or warrant agreement, by the
former employee, the guardian of his estate, the executor or
administrator of his estate or by the person or persons to whom his
rights under the option or warrant shall pass by will or the laws of
descent and distribution, but in no event may the option or warrant be
exercised after its expiration under the terms of the option or warrant
agreement. Notwithstanding the foregoing, no ISO may be exercised later
than one year after the determination of disability or death. A
Participant shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he or she is incapable of
performing services for the Company of the kind he or she was
performing at the time the disability occurred 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. The date of determination of disability for purposes hereof
shall be the date of such determination by such physician.
(vii) Assignability. An option or warrant shall be assignable
or otherwise transferable, in whole or in part, by a Participant as
provided in the option, warrant or designation of the series of
preferred stock.
(viii) Incentive Stock Options. Each option or warrant
agreement may contain such terms and provisions as the Committee may
determine to be necessary or desirable in order to qualify an option or
warrant designated as an incentive stock option.
(ix) Restricted Stock Awards. Awards of restricted stock under
this Plan shall be subject to all the applicable provisions of this
Plan, including the following terms and conditions, and to such other
terms and conditions not inconsistent therewith, as the Committee shall
determine:
(A) Awards of restricted stock may be in addition to
or in lieu of option or warrant grants. Awards may be
conditioned on the attainment of particular performance goals
based on criteria established by the Committee at the time of
each award of restricted stock. During a period set forth in
the agreement (the "Restriction Period"), the recipient shall
not be permitted to sell, transfer, pledge, or otherwise
encumber the shares of restricted stock; except that such
shares may be used, if the agreement permits, to pay the
option or warrant price pursuant to any option or warrant
granted under this Plan, provided an equal number of shares
delivered to the Participant shall carry the same restrictions
as the shares so used. Shares of restricted stock shall become
free of all restrictions if during the Restriction Period, (i)
the recipient dies, (ii) the recipient's directorship,
employment, or consultancy terminates by reason of permanent
disability, as determined by the Committee, (iii) the
recipient retires after attaining both 59 1/2 years of age and
five years of continuous service with the Company and/or a
division or subsidiary, or (iv) if provided in the agreement,
there is a "change in control" of the Company (as defined in
such agreement). The Committee may require medical evidence of
permanent disability, including medical examinations by
physicians selected by it. Unless and to the extent otherwise
provided in the agreement, shares of restricted stock shall be
forfeited and revert to the Company upon the recipient's
termination of directorship, employment or consultancy during
the Restriction Period for any reason other than death,
permanent disability, as determined by the Committee,
retirement after attaining both 59 1/2 years of age and five
years of continuous service with the Company and/or a
subsidiary or division, or, to the extent provided in the
agreement, a "change in control" of the Company (as defined in
such agreement), except to the extent the Committee, in its
sole discretion, finds that such forfeiture might not be in
the best interests of the Company and, therefore, waives all
or part of the application of this provision to the restricted
stock held by such recipient. Certificates for restricted
stock shall be registered in the name of the recipient but
shall be imprinted with the appropriate legend and returned to
the Company by the recipient, together with a stock power
endorsed in blank by the recipient. The recipient shall be
entitled to vote shares of restricted stock and shall be
entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property shall also be subject
to the same restrictions.
(B) Restricted Stock shall become free of the
foregoing restrictions upon expiration of the applicable
Restriction Period and the Company shall then deliver to the
recipient Common Stock certificates evidencing such stock.
Restricted stock and any Common Stock received upon the
expiration of the restriction period shall be subject to such
other transfer restrictions and/or legend requirements as are
specified in the applicable agreement.
(x) Bonuses and Past Salaries and Fees Payable in Unrestricted
Stock.
(A) In lieu of cash bonuses otherwise payable under
the Company's or applicable division's or subsidiary's
compensation practices to employees and consultants eligible
to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable
in unrestricted Common Stock or partly in unrestricted Common
Stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and as an
incentive toward future services and shall consist of shares
of unrestricted Common Stock subject to such terms as the
Committee may determine in its sole discretion. The number of
shares of unrestricted Common Stock payable in lieu of a bonus
otherwise payable shall be determined by dividing such bonus
amount by the fair market value of one share of Common Stock
on the date the bonus is payable, with fair market value
determined as of such date in accordance with Section
5(d)(ii).
(B) In lieu of salaries and fees otherwise payable by
the Company to employees, attorneys and consultants eligible
to participate in this Plan that were incurred for services
rendered during, prior or after the year of 2004, the
Committee, in its sole discretion, may determine that such
unpaid salaries and fees shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly
in cash. Such awards shall be in consideration of services
previously performed and as an incentive toward future
services and shall consist of shares of unrestricted Common
Stock subject to such terms as the Committee may determine in
its sole discretion. The number of shares of unrestricted
Common Stock payable in lieu of a salaries and fees otherwise
payable shall be determined by dividing each calendar month's
of unpaid salary or fee amount by the average trading value of
the Common Stock for the calendar month during which the
subject services were provided.
(xi) No Rights as Stockholder. No Participant shall have any
rights as a stockholder with respect to shares covered by an option or
warrant until the option or warrant is exercised as provided in clause
(d) above.
(xii) Extraordinary Corporate Transactions. The existence of
outstanding options or warrants shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations, exchanges, 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 other securities 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. If the
Company recapitalizes or otherwise changes its capital structure, or
merges, consolidates, sells all of its assets or dissolves (each of the
foregoing a "Fundamental Change"), then thereafter upon any exercise of
an option or warrant theretofore granted the Participant shall be
entitled to purchase under such option or warrant, in lieu of the
number of shares of Common Stock as to which option or warrant shall
then be exercisable, the number and class of shares of stock and
securities to which the Participant would have been entitled pursuant
to the terms of the Fundamental Change if, immediately prior to such
Fundamental Change, the Participant had been the holder of record of
the number of shares of Common Stock as to which such option or warrant
is then exercisable. If (i) the Company shall not be the surviving
entity in any merger or consolidation (or survives only as a subsidiary
of another entity), (ii) the Company sells all or substantially all of
its assets to any other person or entity (other than a wholly-owned
subsidiary), (iii) any person or entity (including a "group" as
contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
ownership or control of (including, without limitation, power to vote)
more than 50% of the outstanding shares of Common Stock, (iv) the
Company is to be dissolved and liquidated, or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute
a majority of the Board (each such event in clauses (i) through (v)
above is referred to herein as a "Corporate Change"), the Committee, in
its sole discretion, may accelerate the time at which all or a portion
of a Participant's option or warrants may be exercised for a limited
period of time before or after a specified date.
(xiii) Changes in Company's Capital Structure. If the
outstanding shares of Common Stock or other securities of the Company,
or both, for which the option or warrant is then exercisable at any
time be changed or exchanged by declaration of a stock dividend, stock
split, combination of shares, recapitalization, or reorganization, the
number and kind of shares of Common Stock or other securities which are
subject to the Plan or subject to any options or warrants theretofore
granted, and the option or warrant prices, shall be adjusted only as
provided in the option or warrant.
(xiv) Acceleration of Options and Warrants. Except as
hereinbefore expressly provided, (i) the issuance by the Company of
shares of stock or any class of securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible
into such shares or other securities, (ii) the payment of a dividend in
property other than Common Stock or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Common Stock subject to options or warrants
theretofore granted or the purchase price per share, unless the
Committee shall determine, in its sole discretion, that an adjustment
is necessary to provide equitable treatment to Participant.
Notwithstanding anything to the contrary contained in this Plan, the
Committee may, in its sole discretion, accelerate the time at which any
option or warrant may be exercised, including, but not limited to, upon
the occurrence of the events specified in this Section 5, and is
authorized at any time (with the consent of the Participant) to
purchase options or warrants pursuant to Section 6.
SECTION 6. RELINQUISHMENT OF OPTIONS OR WARRANTS.
(a) The Committee, in granting options or warrants hereunder, shall
have discretion to determine whether or not options or warrants shall include a
right of relinquishment as hereinafter provided by this Section 6. The Committee
shall also have discretion to determine whether an option or warrant agreement
evidencing an option or warrant initially granted by the Committee without a
right of relinquishment shall be amended or supplemented to include such a right
of relinquishment. Neither the Committee nor the Company shall be under any
obligation or incur any liability to any person by reason of the Committee's
refusal to grant or include a right of relinquishment in any option or warrant
granted hereunder or in any option or warrant agreement evidencing the same.
Subject to the Committee's determination in any case that the grant by it of a
right of relinquishment is consistent with Section 1 hereof, any option or
warrant granted under this Plan, and the option or warrant agreement evidencing
such option or warrant, may provide:
(i) That the Participant, or his or her heirs or other legal
representatives to the extent entitled to exercise the option or
warrant under the terms thereof, in lieu of purchasing the entire
number of shares subject to purchase thereunder, shall have the right
to relinquish all or any part of the then unexercised portion of the
option or warrant (to the extent then exercisable) for a number of
shares of Common Stock to be determined in accordance with the
following provisions of this clause (i):
(A) The written notice of exercise of such right of
relinquishment shall state the percentage of the total number
of shares of Common Stock issuable pursuant to such
relinquishment (as defined below) that the Participant elects
to receive;
(B) The number of shares of Common Stock, if any,
issuable pursuant to such relinquishment shall be the number
of such shares, rounded to the next greater number of full
shares, as shall be equal to the quotient obtained by dividing
(i) the Appreciated Value by (ii) the purchase price for each
of such shares specified in such option or warrant;
(C) For the purpose of this clause (C), "Appreciated
Value" means the excess, if any, of (x) the total current
market value of the shares of Common Stock covered by the
option or warrant or the portion thereof to be relinquished
over (y) the total purchase price for such shares specified in
such option or warrant;
(ii) That such right of relinquishment may be exercised only
upon receipt by the Company of a written notice of such relinquishment
which shall be dated the date of election to make such relinquishment;
and that, for the purposes of this Plan, such date of election shall be
deemed to be the date when such notice is sent by registered or
certified mail, or when receipt is acknowledged by the Company, if
mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or
otherwise delivered; provided, that, in the event the method just
described for determining such date of election shall not be or remain
consistent with the provisions of Section 16(b) of the Exchange Act or
the rules and regulations adopted by the Commission thereunder, as
presently existing or as may be hereafter amended, which regulations
exempt from the operation of Section 16(b) of the Exchange Act in whole
or in part any such relinquishment transaction, then such date of
election shall be determined by such other method consistent with
Section 16(b) of the Exchange Act or the rules and regulations
thereunder as the Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share of Common
Stock on a particular date shall be deemed to be its fair market value
on that date as determined in accordance with Paragraph 5(d)(ii); and
(iv) That the option or warrant, or any portion thereof, may
be relinquished only to the extent that (A) it is exercisable on the
date written notice of relinquishment is received by the Company, and
(B) the holder of such option or warrant pays, or makes provision
satisfactory to the Company for the payment of, any taxes which the
Company is obligated to collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove, and neither the Committee nor the Company shall be under any
liability by reason of the Committee's disapproval of, any election by a holder
of preferred stock to relinquish such preferred stock in whole or in part as
provided in Paragraph 7(a), except that no such consent to or approval of a
relinquishment shall be required under the following circumstances. Each
Participant who is subject to the short-swing profits recapture provisions of
Section 16(b) of the Exchange Act ("Covered Participant") shall not be entitled
to receive shares of Common Stock when options or warrants are relinquished
during any window period commencing on the third business day following the
Company's release of a quarterly or annual summary statement of sales and
earnings and ending on the twelfth business day following such release ("Window
Period"). A Covered Participant shall be entitled to receive shares of Common
Stock upon the relinquishment of options or warrants outside a Window Period.
(c) The Committee, in granting options or warrants hereunder, shall
have discretion to determine the terms upon which such options or warrants shall
be relinquishable, subject to the applicable provisions of this Plan, and
including such provisions as are deemed advisable to permit the exemption from
the operation from Section 16(b) of the Exchange Act of any such relinquishment
transaction, and options or warrants outstanding, and option agreements
evidencing such options, may be amended, if necessary, to permit such exemption.
If options or warrants are relinquished, such option or warrant shall be deemed
to have been exercised to the extent of the number of shares of Common Stock
covered by the option or warrant or part thereof which is relinquished, and no
further options or warrants may be granted covering such shares of Common Stock.
(d) Any options or warrants or any right to relinquish the same to the
Company as contemplated by this Paragraph 6 shall be assignable by the
Participant, provided the transaction complies with any applicable securities
laws.
(e) Except as provided in Section 6(f) below, no right of
relinquishment may be exercised within the first six months after the initial
award of any option or warrant containing, or the amendment or supplementation
of any existing option or warrant agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised after the initial award
of any option or warrant containing, or the amendment or supplementation of any
existing option or warrant agreement adding the right of relinquishment, unless
such right of relinquishment is effective upon the Participant's death,
disability or termination of his relationship with the Company for a reason
other than "for cause."
SECTION 7. GRANT OF CONVERTIBLE PREFERRED STOCK.
(a) Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive restricted preferred stock, or
unrestricted preferred stock under the Plan, and (ii) to determine the number of
shares of Common Stock to be issued upon conversion of such shares of preferred
stock and the terms thereof. The Committee shall thereupon grant shares of
preferred stock in accordance with such determinations as evidenced by a written
preferred stock designation. Subject to the express provisions of the Plan, the
Committee shall have discretionary authority to prescribe, amend and rescind
rules and regulations relating to the Plan, to interpret the Plan, to prescribe
and amend the terms of the preferred stock designation (which need not be
identical) and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(b) Terms and Conditions. Each series of preferred stock granted under
the Plan shall be evidenced by a designation in the form for filing with the
Secretary of State of the state of incorporation of the Company, containing such
terms as 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:
(i) Conversion Ratio. The number of shares of Common Stock
issuable upon conversion of each share of preferred stock granted
pursuant to the Plan shall be determined by the Committee at the time
the preferred stock is granted. The conversion ration may be determined
by reference to the fair market value of each share of Common Stock on
the date the preferred stock is granted, or at such other price as the
Committee in its sole discretion shall determine.
At the time a determination of the fair market value of a
share of Common Stock is required to be made hereunder, the
determination of its fair market value shall be made in accordance with
Paragraph 5(d)(ii).
(ii) Conversion Period. The Committee may provide in the
preferred stock agreement that an preferred stock may be converted in
whole, immediately, or is to be convertible in increments. In addition,
the Committee may provide that the conversion of all or part of an
preferred stock is subject to specified performance by the Participant.
(iii) Procedure for Conversion. Shares of preferred stock
shall be converted in the manner specified in the preferred stock
designation. The notice of conversion shall specify the address to
which the certificates for such shares are to be mailed. A Participant
shall be deemed to be a stockholder with respect to shares covered by
preferred stock on the date specified in the preferred stock agreement
. As promptly as practicable, the Company shall deliver to the
Participant or other holder of the warrant, certificates for the number
of shares with respect to which such preferred stock has been so
converted, issued in the holder's name or such other name as holder
directs; 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 with a carrier for overnight delivery,
addressed to the holder at the address specified pursuant to this
Section 6(d).
(iv) Termination of Employment. If an executive officer to
whom preferred stock is granted ceases to be employed by the Company
for any reason other than death or disability, any preferred stock
which is convertible on the date of such termination of employment may
be converted during a period beginning on such date and ending at the
time set forth in the preferred stock agreement; provided, however,
that if a Participant's employment is terminated because of the
Participant's theft or embezzlement from the Company, disclosure of
trade secrets of the Company or the commission of a willful, felonious
act while in the employment of the Company (such reasons shall
hereinafter be collectively referred to as "for cause"), then any
preferred stock or unconverted portion thereof granted to said
Participant shall expire upon such termination of employment.
Notwithstanding the foregoing, no ISO may be converted later than three
months after an employee's termination of employment for any reason
other than death or disability.
(v) Disability or Death of Participant. In the event of the
determination of disability or death of a Participant under the Plan
while he or she is employed by the Company, the preferred stock
previously granted to him may be converted (to the extent he or she
would have been entitled to do so at the date of the determination of
disability or death) at any time and from time to time, within a period
beginning on the date of such determination of disability or death and
ending at the time set forth in the preferred stock agreement, by the
former employee, the guardian of his estate, the executor or
administrator of his estate or by the person or persons to whom his
rights under the preferred stock shall pass by will or the laws of
descent and distribution, but in no event may the preferred stock be
converted after its expiration under the terms of the preferred stock
agreement. Notwithstanding the foregoing, no ISO may be converted later
than one year after the determination of disability or death. A
Participant shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he or she is incapable of
performing services for the Company of the kind he or she was
performing at the time the disability occurred 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. The date of determination of disability for purposes hereof
shall be the date of such determination by such physician.
(vi) Assignability. Preferred stock shall be assignable or
otherwise transferable, in whole or in part, by a Participant.
(vii) Restricted Stock Awards. Awards of restricted preferred
stock under this Plan shall be subject to all the applicable provisions
of this Plan, including the following terms and conditions, and to such
other terms and conditions not inconsistent therewith, as the Committee
shall determine:
(A) Awards of restricted preferred stock may be in
addition to or in lieu of preferred stock grants. Awards may
be conditioned on the attainment of particular performance
goals based on criteria established by the Committee at the
time of each award of restricted preferred stock. During a
period set forth in the agreement (the "Restriction Period"),
the recipient shall not be permitted to sell, transfer,
pledge, or otherwise encumber the shares of restricted
preferred stock. Shares of restricted preferred stock shall
become free of all restrictions if during the Restriction
Period, (i) the recipient dies, (ii) the recipient's
directorship, employment, or consultancy terminates by reason
of permanent disability, as determined by the Committee, (iii)
the recipient retires after attaining both 59 1/2 years of age
and five years of continuous service with the Company and/or a
division or subsidiary, or (iv) if provided in the agreement,
there is a "change in control" of the Company (as defined in
such agreement). The Committee may require medical evidence of
permanent disability, including medical examinations by
physicians selected by it. Unless and to the extent otherwise
provided in the agreement, shares of restricted preferred
stock shall be forfeited and revert to the Company upon the
recipient's termination of directorship, employment or
consultancy during the Restriction Period for any reason other
than death, permanent disability, as determined by the
Committee, retirement after attaining both 59 1/2 years of age
and five years of continuous service with the Company and/or a
subsidiary or division, or, to the extent provided in the
agreement, a "change in control" of the Company (as defined in
such agreement), except to the extent the Committee, in its
sole discretion, finds that such forfeiture might not be in
the best interests of the Company and, therefore, waives all
or part of the application of this provision to the restricted
preferred stock held by such recipient. Certificates for
restricted preferred stock shall be registered in the name of
the recipient but shall be imprinted with the appropriate
legend and returned to the Company by the recipient, together
with a preferred stock power endorsed in blank by the
recipient. The recipient shall be entitled to vote shares of
restricted preferred stock and shall be entitled to all
dividends paid thereon, except that dividends paid in Common
Stock or other property shall also be subject to the same
restrictions.
(B) Restricted preferred stock shall become free of
the foregoing restrictions upon expiration of the applicable
Restriction Period and the Company shall then deliver to the
recipient Common Stock certificates evidencing such stock.
Restricted preferred stock and any Common Stock received upon
the expiration of the restriction period shall be subject to
such other transfer restrictions and/or legend requirements as
are specified in the applicable agreement.
(x) Bonuses and Past Salaries and Fees Payable in Unrestricted
Preferred stock.
(A) In lieu of cash bonuses otherwise payable under
the Company's or applicable division's or subsidiary's
compensation practices to employees and consultants eligible
to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable
in unrestricted Common Stock or partly in unrestricted Common
Stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and as an
incentive toward future services and shall consist of shares
of unrestricted Common Stock subject to such terms as the
Committee may determine in its sole discretion. The number of
shares of unrestricted Common Stock payable in lieu of a bonus
otherwise payable shall be determined by dividing such bonus
amount by the fair market value of one share of Common Stock
on the date the bonus is payable, with fair market value
determined as of such date in accordance with Section
5(d)(ii).
(B) In lieu of salaries and fees otherwise payable by
the Company to employees, attorneys and consultants eligible
to participate in this Plan that were incurred for services
rendered during, prior or after the year of 2004, the
Committee, in its sole discretion, may determine that such
unpaid salaries and fees shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly
in cash. Such awards shall be in consideration of services
previously performed and as an incentive toward future
services and shall consist of shares of unrestricted Common
Stock subject to such terms as the Committee may determine in
its sole discretion. The number of shares of unrestricted
Common Stock payable in lieu of a salaries and fees otherwise
payable shall be determined by dividing each calendar month's
of unpaid salary or fee amount by the average trading value of
the Common Stock for the calendar month during which the
subject services were provided.
(xi) No Rights as Stockholder. No Participant shall have any
rights as a stockholder with respect to shares covered by an preferred
stock until the preferred stock is converted as provided in clause
(b)(iii) above.
(xii) Extraordinary Corporate Transactions. The existence of
outstanding preferred stock shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations, exchanges, 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 other securities 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. If the
Company recapitalizes or otherwise changes its capital structure, or
merges, consolidates, sells all of its assets or dissolves (each of the
foregoing a "Fundamental Change"), then thereafter upon any conversion
of preferred stock theretofore granted the Participant shall be
entitled to the number of shares of Common Stock upon conversion of
such preferred stock, in lieu of the number of shares of Common Stock
as to which preferred stock shall then be convertible, the number and
class of shares of stock and securities to which the Participant would
have been entitled pursuant to the terms of the Fundamental Change if,
immediately prior to such Fundamental Change, the Participant had been
the holder of record of the number of shares of Common Stock as to
which such preferred stock is then convertible. If (i) the Company
shall not be the surviving entity in any merger or consolidation (or
survives only as a subsidiary of another entity), (ii) the Company
sells all or substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary), (iii) any person or
entity (including a "group" as contemplated by Section 13(d)(3) of the
Exchange Act) acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the outstanding
shares of Common Stock, (iv) the Company is to be dissolved and
liquidated, or (v) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board
(each such event in clauses (i) through (v) above is referred to herein
as a "Corporate Change"), the Committee, in its sole discretion, may
accelerate the time at which all or a portion of a Participant's shares
of preferred stock may be converted for a limited period of time before
or after a specified date.
(xiii) Changes in Company's Capital Structure. If the
outstanding shares of Common Stock or other securities of the Company,
or both, for which the preferred stock is then convertible at any time
be changed or exchanged by declaration of a stock dividend, stock
split, combination of shares, recapitalization, or reorganization, the
number and kind of shares of Common Stock or other securities which are
subject to the Plan or subject to any preferred stock theretofore
granted, and the conversion ratio, shall be adjusted only as provided
in the designation of the preferred stock.
(xiv) Acceleration of Conversion of Preferred Stock. Except as
hereinbefore expressly provided, (i) the issuance by the Company of
shares of stock or any class of securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct
sale, upon the conversion of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, (ii) the payment of a dividend in
property other than Common Stock or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Common Stock subject to preferred stock
theretofore granted, unless the Committee shall determine, in its sole
discretion, that an adjustment is necessary to provide equitable
treatment to Participant. Notwithstanding anything to the contrary
contained in this Plan, the Committee may, in its sole discretion,
accelerate the time at which any preferred stock may be converted,
including, but not limited to, upon the occurrence of the events
specified in this Section 7(xiv).
SECTION 8. AMENDMENTS OR TERMINATION. The Board may amend, alter or discontinue
the Plan, but no amendment or alteration shall be made which would impair the
rights of any Participant, without his consent, under any option, warrant or
preferred stock theretofore granted.
SECTION 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of options or warrants and grant and conversion of preferred stock
thereunder, and the obligation of the Company to sell and deliver shares under
such options, warrants or preferred stock, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
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 issuance of any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be necessary
or advisable. Any adjustments provided for in subparagraphs 5(d)(xii), (xiii)
and (xiv) shall be subject to any shareholder action required by the corporate
law of the state of incorporation of the Company.
SECTION 10. PURCHASE FOR INVESTMENT. Unless the options, warrants, shares of
convertible preferred stock and shares of Common Stock covered by this Plan have
been registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person acquiring or
exercising an option or warrant under this Plan or converting shares of
preferred stock may be required by the Company to give a representation in
writing that he or she is acquiring such option or warrant or such shares for
his own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
SECTION 11. TAXES.
(a) The Company may make such provisions as it may deem appropriate for
the withholding of any taxes which it determines is required in connection with
any options, warrants or preferred stock granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11 (a), any Participant may
pay all or any portion of the taxes required to be withheld by the Company or
paid by him or her in connection with the exercise of a nonqualified option or
warrant or conversion of preferred stock by electing to have the Company
withhold shares of Common Stock, or by delivering previously owned shares of
Common Stock, having a fair market value, determined in accordance with
Paragraph 5(d)(ii), equal to the amount required to be withheld or paid. A
Participant must make the foregoing election on or before the date that the
amount of tax to be withheld is determined ("Tax Date"). All such elections are
irrevocable and subject to disapproval by the Committee. Elections by Covered
Participants are subject to the following additional restrictions: (i) such
election may not be made within six months of the grant of an option or warrant,
provided that this limitation shall not apply in the event of death or
disability, and (ii) such election must be made either six months or more prior
to the Tax Date or in a Window Period. Where the Tax Date in respect of an
option or warrant is deferred until six months after exercise and the Covered
Participant elects share withholding, the full amount of shares of Common Stock
will be issued or transferred to him upon exercise of the option or warrant, but
he or she shall be unconditionally obligated to tender back to the Company the
number of shares necessary to discharge the Company's withholding obligation or
his estimated tax obligation on the Tax Date.
SECTION 12. REPLACEMENT OF OPTIONS, WARRANTS AND PREFERRED STOCK. The Committee
from time to time may permit a Participant under the Plan to surrender for
cancellation any unexercised outstanding option or warrant or unconverted
Preferred stock and receive from the Company in exchange an option, warrant or
preferred stock for such number of shares of Common Stock as may be designated
by the Committee. The Committee may, with the consent of the holder of any
outstanding option, warrant or preferred stock, amend such option, warrant or
preferred stock, including reducing the exercise price of any option or warrant
to not less than the fair market value of the Common Stock at the time of the
amendment, increasing the conversion ratio of any preferred stock and extending
the exercise or conversion term of and warrant, option or preferred stock.
SECTION 13. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as a result
of any option or warrant granted pursuant to this Plan shall confer on any
individual any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an individual's employment at
any time. The option, warrant or preferred stock agreements may contain such
provisions as the Committee may approve with reference to the effect of approved
leaves of absence.
SECTION 14. LIABILITY OF COMPANY. The Company and any Affiliate which is in
existence or hereafter comes into existence shall not be liable to a Participant
or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as
to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized,
by any Participant or other person due to the exercise of any option or warrant
or the conversion of any preferred stock granted hereunder.
SECTION 15. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be effective on
the date the Board adopts the Plan. The Plan shall expire ten years after the
date the Board approves the Plan and thereafter no option, warrant or preferred
stock shall be granted pursuant to the Plan.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption by the Board nor
the submission of the Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of restricted stock or stock options, warrants or
preferred stock otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
SECTION 17. GOVERNING LAW. This Plan and any agreements hereunder shall be
interpreted and construed in accordance with the laws of the state of
incorporation of the Company and applicable federal law.
SECTION 18. CASHLESS EXERCISE. The Committee also may allow cashless exercises
as permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions. or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
EXHIBIT 5 & 24.1
LETTERHEAD OF SONFIELD AND SONFIELD
January 20, 2004
Board of Directors
Power3 Medical Products, Inc.
8374 Market Street, # 439
Bradenton, Florida 34202
Ladies and Gentlemen:
In our capacity as counsel for Power3 Medical Products, Inc., a New
York corporation (the "Company"), we have participated in the corporate
proceedings relative to the authorization and issuance by the Company of a
maximum of 10,000,000 shares of common stock pursuant to the Plan as set out and
described in the Company's Registration Statement on Form S-8 (File No.
000-24921) under the Securities Act of 1933(the "Registration Statement"). We
have also participated in the preparation and filing of the Registration
Statement.
Based upon the foregoing and upon our examination of originals (or
copies certified to our satisfaction) of such corporate records of the Company
and other documents as we have deemed necessary as a basis for the opinions
hereinafter expressed, and assuming the accuracy and completeness of all
information supplied us by the Company, having regard for the legal
considerations which we deem relevant, we are of the opinion that:
(1) The Company is a corporation duly organized and
validly existing under the laws of the State of New York;
(2) The Company has taken all requisite corporate action and
all action required by the laws of the State of New York with respect
to the authorization, issuance and sale of warrants and shares of
common and preferred stock to be issued pursuant to the Registration
Statement;
(3) The 6,000,000 shares of common stock, when issued pursuant
to the Registration Statement, will be validly issued, fully paid and
non-assessable; and
(4) The 2,000,000 warrants when issued pursuant to the
Registration Statement will be duly authorized and a binding obligation
of the Company in accordance with their respective terms.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Registration
Statement.
Yours very truly,
/s/SONFIELD & SONFIELD
SONFIELD & SONFIELD
EXHIBIT 24.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Power 3 Medical Products, Inc.
8374 Market Street, Suite 439
Bradenton, FL 34202
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 of our report dated
pril 15, 2003 included in the Annual Report on Form 10-KSB of Power 3 Medical
Products, Inc. as of December 31, 2002 and for the years ended December 31,
2002 and 2001.
Kingery Crouse & Hohl, P.A.
January 20, 2004